High Court clarifies Income Tax Act Section 148A application, emphasizes single deposit treatment

The Rajasthan High Court, in a judgment by Hon'ble Mr. Justice Manindra Mohan Shrivastava and Hon'ble Mrs. Justice Shubha Mehta, addressed challenges to the initiation of proceedings under Section 148A of the Income Tax Act, 1961. The court declined to interfere with the orders passed but directed the authority to address the discrepancy in treating a single cash deposit as two transactions. The petitioners were granted the liberty to revive their cases if needed, with the judgment to be placed on record in each connected petition for transparency and compliance.

---

---

Issues: Challenge to initiation of proceedings under Section 148A of the Income Tax Act, 1961, validity of orders passed under clause (d) of Section 148A, issuance of subsequent notices under Section 148, alleged discrepancy in considering a single cash deposit as two transactions, miscarriage of justice.

The judgment by the Rajasthan High Court, delivered by Hon'ble Mr. Justice Manindra Mohan Shrivastava and Hon'ble Mrs. Justice Shubha Mehta, addressed the challenge to the initiation of proceedings under Section 148A of the Income Tax Act, 1961, along with the validity of orders passed under clause (d) of Section 148A and the issuance of subsequent notices under Section 148. The petitioners contended that a single cash deposit of Rs.34,01,000 had been incorrectly treated as two transactions totaling Rs.68,02,000, surpassing the threshold under Section 149 of the I.T. Act, leading to a miscarriage of justice.

The court noted that while the petitioners had requested an adjournment to respond to notices under Section 148A, the orders under clause (d) of Section 148A did not mention this request. However, as no extraordinary grounds were presented for the adjournment, the court declined to interfere with the orders. Nevertheless, considering the substantial objection raised by the petitioners regarding the alleged discrepancy in the cash deposit being treated as two transactions, the court directed the concerned authority in the Section 148 proceedings to address this objection. The authority was instructed to evaluate the objection based on the material provided by the petitioners, including bank transactions, slips, statements, and specific records, and provide clear reasons for the discrepancy in the alleged income chargeable to tax.

Concluding the judgment, the court disposed of the petitions at that stage, granting the petitioners the liberty to revive their cases if necessary. The court ordered a copy of the judgment to be placed on record in each connected petition, ensuring transparency and compliance with the directives issued.

---