Reassessment notice for cash deposit not valid if assessee wasn’t confronted with such infomation : High Court

ORDER

1. Heard Sri Kishore Kunal along with Ms. Parinita Gupta, learned counsel for the petitioner, Sri Gaurav Mahajan, learned counsel for Income Tax Department and Sri Manu Ghidyal, learned counsel for the revenue.

2. Present petition has been filed for following relief:

“(i) Issue a writ, order or direction in the nature of certiorari or any other appropriate writ, order or direction quashing the Impugned Notice u/s 148A (b) of the Act dated 29.02.2024 (Annexure 1), Impugned Order u/s 148A (d) of the Act dated 27.03.2024 (Annexure 2) and Impugned Notice u/s 148 of the Act dated 27.03.2024 (Annexure 3) issued/passed by respondent no. 3 for A.Y. 2017-18.”

3. Submission is that information was received by the revenue of unaccounted cash entries made in the bank accounts of the petitioner by the entities M/s Himani International, M/s Bhawani Trading Co., M/s V N Trading Co. and M/s Olivia Tradelinks India Pvt. Ltd.

4. While the petitioner offered explanation with respect to each of the above four depositors, reassessment proceeding have been drawn up solely on the strength of information received with respect to deposits made by M/s Olivia Tradelinks India Pvt. Ltd. With respect to that, it is the petitioner’s case that he had disputed any transaction performed by M/s Olivia Tradelinks India Pvt. Ltd. involving deposits of any cash by that entity in the petitioner’s bank account. It was further case that all bank transactions of the petitioner had been examined in the scrutiny assessment proceeding for the A.Y. 2017-18.

5. Therefore, no material existed to suggest that any income has escaped assessment at the hands of the petitioner.

6. In such submissions made, we had made the following observations in our last order passed yesterday:

“2. Limited dispute exists, if any information has been received by the Revenue Authority of Rs.1,44,87,500/- received by the petitioner in its bank account from M/s Olivia Tradelinks India Pvt. Ltd. during the F.Y. 2016-17.

3. At present, that fact is not very clear from the reading of the notice issued under Section 148(A)(b) and the order passed under Section 148 (A)(d) of the Act.”

7. Today, Sri Manu Ghidyal, learned counsel for the revenue has obtained written instructions. Those have been marked as ‘X’ and retained on record. Relying on the written instructions, Sri Manu Ghidyal, learned counsel for the revenue would submit that there was survey in the case of M/s Olivia Tradelinks India Pvt. Ltd. and other entities (not involving the petitioner). In that information had been received, that money has been brought by M/s Olivia Tradelinks India Pvt. Ltd to the petitioner’s bank account through M/s Agarwal Bullion.

8. Yet, that vital information was not furnished to the petitioner. By means of a notice issued dated under Section 148A (b) of the Act dated 29.02.2024, the only information furnished to the petitioner was with respect to cash deposits received in his bank account from M/s Olivia Tradelinks India Pvt. Ltd. The other receipts with respect to which notice was issued are not disputed by the revenue. To that extent, the explanation furnished by the petitioner has found acceptance.

9. Since, the petitioner was not confronted with the information that he had received cash deposits from M/s Agarwal Bullion, the petitioner was not granted opportunity to rebut the same. Seen in that light, it appears that due compliance of Section 148A of the Act has not been made, inasmuch as the notice issued to the petitioner under Section 148A (b) of the Act dated 29.02.2024, was not complete.

10. In view of the fact that the petitioner has earlier faced scrutiny assessment for the same assessment year, wherein he claims to have disclosed all bank accounts with respect to which reassessment has been drawn, we consider it desirable that appropriate consideration be first made to the material aspects noted above before the fruitful reassessment proceeding may arise to the petitioner.

11. Accordingly, the order dated 27.03.2024 is set aside.

12. Copy of the instructions received by Sri Manu Ghidyal, learned counsel for the revenue has been made over to learned counsel for the petitioner during course of hearing, today. Accordingly, the petitioner may file his further objections to the notice dated 29.02.2024 within a period of two weeks. Thereafter, the appropriate authority may pass fresh order under Section 148A (d) of the Act dealing with the further objection that may be raised by the petitioner. Reassessment proceeding, if any, may arise accordingly.

13. The writ petition is disposed of, accordingly.