Delhi High Court
Abhinav Jain vs Income Tax Officer & Ors on 13 April, 2026
Author: V. Kameswar Rao
Bench: V. Kameswar Rao
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 15.12.2025
Judgment delivered on: 13.04.2026
Judgment uploaded on: As per Digital Signature~
+ W.P.(C) 2638/2023
ABHINAV JAIN .....Petitioner
versus
INCOME TAX OFFICER & ORS. .....Respondents
Advocates who appeared in this case
For the Petitioner : Mr. Rohit Jain and Mr. Samarth Chaudhari,
Advocates.
For the Respondent : Mr. Vipul Agrawal, SSC, Ms. Sakshi
Shairwal, JSC, Mr. Akshat Singh, JSC, Ms.
Harshita Katru and Mr. Gorang Ranjan,
Advocates.
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
HON'BLE MR. JUSTICE VINOD KUMAR
JUDGMENT
V. KAMESWAR RAO, J.
1. This petition has been filed with the following prayers:
“(a) issue a writ and/or order and/or direction in the nature of
mandamus/certiorari or any other appropriate writ, order or
direction quashing the impugned order dated 07.04.2022
passed by Respondent No.1 under section 148A(d) of the
Income Tax Act, 1961 (‘the Act’), and the consequent initiation
of reassessment proceedings under section 147 vide noticeSignature Not Verified
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dated 07.04.2022 issued by Respondent No.1 under section 148
of the Act for the assessment year 2018-19, and all
proceedings/ actions consequent thereto including but not
limited to the notice dated 20.02.2023 issues by Respondent
No.3 under section 142(1) of the Act;
(b) stay the reassessment proceedings initiated under sections
147/148 vide the impugned notice dated 07.04.2022 issued
under section 148 of the Act, and/or any other proceedings
initiated there under or in consequence thereto, in the matter of
the Petitioner for the assessment year 2018-19, during
pendency of the present petition;
(c) grant ad-interim ex-parte stay in terms of prayer (b) above;
(d) call for the records of the case from the Respondents;”
FACTUAL BACKGROUND
2. At the outset, we may lay the facts as borne out of the petition. The
petition relates to the Assessment Years (AY) 2018-19. For the AY under
consideration, the petitioner, inter alia, maintained the following bank
accounts:
(i) Savings Non-Resident External (‘NRE’) Account bearing SB-
NRE No.015013110007312 with Bank of India, New Delhi
(‘BOI’);
(ii) Savings Account No.0650000100137681 with Punjab
National Bank, New Delhi (‘PNB’).
3. For the AY 2018-19, certain verification queries were generated on
the insight portal of the Income Tax Department on account of the petitioner
not filing his tax returns for AY 2018-19, in response to which, on
05.02.2019, the petitioner filed his e-response to the verification queries so
raised.
4. The details of information purportedly pushed through the Insight
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portal and relied upon by respondent No.1 are as follows:-
“In this case information under NMS category was pushed
through Insight portal that the assessee during the financial
year 2017-18 relevant to AY 2018-19 has entered into following
transactions as below:
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2. The case has been selected on the basis of NMS category in
line with Risk Management Strategy formulated by CBDT. As
per records the assessee did not file his return of income for the
A.Y. 2018-19 as required under the provisions of Income Tax
Act, 1961. The above amount received towards foreign
remittance, interest income and time deposits in bank is
significant and despite this the assessment year. Looking at the
above undisclosed income it is found that despite having
taxable income, the assessee has not filed his return of income.
As per record no scrutiny assessment has been made in this
case for the relevant assessment year. Moreover, this piece of
information falls in the category as explained in Explanation
1(i) to Section 148 and suggests that income of Rs.9,28,66,191/-
chargeable to tax has escaped assessment. Therefore, it
appears to be a fit case to issue notice u/s 148 for AY 2018-
19.”
5. It can be noted from the above that it was alleged that information
under Non-filers Monitoring System (NMS) category was pushed through
the insight portal demonstrating that during the financial year relevant to AY
2018-19, the petitioner had entered into certain transactions relating to
receipts of various amounts, being in the nature of foreign remittance,
interest income and time deposits in banks and despite the fact that
transactions pertained to significant amounts giving rise to “taxable
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income”, the petitioner had not filed his ITR for AY 2018-19.
6. Thereafter, the respondent/Revenue issued a notice under Section
148A(b) of the Act upon the petitioner on 22.03.2022, based on the
information of the insight portal. The aforesaid information, it was stated,
fell in the category of Explanation 1(i) to Section 148 of the Act and
suggested that income to the tune of Rs.9,28,66,191/- being chargeable to
tax has escaped assessment and it is a fit case for issuing notice under
Section 148 of the Act. The petitioner was provided an opportunity to
present his case by 28.03.2022, and justify why a show cause notice under
Section 148 of the Act initiating reassessment proceedings should not be
issued to him. The petitioner submitted his reply to this show cause notice
on 26.03.2022.
7. Thereafter, the respondent no.1 issued two corrigenda to the show
cause notice under Section 148A(b), on 31.03.2022 and on 01.04.2022,
extending the time limit for furnishing response to the show cause notice
issued, till 02.04.2022. Thereafter, an order under Section 148A(d),
(impugned order) was passed, initiating reassessment proceedings in the
case of the petitioner, on 07.04.2022. The findings of the Assessing Officer
(AO), including the table of transactions which we have reproduced above,
in the order dated 07.04.2022 are as follows:
“Information has been received in accordance with the Risk
Management Strategy formulated by CBDT, on Insight Portal
maintained by the Income Tax Department, under the head
NMS (Nonfilers Monitoring System), that the assessee during
the financial year 2017-18 relevant to A.Y 2018-19 has entered
into following transaction as below:
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xxxxxx
3. The available information is explicit and clearly suggest that
during the relevant previous year, the assessee had income
chargeable to tax. As the information was self-sufficient, it was
considered that further enquiries u/s 148A(a) of the I.T. Act
were not required. Therefore, in accordance with section
148A(b) of the I.T. Act, an opportunity of being heard was
provided to the assessee, with prior approval of Principal
Commissioner of Income Tax-12, Delhi, vide notice u/s 148A(b)
of the I.T. Act with DIN No. ITBA/AST/F/148A(SCN)/2021-
22/1041060043 (1) dated 19.03.2022. The said notice was duly
served upon the assessee through declared e-mail and also
through speed post with tracking ID No. ED 05024320 9IN
requiring it to furnish the relevant details along with
supporting documentary evidence with respect to the
transactions as cited above. Vide the above said notice the
assessee was also asked as to why a notice under section 148
should not be issued on the basis of information which suggests
that income chargeable to tax has escaped assessment in this
case for the A.Y. 2018-19.
3.1 Further, a corrigendum was also issued to the assessee on
31.03.2022 informing the assessee that the compliance date
mentioned in the show cause notice u/s 148A (b) of the Act
dated 19.03.2022 may be read as 02.04.2022 instead of
25.03.2022.
xxx xxx xxx
5. Thus, in view of the facts and information available with this
office (which has already been communicated through
opportunity of being heard), it is established that the assessee
has no proper explanation for issue discussed above.
Moreover, this piece of information falls in category as
explained in explanation 1(i) to section 148 of the Act and
suggest that income of Rs. 9,83,338/- chargeable to tax has
escaped assessment. Accordingly, it is concluded that this is a
fit case for issuing notice u/s 148 of the Income Tax Act.
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6. This order is being passed with prior approval of the Pr.
Commissioner of Income Tax-12, Delhi. Notice u/s 148 of the
I.T Act is issued along with this order.”
