Court affirms reassessment notice under Income Tax Act, emphasizing "reason to believe" standard for reopening assessments.

The Court upheld the reassessment notice issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2017-18, emphasizing the "reason to believe" standard for reopening assessments within four years of filing. The Court noted the petitioner's cash deposits during demonetization but found a lack of evidence on the source of the deposit, suggesting undisclosed taxable income. The issue of lack of sanction by the appropriate authority was not addressed in the objections but was allowed to be raised during the reassessment proceedings, granting the petitioner the opportunity to contest it.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 and order disposing of objections related to Assessment Year 2017-18.

Analysis:
The petition challenged a notice issued under Section 148 of the Income Tax Act, 1961, and an order disposing of objections regarding Assessment Year 2017-18. The petitioner argued that the notice was based solely on cash deposits during demonetization, which were already disclosed in the return. The petitioner contended that there was no new material to suggest the deposited cash was undisclosed income, citing the requirement for positive evidence of income escapement for reopening assessments. Reference was made to the Sabharwal Properties case emphasizing the need for concrete evidence. The petitioner also raised the lack of sanction by the appropriate authority as a point of contention.

The Court noted that the reassessment notice was issued within four years of the assessment filing, with no prior scrutiny assessment. Therefore, the standard of "reason to believe" was the only requirement for reopening the assessment. It was emphasized that Courts cannot delve into the subjective satisfaction of the Assessing Officer or assess the sufficiency of reasons recorded, citing the Raymond Woolen Mills case. The Court acknowledged the petitioner's cash deposit but highlighted the absence of supporting evidence for the source of the deposit, leading to the belief that taxable income had escaped assessment.

Regarding the lack of sanction by the appropriate authority, the Court observed that this issue was not raised in the petitioner's objection petition and thus not addressed by the Revenue in its decision on the objections. However, the Court granted the petitioner the liberty to raise this issue during the reassessment proceedings. The writ petition and applications were disposed of, providing the petitioner with the opportunity to address the lack of sanction during the reassessment process.

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