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  • The Rajasthan High Court with a bench of Justice Manindra Mohan Shrivastav and Justice Shubha Mehta held before the court that any material evidence is required to prove that the income exceeding 50,00,000 chargeable to tax has been escaped from assessment. Since that evidence could not be brought to light, the warrant under section 148A cannot be brought into action.
  • The HC held that authority is required to satisfy that income chargeable to tax, has escaped the assessment. But in cases where three years have elapsed from the end of the relevant assessment year, the order under Section 148A for issuance of notice could be passed only if there were no statutory impediment as contained in Section 149(1)(b) of the Income Tax Act.
  • A case was filed claiming that the respondent had not disclosed an income of approx. 52,00,000.
  • This would fall under the meaning of section 147implying that income chargeable to tax for the assessment year 2015-2016 had escaped. 
  • The notice was sent along with the details of the cash deposits in the account of the respondent, maintained with the Corporation Bank.
  • The notice stated that the respondent did not disclose the amount of cash deposit during the relevant financial year and, therefore, on that basis, the proceedings are required to be initiated.
  • Replying to the said notice, the respondent stated that the initiation of proceedings on the basis that the cash deposits during the relevant financial year are Rs.52,75,000/- is factually incorrect and according to the respondent, the total amount of cash deposit in his bank account in the Corporation Bank was only Rs.19,39,000.
  • The competent authority, however, proceeded to pass an order for issuance of notice under Section 148.
  • To initiate proceedings under Section 148 of the Act, the law requires the authority to first arrive at satisfaction after holding an enquiry in terms of provisions contained in Section 148A.
  • Learned counsel for the rsepondent vehemently contended that the entire material, which has been collected by the authority, does not contain any material to even remotely suggest that the total income which according to them escaped assessment is more than Rs.50,00,000/-
  • Only on conjecture that the respondent may have some more bank accounts.
  • Therefore, warrant of issuance under section 148 was quashed. 
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