Income Tax Act, 1961 – Section 148A(b) and 148A(d) - The petitioner, challenged the notice issued under Section 148A(b) for reopening assessment for AY 2017-18, alleging unexplained cash deposits aggregating Rs.9,43,36,231 in multiple bank accounts. The petitioner contended that the Jurisdictional Assessing Officer (JAO) lacked jurisdiction to issue the notice following the CBDT notification dated 29.03.2022 and that the petitioner's response to the notice was not adequately considered. The petitioner also alleged denial of an oral hearing - Whether the JAO had jurisdiction to issue the notice - Whether the reassessment initiation was valid under Section 148A(b) in the absence of adequate consideration of the petitioner’s response - HELD - The Court rejected the petitioner’s jurisdictional challenge, citing the decision in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer, which upheld the validity of similar notices post-CBDT notification - The Court found that the petitioner failed to provide sufficient information regarding the cash deposits or their sources in response to the notice. The reassessment initiation under Section 148A(b) is a preliminary step to ascertain escaped income, not a final conclusion on tax liability. The AO’s action of issuing the notice was upheld as procedurally valid - The petitioner retains the right to contest the quantum and taxability of the alleged income during reassessment proceedings - Petition dismissed; reassessment proceedings under Section 148A(b) upheld. The petitioner’s rights to challenge the findings during reassessment are reserved

2024-VIL-230-DEL-DT

Neutral Citation: 2024:DHC:8967-DB

IN THE HIGH COURT OF DELHI AT NEW DELHI

W.P.(C) 9184/2024

Dated: 20.11.2024

DHAN PRAKASH GUPTA

Vs

INCOME TAX DEPARTMENT

For the Petitioner: Mr. Chander Kant Tyagi and Mr. Amar Gupta, Advocates

For the Respondent: Mr. Sanjay Kumar, Advocate

CORAM

HON'BLE MR. JUSTICE VIBHU BAKHRU

HON'BLE MS. JUSTICE SWARANA KANTA SHARMA

VIBHU BAKHRU, J. (ORAL)

CM APPL. 67582/2024 (for early hearing)

1. This is an application seeking an early hearing of the above captioned petition which is now listed on 09.04.2025.

2. The application is allowed, and with the consent of the learned counsel for the parties, the above captioned petition is taken on Board.

3. The hearing scheduled on 09.04.2025, is cancelled.

W.P.(C) 9184/2024

4. The petitioner has filed the present petition impugning a notice dated 01.03.2024 (hereafter the impugned notice) issued under Section 148A(b) of the Income Tax Act, 1961 (hereafter the Act). The petitioner also impugns a consequent order dated 30.03.2024 (hereafter the impugned order) issued under Section 148A(d) of the Act seeking reopening of the petitioner’s assessment for the assessment year (AY) 2017-18.

5. Apart from assailing the impugned notice and the impugned order on merits, the petitioner also challenges the initiation of the said proceedings on the ground of jurisdiction of the Jurisdictional Assessing Officer (hereafter the JAO). The petitioner claims that JAO does not have the jurisdiction to initiate the said proceedings after the issuance of CBDT Notification dated 29.03.2022.

6. Insofar as the petitioner’s challenge to the jurisdiction of the JAO to issue the impugned notice is concerned, the said issue stands settled in favour of the Revenue by the decision of this court in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer Ward 25 (3) New Delhi, 2024:DHC:8330-DB. Accordingly, the petitioner’s contention that the impugned notice and the impugned order are liable to be set aside as the same have been issued without jurisdiction, is rejected.

7. Insofar as the issue on merits is concerned, it is the petitioner’s case that his response to the impugned notice was not considered.

8. The learned counsel for the petitioner submits that the petitioner had asked for further information regarding the entries as set out in the impugned notice, which were suggestive of the petitioner’s income escaping assessment. However, the petitioner had not received any response from the JAO. It is also stated that the petitioner had sought an oral hearing, which was also not afforded to the petitioner.

9. A plain reading of the impugned notice indicates that the JAO had information that large cash deposits were made in the petitioner’s bank accounts. A tabular statement relating to the information regarding the cash deposits as set out in the impugned notice, is reproduced below:

10. In addition to the cash deposits aggregating Rs.8,79,42,231/-, the JAO had also alleged that there was unexplained cash in the account (Axis Bank) amounting to Rs.63,94,000/-. Thus, the total value of the transactions, which were suggestive of petitioner’s income escaping assessment was quantified at Rs.9,43,36,231/-. 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.

11. In view of the above, the AO had passed the impugned order holding that the petitioner’s response was found to be unsatisfactory.

12. The entire purpose of issuing a notice under Section 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.

13. 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. However, at this stage, we are unable to accept that any interference by this court is warranted in proceedings under Article 226 of the Constitution of India.

14. The petition is, accordingly, dismissed.

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