Can Cash deposited above 10 lacs in saving bank account be the reasons for opening the case u/s 148 ...? Is notice issued u/s 148 valid..? Please provide me case law if any on this issue.
Shivprasad Lohiya (123) (30 Points)
02 July 2016Can Cash deposited above 10 lacs in saving bank account be the reasons for opening the case u/s 148 ...? Is notice issued u/s 148 valid..? Please provide me case law if any on this issue.
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(161231 Points)
Replied 09 July 2016
It can be one of the reasons. Usually AO gets solid informations from other sources (under scrutiny with him/department) to reopen the case u/s. 148. The reason of reopening can be obtained from AO in writing, after submition of all required details.
CA. KAPIL MITTAL
(Partner)
(68 Points)
Replied 10 July 2016
Pl. refer Section 68 / 69A/ 69B of Income Tax act, 1961. If the cash credit in bank account of Rs. 10 Lacs remains unexplained in terms of said section it is deemed as income. Now if AO finds in your case that 10 Lacs had been deposited in your bank account in cash, he can seek the source and nature of such cash credit. If the same if in respect of earlier years, the notice u/s 148 can be issued within time gap stated in Sec 149 and following approval prescribed thereunder.
Shivprasad Lohiya
(123)
(30 Points)
Replied 10 July 2016
Thank you Rambhia and Mittal sir.
I am referring case law of Bir Bahadur Singh Sijwali vs ITO for the above case. Yes, A/O can issue notice u/s 148 if he has strong reason to belief on his part. But mere suspicion or deposit made in bank account do not constitute an income which has escaped assessment.
CA. KAPIL MITTAL
(Partner)
(68 Points)
Replied 10 July 2016
Mr. Lohiya, Very well said.... your reasoning is very clear correct and the notice u/s 148 can be issued only where there are "reasons to believe" which is already enshrined in the act itself but there is nothing which is "Strong". Further, as already stated bank deposits in a cash generally get transmitted through AIR filed by banks and practically A.O. has power to ask the sources and nature of deposit in respect thereof and if there is no such valid explanation, A.O. can further issue notice u/s 148 asking to file correct income tax return and thereafter 147 code is being followed.
CA. KAPIL MITTAL
(Partner)
(68 Points)
Replied 10 July 2016
Mr. Lohiya, Very well said.... your reasoning is very clear correct and the notice u/s 148 can be issued only where there are "reasons to believe" which is already enshrined in the act itself but there is nothing which is "Strong". Further, as already stated bank deposits in a cash generally get transmitted through AIR filed by banks and practically A.O. has power to ask the sources and nature of deposit in respect thereof and if there is no such valid explanation, A.O. can further issue notice u/s 148 asking to file correct income tax return and thereafter 147 code is being followed.
CA. KAPIL MITTAL
(Partner)
(68 Points)
Replied 10 July 2016
Mr. Lohiya, Very well said.... your reasoning is very clear correct and the notice u/s 148 can be issued only where there are "reasons to believe" which is already enshrined in the act itself but there is nothing which is "Strong". Further, as already stated bank deposits in a cash generally get transmitted through AIR filed by banks and practically A.O. has power to ask the sources and nature of deposit in respect thereof and if there is no such valid explanation, A.O. can further issue notice u/s 148 asking to file correct income tax return and thereafter 147 code is being followed.
Shivprasad Lohiya
(123)
(30 Points)
Replied 13 July 2016
Thank you Kapil sir for your reply. It has clearly mentioned in the provision regarding issuance of notice u/s 148. There should be reason to believe on the part of A/O. Sources also mentioned the effect of issuance of notice by way of case law. But if assesse e has filed income tax return and A/O issued notice of escapement of income on the basis of cash deposit exceeding Rs.10 lakhs in saving bank account, then can we apply for appeal... And can such notice be quashed. ?
CA. KAPIL MITTAL
(Partner)
(68 Points)
Replied 14 July 2016
Mr. Lohiya... I think you are endorsing same point only.... there should be reasons to believe but the phrase " Strong reasons" as stated by you in last email, is not there. Subsequently if on re-assessment, there is no addition on that partiuclar ground, but on other grounds, still the re-assessment based on said notice u/s 148 will be valid.
In my view, if the saving bank statement was filed earlier in assessment if any and assessee is confident that there is no escapement of income, he can probably challenge the same. But if the saving bank statement was not asked for or no assessment u/s 143 performed earlier, AO can ask for source of cash deposit in assessment by issue of 142(1) notice,which he can do through sec 147 /143(1) and assessee is reqd to reply.
Shivprasad Lohiya
(123)
(30 Points)
Replied 14 July 2016
Thank you kapil sir. As mentioned by you about bank statement, Assessing officer hasn't called information u/s 142(1) or has not issued notice u/s 143. A/O directly issued noticed u/s 148 stating above fact only. So we can reply the same by not accepting the notice.
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