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2026 (4) TMI 924
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....d to the notice dated 20.02.2023 issues by Respondent No.3 under section 142(1) of the Act; (b) stay the reassessment proceedings initiated under sections 147/148 vide the impugned notice dated 07.04.2022 issued under section 148 of the Act, and/or any other proceedings initiated there under or in consequence thereto, in the matter of the Petitioner for the assessment year 2018-19, during pendency of the present petition; (c) grant ad-interim ex-parte stay in terms of prayer (b) above; (d) call for the records of the case from the Respondents;" FACTUAL BACKGROUND 2. At the outset, we may lay the facts as borne out of the petition. The petition relates to the Assessment Years (AY) 2018-19. For the AY under consideration, the petitioner, inter alia, maintained the following bank accounts: (i) Savings Non-Resident External ('NRE') Account bearing SB-NRE No.015013110007312 with Bank of India, New Delhi ('BOI'); (ii) Savings Account No.0650000100137681 with Punjab National Bank, New Delhi ('PNB'). 3. For the AY 2018-19, certain verification queries were generated on the insight portal of the Income Tax Department on account of the pe....
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....61. The above amount received towards foreign remittance, interest income and time deposits in bank is significant and despite this the assessment year. Looking at the above undisclosed income it is found that despite having taxable income, the assessee has not filed his return of income. As per record no scrutiny assessment has been made in this case for the relevant assessment year. Moreover, this piece of information falls in the category as explained in Explanation 1(i) to Section 148 and suggests that income of Rs. 9,28,66,191/-chargeable to tax has escaped assessment. Therefore, it appears to be a fit case to issue notice u/s 148 for AY 2018-19." 5. It can be noted from the above that it was alleged that information under Non-filers Monitoring System (NMS) category was pushed through the insight portal demonstrating that during the financial year relevant to AY 2018-19, the petitioner had entered into certain transactions relating to receipts of various amounts, being in the nature of foreign remittance, interest income and time deposits in banks and despite the fact that transactions pertained to significant amounts giving rise to "taxable income", the petitioner had not ....
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....05024320 9IN requiring it to furnish the relevant details along with supporting documentary evidence with respect to the transactions as cited above. Vide the above said notice the assessee was also asked as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in this case for the A.Y. 2018-19. 3.1 Further, a corrigendum was also issued to the assessee on 31.03.2022 informing the assessee that the compliance date mentioned in the show cause notice u/s 148A (b) of the Act dated 19.03.2022 may be read as 02.04.2022 instead of 25.03.2022. xxx xxx xxx 5. Thus, in view of the facts and information available with this office (which has already been communicated through opportunity of being heard), it is established that the assessee has no proper explanation for issue discussed above. Moreover, this piece of information falls in category as explained in explanation 1(i) to section 148 of the Act and suggest that income of Rs. 9,83,338/- chargeable to tax has escaped assessment. Accordingly, it is concluded that this is a fit case for issuing notice u/s 148 of the I....
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....maximum amount not chargeable to tax under the Act, the petitioner did not file his income tax return (ITR) under Section 139(1)(b) of the Act for the AY 2018-19. 12. He stated, the respondents in this case are simply trying to assess the income of the petitioner through regular assessment in the garb of reassessment. Pursuant to verification queries being generated on the insight portal of the income tax department, the petitioner duly replied to the same, explaining that the income in his case accrued as interest income from the banks and was below the taxable limits as per the Act. 13. Mr Jain submitted that the response which was a part of the e-verification response sheet dated 05.02.2019 was not considered by the respondent no. 1, rendering the entire exercise futile. The respondent no. 1 arbitrarily issued the notice under Section 148A(b) of the Act, based on the same information available on the insight portal. The notice alleged that information under the NMS category demonstrated that the petitioner had entered into certain transactions for the AY 2018-19, for which various receipts in the nature of foreign remittance, interest income and time deposits in the bank w....
