Excel Sheet Found During Income Tax Search at Builder’s Premises Indicating Cash Transaction Sufficient to Initiate Reassessment: Delhi HC [Read Order]

In a recent ruling, the Delhi High Court held that an Excel sheet recovered during an income tax search at a builder’s premises indicating a cash transaction in the name of a taxpayer is sufficient material to initiate reassessment proceedings under Section 148 of the Income Tax Act, 1961.

Veena Arora, the petitioner filed a writ petition challenging a notice which sought to reopen her assessment for the relevant assessment year based on material recovered during a search conducted at the premises of Bhutani Infra Group and Associates.

The petitioner argued that the reassessment notice was arbitrary and without any basis. Referring to the annexure attached to the notice, her counsel argued that except for an Excel sheet recovered from the builder’s premises, which mentioned the petitioner’s name along with a cash transaction of ₹7,97,991, there was no other incriminating material against her.

During the hearing, the petitioner’s counsel admitted that she had purchased a flat from Bhutani Infra Group. They argued that merely purchasing a flat from the said builder could not justify initiation of reassessment proceedings unless the assessing officer was able to establish a clear link between her and the alleged cash transaction mentioned in the Excel sheet.

After hearing the petitioner, the Division Bench comprising Justice Dinesh Mehta and Justice Vinod Kumar observed that the material relied upon by the assessing officer was sufficient to infer escapement of income for the relevant assessment year.

The court observed that after the amendment to Section 148 with effect from 1 April 2021, the provision does not even require recording of “reason to believe,” much less possession of conclusive evidence, at the stage of issuing a reassessment notice.

The court explained that it would be open to the petitioner to satisfy the assessing authority that the basis of the notice was erroneous or that she had no connection with the amount reflected in the Excel sheet recovered from the builder’s premises. The court pointed out such issues could be examined during the reassessment proceedings.

The court held that the notice under Section 148 could not be said to be without jurisdiction or void. The writ petition was dismissed.

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