IMPORTANT POINT
The authority's issuance of notices under the Income Tax Act was invalid due to exceeding statutory limitations based on incorrect cash deposit figures.

ORDER :

This writ petition has been filed by the petitioner aggrieved of the order dated 31.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961 ('the Act of 1961'), the notice dated 31.03.2022 issued under Section 148 of the Act of 1961 and consequential assessment order dated 27.03.2023 passed for the assessment year 2015-16.

2. It is inter-alia indicated that the petitioner was issued a notice under Section 148A(b) of the Act of 1961 inter-alia indicating that the information annexed with the notice suggest that income chargeable to tax for the assessment year 2015-16 has escaped assessment under the meaning of Section 147 of the Act of 1961.

3. The annexure to the notice disclosing information inter-alia indicated that the petitioner had deposited cash of Rs. 10,00,000/- or more in the same bank account amounting to Rs. 33,62,000/-. It was further indicated that cash amounting to Rs. 2,00,000/- or more was deposited to the tune of Rs. 26,13,000/- during the said assessment year in Punjab National Bank.

4. The petitioner filed reply to the show cause notice (Annexure-2) inter-alia indicating that during the year 2015-16, a sum of Rs. 33,62,000/- was deposited in cash and not Rs. 59,75,000/- and as the amount was less than Rs. 50,00,000/-, the extended period of limitation available under Section 149(1) (b) of the Act of 1961 was not available and therefore, the proceedings be dropped.

5. The assessee also enclosed the statements of account of his bank accounts indicating the said cash transactions. The Assessing Authority passed the order under Section 148A(d) of the Act on 31.03.2022 (Annexure-3) inter-alia rejecting the contentions of the petitioner and found the same to be a fit case for issuance of notice under Section 148 of the Act of 1961. A notice under Section 148 of the Act of 1961 (Annexure-4) was issued on the same day.

6. Pursuant to the said notice, the assessment proceeded and on 06.03.2023 (Annexure-4A) after considering the submissions made, the authority show caused the petitioner indicating that why the cash deposited to the tune of Rs. 33,62,000/- in the bank be not treated as unexplained money of the assessee and he was asked to show cause under Section 69A read with Section 115BBE of the Act of 1961.

7. To which show cause notice, a response was filed by the petitioner, which ultimately resulted in passing of the assessment order dated 27.03.2023 (Annexure-4C) by the Assessing Authority.

8. The petitioner raised objections about maintainability of the proceedings relying on judgement in Abdul Majeed v. ITO, CWP No.7853/2022, decided on 29.06.2022 by this Court. However, the authority indicating lack of jurisdiction to question the validity of the proceedings under Section 148A of the Act of 1961, refused to drop the proceedings and consequently determined the income of the petitioner at Rs. 15,18,900/.

9. Though, initially petition was filed questioning the validity of the order passed under Section 148A(d) of the Act of 1961. However, as assessment order under Section 148 of the Act of 1961 was passed during pendency of the petition, the petition was permitted to be amended qua the said orders to be questioned by the petitioner.

10. Learned counsel for the petitioner made submissions that the show cause notice was issued on the premise that the cash transactions of the petitioner were about Rs. 50,00,000/- and extended period of limitation was invoked. However, as admittedly, it was found that the transactions were only of Rs. 33,62,000/-, the issuance of notice itself is wholly without jurisdiction being barred by limitation and the authority while passing the order under Section 148(d) of the Act of 1961 could not have found it a fit case for issuance of notice under Section 148 of the Act of 1961.

11. Further submissions have been made that the trigger for the purpose of initiating the proceedings against the petitioner has been alleged unexplained money deposited and the notice was issued under S