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....nts in Form No.26AS replies as well as the schedule of total income earned by him during the relevant year. He even submitted all the documentary details including inter alia, the copy of the passport and resident permit of UAE of the petitioner, copies of bank accounts of the petitioner, copy of the bank account of the father of the petitioner from whom the amount of Rs. 8,50,00,000/- was received to show that the same was below taxable limit. 16. It is his submission that, primarily three amounts were raised in the notice for which the petitioner's detailed response was submitted and can be summarized as follows: a) Rs. 3,75,000/-: This is the same amount for which query was also raised earlier with source being 'Poonam Jain'. It was explained that the said amount was merely an inter-bank transfer entry of the said amount being received in SB-NRE Account No.015013110007312 on 17.08.2017 from funds lying in PNB Savings Bank Account No.0650000100137681 also belonging to the petitioner. b) Rs. 4,90,000/-: No query was raised in respect of this amount earlier since the source was mentioned as 'Abhinav Jain', being the petitioner himself. It was explained that the....
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....e initiated vide show cause notice dated 19.03.2022 under Section 148A of the Act for the AY 2018-19, for the verification of Rs.9,40,89,186/-. Mr. Jain's submission is that it is the same payer i.e., Brijesh Jain in the present case and the amount which is the subject matter of the dispute is also same. He stated that the explanations rendered by the petitioner's parents were accepted by the tax department The Jurisdictional Assessing Officer (JAO) passed an order under Section 148A(d) of the Act and accepted the explanation furnished thereby, not proposing initiating of reassessment proceedings thereon. B. Assessment proceedings of Kamini Jain. In Kamini Jain's case, notice was issued under Section 148A for the Act of the AY 2018-19. She also filed her response and explained the nature/ source of the amount of Rs. 8,50,00,000/- received from her husband. This reply was accepted by the JAO of Kamini Jain thereby, not proposing initiating of reassessment proceedings thereon. 18. In view of the above, he stated that it is trite law that that once a transaction is accepted in the hands of one co-owner, adverse inference cannot be drawn in the respect of the very ....
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....ree years from the end of the relevant AY, which in the present petition relatable to AY 2018-19 would be 31.03.2022. It can only be issued beyond three years upto six years, subject to the satisfaction of the conditions as provided under Section 149 (1)(b). However, the present proceedings have been issued beyond three years as the notice under Section 148 was issued only on 07.04.2022. He further stated that Section 149(1) proviso no. 3 (as it then existed [Act of 2021]), which provides that "the time allowed or extended time allowed to the assessee as per the show cause notice issued under Section 148A(b) shall be excluded" and applying the same in the present case would also not bring the proceedings within limitation as even if the six days period from 22.03.2022-28.03.2022 is excluded from the limitation period, it would extend the limitation period only till 06.04.2022, and the impugned notice under Section 148 being issued on 07.04.2022 would be beyond the limitation period. Even the fourth proviso of Section 148A(b) would not be applicable. It provides that seven days should be provided after such exclusion, to the Department to pass the order under Section 148A(d), which ....
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..... DDIT [W.P.(C) No. 1353/2013; decided on 31.08.2017] (Del) e. Bhagwan Sahai Sharma v. DCIT 2025:DHC:3960-DB. f. Communist Party of India (Marxist) v. Income Tax Department [2025] 174 taxmann.com 325 (Del). g. Vodafone Idea Ltd. vs. DCIT, 2024:BHC-OS:2100-DB h. Prakash Pandurang Patil vs. ITO [2025] 177 taxmann.com 552 (Bom) [Dept SLP dismissed @ (2025 (178] taxmann.com 8. i. Agnello Oswin Das vs. ACIT [2024] 161 taxmann.com 16 (Bom) j. Mrs. Chitra Supekar vs. ITO [2023] 453 ITR 530 (Bom) k. Ambika Iron and Steel (P.) Ltd. v. Pr. CIT [2023] 452 ITR 285 (Ori.)]. 23. Mr. Jain relied on the Finance Act of 2023 to state that the amendment to Section 151 was made effective from 01.04.2023. Hence, the same would not come to the rescue of the respondents with respect to the argument of the notice being barred by limitation as the amendment is prospective in nature. The respondent No. 1 has not brought on record any material to indicate that he was adopting the exclusions as envisaged by the proviso to Section 149 and the respondents could not have presumed that an amendment would subsequently be made. To Substantiate this a....
