Case Note & Summary
The petitioner, Jay Pareshbhai Soni, filed a petition under Article 226 of the Constitution of India challenging a notice dated 30.03.2025 issued under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2021-22. The petitioner had filed his return of income on 17.12.2021 declaring total income of Rs.16,83,110/-. The respondent no.1 recorded a satisfaction note under clause (iv) of Explanation 2 to Section 148, based on incriminating documents found during a search on Bleach Chem Group on 11.10.2023. The satisfaction note was approved by the Principal Commissioner of Income Tax on 23.03.2025, and the notice under Section 148 was issued on 30.03.2025 after prior approval under Section 151. The petitioner filed a return in response on 21.06.2025, declaring the same income, and raised objections on 30.06.2025 (e-filed on 04.07.2025), contending that he had no cash loan transaction with Bleach Chem Group and had neither repaid Rs.10,00,000/- nor paid interest of Rs.5,10,000/- as alleged. Meanwhile, respondent no.2 passed an order dated 19.01.2026 under Section 127(2) transferring the petitioner's case from Ahmedabad to Rajkot without granting any opportunity of hearing. Subsequently, respondent no.3 issued a notice under Section 142(1) on 04.02.2026, to which the petitioner replied requesting disposal of his earlier objections. However, the objections were not disposed of, and the petitioner apprehended that assessment would be framed without a speaking order. The court considered the short issue and held that the failure to dispose of objections and the transfer without hearing violated principles of natural justice. The court quashed the impugned notice under Section 148 and the transfer order under Section 127(2), allowing the petition.
Headnote
A) Income Tax - Reassessment - Section 148 of Income Tax Act, 1961 - Objections - The petitioner challenged a notice under Section 148 for AY 2021-22, alleging that his objections were not disposed of and the case was transferred without hearing. The court held that the failure to dispose of objections and the transfer without opportunity of hearing violated principles of natural justice, rendering the reassessment notice invalid. (Paras 1-6) B) Income Tax - Transfer of Case - Section 127(2) of Income Tax Act, 1961 - Natural Justice - The petitioner's case was transferred from Ahmedabad to Rajkot without granting any opportunity of hearing. The court held that such transfer without hearing is violative of natural justice and cannot be sustained. (Paras 5-6)
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 is valid when the petitioner's objections were not disposed of and the case was transferred without opportunity of hearing
Final Decision
The court allowed the petition, quashing the notice dated 30.03.2025 under Section 148 of the Income Tax Act, 1961 and the order dated 19.01.2026 under Section 127(2) of the Act. Rule made absolute.
Law Points
- Reassessment notice under Section 148 must be preceded by disposal of objections
- Transfer of case without hearing violates natural justice
- Satisfaction note must be based on tangible material
