Case Note & Summary
The petitioner, Yashoda Shivappa Nagangoudar, received a notice dated 16 March 2019 under Section 148 of the Income Tax Act, 1961 for the assessment year 2012-13, on the ground that income chargeable to tax had escaped assessment. The reasons recorded indicated that the petitioner had deposited Rs.13,40,000 in cash during the financial year 2011-12, and had not filed a return of income. The petitioner filed objections on 10 October 2019, explaining that the bank (Dena Bank) had made a factual mistake in reporting the transactions. The petitioner stated that only Rs.18,000 was deposited in cash, and the figure of Rs.13,40,000 was actually the amount of cash withdrawn, erroneously reported as cash deposit in the AIR/CIB. The petitioner attached a copy of the bank statement and a letter to the bank seeking rectification. The court examined the bank statement and found that it did not show any cash deposit of Rs.13,40,000; it only showed cash deposits of Rs.18,000. The court noted that the respondents did not dispute the bank statement. The court held that the reopening was based on incorrect material facts and therefore the notice under Section 148 was not valid. The court quashed the notice and the impugned order disposing of the objections. The petition was allowed.
Headnote
A) Income Tax - Reopening of Assessment - Section 147, Income Tax Act, 1961 - Reopening based on incorrect information - The Assessing Officer issued notice under Section 148 based on information that the petitioner deposited Rs.13,40,000 in cash, but the bank statement showed only Rs.18,000 cash deposit and the larger amount was actually a withdrawal. The court held that reopening on incorrect material is not valid and quashed the notice. (Paras 1-4)
Issue of Consideration
Whether the reopening of assessment under Section 147 of the Income Tax Act, 1961 based on incorrect information regarding cash deposit is valid.
Final Decision
The court quashed the notice under Section 148 dated 16 March 2019 and the impugned order disposing of objections. The petition was allowed.
Law Points
- Reopening of assessment under Section 147 based on incorrect information is not valid
- Assessee must be given opportunity to show that information is erroneous
- Bank statement can be relied upon to contradict AIR/CIB data
