2025 (5) TMI 2246 - HC - Income Tax

Asset definition: bank deposits and cash withdrawals qualify for reassessment, andAssessingOfficer notices upheld when prima facie satisfaction recorded.

Jurisdictional issuing of reassessment notices is upheld: the assessing officer's Section 148A(d) record of prima facie satisfaction and provision of ... Validity of re-assessment u/s 148 - cash withdrawal would fall within the ambit of the expression “asset” as defined under Section 149 or not? - ‘roving enquiry’ - jurisdictional competence of the assessing officer under the Faceless Scheme HELD THAT: - The court noted that substantial cash withdrawals from the assessee's HDFC Bank account exceeded the statutory threshold and that the Explanation to Section 149(1)(b) refers to deposits in bank accounts, supporting the view that such bank transactions fall within the definition of 'asset'. On that basis the court held the assumption of jurisdiction could not be assailed on the ground that the transactions were not assets. [Paras 4, 5] Assumption of jurisdiction under Section 149(1)(b) upheld insofar as bank withdrawals constitute an 'asset' and meet the threshold. Scope of Section 148A(d) and limits on roving inquiry - The Section 148A(d) order did not constitute a roving enquiry and was based on a recorded prima facie opinion followed by an opportunity to produce evidence. - HELD THAT: - An ex facie reading of the Section 148A(d) order showed the Assessing Officer had formed a prima facie opinion regarding escapement of income, recorded that opinion, and then granted the assessee an opportunity to produce supporting documentary evidence. Accordingly, the court found no merit in the contention that the AO was proposing a roving inquiry. [Paras 6] Challenge to the Section 148A(d) order as a roving inquiry rejected. Jurisdiction of the jurisdictional Assessing Officer vis-a -vis Faceless Assessing Unit - Issuance of the notice by the jurisdictional Assessing Officer (as opposed to a Faceless Assessing Unit) was not impermissible in the circumstances. - HELD THAT: - The court observed that the question whether the jurisdictional AO may issue the impugned notice, instead of the Faceless Assessing Unit, was the remaining issue and recorded that this aspect had been concluded in favour of the Revenue by this court in TKS Builder [2024 (10) TMI 1586 - DELHI HIGH COURT] no separate relief was warranted to the petitioner on this ground. [Paras 3, 7] Petitioner's challenge to the issuing authority was dismissed in view of controlling precedent favouring the Revenue. Final Conclusion: The writ petition challenging the Section 148A(d) order and the consequent Section 148 notice was dismissed; the court found the AO's assumption of jurisdiction valid, the Section 148A(d) order not to be a roving inquiry, and the issuance by the jurisdictional AO permissible in view of controlling precedent. Pending application disposed of. Issues: Whether the jurisdictional Assessing Officer could validly issue the notice under Section 148 read with Section 148A(d) of the Income-tax Act, 1961 (as opposed to issuance only by a faceless assessing unit), and whether cash withdrawals/deposits qualify as an 'asset' under Section 149(1)(b) of the Income-tax Act, 1961.Analysis: The Court examined the Section 148A(d) order and the SFT information showing cash withdrawals of Rs. 1,87,95,000/-, noting that the amount exceeds the Rs. 50,00,000 threshold in Section 149(1)(b). The Explanation to Section 149(1)(b) expressly refers to deposits in bank accounts, supporting the view that such bank transactions fall within the definition of 'asset' for the purposes of initiating reassessment proceedings. The Court further reviewed the Section 148A(d) record of prima facie opinion formed by the Assessing Officer and found that the AO had recorded requisite satisfaction and afforded the petitioner an opportunity to produce documents, negating the contention of a prohibited roving inquiry. The Court also considered precedent on the competence of jurisdictional AO versus faceless units and observed that the specific issue had been concluded in favour of the Revenue in TKS Builders v. Income Tax Officer (Delhi High Court), which governs the present dispute.Conclusion: The issuance of the impugned notice by the jurisdictional Assessing Officer is valid; bank deposits/withdrawals fall within the definition of 'asset' under Section 149(1)(b); the challenge to the Section 148A(d) order is dismissed. In favour of Revenue.