Reassessment Proceedings Quashed for Bypassing Mandatory Inquiry Under Section 148A(a): Chhattisgarh High Court Ruling

Case Overview

Case Name: Satish Thourani Vs Union of India
Court: Chhattisgarh High Court
Key Provision: Section 148A of the Income Tax Act, 1961

The Chhattisgarh High Court delivered a significant ruling on the procedural requirements governing reassessment proceedings under the Income Tax Act, 1961. The Court unequivocally held that once an Assessing Officer seeks and obtains prior approval from the specified authority under Section 148A(a) to conduct an inquiry, that inquiry becomes a mandatory and non-negotiable step — it cannot be skipped before issuing a show-cause notice under Section 148A(b).

What Was the Central Question?

The fundamental legal question before the Court was:

Can an Assessing Officer, having already obtained prior approval from the specified authority to conduct an inquiry under Section 148A(a), validly proceed to issue a notice under Section 148A(b) without actually carrying out that inquiry? And if such a notice is issued, do the consequential order under Section 148A(d) and the notice under Section 148 remain legally sustainable?

The Court's answer was a categorical no.

Facts of the Case

The sequence of events that led to this litigation unfolded as follows:

  1. The Assessing Officer gathered information suggesting that income chargeable to tax had escaped assessment in the case of the assessee.
  2. On 14.02.2024, the Assessing Officer sought and received prior approval from the Chief Commissioner of Income Tax (CCIT), Raipur, under Section 148A(a) of the Income Tax Act, 1961, specifically for the purpose of conducting an inquiry into the alleged escapement of income.
  3. The annexure appended to the subsequent show-cause notice explicitly acknowledged this — it stated in Clause 3 that approval had been granted by the CCIT, Raipur under Section 148A(a) on 14.02.2024 for conducting an inquiry in respect of the transactions in question.
  4. Despite having obtained such approval — and despite the annexure itself recording the intention to conduct an inquiry — the Assessing Officer did not conduct any inquiry whatsoever.
  5. Instead, on 15.02.2024, just one day after the approval was granted, the Assessing Officer directly issued a show-cause notice under Section 148A(b).
  6. The Assessing Officer then proceeded to pass an order under Section 148A(d) and subsequently issued a notice under Section 148 of the Income Tax Act, 1961.

The assessee challenged this entire chain of proceedings before the Chhattisgarh High Court by way of a writ petition.

Arguments Presented Before the Court

Arguments by the Assessee

Counsel for the assessee drew the Court's attention to the express language of Section 148A and made the following submissions: