2022 (10) TMI 233 - HC - Income Tax

Validity of Reopening of assessment - initiation of proceedings u/s 148A - As argued even though a prayer for short adjournment was made to file response to notices u/s 148A despite having been duly acknowledged, no time was granted and the orders were passed which has resulted in miscarriage of justice because according to the petitioners one single transaction of alleged cash deposit of Rs.34,01,000/- has been taken into consideration as two different cash deposits to make it Rs.68,02,000/- only to surpass the bar under Section 149 - HELD THAT - We find that though notices under Section 148A of the I.T. Act were given to the petitioners to file their response within the statutory period of seven days, the petitioners applied for adjournment. The orders passed under clause (d) of Section 148A do not refer to such prayer for adjournment. Taking into consideration that the material placed before us does not show any extraordinary grounds for seeking such adjournment, only on that ground we are not inclined to interfere with the orders which have been passed under clause (d) of Section 148A - However, at the same time taking into consideration the very substantial point which has been raised by the petitioners that one single cash deposit has been taken as two different transactions, which according to the petitioners is factually incorrect and not borne out from any of the record including transactions made as entered in the accounts of the bank, we are of the view that this objection should be taken into consideration by the authority concerned in proceedings under Section 148 which have now been initiated. The authority would be obliged under the law to decide this very objection with reference to the relevant material, which has been placed before it by the petitioners as also by collecting other material including the bank transactions, slips, statements and specific record and clear reasons on the objection raised by the petitioners that the alleged income chargeable to tax is less than Rs.50,00,000/- as there is only single alleged transaction of Rs.34,01,000/- and not two transactions as stated in the proceedings drawn u/s 148A. These petitions, at this stage, are disposed off with liberty to the petitioners to revive their cases, if eventuality so arises.

Summary

Issues: Challenge to initiation of proceedings under Section 148A of the Income Tax Act, 1961, validity of orders passed under clause (d) of Section 148A, issuance of subsequent notices under Section 148, alleged discrepancy in considering a single cash deposit as two transactions, miscarriage of justice.

The judgment by the Rajasthan High Court, delivered by Hon'ble Mr. Justice Manindra Mohan Shrivastava and Hon'ble Mrs. Justice Shubha Mehta, addressed the challenge to the initiation of proceedings under Section 148A of the Income Tax Act, 1961, along with the validity of orders passed under clause (d) of Section 148A and the issuance of subsequent notices under Section 148. The petitioners contended that a single cash deposit of Rs.34,01,000 had been incorrectly treated as two transactions totaling Rs.68,02,000, surpassing the threshold under Section 149 of the I.T. Act, leading to a miscarriage of justice.

The court noted that while the petitioners had requested an adjournment to respond to notices under Section 148A, the orders under clause (d) of Section 148A did not mention this request. However, as no extraordinary grounds were presented for the adjournment, the court declined to interfere with the orders. Nevertheless, considering the substantial objection raised by the petitioners regarding the alleged discrepancy in the cash deposit being treated as two transactions, the court directed the concerned authority in the Section 148 proceedings to address this objection. The authority was instructed to evaluate the objection based on the material provided by the petitioners, including bank transactions, slips, statements, and specific records, and provide clear reasons for the discrepancy in the alleged income chargeable to tax.

Concluding the judgment, the court disposed of the petitions at that stage, granting the petitioners the liberty to revive their cases if necessary. The court ordered a copy of the judgment to be placed on record in each connected petition, ensuring transparency and compliance with the directives issued.