8. Consequently, a notice under Section 148 of the Act, dated
07.04.2022 (impugned notice) was issued to the petitioner and the petitioner
was directed to furnish his ITR for the AY 2018-19 within thirty days. The
respondent no.3/Revenue, on 13.02.2023, supplied a notice under Section
144B of the Act upon the petitioner, intimating him that the reassessment in
his case would be completed in a faceless manner as per the procedure
prescribed under Section 144B of the Act. Thereafter, on 20.02.2023, the
respondent no.1 issued a notice under Section 142(1) of the Act, (impugned
notice) along with a questionnaire, upon the petitioner, directing him to
furnish the information/documents related to the issues raised.
9. It is the order under Section 148A(d) dated 07.04.2022 and notice
under Section 148 of the Act dated 07.04.2022, followed by the notice under
Section 142(1) of the Act dated 20.02.2023, which are impugned before us.
SUBMISSIONS BY COUNSEL FOR THE PETITIONER
10. Mr. Rohit Jain, learned counsel for the petitioner stated that the
impugned notices dated 07.04.2022 and 20.02.2023 under Section 148A(d)
and Section 142(1) respectively, and impugned order dated 07.04.2022 are
wholly without jurisdiction, bad in law, and are liable to be quashed. He has
raised various grounds. As per him, there was no escapement of income by
the assessee under Section 147 of the Act, which is the fundamental
jurisdictional condition to initiate reassessment. The reassessment
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proceedings are nothing but a fishing and roving enquiry, and are
impermissible in law.
11. For the AY 2018-19, the petitioner qualified as a non resident as per
Section 2(3) read with Section 6(1) of the Act and stayed in India for less
than 60 days in the financial year 2017-18. The petitioner transferred certain
amounts from his savings bank account with PNB to his Non-Resident
External Account (NRE) account with BOI. The petitioner earned interest on
fixed deposits from BOI and UCO Bank, New Delhi. The petitioner also
received amounts upon maturity of his fixed deposit receipts with PNB and
in its NRE account with BOI. Due to this, under the belief that the total
income of the petitioner was below the maximum amount not chargeable to
tax under the Act, the petitioner did not file his income tax return (ITR)
under Section 139(1)(b) of the Act for the AY 2018-19.
12. He stated, the respondents in this case are simply trying to assess the
income of the petitioner through regular assessment in the garb of
reassessment. Pursuant to verification queries being generated on the insight
portal of the income tax department, the petitioner duly replied to the same,
explaining that the income in his case accrued as interest income from the
banks and was below the taxable limits as per the Act.
13. Mr Jain submitted that the response which was a part of the e-
verification response sheet dated 05.02.2019 was not considered by the
respondent no.1, rendering the entire exercise futile. The respondent no.1
arbitrarily issued the notice under Section 148A(b) of the Act, based on the
same information available on the insight portal. The notice alleged that
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information under the NMS category demonstrated that the petitioner had
entered into certain transactions for the AY 2018-19, for which various
receipts in the nature of foreign remittance, interest income and time
deposits in the bank were relied upon.
14. He submitted that the petitioner responded to the show cause notice
with detailed reasons, stating that the petitioner being a non resident Indian,
who was living in Dubai during the relevant year under consideration, was
not bound to file his ITR. This fact, as per him, has not even been rebutted
or controverted in the impugned order dated 07.04.2022 under Section
148A(d) of the Act and the vital column- Resident/Not Ordinary Resident/
Non-Resident has been left blank. In terms of Section 139(1)(b) of the Act,
the petitioner was obligated to file ITR only if “his total income……
assessable under this Act during previous year exceeded the maximum
amount which is not chargeable to income-tax”. Hence, individuals having
total income below the threshold for taxability, are not mandated to file ITR.
The threshold for the AY 2018-19 was Rs.2,50,000/-. The petitioner duly
explained the amounts received by him on account “foreign remittance,
interest income and time deposits in bank”, by way of supporting documents
vide reply dated 26.03.2022 to the 148A(b) notice. An examination of the
same would demonstrate that the total receipts of the petitioner partaking the
character of income during the financial year (FY) for the AY 2018-19 is
barely Rs.62,340/-, which is much below the maximum amount not
chargeable to tax under the Act i.e., Rs.2,50,000/- for the AY 2018-19. This
fact can also be seen from the ITR accompanying the computation of
income, filed by the petitioner under protest as a response to the notice
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under Section 148 of the Act. Reliance has been placed by him on the
judgment in the cases of Angelantoni Test Technologies SRL v. ACIT 2024
463 ITR 139 (Del) and Nestle SA v. ACIT 417 ITR 213 (Del), whereby this
Court has decided the teeth of this issue.
15. He further stated that the petitioner had explained the nature and
source of all the amounts mentioned in the show cause notice, supported by
documents. Since the petitioner is a non-resident, the interest which accrued
on time deposits, earned by the petitioner on the NRE account is exempt
from tax as per Section 10 (4)(ii) / Section 10 (15) (fa) of the Act. Moreover,
even the interest income received in the NRI account was below the taxable
limits as prescribed under the Act. He reiterated that the petitioner furnished
all the relevant bank statements, tax credit statements in Form No.26AS
replies as well as the schedule of total income earned by him during the
relevant year. He even submitted all the documentary details including inter
alia, the copy of the passport and resident permit of UAE of the petitioner,
copies of bank accounts of the petitioner, copy of the bank account of the
father of the petitioner from whom the amount of Rs. 8,50,00,000/- was
received to show that the same was below taxable limit.
16. It is his submission that, primarily three amounts were raised in the
notice for which the petitioner’s detailed response was submitted and can be
summarized as follows:
a) Rs.3,75,000/-: This is the same amount for which query was also
raised earlier with source being ‘Poonam Jain’. It was explained that
the said amount was merely an inter-bank transfer entry of the saidSignature Not Verified
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amount being received in SB-NRE Account No.015013110007312 on
17.08.2017 from funds lying in PNB Savings Bank Account
No.0650000100137681 also belonging to the petitioner.
b) Rs.4,90,000/-: No query was raised in respect of this amount earlier
since the source was mentioned as ‘Abhinav Jain’, being the
petitioner himself. It was explained that the said amount was also
merely inter-bank transfer entry of the said amount being received in
SB-NRE Account No.015013110007312 on 28.02.2018 from PNB
Savings Account No.0650000100137681, also belonging to the
petitioner. The same did not represent any income of the petitioner for
the AY 2018-19. It was pointed out that the amount was out of
maturity proceeds of small FDRs and other savings in the said PNB
account.
c) Rs.9,11,07,929/-: This is the same amount for which query was also
raised earlier with the source being ‘Time Deposits’. It was explained
that the aforesaid amount comprised the following three components
of the time deposits:
(i) FDR’s of Rs.8,50,00,000/- was received from the petitioner’s
father, Brijesh Jain (NRI). This amount was received in the BOI
SB-NRE Account No.015013110007312 and PAN: AEBPJ1539C.
The father of the petitioner, made one Fixed Deposit from his BOI
SB-NRE Account No.015013110007310 for a sum of
Rs.16,71,45,050/- on 15.03.2012 which was renewed from time to
time and finally the closure proceeds of that fixed deposit,
including interest accrued thereon, which was credited to his SB-
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NRE account on 24.04.2017 for a total sum of Rs.25,50,44,233/-.
On 24.04.2017, the petitioner’s father (Brijesh Jain) transferred a
sum of Rs.8,50,00,000/- each to the petitioner’s BOI SB-NRE
Account No.015013110007312 and to the BOI SBNRE Account
No.015013110007369 of the petitioner’s mother Kamini Jain
(PAN: AFRPJ0505K). The bank, i.e., BOI, has made a single
entry in the account of Brijesh Jain for the transfer of
Rs.17,00,00,000/- mentioning the account numbers of the
petitioner and his mother in the narration and crediting both
accounts for Rs.8,50,00,000/- each.
