Court sets aside invalid tax notices due to lack of pre-conditions, no assessment proceedings initiated.

The Court granted the application for extension of the interim order, leading to a comprehensive review of the case. Regarding the interpretation of Section 281B of the Income Tax Act, 1961, the Court found that the department's notices were invalid as the pre-conditions for invoking the section were not met. Despite a significant cash deposit in the petitioner's bank account, assessment proceedings were not initiated for the relevant years. The Court set aside the impugned notices due to the absence of pre-conditions and the department's delay in initiating assessment proceedings, disposing of the writ petition with no costs.

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Issues: Application for extension of interim order, Interpretation of Section 281B of the Income Tax Act, 1961, Assessment proceedings initiation delay

Extension of Interim Order:
The Court treated the writ petition as on day's list for hearing since the application for extension of the subsisting interim order was filed. The parties consented to consider the writ petition along with the interim application, leading to a comprehensive review of the case.

Interpretation of Section 281B of the Income Tax Act, 1961:
The petitioner contended that the department issued two notices under Section 281B of the Income Tax Act, 1961, but the necessary ingredients for invoking the section were not fulfilled. The petitioner argued that there were no pending assessment proceedings, and the Assessing Officer had not determined any income escaping assessment warranting the bank account's attachment. Despite a search and seizure operation revealing a significant cash deposit in the petitioner's bank account, the department had not initiated assessment proceedings for the relevant years from 2011-12 to 2016-17. The court observed that the pre-conditions for invoking Section 281B were absent in this case, leading to the setting aside of the impugned notices.

Delay in Initiation of Assessment Proceedings:
The department acknowledged that assessment proceedings were yet to be initiated despite the search and seizure operation conducted months earlier. The court noted the department's failure to commence proceedings even after the petitioner had been enjoying an interim order since April 5, 2017. Consequently, the court set aside the impugned orders due to the absence of pre-conditions for invoking Section 281B and the department's inaction in initiating assessment proceedings. The writ petition was disposed of with no order as to costs, and the related application was also disposed of in light of the writ petition's disposal.

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