Reopening of assessment for unexplained bank cash deposits upheld; reassessment permitted where reason to believe exists.

Reopening of assessment was sustained for unexplained cash deposits in specified bank accounts because the assessing officer retained an independent reason to believe; reassessment jurisdiction is not ousted by appellate modification undertaken on a different source of income. The return did not disclose the contested bank deposits, and the reassessment notice was issued within the fouryear window, so statutory procedural requirements were met. The article reiterates that taxpayers cannot bypass statutory assessment/reassessment mechanisms by seeking writ relief and that tax objections must be pursued before the designated appellate authorities; writ petitions were therefore dismissed with liberty to prosecute appeals.

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Issues Involved:
1. Validity of the reassessment notice under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to issue reassessment notice during the pendency of an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)].
3. Alleged violation of principles of natural justice.
4. Distinction between reassessment under Section 147 and appellate proceedings under Section 251.

Detailed Analysis:

1. Validity of the reassessment notice under Section 148:
The petitioner challenged the reassessment notice dated 28th March 2021, issued under Section 148, and the subsequent assessment order dated 27th March 2022, passed under Section 147 read with Section 144B of the Income Tax Act for the Assessment Year 2017-18. The petitioner argued that the original assessment was validly framed on 26th December 2019 after full disclosure, and the reassessment notice was a mere change of opinion. The court, however, noted that the reassessment notice dealt with a different cash deposit of Rs.12,50,000/- in Punjab National Bank and Bank of India, which was not adjudicated in the original assessment proceedings under Section 143(3). Thus, the reassessment notice was valid as it pertained to a different transaction not previously examined.

2. Jurisdiction of the Assessing Officer during the pendency of an appeal:
The petitioner contended that the reassessment notice encroached on the exclusive jurisdiction of the CIT(A) under Section 251 of the Act, as the original assessment order was already under appeal. The court referred to the case of Gurinder Mohan Singh Nindrajog, which clarified that the Commissioner (Appeals) has the power to enhance assessments dealt with during scrutiny proceedings. However, the court emphasized that the power under Section 148 is independent and not excluded by the appellate jurisdiction of the CIT(A). The reassessment notice was issued within four years from the relevant assessment year, and the requirement of "reason to believe" was satisfied.

3. Alleged violation of principles of natural justice:
The petitioner argued that the reassessment order was passed without considering the detailed replies submitted during the proceedings, thereby violating principles of natural justice. The court did not find merit in this argument, noting that the reassessment was based on different cash deposits not previously scrutinized. The court held that the petitioner should raise these contentions before the appropriate appellate authority.

4. Distinction between reassessment under Section 147 and appellate proceedings under Section 251:
The petitioner relied on the case of Ardor Technopark Ltd., arguing that the Assessing Officer cannot reopen an assessment when the Commissioner has already reopened it under Section 263. The court distinguished this case, stating that the current proceedings under Section 148 were based on different transactions than those under appeal before the CIT(A). The court reiterated that the power under Section 148 is independent and can be exercised even when an appeal is pending, provided the issues are distinct.

Court's Conclusion:
The court dismissed the writ petitions, granting the petitioner liberty to raise all contentions before the appellate authority. It concluded that the reassessment notice and subsequent order were valid, as they pertained to transactions not previously examined, and the jurisdiction of the Assessing Officer under Section 148 was not excluded by the pending appeal under Section 251. The court also emphasized that the Income Tax Act provides a complete machinery for assessment/reassessment, and the petitioner should utilize this mechanism rather than seeking relief under Article 226 of the Constitution.

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