(ii) FDR of Rs.4,25,000/- made on 17.08.2017 primarily out of
Rs.3.75 lakhs
(iii)Tax free accrued interest income of Rs.56,82,929/- till 31.03.2018.
(iv)Hence, the amount of Rs.9,11,07,929/- represents original deposit
amount of Rs.8,54,25,000/- (Rs.8,50,00,000 + Rs.4,25,000/-) and
Rs.56,82,929/- (interest) accrued till 31.03.2018.
17. It is also his submission that similar proceedings were initiated for the
father and mother of the petitioner as well. The details of the same, as
provided by the petitioner are as under:
A. Assessment proceedings of Brijesh Jain.
In Brijesh Jain’s case, proceedings were initiated vide show cause
notice dated 19.03.2022 under Section 148A of the Act for the AY
2018-19, for the verification of Rs.9,40,89,186/-. Mr. Jain’s
submission is that it is the same payer i.e., Brijesh Jain in the presentSignature Not Verified
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case and the amount which is the subject matter of the dispute is also
same. He stated that the explanations rendered by the petitioner’s
parents were accepted by the tax department The Jurisdictional
Assessing Officer (JAO) passed an order under Section 148A(d) of
the Act and accepted the explanation furnished thereby, not proposing
initiating of reassessment proceedings thereon.
B. Assessment proceedings of Kamini Jain.
In Kamini Jain’s case, notice was issued under Section 148A for the
Act of the AY 2018-19. She also filed her response and explained the
nature/ source of the amount of Rs.8,50,00,000/- received from her
husband. This reply was accepted by the JAO of Kamini Jain thereby,
not proposing initiating of reassessment proceedings thereon.
18. In view of the above, he stated that it is trite law that that once a
transaction is accepted in the hands of one co-owner, adverse inference
cannot be drawn in the respect of the very same transaction in the hands of
another co-owner. When the very same transaction of giving of Rs.8.5
crores stands accepted both in the hands of the father (the giver) and the
mother (the other receiver), different treatment cannot be meted out to the
very same and identical transaction of Rs.8.5 crores paid by the father to the
Petitioner. To substantiate this, reliance was placed on the following
judgments:-
(i) Jaswant Rai v. Commissioner of Wealth-Tax: 107 ITR 477
(P&H),
(ii) Gulab Rai Hanuman Box v. CWT 198 ITR 131 ( Gau)
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(iii) CIT v. Kumararani Smt. Meenakshi Achi 292 ITR 624 (Mad)
19. It is further his submission that the show cause notice under Section
148A(b) was issued on 22.03.2022, and provided the time till 26.03.2022, to
the assessee, to file his reply to the said notice. This is against the mandate
of the provision itself as Section 148A (b) of the Act mandates that a
minimum of seven days must be provided to the assessee to file reply to the
show cause notice. However, only six days were provided to the assessee to
furnish his reply, which he duly did by 26.03.2022, without seeking any
extension of time from the Department. He has placed reliance on the
following judgments, which hold that minimum seven days should be
provided to file the reply to the show cause notice and the date on which the
show cause notice is issued has to be excluded in the calculation of days and
further interpret the period of ‘7 days’ as provided in Section 148A(b):
(i) Pioneer Motors (Private) Ltd. v. Municipal Council, Nagercoil
(1961) 3 SCR 609.
(ii) CIT v. Ekbal & co. (1954) 13 ITR 154.
(iii) Suresh Chandra v. Birdi Chand, 1965 SCC OnLine Raj 15.
(iv) Damineni Sangayya v. State of Andhra Pradesh, 1962 SCC
OnLine AP 3
(v) Girdhar Gopal Dalmia v. UOI, (2023) 450 ITR 143 (Cal)
(vi) Bijendra Singh v. PCIT, (2025) 478 ITR 493 (Raj).
(vii) Nidhi Bansal v. ITO [2023] 290 Taxman 306 (Del)
(viii) Hardev Singh v. ITO [2022] 140 taxmann.com 67 (Del)
(ix) Srivenkateshwar Tradex (P.) Ltd. v. PCIT [2024] 296 Taxman 76
(Del)
(x) Mukesh J. Ruparel v. ITO [2023] 295 Taxman 475 (Bom)
20. Mr. Jain has also challenged the proceedings on the ground of
limitation. He stated that as per Section 149(1)(a) of the Act, a notice under
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Section 148 can be issued upto three years from the end of the relevant AY,
which in the present petition relatable to AY 2018-19 would be 31.03.2022.
It can only be issued beyond three years upto six years, subject to the
satisfaction of the conditions as provided under Section 149 (1)(b).
However, the present proceedings have been issued beyond three years as
the notice under Section 148 was issued only on 07.04.2022. He further
stated that Section 149(1) proviso no. 3 (as it then existed [Act of 2021]),
which provides that “the time allowed or extended time allowed to the
assessee as per the show cause notice issued under Section 148A(b) shall be
excluded” and applying the same in the present case would also not bring
the proceedings within limitation as even if the six days period from
22.03.2022- 28.03.2022 is excluded from the limitation period, it would
extend the limitation period only till 06.04.2022, and the impugned notice
under Section 148 being issued on 07.04.2022 would be beyond the
limitation period. Even the fourth proviso of Section 148A(b) would not be
applicable. It provides that seven days should be provided after such
exclusion, to the Department to pass the order under Section 148A(d), which
in the present case was not needed as, the reply which was sought to be filed
by 28.03.2022, and the limitation period being till 06.04.2022, there were 9
days within which the order under Section 148A(d) could have been passed,
however, the same was also passed beyond such limitation period.
21. It is the case of the petitioners that even though corrigenda were
issued by the respondents which extended the time allowed to the petitioner
to file response till 02.04.2022, the same was wholly erroneous. Firstly, the
corrigendum were issued after the life of the notice under Section 148A(b)
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dated 22.03.2022 and the reply of the petitioner stood filed on 26.03.2022.
Secondly, both the corrigenda were unsigned and hence, were invalid in the
eyes of law. Thirdly, no law including the Act, permits ipso-facto corrigenda
to be issued as an afterthought to usurp jurisdiction, when it is lost. If such
corrigenda are permitted, then that would render the strict time limitations of
the Act otiose and would allow the Revenue to usurp jurisdiction illegally.
He placed reliance on the judgments in the cases of PCIT v. Lionbridege
Technologies (P) Ltd. , 2019 260 Taxmann 273 and ACIT v. Vijay
Television (P.) Ltd. 2018, 407 ITR 642 (Mad), wherein in the context of
orders passed under Section 144C(13), it was held that the issuance of
corrigendum to correct errors after the period of limitation had expired was
defective and ineffective.
22. He stated that the correct specified Authority under Section 151 at the
relevant time would be dependent on the date of the issuance of the notice.
Based on the above mentioned arguments that since the notice has been
issued after three years from the end of the relevant AY, the correct
specified Authority to issue the notice would have been the PCCIT/CCIT
and not PCIT/CIT. The approval, however, was sought from the PCIT. The
failure to obtain sanction from the ‘specified authority’ in terms of section
151 of the Act, renders the jurisdictional notice under section 148 of the Act,
void ab initio and untenable in law. He relied upon the following
judgments:-
a. CIT v. SPL‘s Siddhartha Ltd. 345 ITR 223 (Del)
b. Yum! Restaurants Asia Pte. Ltd. [W.P.(C) No.614/2014; decided on
31.08.2017] (Del)Signature Not Verified
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c. CIT vs. Soyuz Industrial Resources Ltd. (2015) 58 taxmann.com
336 (Del)
d. Yum! Restaurants Asia Pte. Ltd. vs. DDIT [W.P.(C) No.1353/2013;
decided on 31.08.2017] (Del)
e. Bhagwan Sahai Sharma v. DCIT 2025:DHC:3960-DB.
f. Communist Party of India (Marxist) v. Income Tax Department
[2025] 174 taxmann.com 325 (Del).
g. Vodafone Idea Ltd. vs. DCIT, 2024:BHC-OS:2100-DB
h. Prakash Pandurang Patil vs. ITO [2025] 177 taxmann.com 552
(Bom) [Dept SLP dismissed @ (2025( 178] taxmann.com 8.
i. Agnello Oswin Das vs. ACIT [2024] 161 taxmann.com 16 (Bom)
j. Mrs. Chitra Supekar vs. ITO [2023] 453 ITR 530 (Bom)
k. Ambika Iron and Steel (P.) Ltd. v. Pr. CIT [2023] 452 ITR 285
(Ori.)].
