2022 (5) TMI 1436 - HC - Income Tax

Reopening of assessment u/s 147 - unexplained cash deposited u/s 68 - HELD THAT - It prima facie appears that the assessee has completely denied deposit of any cash in Bank of Baroda. He has disclosed information about cash deposit in his bank account in Union Bank of India and State Bank of India. Prima facie, it appears that the respondent No.4 has very casually made addition without any discussion or without reference to any evidence in respect of the alleged cash deposit of the assessee in his bank account in Bank of Baroda. ASGI and learned counsel for the respondent pray for and are granted three days time to obtain instructions. The petitioner shall also file a supplementary affidavit annexing therewith copy of his bank account in Bank of Baroda for the Financial Year 2016-17. Put up as a fresh case on 30.05.2022 at 10 00 A.M.

Issues:
1. Validity of the notice issued under Section 148 of the Income Tax Act for reassessment of income for A.Y. 2017-18.
2. Legality of the Re-Assessment Order for A.Y. 2017-18 and alleged violation of principles of natural justice.
3. Constitutionality of the amendment to the Income Tax Act, 1961, vide Section 42 of the Finance Act, 2022, omitting Sub-Section 9 of Section 144B.
4. Validity of the Order issued under Section 151 of the Income Tax Act for reassessment of income for A.Y. 2017-18.

Analysis:

Issue 1:
The petitioner challenged the validity of the notice issued under Section 148 of the Income Tax Act for reassessment of income for A.Y. 2017-18. The draft assessment order alleged unexplained cash credit based on cash deposits made by the assessee firm at Bank of Baroda, Kanpur. The petitioner denied these allegations, providing details of cash deposits in other banks. The respondent made an addition of Rs. 13,67,24,000 under Section 68 of the Income Tax Act, which the petitioner contested as baseless and incorrect. The respondent's addition was made without proper discussion or reference to evidence, raising concerns about the validity of the notice.

Issue 2:
The legality of the Re-Assessment Order for A.Y. 2017-18 was questioned by the petitioner, alleging a gross violation of law and principles of natural justice. The assessment order included the disputed addition of Rs. 13,67,24,000 under Section 68. The petitioner's reply to the show cause notice highlighted the lack of cash deposits in Bank of Baroda and provided evidence of deposits in other banks. The petitioner requested the source and details of the alleged cash deposit, emphasizing the illegality and unjustified nature of the proceedings based on this issue.

Issue 3:
The petitioner sought a declaration that the amendment to the Income Tax Act, 1961, through Section 42 of the Finance Act, 2022, omitting Sub-Section 9 of Section 144B, was unconstitutional and bad in law. However, the petitioner later decided not to press this relief, leading to its deletion from the petition.

Issue 4:
The validity of the Order issued under Section 151 of the Income Tax Act for reassessment of income for A.Y. 2017-18 was challenged. The petitioner contested the addition made by the respondent based on alleged cash deposits at Bank of Baroda, asserting that the proceedings were illegal, unconstitutional, and unjustified. The Court granted time for the respondents to obtain instructions and requested the petitioner to file a supplementary affidavit with relevant bank account details for further consideration on the next hearing date.

This detailed analysis outlines the key issues raised in the legal judgment before the Allahabad High Court, addressing the challenges to the notice, reassessment order, constitutional validity of the amendment, and the legality of the proceedings related to the alleged cash deposits.

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