Asamsreenivasa Reddy, vs The Income Tax Officer,
2022 Latest Caselaw 6680 AP

           HON'BLE SRI JUSTICE C.PRAVEEN KUMAR

                                AND

          HON'BLE SRI JUSTICE A.V. RAVINDRA BABU


              WRIT PETITION NO. 19139 OF 2022

ORDER: (Per Hon'ble Sri Justice C. Praveen Kumar)


1.        Assailing the Order made under Clause (d) of Section

148A of Income Tax Act, 1961 ['the Act'], wherein the

Authority on coming to the conclusion that, income

chargeable to tax, which is in the form of an asset, is likely

to amount to Rs.50,00,000/- or more, which escaped the

assessment, leading to issuance of notice under Section

148 of the Act, the present Writ Petition is filed.


2.        The facts, in issue, are as under:


     i.   The Petitioner herein is involved in business of Fish

          farming. Basing on the information received under

          the category of 'NMS Module of insight portal' and as

          no declaration was filed for the assessment year

          2015-2016, the Petitioner's case was taken up by the

          first Respondent under Section 148A(a) of the Act.

ii. A Notice came to be issued under Section 148A(b) of

the Act, on 20.03.2022 i.e., before the end of the

period of six [06] years from the end of the relevant

assessment year, to which the Petitioner is said to

have submitted an explanation under Section

148A(c) of the Act, on 21.03.2022. Taking into

consideration the explanation submitted by the

Petitioner, the Authorities felt that it is a fit case for

issuance of notice under Section 148 of the Act, for

the assessment year 2015-2016. This Order is

sought to be challenged in the present Writ Petition,

on various grounds.

3. (i) The learned Counsel for the Petitioner mainly

submits that, the primary condition under Section 149 of

the Act, to issue a notice is not satisfied, as the Assessing

Officer was not in possession of books of account or other

documents to find out the income chargeable to tax,

escaped the assessment amounts or that the amount is

likely to cross Rs.50,00,000/-.

(ii) It is further stated that, as per Section 148A(b) and

(d) of the Act, the expression "shall verify" mandates proper

verification by the Assessing Officer of the information

collected through sources, such as Central Information

Branch ['CIB'] and Annual Information Return ['AIR'], and

that the Revenue should not treat verification procedure as

an empty formality, more so, having regard to the

instructions issued by CBDT, dated 22.08.2022.

(iii) The Counsel also submits that, when the Petitioner

has raised objection under Section 148A(c) of the Act, in

his reply, dated 21.03.2022, it is the duty of the first

Respondent to properly verify the same and even the

second Respondent cannot mechanically grant approval.

In-fact, it is stated that, instructions were given by CBDT,

directing their Officers to consider the Assessee's reply

objectively before adjudicating the same. The learned

Counsel would contend that, none of these procedural

aspects were dealt with by the Authority while dealing with

the same.

(iv) Even on merits, the learned Counsel would contend

that, the information received by the Department under

two heads i.e., AIR and CIB show that the Petitioner has

deposited Rs.25,00,000/- and Rs.26,00,000/- respectively,

into the same bank account, which is Andhra Bank, is far

from truth and without any basis. According to him, the

amount under AIR takes within its fold the amount covered

under the head CIB. In other words, his plea appears to be

that the same amount is shown twice under two different

heads vide two different annual returns, which escalated

the amount carrying to Rs.51,00,000/-. In-fact, the

Authorities ought to have given an opportunity to explain

this contingency before passing the impugned order. It is

stated that along with the explanation, the Petitioner filed

the bank accounts showing that he has deposited only

Rs.26,00,000/- into his bank account and that he has only

one bank account in Andhra Bank at Kaikaluru. According

to him, things would have been different if the AIR

disclosed the bank account number, which would have

enabled the Petitioner to explain the same.

(v) The notice given also does not indicate the Branch of

the Andhra Bank, where the Petitioner is alleged to have

deposited Rs.26,00,000/-, and since no account number is

given, he pleads that the argument of the Petitioner cannot

be found fault with, at this stage.

(vi) The learned Counsel took us through the provisions

of the Act, to show that the Order under challenge is illegal

and that the Petitioner cannot be forced to undergo further

process, though, the counter filed by the Respondent

would show that, the Petitioner would be having number of

more opportunities to explain his stand.

4. On the other hand, Ms. M. Kiranmayee, learned

Standing Counsel appearing for Respondents, would

contend that, since the proceedings are not concluded and

that the Petitioner would be getting more number of

opportunities to explain his stand, it may not be proper to

curtail further proceedings, at this stage. Since, the

assessment is not yet made, no prejudice is caused if the

Petitioner is put to filing of assessment for the assessment

year 2015-2016, in which proceedings he can explain his

stand.

5. The counter filed by the Department also states that

the Court has to see whether any prima facie material is

available, on the basis of which, the Department could

reopen the case and that the sufficiency and the

correctness of the material is not a thing to be considered,

at this stage. Since, the procedure as contemplated under

Sections 147 and 148 are not violated and that the notice

under Section 148 is not a final proceeding, it is stated

that, the Petitioner has not made out any case seeking

interference by this Court.

6. The point that arises for consideration is, whether the

Order passed under Clause (d) of Section 148A warrants

interference?