23. Mr. Jain relied on the Finance Act of 2023 to state that the
amendment to Section 151 was made effective from 01.04.2023. Hence, the
same would not come to the rescue of the respondents with respect to the
argument of the notice being barred by limitation as the amendment is
prospective in nature. The respondent No. 1 has not brought on record any
material to indicate that he was adopting the exclusions as envisaged by the
proviso to Section 149 and the respondents could not have presumed that an
amendment would subsequently be made. To Substantiate this argument, he
has placed reliance on Deloittee Consulting India (P.) Ltd. vs. NFAC
[2025] 481 ITR 175 (Tel), Vodafone Idea Ltd. vs. DCIT [2024:BHC-
OS:2100-DB] and Prakash Pandurang Patil (supra), Agnello Oswin Das
(supra), Mrs. Chitra Supekar (supra), Linkedin Singapore Pte. Ltd. vs.
ACIT [2025] 179 taxmann.com 412 (Bom).
24. He further submitted that the legislature vide Finance Act of 2021
introduced the provision of Section 151A to the Act, which came into force
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on 01.04.2021, to remove the face to face interaction between the assessee
and the Revenue in the conduct of reassessment proceedings. In exercise of
the power under Section 151A, the CBDT vide Notification No. 18/2022
dated 29.03.2022 notified ‘e-Assessment of Income Escaping Assessment
Scheme, 2022’, whereby the notice under section 148 can be issued by any
officer other than the jurisdictional Assessing Officer selected through
automated allocation. If considered in terms of section 144B of the Act, the
same can only be done by National Faceless Assessment Centre.
25. He relied upon the budget speech of the year 2021-22 by the Finance
Minister and also upon the memorandum of provisions of Finance Bill of
2021 to state the intent/object of Section 148A of the Act was to reduce
litigation relating to ‘reassessment’ insofar as the conduct of pre-notice
enquiry and determination, which would result in filtering out of those cases
wherein, invocation of powers of reassessment enshrined under sections
147/148 are not, per se, warranted. Hence, in the instant case, the AO was
bound to judiciously consider/ appreciate the submission advanced by the
petitioner.
26. He also stated that even though the requirement of “reason to
believe”, as existing prior to Finance Act, 2021, has been substituted with
the “possession of information” under the new provisions, the fundamental
jurisdictional condition for invocation of powers of reassessment under
section 147/148 continues to remain that of “escapement of income” in the
hands of the assessee. In the absence of any such ‘escapement of income’ in
the hands of the assessee, resort cannot be had to the provisions of section
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147/148 of the Act. As per him, the present case is a test case which ought
to have been filtered out of the scope of Section 147/148 of the Act due to
the machinery enshrined under Section 148A of the Act. Reliance was
placed by him on the following judgments:
a) ACIT v. Rajesh Jhaveri Stock Brokers (P) Ltd, 291 ITR 500 (SC)
b) CIT v. Orient Craft Ltd, 354 ITR 536 (Del)
c) Mohan Gupta (HUF) v. CIT, 366 ITR 515 (Del)
d) Madhukar Khosla v. ACIT, 367 ITR 165 (Del)
e) CIT v. Indo Arab Air Services, 283 CTR 92 (Del)
f) Indu Lata Rangwala v. DCIT, 384 ITR 337 (Del)
g) Khubchandani Healthparks (P.) Ltd. v. ITO, 384 ITR 322(Bom)
h) Prashant S. Joshi v. ITO, 324 ITR 154 (Bom)
27. The impugned order was passed without appreciating or
acknowledging that the reply of the petitioner had already been filed on
26.03.2022. Hence, ignoring the explanations and supporting documents
furnished by the petitioner, re-assessment proceedings were initiated by
issuance of notice under Section 148 of the Act. Even the comprehensive
factual details were not considered and the respondent merely reproduced
the ingredients of Section 148A to issue the notice under Section 148 of the
Act. Additionally, he also stated that even though the aforesaid impugned
order under Section 148A(d) of the Act was stated to have been passed
obtaining the prior approval of the respondent no.2, the same
approval/sanction was not furnished to the petitioner.
28. Mr. Jain also submitted that merely to comply with the impugned
notice, without admitting its validity, the petitioner e-filed his ITR on
05.05.2022 accompanied by a protest letter dated 11.05.2022. Pursuant to
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the issuance of the Section 148 notice, the petitioner raised many objections,
vide letter dated 22.05.2022, stating that there has been no escapement of
income by the petitioner who qualified as a non resident as per Section 2(3)
read with Section 6(1) of the Act. Another objection related to the notice
being barred by limitation was also raised along with the approval of the
competent authority, the income being below the taxable limit, and
procedure prescribed under Section 151A of the Act. It was also objected
that in the absence of non filing of ITR, reassessment proceedings could not
have been initiated. However, these objections of the petitioner were not
disposed of by the respondent no.1. Even the sanction obtained under
section 151 of the Act was not provided to the petitioner. Owing to the
same, the petitioner was under the impression that the reassessment
proceedings against him had been dropped by respondent no.1 upon
considering the detailed objections raised there-against. However, on
13.02.2023, the notice under 144B was served upon the petitioner.
Thereafter, on 20.02.2023, the respondent no.3 issued a notice under Section
142(1) along with a questionnaire.
29. It is his submission that the perversity in the conduct of respondent
no. 1 is further demonstrated by the fact that no enquiry was deemed
necessary either prior to issuance of notice dated 22.03.2022 under section
148A(b), or, even after furnishing of reply dated 26.03.2022, clearly
demonstrating the inaccuracy of the reasons/ information/ basis adopted by
respondent No.1. According to him, a bare perusal of the impugned order
under section 148A(d) would demonstrate that instead of being a tentative
determination, the same is in the nature of a final conclusion, whereby,
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respondent No.1 has already made up its mind regarding the escapement of
income in the hands of the Petitioner.
30. He relied upon the judgment of the Supreme Court in case of Siemens
Ltd. vs. State of Maharashtra (2006) 12 SCC 33, wherein, the Hon’ble
Supreme Court was pleased to exercise its extraordinary writ jurisdiction at
the stage of issuance of notice itself, on the reasoning that when a notice is
issued with premeditation, a writ petition would be maintainable. In such an
event, even if the court directs the statutory authority to hear the matter
afresh, ordinarily such hearing would not yield any fruitful purpose. It is
evident in the instant case that the respondent has clearly made up its mind.
31. Mr. Jain stated that the respondent, along with this notice under
Section 142(1), directed the petitioner to furnish information not just
specific to the disputed issues but also on general issues which have no
connection with the information basis which the impugned reassessment
proceedings were initiated. This was in blatant violation of natural justice
and the settled legal principles.
SUBMISSIONS BY COUNSEL FOR THE RESPONDENTS
32. Contesting these submissions, Mr Vipul Agrawal, learned SCC
appearing for the Revenue submitted that the petitioner in the present case is
approaching this Court in March, 2023 to challenge the reassessment
proceedings that were initiated in April 2022. Based on the huge delay
alone, the petition should be dismissed.
