Facts of the Case

The petitioner, Dhan Prakash Gupta, challenged the notice dated 01.03.2024 issued under Section 148A(b) and the order dated 30.03.2024 passed under Section 148A(d) of the Income-tax Act, 1961 seeking to reopen assessment for Assessment Year 2017–18.

The notice was issued on the basis of information available with the Jurisdictional Assessing Officer indicating substantial cash deposits and cash-based transactions in the petitioner’s bank accounts, credit card payments, and foreign remittance disclosures. The information was sourced from SFT data reported by multiple banks and financial institutions and reflected aggregate transactions of ₹8,79,42,231/-, along with alleged unexplained cash deposits of ₹63,94,000/-, aggregating to ₹9,43,36,231/-.

The petitioner responded to the notice and also raised a jurisdictional objection, contending that the Jurisdictional Assessing Officer lacked authority to initiate proceedings after the CBDT Notification dated 29.03.2022.

Issues Involved

Whether reassessment proceedings initiated under Sections 148A(b) and 148A(d) were liable to be set aside on grounds of lack of jurisdiction or non-consideration of the petitioner’s response, and whether interference under Article 226 was warranted at the threshold stage.

Petitioner’s Arguments

The petitioner argued that the notice and order were without jurisdiction and that the Jurisdictional Assessing Officer could not have initiated proceedings post the CBDT Notification dated 29.03.2022. It was further contended that the petitioner’s request for additional information and for an oral hearing was ignored and that his response was not duly considered.

Respondent’s Arguments

The Revenue contended that the jurisdictional issue stood conclusively settled in favour of the Revenue by the decision of the Delhi High Court in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer Ward 25(3), New Delhi. On merits, it was argued that the petitioner failed to provide any explanation regarding the quantum of cash deposits or the reasons for receiving large sums in cash, thereby justifying initiation of reassessment proceedings.

Court Order / Findings

The Delhi High Court rejected the jurisdictional challenge, holding that the issue was squarely covered against the petitioner by its earlier decision in T.K.S. Builders Pvt. Ltd. The Court observed that the impugned notice clearly set out detailed SFT-based information indicating large cash deposits and transactions across multiple bank accounts and financial instruments.

On merits, the Court held that the purpose of Section 148A(b) is to enable the assessee to respond to information suggestive of income escaping assessment. In the present case, the petitioner failed to disclose the correct quantum of cash deposits or provide any explanation for receiving large amounts in cash. The Court noted that at the threshold stage, the Assessing Officer is not required to finally adjudicate tax liability and that reassessment proceedings merely initiate inquiry.

The Court held that no procedural infirmity or violation of natural justice was made out warranting interference under Article 226.

Important Clarification

The Court clarified that at the stage of issuing a notice under Section 148, the Assessing Officer is only required to form a prima facie view based on available information. All rights and contentions of the assessee regarding quantum, nature, and taxability of transactions remain open to be urged during reassessment proceedings.

Final Outcome

The writ petition was dismissed. The Delhi High Court upheld the notice dated 01.03.2024 issued under Section 148A(b) and the order dated 30.03.2024 passed under Section 148A(d), holding that reassessment proceedings for Assessment Year 2017–18 were validly initiated in law. All pending applications were disposed of accordingly.

 

Link to download the order - https://www.mytaxexpert.co.in/uploads/1769850535_DHANPRAKASHGUPTAVsINCOMETAXDEPARTMENT.pdf

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