7. As seen from the record, a notice under Clause (d) of

Section 148A of the Act was issued to the Petitioner basing

on the information that the income chargeable to tax for

the assessment year 2015-2016 has escaped assessment

within the meaning of Section 147 of the Act. Hence, a

notice was issued on 20.03.2022 calling upon the

Petitioner to explain with supporting documents on or

before 29.03.2022.

8. The notice issued under Clause (b) of Section 148A of

the Act, also contains an annexure, which states that, "as

per NMS module of insight portal for assessment year

2015-2016, it was noticed that the case of the Petitioner

was identified as Non-filer with potential tax liabilities".

The annexure also indicate that, the source of information

for CIB-410 is Andhra Bank, Kaikalur, wherein an amount

of Rs.25,00,000/- was deposited in six transactions, while

for AIR-001, the source of information was Andhra Bank,

where more than Rs. 10,00,000/- was deposited under one

account totalling to Rs.26,00,000/-. Adding both the

transactions, the Petitioner was asked to show cause the

deposit of Rs.51,00,000/-.

9. An explanation was submitted by the Petitioner on

21.03.2022 enclosing the statement of Andhra Bank,

Kaikaluru Branch, which shows that the Petitioner is

having only one savings bank account in Andhra Bank,

Kaikaluru Branch, and the amount of cash deposits for the

year is about Rs.26,00,000/-. In the explanation, the

Petitioner denied depositing cash of Rs.10,00,000/- or

more in a savings bank account. It was further stated that,

the Petitioner never had another bank account in Andhra

Bank, Kaikaluru Branch or any other bank except State

Bank of Hyderabad at Kaikaluru Branch.

10. Section 148A(b) and (d) of the Act, specifically

contemplate that the expression "shall verify" should carry

some meaning, namely, that the information collected

through source such as CIB and AIR should be verified by

the authority before issuing of notice under Clause (b) of

Section 148 of the Act. Further, when a objection is raised

by the Petitioner under Clause (c) of Section 14A of the Act,

it was the duty of the Respondent to at-least verify the

error committed by them in not disclosing the branch of

the bank where an amount of Rs. 26,00,000/- have been

deposited, more so, when the case of the Petitioner is that

he is having only one account in Andhra Bank at

Kaikaluru. Therefore, the argument of the learned Counsel

for the Petitioner that the bank has reported the same

transactions twice under two different heads through two

different AIR, cannot be brushed aside, at this stage, more

so, when the statement of account of Andhra Bank,

Kaikaluru, was enclosed along with the notice.

11. It may be true that, the Petitioner would be having

number of opportunities to explain his stand in the

proceedings to be initiated under Section 148 of the Act,

i.e., after filing of the assessment, but the argument of the

learned Counsel for the Petitioner that the Petitioner could

not be put to such a ordeal, at this stage, more so, when

the Order came to be passed without verifying the records,

cannot also be brushed aside.

12. As stated earlier, a perusal of the explanation and the

material would show that the Petitioner is only having one

bank account in Andhra Branch at Kaikaluru Branch. To

prove that, he had an another account at Kaikaluru

Branch, in which he has deposited Rs.26,00,000/-, is

practically impossible for him to prove. A negative fact

cannot be proved. On the other hand, if there is material to

show that the Petitioner had another bank account, it

would be useful for the Respondent to verify the same and

place material in support of it. Apart from that, the AIR

does not mention the bank account number or the branch

of the Andhra Bank in the show cause notice. In such an

event, it would be difficult for the Petitioner to explain the

deposit of Rs.26,00,000/-.

13. As stated earlier, it is practically impossible to

explain a fact, which according to the Petitioner is not in

existence. Had any information was given to the Petitioner

about the existence of another bank account either in

Kaikaluru Branch or any other branch of Andhra Bank

[Union Bank] with the account number, it can be said that

the Petitioner was given an opportunity to explain a fact,

which is against him and which could be made the basis to

issue notice under Section 148. This issue is fortified by

the fact that, in respect of information furnished under

CIB, the Petitioner was able to explain the deposits made

in the assessment year 2015-16, which tallied with the

figures mentioned in the notice.

14. Having regard to the above and the judgment of the

Hon'ble Supreme Court relied upon, the Order under

challenge is set-aside and the matter is remanded back to

the first Respondent with a direction that a fresh notice be

given, disclosing the details of the second bank account if

any with Andhra Bank or in any branch of Andhra Bank,

where cash deposits are made within a period of one week

or 10 days from the date of receipt of the Order, fixing a

time limit for reply and, thereafter, proceed further in

accordance with law. It is needless to mention that an

opportunity of hearing be given, if requested.

15. With the above direction, the Writ Petition is

disposed of. No order as to costs.

16. As a sequel, interlocutory applications, if any,

pending shall stand closed.

_________________________ C. PRAVEEN KUMAR, J

_________________________ A.V. RAVINDRA BABU, J Date: 12.09.2022 SM...

HON'BLE SRI JUSTICE C.PRAVEEN KUMAR

AND

HON'BLE SRI JUSTICE A.V. RAVINDRA BABU

WRIT PETITION NO. 19139 OF 2022 (Per Hon'ble Sri Justice C. Praveen Kumar)

Date: 12.09.2022

SM