33. He stated that the AO in this case has initiated the reassessment
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proceedings based on the information available with the Department that the
petitioner has received amounts of foreign remittance, interest income and
time deposits in their bank amounting to a total of Rs.9,28,66,191/- but has
failed to file the ITR for the relevant AY. The Department is of the view that
amount received is significant and despite which the petitioner had not filed
their respective ITR. The specific details of the transactions adding up to the
above amount were provided in the said notice as well. It is pertinent to note
that the available information was explicit and indicative of the fact that
during the relevant previous year, the petitioner had earned /obtained income
chargeable to tax. In view of this, the piece of information fell in the
category as enumerated under Explanation 1(i) of Section 148 of the Act and
suggested that an income to the tune of Rs.9,28,66,191/- chargeable to tax
escaped assessment and hence, this was a fit case for issuing notice under
Section 148 of the Act. Since the Department considered the information as
self sufficient, it was therefore considered that the no further enquires under
Section 148A(a) of the Act were required.
34. It is his submission that the petitioner was directed to provide specific
details and documents with its reply to the said notice under Section
148A(b) of the Act. The reply filed by the petitioner was perused by the
officer and the same was not found tenable in the absence of any
explanations provided by the petitioner. Mr. Agrawal stated that as per the
petitioner, he received an amount of Rs.8,50,00,000/- from his father on
24.04.2017 in his BOI account. However, as per the information available
with the department, the petitioner created an FD amounting to
Rs.9,11,07,929/- and as per his reply dated 26.03.2022, in total 10 FD’s of
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Rs.8,50,00,000/-, totaling to Rs.8,50,00,000/- were created. Another FD of
Rs.4,25,000/- was created by him out of the sum transferred from his other
bank account maintained with Punjab National Bank. The petitioner also
submitted that balance amount of Rs.56,82,929/- (Rs.9,11,07,929 minus
Rs.8,50,00,000/- minus Rs.4,25,000/-) is the accrued interest till 31.03.2018.
However, the petitioner did not submit any supporting documents in this
respect. Further, the bank account statement submitted by the petitioner also
did not have any mention of this entry of Rs.56,82,929/- and neither were
there any supporting evidence produced by the petitioner to cement their
argument. He states that those documents have been filed before this Court
at the stage of the rejoinder. However, the same was not filed before the AO.
Hence, the case of the petitioner was correctly reopened under Section 147
of the Act.
35. It is further his submission that Section 148 of the Act does not
mandate a detailed investigation at the time of issuance of notice under
Section 148 of the Act. Continuing from above, the petitioner further stated
that the department had granted comparable justifications in the same
transaction for the assessee’s parents. However, without the supporting
documentation, it is impossible to determine the petitioner’s ground. It is not
possible to determine whether the transactions served as the foundation for
the proceedings under section 148A of the Act, as the assessee has not
produced any supporting documentation to substantiate his claims.
Additionally, it is also to be noted that on the bare perusal of the bank
records and documents submitted by the petitioner, there appeared to be
inconsistency in the deposits in the petitioner’s account and such deposits
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did not appear to be continuous. Hence, in the view of the above facts and
circumstances, the Department has formidable reasons to determine that
there has been an escapement of income by the petitioner.
36. As per him, the argument of the petitioner that he is an NRI is not
tenable as no supporting documents have been provided by the petitioner to
verify whether the income accrued or received in India would be liable to
tax under the Act. In the absence of filing of ITR, the true nature and
explanation of the petitioner’s transactions cannot be verified. He stated that
it is undisputed that the assessee has received Rs. 56,82,929/- as interest on
the deposits made in the NRE account. The claim of the petitioner is that
such income is exempt as per Section 10(4)(ii) of the Act. This exemption
can be availed. However, the same must be subject to certain conditions.
The proviso to Section 10(4)(ii) clearly provides that such exemption is
available provided the individual is a resident outside India, as defined in
clause (w) of Section 2 of FEMA, 1999 or such individual has been
permitted by the Reserve Bank of India (RBI) to maintain the aforesaid
account. Section 2 Clause (w) of FEMA, 1999 states that “person resident
outside India” means a person who is not resident in India”. For this,
proper documents need to be provided by the petitioner. In case the
petitioner has been permitted by the RBI, the same permission was also not
furnished by the assessee along with his reply to the show cause notice.
37. Additionally, it is his submission that the details of the passport
enclosed by the petitioner along with his reply dated 26.03.2022 revealed
that the petitioner had travelled to India in the FY 2017-18. In light of the
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same, whether or not the conditions of Section 2(w) of FEMA, 1999
requires a detailed enquiry during the assessment proceedings.
38. The respondents indeed proceeded after due application of mind
upon the information available with them. Further, he stated that the notice
under Section 148A(b) and the order under Section 148A(d) of the Act are
will within the jurisdiction and have been issued after obtaining prior
approval from the competent authorities. Even an opportunity of presenting
his case was provided to the petitioner by way of the Section 148A(c) of the
Act. Since the ITR was not filed by the petitioner then, the transactions
undertaken by the petitioner remained unexplained, which was clearly stated
in the 148A(d) order.
39. His submission on the aspect of limitation, raised by the petitioner, is
that in the absence of any specific challenge to the power of the AO to issue
the corrigenda dated 31.03.2022 and 01.04.2022, the time granted by the AO
to the petitioner to submit its reply is required to be considered as
02.04.2022. By doing so, the third proviso to Section 149(at the relevant
time) would apply and the time period between 22.03.2022- 02.04.2022
would be required to be excluded from the limitation period. This would
take the period of limitation to end on 10.04.2022, and hence, the impugned
order under Section 148A(d) and impugned notice under Section 148, both
dated 07.04.2022, would be clearly within limitation as envisaged by
Section 149(1)(a). Since the AO issued the corrigenda within the outer limit
i.e. 31.03.2022, the AO was competent to grant additional time to the
petitioner to file his reply. It is the petitioner’s own case, by relying upon a
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catena of judgments that the Department must mandatorily grant ‘not less
than seven days’ to furnish response to Section 148A(b). Hence, the AO has
complied with such timeline suo moto.
40. He stated that in case of time period required to be excluded as per 3rd
proviso to Section 149, a period of 7 days (i.e. 22.03.2022 to 28.03.2022) is
required to be excluded and accordingly, impugned order/notice dated
07.04.2022 are required to be deemed to have been passed/issued
respectively within the prescribed time limit u/s 149(1)(a). In support of this
contention, reliance is placed upon the provisions of Limitation Act, 1963.
Section 12(1) of the Limitation Act in respect of institution of any legal
proceedings provides as follows:
“12. Exclusion of time in legal proceedings —
(1) In computing the period of limitation for any suit,
appeal or application, the day from which such period
is to be reckoned, shall be excluded.”
Whereas Section 14(1) r.w.s. Explanation and Section 15 provide as follows:
“14. Exclusion of time of proceeding bona fide in court
without jurisdiction. (1) In computing the period of
limitation for any suit the time during which the
plaintiff has been prosecuting with due diligence
another civil proceeding, whether in a court of first
instance or of appeal or revision, against the defendant
shall be excluded, where the proceeding relates to the
same matter in issue and is prosecuted in good faith in
a court which, from defect of jurisdiction or other
cause of a like nature, is unable to entertain it.
….
Explanation.–For the purposes of this section,–
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(a) in excluding the time during which a former civil
proceeding was pending, the day on which that
proceeding was instituted and the day on which it
ended shall both be counted;
….
15. Exclusion of time in certain other cases.–
(1) In computing the period of limitation of any suit or
application for the execution of a decree, the institution
or execution of which has been stayed by injunction or
order, the time of the continuance of the injunction or
order, the day on which it was issued or made, and the
day on which it was withdrawn, shall be excluded.