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....on the following judgments: a) ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd, 291 ITR 500 (SC) b) CIT v. Orient Craft Ltd, 354 ITR 536 (Del) c) Mohan Gupta (HUF) v. CIT, 366 ITR 515 (Del) d) Madhukar Khosla v. ACIT, 367 ITR 165 (Del) e) CIT v. Indo Arab Air Services, 283 CTR 92 (Del) f) Indu Lata Rangwala v. DCIT, 384 ITR 337 (Del) g) Khubchandani Healthparks (P.) Ltd. v. ITO, 384 ITR 322(Bom) h) Prashant S. Joshi v. ITO, 324 ITR 154 (Bom) 27. The impugned order was passed without appreciating or acknowledging that the reply of the petitioner had already been filed on 26.03.2022. Hence, ignoring the explanations and supporting documents furnished by the petitioner, re-assessment proceedings were initiated by issuance of notice under Section 148 of the Act. Even the comprehensive factual details were not considered and the respondent merely reproduced the ingredients of Section 148A to issue the notice under Section 148 of the Act. Additionally, he also stated that even though the aforesaid impugned order under Section 148A(d) of the Act was stated to have been passed obtaining the prior approval of the respon....
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....ction at the stage of issuance of notice itself, on the reasoning that when a notice is issued with premeditation, a writ petition would be maintainable. In such an event, even if the court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose. It is evident in the instant case that the respondent has clearly made up its mind. 31. Mr. Jain stated that the respondent, along with this notice under Section 142(1), directed the petitioner to furnish information not just specific to the disputed issues but also on general issues which have no connection with the information basis which the impugned reassessment proceedings were initiated. This was in blatant violation of natural justice and the settled legal principles. SUBMISSIONS BY COUNSEL FOR THE RESPONDENTS 32. Contesting these submissions, Mr Vipul Agrawal, learned SCC appearing for the Revenue submitted that the petitioner in the present case is approaching this Court in March, 2023 to challenge the reassessment proceedings that were initiated in April 2022. Based on the huge delay alone, the petition should be dismissed. 33. He stated that the AO in th....
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....e petitioner also did not have any mention of this entry of Rs. 56,82,929/- and neither were there any supporting evidence produced by the petitioner to cement their argument. He states that those documents have been filed before this Court at the stage of the rejoinder. However, the same was not filed before the AO. Hence, the case of the petitioner was correctly reopened under Section 147 of the Act. 35. It is further his submission that Section 148 of the Act does not mandate a detailed investigation at the time of issuance of notice under Section 148 of the Act. Continuing from above, the petitioner further stated that the department had granted comparable justifications in the same transaction for the assessee's parents. However, without the supporting documentation, it is impossible to determine the petitioner's ground. It is not possible to determine whether the transactions served as the foundation for the proceedings under section 148A of the Act, as the assessee has not produced any supporting documentation to substantiate his claims. Additionally, it is also to be noted that on the bare perusal of the bank records and documents submitted by the petitioner, there appea....
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....8A(c) of the Act. Since the ITR was not filed by the petitioner then, the transactions undertaken by the petitioner remained unexplained, which was clearly stated in the 148A(d) order. 39. His submission on the aspect of limitation, raised by the petitioner, is that in the absence of any specific challenge to the power of the AO to issue the corrigenda dated 31.03.2022 and 01.04.2022, the time granted by the AO to the petitioner to submit its reply is required to be considered as 02.04.2022. By doing so, the third proviso to Section 149(at the relevant time) would apply and the time period between 22.03.2022-02.04.2022 would be required to be excluded from the limitation period. This would take the period of limitation to end on 10.04.2022, and hence, the impugned order under Section 148A(d) and impugned notice under Section 148, both dated 07.04.2022, would be clearly within limitation as envisaged by Section 149(1)(a). Since the AO issued the corrigenda within the outer limit i.e. 31.03.2022, the AO was competent to grant additional time to the petitioner to file his reply. It is the petitioner's own case, by relying upon a catena of judgments that the Department must mandator....
