Collection Of Relevant Or Tangible Material Required For Opening Section 148A Proceedings: Rajasthan High Court


In the case of Abdul Majeed vs Income Tax Officer (D.B. Civil Writ Petition No. 7853/2022), The Rajasthan High Court division bench including Justice Manindra Mohan Shrivastav and Justice Shubha Mehta held that the authority is required to reach satisfaction that income chargeable to tax has escaped assessment but in cases where three years have elapsed from the end of the relevant assessment year, the order under Section 148A for issuance of notice could be passed if there were no statutory impediment as contained in Section 149(1)(b) of the Income Tax Act. 


The respondent/department issued a notice under Section 148A(b) of the Income Tax Act, implying that income chargeable to tax for the assessment year 2015-2016 had escaped assessment within the meaning of Section 147 of the Act. The notice was sent along with the details of the cash deposits in the account of the assessee maintained with the Corporation Bank, which according to the notice disclosed a deposit of a total amount of Rs.52,75,000. The notice stated that the assessee did not disclose the amount of cash deposit during the relevant financial year and, therefore, on that basis, the proceedings are required to be initiated. The petitioner/assessesse stated that the initiation of proceedings on the basis that the cash deposits during the relevant financial year were Rs. 52,75,000 is factually incorrect. The total amount of cash deposited in his bank account in the Corporation Bank was only Rs.19,39,000. The competent authority, however, proceeded to pass an order for the issuance of notice under Section 148 of the Act. Following that, a notice under Section 148 was issued to the assessee.


The court quashed the order and the notices. The court noted that only on the basis that the cash deposits of Rs. 19,39,000 chargeable to tax have escaped assessment, without anything more, the authorities were not justified in jumping to the conclusion that the assessee may have more bank accounts. The Court held, “If such an interpretation is placed on the provision of Section 148A (d) of the Act with reference to the expression “material available on record”, t hen in that case, it will open floodgates and even without the availability of any material, the authorities would be initiating proceedings under Section 148 of the Act, which will completely frustrate the object of the incorporation of Section 148A into the Act. It is a well-settled principle of interpretation that the taxing statute is required to be construed strictly. The interpretation as has been suggested by the learned counsel for the revenue cannot be placed upon the expression ‘material available on record’ to include the possibility of collection of any relevant or tangible material for the opening of proceedings under Section 148A of the Act,”



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