2024 (11) TMI 1389 - HC - Income Tax

Reopening of assessment u/s 147 - cash deposits were made in the bank account of the petitioner - HELD THAT - The total value of the transactions, which were suggestive of petitioner s income escaping assessment was quantified. The petitioner had responded to the impugned notice raising several issues. However, we do not find that the said response contains any information either as to the quantum of cash deposited during the previous year relevant to the AY 2017-18. There was also no explanation as to why large amounts were received in cash. AO had passed the impugned order holding that the petitioner s response was found to be unsatisfactory. The entire purpose of issuing a notice u/s 148A (b) of the Act is to enable the Assessee to respond to the information available with the AO, which may be suggestive of the Assessee s income escaping assessment. In the instant case, where the allegation is that a large cash deposits were made in the bank account of the petitioner, the least that was required for the petitioner was to inform the AO as to the correct quantum of the cash deposits in his bank account and his explanation for the same. This crucial information is not available in the petitioner s response to the impugned notice. It is relevant to note that at the threshold stage of issuing a notice under Section 148 of the Act, the AO is not required to finally conclude whether any income has escaped assessment. The notice merely initiates the reassessment proceedings. Thus, all rights and contentions of the petitioner to contest the quantum as well as the taxability of the amounts as reflected in the impugned notice and the impugned order are reserved. We are unable to accept that any interference by this court is warranted in proceedings under Article 226 of the Constitution of India.

Summary

Issues:
Jurisdiction of Assessing Officer to issue notice under Section 148A of the Income Tax Act, 1961; Merits of the case regarding response to the impugned notice.

Jurisdiction Issue:
The petitioner challenged the jurisdiction of the Jurisdictional Assessing Officer (JAO) to initiate proceedings after a specific CBDT Notification. The court referred to a previous decision where a similar issue was settled in favor of the Revenue. The court rejected the petitioner's contention that the notice and order were issued without jurisdiction.

Merits Issue:
The petitioner contended that their response to the impugned notice was not considered. The petitioner had requested further information and an oral hearing, which were allegedly not provided by the JAO. The notice indicated large cash deposits in the petitioner's bank accounts, totaling Rs. 8,79,42,231, and unexplained cash of Rs. 63,94,000. The petitioner's response did not provide details on the cash deposits or explanations for the large amounts received in cash.

The Assessing Officer (AO) found the petitioner's response unsatisfactory and passed the impugned order. The court emphasized that the purpose of the notice was to enable the Assessee to respond to information suggesting income escaping assessment. The petitioner failed to provide crucial information on the cash deposits and explanations for the same in their response.

The court clarified that at the notice stage, the AO does not need to conclude on income escaping assessment; it merely initiates reassessment proceedings. The petitioner retains the right to contest the quantum and taxability of the amounts. However, the court found no grounds for interference in Article 226 proceedings.

Ultimately, the petition was dismissed by the court.