In W.P. (C) 13040/2019 -DEL HC- Income Tax Act: Delhi High Court dismisses petitioner’s Review Petition, says valid basis for triggering inquiry by issuing Notices
Justice Rajiv Shakdher & Justice Tara Vitasta Ganju [19-05-2023]

Read Order: Ramakant V. Income Tax Officer, Ward Int Tax 3(1)(2) & Ors

Chahat Varma

New Delhi, June 20, 2023: The Delhi High Court has dismissed the review petition filed by the petitioner, stating that there was a valid basis for triggering an inquiry through the impugned notices. Therefore, the court concluded that the notices were not invalid.

The instant review petition had been preferred by the petitioner.  The petitioner argued that the writ petition was filed to seek relief regarding the validity of two notices, a notice issued under Section 148 of the Income Tax Act, 1961, and a notice issued under Section 142(1) of the Act. It was contended that these specific reliefs were not considered by the court when disposing of the writ petition, and it was submitted that it was incumbent on the court to first establish as to whether or not the said prayers were made out.

The court observed that although the petitioner had filed his return for the assessment year in question, he did not dispute the fact that he had deposited a cash amount of Rs. 14,00,000 in his bank accounts. The AO had received two pieces of information: First, that the said amount had been deposited in the mentioned bank account, and second, that the petitioner had not filed a return. The second piece of information was not accurate. However, once the petitioner informed the AO that a return had been filed, it came to light that no scrutiny-assessment has taken place. The AO, thus believed, that further inquiry and investigation were necessary, and therefore, proceeded further after disposing of the objections raised by the petitioner.

The court observed that the objections were disposed of by the AO on 27.11.2019. It was only thereafter that a notice under Section 142(1) of the Act was issued on 27.11.2019. Therefore, the AO had examined the matter holistically.

The court noted that the argument made by the petitioner, that reassessment proceedings were initiated solely based on the assumption that the return had not been filed, does not give a complete picture of the background facts. The court highlighted that another factor that triggered the inquiry under Section 148 of the Income Tax Act was the cash deposits made by the petitioner in the mentioned bank accounts.

The court held, “Therefore, it cannot be said that the notice under Section 148 of the Act was invalid. This is evident upon a bare perusal of the reasons given by the AO for reopening the assessment. Thus, in our opinion, it cannot be said that the impugned notices had no basis for triggering an enquiry, and therefore, were invalid.”