Monetary Limit of Rs. 50 Lakhs not applicable to Notice u/s 148 unless Time Barred: Delhi HC dismisses Writ Petition by Assessee [Read Order]

In a recent decision of a Division Bench of the Delhi HIgh Court, it was held in favour of the Income Tax Department that, a notice served to the assessee under Section 148 of the Income Tax Act, 1961 need not meet the monetary requirement of Rs. 50 Lakhs if the issuance of notice was done within the prescribed time and the writ petition filed by assessee was dismissed.

The petitioner-assessee, M/s Ester Industries Ltd. contended that the monetary requirement for reopening assessment is Rs.50 lakhs which is not fulfilled in the present matter as the amount sought to be added in the income of the Petitioner is only Rs.34,62,830/-.

It was also stated by the assessee that the entire sales and records had been already verified and accepted in the original scrutiny assessment and that sale proceeds of goods sold by the assessee and monies received for the purpose from the buyer through RTGS in the bank cannot be regarded as unexplained cash credit under Section 68 of the Income Tax Act,1961 as the same had been offered to tax.

The Bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that the monetary limit of Rs. 50 Lakhs to  reopen the assessment is not applicable in this case as the notice cannot be considered to be time barred. In regard to the allegedly bogus sale proceeds and monies received, the court observed that the sale would be treated as unexplained cash credit under Section 68 of the Income Tax Act,1961 and the full value would be liable to tax.

Saving the liberty to raise all the contentions and submissions of the assessee before the Assessing Officer, the writ petition filed was dismissed upholding the view that, the notice was not time barred and the limit of Rs. 50 Lakhs was not applicable in this regard. Regarding the alleged transaction, it was held that “This Court is of the view that the issue whether the transaction was executed by the Petitioner with Nitin Trading Company, a proprietorship of Mr. Aman Bhalla or Mr. Dev Narayan, cannot be adjudicated upon in writ proceedings and that too, when the assessment proceedings are pending.”

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