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....ce with the requirements of any law for the time being in force, the period of such notice or, as the case may be, the time required for obtaining such consent or sanction shall be excluded. Explanation.-In excluding the time required for obtaining the consent or sanction of the Government or any other authority, the date on which the application was made, for obtaining the consent or sanction and the date of receipt of the order of the Government or other authority shall both be counted. ...." 41. It is his submission that the third proviso to Section 149(1) is similarly worded and provides for exclusion of time/extended time period which was allowed to the assessee as per notice issued under Section 148A(b). Accordingly, the date of issuance of notice under Section 148A(b) along with the entire time period granted to the assessee to file his response is required to be excluded. In the present case, that would result in exclusion of and accordingly, the impugned order under Section 148A(d) and time between 22.03.2022 and 02.04.2022 notice under Section 148 are required to be considered within the limitation period as per Section 149(1)(a). This principle has b....
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....dance with the risk management strategy and provides the manner of carrying out the reassessment, being under Section 144B of the Act, i.e. in a faceless manner. Since the cases are selected on the basis of the automation, the same highlights the intent behind the scheme to ensure fairness in the process of issuance of notice. The cases are flagged to the Jurisdictional Assessing Officer (JAO) by the directorate of systems, who has no control over the process. Hence, the JAO has no method/control to know which cases would be allocated to him. 46. At the stage of rejoinder submission, the counsel for the petitioner has submitted that in the re-assessment proceedings of the mother, the AO of the mother was under the superintendence of the same PCIT-12, who is the respondent no. 2 herein. He further stated that the case of Raminder Singh (supra) on which reliance has been placed by the respondents is clearly distinguishable on facts since in that case no corrigendum was issued by the AO and it was a clear case where the Section 148A(b) notice was issued within the limitation period and there was no doubt regarding the invocations of exclusion/extension of limitation period envisage....
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....having been extended till 02.04.2022, by the application of the third proviso to Section 149(1), the time allowed to the assessee to file the reply (eleven days) has to be excluded. As such, the order under Section 148A(d) and notice under Section 148 having been passed and issued on 07.04.2022, shall be within limitation. 50. Even though the minimum period of seven days has not been granted initially, on a conjoint reading of the notice dated 22.03.2022 and the corrigendum dated 31.03.2022, the time to file reply to the notice dated 22.03.2022 has been extended till 02.04.2022. The same has the effect of correcting the error made by the AO in granting less than seven days to the assessee to file reply, bringing it in conformity with the statute. This we say so, because while granting the initial time to the assessee to file the reply, i.e., till 28.03.2022, the AO has made an arithmetical error, i.e., he took into consideration the date of issuing the notice, i.e. 22.03.2022 while calculating the seven days period. It is the case of the Revenue that the AO noticed this mistake, and by way of the corrigenda attempted to correct the same. When the AO is not precluded from withdra....
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....c) of the Act had been violated as it casts a duty on the AO by using the expression 'shall' to consider the reply of the petitioner/assessee in response to the notice under Section 148A(b) before making an order under Section 148A(d). It was under these circumstances that the Court had set aside the impugned order under Section 148A(d) of the Act and the notice under Section 148 of the Act dated 30.03.2022. In that sense, the notice issued under Section 148A(b) of the Act was not interfered with. Hence, the said judgment is clearly distinguishable in the facts. 53. Similar is the position in the case of Hardev Singh (supra) wherein the Court has set aside the order passed under Section 148A(d) of the Act by directing the AO to consider the reply dated 24.03.2022 filed by the petitioner therein. 54. Insofar as the judgment in the case of Sri Venkateshwar Tradex Pvt. Ltd. (supra) is concerned, the petitioner therein was issued a notice dated 05.03.2023 under Section 148A(b) of the Act with regard to the bogus purchases allegedly made by it from two suppliers. The record shows that the petitioner was called upon to file reply on or before 16.03.2023. That apart, another notice ....