(2) In computing the period of limitation for any suit of
which notice has been given, or for which the previous
consent or sanction of the Government or any other
authority is required, in accordance with the
requirements of any law for the time being in force, the
period of such notice or, as the case may be, the time
required for obtaining such consent or sanction shall
be excluded.
Explanation.–In excluding the time required for
obtaining the consent or sanction of the Government or
any other authority, the date on which the application
was made, for obtaining the consent or sanction and
the date of receipt of the order of the Government or
other authority shall both be counted.
….”
41. It is his submission that the third proviso to Section 149(1) is similarly
worded and provides for exclusion of time/extended time period which was
allowed to the assessee as per notice issued under Section 148A(b).
Accordingly, the date of issuance of notice under Section 148A(b) along
with the entire time period granted to the assessee to file his response is
required to be excluded. In the present case, that would result in exclusion of
and accordingly, the impugned order under Section 148A(d) and time
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between 22.03.2022 and 02.04.2022 notice under Section 148 are required
to be considered within the limitation period as per Section 149(1)(a). This
principle has been duly applied by a co-ordinate Bench of this Court while
deciding in the case of Raminder Singh v. ACIT, Circle 52(1), New Delhi,
2023:DHC:6672-DB.
42. On the aspect of the approval being from the competent authority, Mr
Agrawal stated that the impugned order and notice clearly state that the
sanction under Section 151 in the present case was obtained from the PCIT,
Delhi-12, which is the specified authority as per Section 151 in case the
notice is issued within a period of three years from the end of the relevant
AY. By way of the above argument by the application of exclusions
provided in the third proviso to Section 149 (1), the impugned notice must
be construed to have been issued within 3 years. The deeming fiction in the
present case is required to be given its full effect and carried to a logical
conclusion. Law must be interpreted in a manner to ensure harmonious
construction among various provisions.
43. Further, he stated that even though the amendment had not come into
force, the Memorandum to the Finance Bill, 2023 was brought in to clear the
above mentioned distinction. The said Memorandum stated the intention of
the legislature to introduce a clarificatory amendment. The relevant part of
the same is reproduced as under:
“9. At the same time, to, ive further clarity with
regards to the specified authority a proviso is proposed
to be inserted in the section 151 to provide that while
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has been excluded or extended as per the provisos in
section 149 of the Act from the time limit for issuance
of notice under section 148 of the Act shall be taken
into account.”
44. Mr Agrawal has relied upon the judgment of Union of India v.
Rajeev Bansal, 2024 SCC OnLine SC 2693 which has acknowledged the
interlinking of the provisions of Section 149 and Section 151. He has also
referred to the cases of this Court in Twylight Infrastructure Pvt. Ltd. v.
ITO Ward 25 3 Delhi and Ors, 2024:DHC:259-DB and Bhagwan Sahai
Sharma (supra).
45. He stated that the reassessment proceedings in the present case are
covered by the notification No.S.O. 1466(F) dated 29.03.2022, the e-
Assessment of Income Escaping Assessment Scheme, 2022. This scheme
regulates the issuance of the notice under Section 147/148 of the Act
through the automation in accordance with the risk management strategy
and provides the manner of carrying out the reassessment, being under
Section 144B of the Act, i.e. in a faceless manner. Since the cases are
selected on the basis of the automation, the same highlights the intent behind
the scheme to ensure fairness in the process of issuance of notice. The
cases are flagged to the Jurisdictional Assessing Officer (JAO) by the
directorate of systems, who has no control over the process. Hence, the JAO
has no method/control to know which cases would be allocated to him.
46. At the stage of rejoinder submission, the counsel for the petitioner has
submitted that in the re-assessment proceedings of the mother, the AO of the
mother was under the superintendence of the same PCIT-12, who is the
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respondent no. 2 herein. He further stated that the case of Raminder Singh
(supra) on which reliance has been placed by the respondents is clearly
distinguishable on facts since in that case no corrigendum was issued by the
AO and it was a clear case where the Section 148A(b) notice was issued
within the limitation period and there was no doubt regarding the
invocations of exclusion/extension of limitation period envisaged in the
proviso to Section 49 of the Act.
47. It has also been contended at the stage of rejoinder submissions by the
counsel for the petitioner that the amount transferred to the petitioner from
his father Brijesh Jain was a gift and should be exempt from tax as per the
provision of Section 56(2)(x) of the Act and the Revenue cannot resort to the
provision of Section 147/148 to undertake further examinations in this
regard. Reliance has been placed on the judgment in the cases of Anil
Kumar Ramabhai Patel vs. ITO [2025] 178 taxmann.com 634 (Guj),
Inductotherm (India) P. Ltd. (formerly known as Inductotherm India) vs.
DCIT [2013] 356 ITR 481 (Guj) and Onir Infraspace (P.) Ltd. v. ITO
[2024] 168 taxmann.com 21 (Guj)].
48. To this, Mr. Agrawal stated that the contention of the petitioner about
the amount received from the father as a gift was never made, even in the
reply dated 26.03.2022. No documentary proof of receiving the amount of
Rs. 8.5 crores as a gift was enclosed by the petitioner. The same remains
unexplained and is required to be examined in detail during the assessment
re-proceedings after necessary enquiries.
ANALYSIS AND CONCLUSION
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49. Having heard the learned counsel for the parties and perused the
record, at the outset, we intend to deal with the submission of Mr. Jain that
the proceedings initiated by the respondents under Section 148 of the Act
are beyond the limitation period as prescribed under Section 149(1)(a) of the
Act as notice under Section 148 can be issued within three years from the
end of the relevant AY, which in the present petition relatable to AY 2018-
19 would be 31.03.2022. The notice can be issued beyond three years up to
six years, subject to the satisfaction of the condition as provided under
Section 149(1)(b) of the Act. The notice dated 22.03.2022 under Section
148A(b) was issued to the petitioner granting him time till 28.03.2022 to file
reply. The petitioner had submitted the reply on 26.03.2022. The submission
of Mr. Jain is primarily that by excluding 22.03.2022, the period granted to
the petitioner is six days and not seven days as mandated under Section
148A(b). Pertinently, the respondents had issued two corrigenda on
31.03.2022 and 01.04.2022 extending the time to submit the reply till
02.04.2022. There is no challenge made in the petition to the corrigenda. In
that sense, the period to file reply having been extended till 02.04.2022, by
the application of the third proviso to Section 149(1), the time allowed to the
assessee to file the reply (eleven days) has to be excluded. As such, the
order under Section 148A(d) and notice under Section 148 having been
passed and issued on 07.04.2022, shall be within limitation.
50. Even though the minimum period of seven days has not been granted
initially, on a conjoint reading of the notice dated 22.03.2022 and the
corrigendum dated 31.03.2022, the time to file reply to the notice dated
22.03.2022 has been extended till 02.04.2022. The same has the effect of
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correcting the error made by the AO in granting less than seven days to the
assessee to file reply, bringing it in conformity with the statute. This we say
so, because while granting the initial time to the assessee to file the reply,
i.e., till 28.03.2022, the AO has made an arithmetical error, i.e., he took into
consideration the date of issuing the notice, i.e. 22.03.2022 while calculating
the seven days period. It is the case of the Revenue that the AO noticed this
mistake, and by way of the corrigenda attempted to correct the same. When
the AO is not precluded from withdrawing the notice dated 22.03.2022 and
issuing a fresh notice within the limitation period of 31.03.2022, thereby
granting time of not less than seven days to file the reply, he would also
have the power to correct his mistake by way of a corrigendum, as long as
such corrigendum is issued within the period of limitation period, thus has
the effect of correcting the error in the notice dated 22.03.2022.
51. In view of our above conclusion, the plea of Mr. Jain that the order
under Section 148A(d) and notice under Section 148 have been passed and
issued beyond three years, PCCIT/CCIT are competent to take decision to
issue notice would not survive as the PCIT and CIT are competent to issue
notice within three years, which has been done in this case.
