Notices issued under Section 148 of the Income Tax Act beyond the limitation period are time-barred and quashed, following the Supreme Court's ruling in Rajeev Bansal.

ORDER :

C.Saravanan, J.

I have heard the learned counsel for the Petitioner and the learned Senior Standing Counsel for the Respondent. I have perused the Affidavit, Counter Affidavit; Rejoinder and the additional Counter Affidavit filed in support of the present Writ Petition and the decisions cited by the learned counsel for the Petitioner and the Respondents.

2. In this Writ Petition, the Petitioner has challenged the Impugned Order dated 30.06.2022 bearing DIN & Order No.ITBA/COM/F/17/2022- 2023/1043685307(1) passed by the Respondent under Section 148(A)(d) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

3. Relevant Portion of the Impugned Order dated 30.06.2022 reads as under:-

“The assessee is an individual. The assessee during the F.Y. 2016-17 relevant to the A.Y. 2017-18 deposited cash of Rs.48,96,000/- in bank a/cs during demonetization period. As on 31.03.2016 only Rs.16,971/- cash balance – failed to explain source for cash deposit online verification. However the assessee filed return of income without considering the said amount.

Hence Notice u/s 148A(b) of the Income Tax Act, 1961 was issued to the assessee on 18.05.2022 requiring the assessee to show cause within two weeks as to why a Notice u/s 148 of the Income Tax Act, 1961 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in this case for the Assessment Year 2017- 18. The information in the possession of the undersigned was also communicated to the assessee while granting such opportunity of being heard.

In response to the said Notice u/s 148A(b) of the Income Tax Act, 1961 , assessee filed reply on 31.05.2022. I have considered the reply of assessee and the same is not acceptable for the following reasons:

Though the assessee has submitted the details called for, the statements and details filed by the assessee is not sufficient and could not sustainable the source of the cash deposits. Hence the amount of transaction mentioned above remains undisclosed.

After considering the material available on record and the reply of the assessee, I am satisfied that it is a fit case for issue of notice u/s 148 of the Income Tax Act, 1961 . This order is passed with the prior approval of Principal Commissioner of Income Tax-3, Chennai.”

4. In the background of the Impugned Order is the proceeding initiated by the Respondent against the Petitioner vide Notice dated 21.06.2021 issued under Section 148 of the Act under the old regime stating that the chargeable income of the Petitioner for the AY 2017-2018 has escaped assessment within the meaning of Section 147 of the Act in the light of the judgement of the Hon’ble Supreme Court in the case of Union of India & Ors Vs. Ashish Agarwal, (2023) 1 SCC 617 .

5. Thereafter, the Respondent issued Notice dated 18.05.2022 under 148A(b) of the Act asking the Petitioner to show cause as to why the proceeding under Section 148 of the Act should not be initiated them. The Petitioner filed its reply on 31.05.2022 to the said Notice dated 18.05.2022 and objected to the proposal to initiate proceeding under Section 148 of the Act. Thereafter, the Respondent passed the Impugned Order dated 30.06.2022 and consequently the Notice under Section 148 of the Act was issued on the same day.

6. Relevant Portion of the aforesaid Notice dated 30.06.2022 issued under Section 148 of the Act reads as under:-

“Sir/Madam/M/s.

1. I have the following information in your case or in the case of the person in respect of which you are assessable under the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2017-18:-

“The assessee during the F.Y. 2016-17 relevant to the A.Y. 2017-18 deposited cash of Rs.48,96,000/- in bank a/cs during demonetization period. As on 31.03.2016 only Rs.16,971/- cash balance – failed to explain source for cash deposit online verification. However, the assessee filed return of Income without considering the said amount.”

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