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....ted 22.03.2022 in as much as time to file reply beyond seven days till 02.04.2022 was granted. Surely, the same would be valid and in any case, no prayer challenging the corrigendum has been made in the writ petition. Hence, the issue must be proceeded on the premise that the corrigendum issued on 31.03.2022 is valid. 57. Insofar as the reliance by the petitioners in the cases of Lionbridge Technologies (Supra) and Vijay Television Pvt. Ltd. (Supra) is concerned, the facts in the cases are entirely different from the facts of the present case inasmuch as the corrigenda in the said cases were issued beyond the limitation period and even on merits, were held to be defective. In fact, in Lionbridge Technologies (Supra), the Court observed that the Madras High Court in Vijay Television Pvt. Ltd. (Supra) held that a corrigendum issued beyond the period of limitation is defective and as such ineffective. Needless to state, such is not the case here. 58. One of the issues raised by Mr. Jain is that the Jurisdictional Assessing Officer ("JAO") could not have issued notice but it should be Faceless Assessing Officer ("FAO"), who is competent to issue the notice. Suffice to state that ....
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....ven the supporting documents were not taken into consideration and the objections raised by the assessee vide his letter dated 22.05.2022 were not disposed of by the respondents. (viii) In the absence of any escapement of income in the hands of the assessee and lack of reasons to believe. The AO cannot resort to the provisions of Section 147/148. (ix) No enquiries under Section 148A(a) were conducted and the respondent no. 1 has already made up his mind with regard to escapement of income by the petitioner. The notice is issued with a premeditation. (x) Pursuant to the notice under Section 142(1), the respondent directed the petitioner to furnish information also on the issues which have no connection to the information on which the impugned re-assessment proceedings are initiated. 60. On the other hand, the submission of Mr. Vipul Agrawal can be summed up as under:- (i) The re-assessment proceedings in the assessee's case were initiated in April, 2022, against which the petitioner approached this Court in March, 2023, that is after a huge delay. (ii) The reassessment proceedings in the case of the assessee are based on the informatio....
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....i) The memorandum to the Finance Bill of 2023 clarified the intention of the legislature to introduce an amendment to Section 151, with regard to the proviso to Section 149. (xiii) The petitioner contended through rejoinder submissions that the amount of Rs. 8,50,00,000/- was received from the father as a gift. However, no such plea was taken in the reply to the show cause notice dated 26.03.2022. More so, no documents have been enclosed to explain the same. 61. From the above, it is noted, the attempt of Mr. Jain is to challenge the notice issued under Section 148 to contend that no income has escaped assessment as the three amounts have been validly explained. His case is that the income generated is not liable to be taxed in India and even interest that has accrued over a period of time is exempted under the provisions of law. 62. On the other hand, the submission of Mr. Vipul Agrawal is only that the petitioner has not produced sufficient documentary evidence in support of his stand. He has gone to the extent of stating that the petitioner has also not produced the permission from the Reserve Bank of India for maintaining the NRE account. In other words, it is hi....
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....d Rs. 4,90,000/- transferred intra-bank by the petitioner from his own PNB account to BOI NRE accounts, no interference with the same is called for. 68. The issue with regard to Rs. 8,50,00,000/- being received as a gift also becomes relevant as no such stand has been taken by the petitioner in this petition. It is only at the stage of the additional submissions that such a plea has been taken. So, it follows that the petitioner shall be within his right to explain to the AO, the amounts having come from his father and deposited in the NRE account, which has been opened pursuant to the permission granted by the RBI. To that extent, we can say that no such document and other relevant documents have been produced before us to show whether the NRE account has been opened with the permission of the RBI. 69. We find it apposite to highlight the observations of this Court in the case of AGR Investment Limited v. ACIT, 2011:DHC:111-DB in paragraph 23 has observed as under:- "23. In the case at hand, as we find, the petitioner is desirous of an adjudication by the writ court with regard to the merits of the controversy. In fact, the petitioner requires this Court to adjudge ....