52. Insofar as the judgments relied upon by Mr. Jain are concerned, in
Nidhi Bindal (supra), the facts are the writ petition was filed challenging
the notice dated 19.03.2022 issued under Section 148A(b) of the Act; order
dated 30.03.2022 passed under Section 148A(d) of the Act and the
impugned notice dated 30.03.2022 issued under Section 148 of the Act by
respondent no.1 for the AY 2015-16. The case of the petitioner therein was
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that the notice dated 19.03.2022 was in contravention of Section 148A(b) of
the Act as it required the petitioner to file reply by 25.03.2022 i.e. within six
days despite the fact that Section 148A(b) mandatorily directs the
respondents to give a minimum time of seven days to the assessee to file its
reply. There is no dispute that the petitioner therein had filed reply on merits
on, 29.03.2022, prior to the passing of the order by the respondents. The
petitioner contended that the impugned order had been passed without
considering the reply dated 29.03.2022 and voluminous documents and
evidences filed by the petitioner in response to the show cause notice dated
19.03.2022. Though, this Court had observed that the period granted to file
reply to notice under Section 148A(b), the respondents had failed to fulfill
the criteria of not less than seven days but the Court had, by noting the fact
that the impugned order under Section 148A(d) had been passed after receipt
of the reply of the petitioner held that the AO should have considered the
reply as the same was available on record. It held that by not considering the
reply of the petitioner dated 29.03.2022, the mandate of Section 148A(c) of
the Act had been violated as it casts a duty on the AO by using the
expression ‘shall’ to consider the reply of the petitioner/assessee in response
to the notice under Section 148A(b) before making an order under Section
148A(d). It was under these circumstances that the Court had set aside the
impugned order under Section 148A(d) of the Act and the notice under
Section 148 of the Act dated 30.03.2022. In that sense, the notice issued
under Section 148A(b) of the Act was not interfered with. Hence, the said
judgment is clearly distinguishable in the facts.
53. Similar is the position in the case of Hardev Singh (supra) wherein
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the Court has set aside the order passed under Section 148A(d) of the Act by
directing the AO to consider the reply dated 24.03.2022 filed by the
petitioner therein.
54. Insofar as the judgment in the case of Sri Venkateshwar Tradex Pvt.
Ltd. (supra) is concerned, the petitioner therein was issued a notice dated
05.03.2023 under Section 148A(b) of the Act with regard to the bogus
purchases allegedly made by it from two suppliers. The record shows that
the petitioner was called upon to file reply on or before 16.03.2023. That
apart, another notice dated 27.03.2023 was issued under Section 148A(b) of
the Act whereby the petitioner was called upon to file reply on or before
29.03.2023. It is not in dispute that the petitioner had filed responses to both
the notices on 16.03.2023 and 13.03.2023. The AO went on to pass an order
under Section 148A(d) of the Act on 31.03.2023. In paragraph 11.1, this
Court had held that the minimum statutory time frame provided under the
provisions of Section 148A(b) of the Act of filing response is not less than
seven days, which in that case, was not clearly provided to the petitioner, the
Court held that the statute as indicated above provides a specific time frame
and therefore, that leeway would have to be granted to the assessee. In any
case, we note that the Court had set aside the notice dated 31.03.2023 passed
under Section 148A(d) of the Act.
55. The said judgments are clearly distinguishable inasmuch as in the
present case, the respondents issued two corrigenda dated 31.03.2022 and
01.04.2022, extending the time period to file reply to notice under Section
148A(b) of the Act till 02.04.2022. The corrigenda read as under:-
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56. No doubt, the corrigendum dated 01.04.2022 was issued beyond
limitation but the first corrigendum having been issued on 31.03.2022,
which aspect has not been denied/contested by the petitioner, surely, the
infirmity which was there in terms of the notice dated 22.03.2022 in as much
as time to file reply beyond seven days till 02.04.2022 was granted. Surely,
the same would be valid and in any case, no prayer challenging the
corrigendum has been made in the writ petition. Hence, the issue must be
proceeded on the premise that the corrigendum issued on 31.03.2022 is
valid.
57. Insofar as the reliance by the petitioners in the cases of Lionbridge
Technologies (Supra) and Vijay Television Pvt. Ltd. (Supra) is concerned,
the facts in the cases are entirely different from the facts of the present case
inasmuch as the corrigenda in the said cases were issued beyond the
limitation period and even on merits, were held to be defective. In fact, in
Lionbridge Technologies (Supra), the Court observed that the Madras High
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beyond the period of limitation is defective and as such ineffective. Needless
to state, such is not the case here.
58. One of the issues raised by Mr. Jain is that the Jurisdictional
Assessing Officer (“JAO”) could not have issued notice but it should be
Faceless Assessing Officer (“FAO”), who is competent to issue the notice.
Suffice to state that this Court in the case of TKS Builders Pvt. Ltd. v.
Income Tax Officer Ward 25 (3) New Delhi, 2024:DHC:8330-DB has
clearly held that both the officers shall be competent to issue notice. Though
the said judgment is pending consideration before the Supreme Court, the
same has not been stayed. Hence, for parity of reasons, we must hold that
the JAO is competent to issue the notice. This plea of Mr. Jain is also
rejected.
59. Even on the merit of the notice, the submission of Mr. Jain can be
summed up as under:-
(i) For the AY 2018-19, the petitioner was living in Dubai and was
not bound to file his ITR and the petitioner qualified as a non-
resident as per Section 2(3) read with Section 6(1) of the Act, and
stayed in India for less than 60 days in the FY 2017-18.
(ii) The amounts transferred by the petitioner from the PNB account to
his BOI – NRE account and the interest received upon the same
were below the maximum amount, not chargeable to tax as per the
provisions of the Act. For the AY 2018-19, the threshold for
taxability was Rs.2,50,000/-. Since the petitioner had duly
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explained the amounts received by him in the nature of foreign
remittance, interest income, time deposits by way of supporting
documents, the total receipts of the petitioner were only amount to
Rs.62,340/-, which is below the amount chargeable to tax.
(iii) Even the interest which accrued on the time deposits in the NRE
account are exempt from tax as per Section 10(4)(ii)/Section
10(15)(fa) of the Act.
(iv) The petitioner explained the nature and source of all amounts and
furnished bank statements, tax credit statements in form no. 26AS,
schedule of total income, copies of the passport and resident
permit of UAE, bank accounts of the petitioner and his father etc.
(v) Similar proceedings were initiated for the father and mother of the
petitioner and in both their cases, their replies were accepted by
their JAO, not proposing initiating of the assessment proceedings
therein.
(vi) Based on the same, it is stated that once a transaction is accepted in
the hands of one co-owner, adverse inference cannot be drawn in
respect of the same transaction in the hands of another co-owner.
(vii) The reply of the petitioner to the show cause notice under Section
148A(b) dated 26.03.2022 was not considered and was
mechanically rejected. Even the supporting documents were not
taken into consideration and the objections raised by the assessee
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vide his letter dated 22.05.2022 were not disposed of by the
respondents.
(viii) In the absence of any escapement of income in the hands of the
assessee and lack of reasons to believe. The AO cannot resort to
the provisions of Section 147/148.
(ix) No enquiries under Section 148A(a) were conducted and the
respondent no.1 has already made up his mind with regard to
escapement of income by the petitioner. The notice is issued with a
premeditation.
(x) Pursuant to the notice under Section 142(1), the respondent
directed the petitioner to furnish information also on the issues
which have no connection to the information on which the
impugned re-assessment proceedings are initiated.
60. On the other hand, the submission of Mr. Vipul Agrawal can be
summed up as under:-
(i) The re-assessment proceedings in the assessee’s case were initiated
in April, 2022, against which the petitioner approached this Court
in March, 2023, that is after a huge delay.
