Bombay HC Quashes Section 148 Notice for Escaped Income Below ₹50 Lakh

Naresh Balchandrarao Shinde Vs ITO (Bombay High Court)

The Bombay High Court heard a writ petition challenging an order passed under Section 148A(d) of the Income-tax Act, 1961 and the consequential notice issued under Section 148 for Assessment Year 2015-16. The petitioner was issued a notice under Section 148A(b) alleging that income had escaped assessment based on the purchase of an immovable property worth ₹40 lakh and cash deposits of ₹20,71,500 and ₹16,20,000. In response, the petitioner submitted that the property had been purchased by his daughter through a registered sale deed dated 03.02.2015 and that he had merely acted as her special power of attorney holder. He also denied depositing ₹16,20,000 and sought disclosure of the material forming the basis of that allegation. The petitioner contended that after excluding the ₹40 lakh property transaction and the disputed cash deposit, the alleged escaped income was below the ₹50 lakh threshold prescribed under Section 149(1)(b) for issuing a notice beyond three years.

The High Court observed that the registered sale deed produced by the petitioner clearly established that the purchaser of the property was the petitioner’s daughter, who was a separate assessee, and that the petitioner had only acted as her constituted attorney. The Court found that despite the sale deed being placed before the Assessing Officer, it was ignored while passing the order under Section 148A(d), indicating a lack of application of mind. The Court therefore held that the amount of ₹40 lakh relating to the property transaction deserved to be excluded from consideration.