Supreme Court Invalidates Reassessment Based on Roving Inquiries: Upholds Gujarat HC Order in ACIT Vs Mukesh Manubhai Shah
In a significant judicial pronouncement, the Supreme Court of India has dismissed a Special Leave Petition (SLP) preferred by the Revenue, thereby affirming the Gujarat High Court's decision to quash reassessment proceedings in the case of ACIT Vs Mukesh Manubhai Shah. The apex court's ruling reinforces the legal principle that tax authorities cannot initiate proceedings under Section 148A of the Income-tax Act, 1961 merely to conduct a roving or fishing inquiry based on unverified consolidated bank entries.
The dispute centered around the reopening of the assessment for AY 2019-20, where the Assessing Officer (AO) relied on high-value transaction data provided by a bank, without conducting the requisite preliminary verification mandated by law.
Factual Matrix of the Dispute
The assessee had duly filed the income tax return for AY 2019-20, disclosing a total income of Rs.33,98,400/-. Subsequently, the Income Tax Department received financial intelligence from the State Bank of India (SBI) indicating substantial banking activities in the assessee's account.
The information highlighted massive transaction volumes, specifically:
- Debit Transactions: Rs.18,70,59,704/-
- Credit Transactions: Rs.18,69,71,900/-
- Aggregate Transaction Value: Rs.37,40,31,604/-