DHAN PRAKASH GUPTA vs. INCOME TAX DEPARTMENT

PDF · subscribers
W.P.(C)/9184/2024HC DelhiDLHC01038902202420 November 2024Author: HON'BLE MR. JUSTICE VIBHU BAKHRU,HON'BLE DR. JUSTICE SWARANA KANTA SHARMA6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the petition. Regarding the first issue, the Court held that the petitioner's contention regarding the JAO's lack of jurisdiction was rejected, as this issue stands settled in favor of the Revenue by the Court's decision in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer Ward 25 (3) New Delhi. On the second issue, the Court found that the petitioner's response to the impugned notice did not contain crucial information regarding the quantum of cash deposits or an explanation for them. While the petitioner requested further information and an oral hearing, the Court noted that the purpose of Section 148A(b) is to allow the assessee to respond to information suggesting income escaping assessment. The Court observed that the petitioner failed to provide the necessary details. The Court also stated that at the stage of issuing a notice under Section 148, the AO is not required to finally conclude income escaping assessment, and all rights and contentions of the petitioner are reserved for the reassessment proceedings. Therefore, interference under Article 226 was not warranted.

What were the facts?

The petitioner, Dhan Prakash Gupta, filed a writ petition challenging a notice dated March 1, 2024, issued under Section 148A(b) of the Income Tax Act, 1961, and a consequent order dated March 30, 2024, under Section 148A(d) of the Act. These actions sought to reopen the petitioner's assessment for Assessment Year 2017-18. The petitioner challenged the proceedings on grounds of jurisdiction of the Jurisdictional Assessing Officer (JAO) and on merits, arguing that his response to the notice was not considered and he was not afforded an oral hearing. The JAO had information regarding significant cash deposits totaling ₹8,79,42,231 and unexplained cash of ₹63,94,000 in the petitioner's Axis Bank account, totaling ₹9,43,36,231, suggesting income escaping assessment.

What were the issues?

1. Whether the Jurisdictional Assessing Officer (JAO) had the jurisdiction to initiate reassessment proceedings after the issuance of CBDT Notification dated March 29, 2022, under Section 148A of the Income Tax Act, 1961? 2. Whether the petitioner's response to the notice under Section 148A(b) was adequately considered by the JAO, and whether an oral hearing should have been provided? Assessee's Contentions: The petitioner argued that the JAO lacked jurisdiction to issue the notice and order due to the CBDT Notification. On merits, the petitioner contended that his response to the impugned notice, which included requests for further information and an oral hearing, was not considered by the JAO. The petitioner stated he did not receive a response to his requests for information. Revenue's Contentions: The judgment does not explicitly record the revenue's contentions. However, it references a decision in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer Ward 25 (3) New Delhi, 2024:DHC:8330-DB, which settled the issue of jurisdiction in favor of the revenue.

Which sections of the Income-tax Act were involved?

Section 148A,Section 148

AI-generated summary — verify with the full judgment below

W.P. (C)9184/2024 Page 1 of 6

$~62 * IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision :20.11.2024

+ W.P.(C) 9184/2024

DHAN PRAKASH GUPTA

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

versus

INCOME TAX DEPARTMENT

.....Respondent

Through: 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

W.P. (C)9184/2024 Page 2 of 6

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.

W.P. (C)9184/2024 Page 3 of 6

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:

Information Code Information Description Source Amount Description Amount (₹) Cash withdrawals STATE OF INDIA

8965000 VIJAYA BANK

10318062 SBI CARDS AND PAYMENT SERVICES PRIVATE

5241312 KOTAK MAHINDRA

5921118 THE HONGKONG &

W.P. (C)9184/2024 Page 4 of 6

SHANGHAI BANKING CORPORATION LTD 1132729 SFT-005 INDUSIND person_ paid to the

2500000 (W)

240000

11730305 INDUSIND

12524385 FRM-15CB (P) Certificate of accountant on foreign remittance (Form 15CB) DHAN PRAKASH GUPTA

Amount payable (INR)

1037683 BANK Aggregate

W.P. (C)9184/2024 Page 5 of 6

6784989 EXC-002 Turnover from Services reported service tax return CBIC Gross taxable amount

21242048 STATE OF INDIA

304600 TOTAL 8,79,42,231

10.

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

W.P. (C)9184/2024 Page 6 of 6

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.

VIBHU BAKHRU, J

SWARANA KANTA SHARMA, J NOVEMBER 20, 2024 zp

More judgments on Section 148A

All 3,543 judgments and leading authorities on Section 148A →

Latest GST High Court judgments

Search GST case law →