(ii) The reassessment proceedings in the case of the assessee are based
on the information that the assessee has received a huge amount of
foreign remittance, interest income and time deposits to the tune of
Rs. 9,28,66,191/-. Despite the same, he failed to file the ITR for
the AY 2018-19.
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(iii) As the information was provided in the notice under Section
148A(b) of the Act and same fell within Explanation 1(i) of
Section 148 of the Act.
(iv) The assessee was asked to provide specific details and documents
with his reply to the show cause notice, which he has not
submitted.
(v) As per the assessee, he received Rs.8,50,00,000/- from his father in
his BOI account. As per the department, he created an FD
amounting to Rs.9,11,07,929/-. However, as per the assessee’s
reply, he created 10 FDs of Rs.8,50,00,000/- each totalling to
Rs.8,50,00,000/- and created another FD of Rs. 4,25,000/- out of
the sum transferred from the PNB account. Upon this, an interest
of Rs.56,82,929/- accrued. The assessee did not furnish any
supporting documents in this respect.
(vi) Even the bank account statements submitted by the petitioner did
not mention the entry of Rs.56,82,929/-.
(vii) Without requisite documentation, the department cannot ascertain
and verify the petitioner’s justifications. It is not possible to
determine whether the transactions served as the foundation for
proceedings under Section 148A of the Act.
(viii) The argument of the petitioner being an NRI is also not tenable as
no supporting documents have been provided to verify the same.
The permission of the RBI under Section 2(w) of FEMA,1999 has
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not been furnished by the assessee to claim exemptions as per
Section 10(4)(ii) of the Act.
(ix) Upon perusal of the documents submitted by the assessee, there
appears to be some inconsistency. The deposits made by him did
not appear to be continuous.
(x) The passport enclosed by the petitioner along with his reply to the
show cause notice would reveal that the petitioner travelled to
India in FY 2017-18. In view of the same, whether or not the
conditions of Section 2(w) are met would have to be examined
during the re-assessment proceedings.
(xi) The notice under Section 148A(b) is well within the jurisdiction.
Even the approval of the competent authority was taken and the
assessee was provided with an opportunity of being heard under
Section 148A(c) of the Act.
(xii) The memorandum to the Finance Bill of 2023 clarified the
intention of the legislature to introduce an amendment to Section
151, with regard to the proviso to Section 149.
(xiii) The petitioner contended through rejoinder submissions that the
amount of Rs.8,50,00,000/- was received from the father as a gift.
However, no such plea was taken in the reply to the show cause
notice dated 26.03.2022. More so, no documents have been
enclosed to explain the same.
61. From the above, it is noted, the attempt of Mr. Jain is to challenge the
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notice issued under Section 148 to contend that no income has escaped
assessment as the three amounts have been validly explained. His case is
that the income generated is not liable to be taxed in India and even interest
that has accrued over a period of time is exempted under the provisions of
law.
62. On the other hand, the submission of Mr. Vipul Agrawal is only that
the petitioner has not produced sufficient documentary evidence in support
of his stand. He has gone to the extent of stating that the petitioner has also
not produced the permission from the Reserve Bank of India for maintaining
the NRE account. In other words, it is his submission that the petitioner is
required to satisfy the AO that the amount, which is purported to have
escaped assessment is not taxable in India.
63. The amount of Rs.8,50,00,000/- is said to have come by way of a gift
from the father of the petitioner and deposited in the BOI NRE account. One
of the submissions of Mr. Jain is primarily by relying upon the reassessment
proceedings initiated against the father and the mother of the petitioner
wherein the similar explanation has been given by the father Sh. Brijesh
Jain, and the reassessment proceedings have been closed based on the said
explanation. Hence, in that sense, the issue has been explained by the father
and the matter having been closed, no further action can be taken.
64. The issue primarily relates to three amounts of Rs.3,75,000/-,
Rs.4,90,000/- and Rs.9,11,07,929/-. The justification given by the petitioner
on these three amounts are as follows:-
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i. The amount of Rs.3,75,000/- is an inter-bank transfer entry received
in SB NRE account from the funds lying in PNB savings account
belonging to the petitioner.
ii. The amount of Rs.4,90,000/- is also an inter-bank transfer entry
received in SB NRE account from PNB savings account of the
petitioner.
iii. Insofar as amount of Rs.9,11,07,929/- is concerned, it has two
components i.e. (a) FDR of Rs.8,50,00,000/- received from
petitioner’s father Brijesh Jain (NRI) in the SB NRE account of the
petitioner and the interest accrued thereon.
65. It is important to note that the amount of Rs.8,50,00,000/- has been
deposited by the petitioner by way of 10 FD’s of Rs.85,00,000/- each in
NRE account. The opening of the account ought to be pursuant to the
permission granted by the Reserve Bank of India (RBI) in terms of Section
10(4)(ii) / Section 10(15)(fa) of the Act. The issue whether the necessary
permissions were obtained from the RBI for the petitioner to open an NRE
account in BOI would decide the aspect of reassessment of the income
which has been initiated by the respondents.
66. The petitioner has not produced before us any such permission
granted by the RBI. Such permission becomes relevant as if the amount has
been deposited without such permission by the RBI, consequences must
follow.
67. Insofar as the other two amounts are concerned, since those are
relatively small amounts of Rs.3,75,000/- and Rs.4,90,000/- transferred
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intra-bank by the petitioner from his own PNB account to BOI NRE
accounts, no interference with the same is called for.
68. The issue with regard to Rs.8,50,00,000/- being received as a gift also
becomes relevant as no such stand has been taken by the petitioner in this
petition. It is only at the stage of the additional submissions that such a plea
has been taken. So, it follows that the petitioner shall be within his right to
explain to the AO, the amounts having come from his father and deposited
in the NRE account, which has been opened pursuant to the permission
granted by the RBI. To that extent, we can say that no such document and
other relevant documents have been produced before us to show whether the
NRE account has been opened with the permission of the RBI.
69. We find it apposite to highlight the observations of this Court in the
case of AGR Investment Limited v. ACIT, 2011:DHC:111-DB in paragraph
23 has observed as under:-
“23. In the case at hand, as we find, the petitioner is
desirous of an adjudication by the writ court with regard to
the merits of the controversy. In fact, the petitioner requires
this Court to adjudge the sufficiency of the material and to
make a roving enquiry that the initiation of proceedings
under Sections 147 and 148 of the Act is not tenable. The
same does not come within the ambit and sweep of exercise
of power under Article 226 of the Constitution of India. It is
open to the assessee to participate in the reassessment
proceedings and put forth its stand and stance in detail to
satisfy the assessing officer that there was no escapement of
taxable income. We may hasten to clarify that any
observation made in this order shall not work to the
detriment of the plea put forth by the assessee during the
reassessment proceedings.”
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70. Hence, appropriate shall be that these aspects shall be looked into by
the AO and to that extent, surely, this Court would not act as an AO and call
for such documents which otherwise can be done by the AO who can satisfy
himself that the necessary permission and documents exist.
71. Though, many judgments have been referred to by Mr. Jain, in view
of the facts of this case and also the conclusion drawn above, the same need
not be gone into. We are of the view that no interference is called for with
the reassessment order and the same is within limitation. It is for the AO to
satisfy himself whether the petitioner has produced all the documents during
the proceedings, including the aspect whether the amounts have accrued in
India and whether the same are exempted from tax.
72. It follows that, the challenge to the reassessment proceedings initiated
vide order / notice dated 07.04.2022 in respect of AY 2018-19 must fail. We
dismiss the petition. Liberty shall be with the petitioner to urge all these
submissions as noted above before the AO.
V. KAMESWAR RAO, J
VINOD KUMAR, J
APRIL 13, 2026/RT
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