Dhan Prakash Gupta v. Income Tax Department

1. This is an application seeking an early hearing of the above captioned petition which is now listed on 09.04.2025.

2. The application is allowed, and with the consent of the learned counsel for the parties, the above captioned petition is taken on Board.

3. The hearing scheduled on 09.04.2025, is cancelled. W.P.(C) 9184/2024

4. The petitioner has filed the present petition impugning a notice dated 01.03.2024 (hereafter the impugned notice) issued under Section 148A(b) of the Income Tax Act, 1961 (hereafter the Act). The petitioner also impugns a consequent order dated 30.03.2024 (hereafter the impugned order) issued RAWAL under Section 148A(d) of the Act seeking reopening of the petitioner’s assessment for the assessment year (AY) 2017-18.

5. Apart from assailing the impugned notice and the impugned order on merits, the petitioner also challenges the initiation of the said proceedings on the ground of jurisdiction of the Jurisdictional Assessing Officer (hereafter the JAO). The petitioner claims that JAO does not have the jurisdiction to initiate the said proceedings after the issuance of CBDT Notification dated 29.03.2022.

6. Insofar as the petitioner’s challenge to the jurisdiction of the JAO to issue the impugned notice is concerned, the said issue stands settled in favour of the Revenue by the decision of this court in T.K.S. Builders Pvt. Ltd. v. Income Tax Officer Ward 25 (3) New Delhi, 2024:DHC:8330-DB. Accordingly, the petitioner’s contention that the impugned notice and the impugned order are liable to be set aside as the same have been issued without jurisdiction, is rejected.

7. Insofar as the issue on merits is concerned, it is the petitioner’s case that his response to the impugned notice was not considered.

8. The learned counsel for the petitioner submits that the petitioner had asked for further information regarding the entries as set out in the impugned notice, which were suggestive of the petitioner’s income escaping assessment. However, the petitioner had not received any response from the JAO. It is also stated that the petitioner had sought an oral hearing, which was also not afforded to the petitioner.

9. A plain reading of the impugned notice indicates that the JAO had information that large cash deposits were made in the petitioner’s bank accounts. A tabular statement relating to the information regarding the cash deposits as set out in the impugned notice, is reproduced below: Information Code Information Description Source Amount Description Amount (₹) SFT-003 Cash withdrawals (including through bearer’s cheque) in current account STATE BANK OF INDIA Aggregate gross amount received from person in cash SFT-003 (D) Cash deposits through bearer’s current account VIJAYA BANK Aggregate SFT-006 Payments made by any person in respect of one or more credit cards issued to that person, in a financial year SBI CARDS AND PAYMENT SERVICES PRIVATE LIMITED Aggregate person in year KOTAK MAHINDRA BANK LIMITED Aggregate THE HONGKONG & Aggregate RAWAL person in year SHANGHAI BANKING CORPORATION LTD SFT-005 Payments person in year INDUSIND BANK LIMITED Aggregate person_ Aggregate paid to the person SFT-003 (W) through bearer’s current account ICICI BANK LIMITED Aggregate SFT-003

ICICI BANK LIMITED Aggregate person in year INDUSIND BANK LIMITED Aggregate FRM-15CB (P) Certificate of accountant on foreign remittance (Form 15CB)

DHAN PRAKASH GUPTA Amount payable (INR) SFT-006 Payments ICICI BANK Aggregate RAWAL person in year LIMITED gross amount EXC-002 Turnover from Services reported in service tax return CBIC Gross taxable amount 21242048 SFT-003 (D)

10. In addition to the cash deposits aggregating ₹8,79,42,231/-, the JAO had also alleged that there was unexplained cash in the account (Axis Bank) amounting to ₹63,94,000/-. Thus, the total value of the transactions, which were suggestive of petitioner’s income escaping assessment was quantified at ₹9,43,36,231/-. The petitioner had responded to the impugned notice raising several issues. However, we do not find that the said response contains any information either as to the quantum of cash deposited during the previous year relevant to the AY 2017-18. There was also no explanation as to why large amounts were received in cash.

11. In view of the above, the AO had passed the impugned order holding that the petitioner’s response was found to be unsatisfactory.

12. The entire purpose of issuing a notice under Section 148A(b) of the Act is to enable the Assessee to respond to the information available with the AO, which may be suggestive of the Assessee’s income escaping assessment. In the instant case, where the allegation is that a large cash deposits were made in the bank account of the petitioner, the least that was required for the petitioner was to inform the AO as to the correct quantum of the cash deposits in his bank account and his explanation for the same. This crucial information is not available in the petitioner’s response to the impugned notice.

13. It is relevant to note that at the threshold stage of issuing a notice under Section 148 of the Act, the AO is not required to finally conclude whether any income has escaped assessment. The notice merely initiates the reassessment proceedings. Thus, all rights and contentions of the petitioner to contest the quantum as well as the taxability of the amounts as reflected in the impugned notice and the impugned order are reserved. However, at this stage, we are unable to accept that any interference by this court is warranted in proceedings under Article 226 of the Constitution of India.