Krishnareddy Venkatesan Vs ITO (Madras High Court)
The petitioner received a notice dated 21.03.2022 under Section 148A(b) of the Income Tax Act, 1961, alleging that during the financial year 2014–2015 (assessment year 2015–2016), cash deposits of ₹25,90,000 and a time deposit of ₹27,00,614 were made. In response, the petitioner submitted that the cash deposits of ₹25,90,000 were used to create the fixed deposit of ₹27,00,614. On this basis, it was contended that the threshold of ₹50,00,000 was not crossed and, therefore, the notice was barred by limitation under Section 149(2)(v) of the Act, which prescribes a three-year limit.
The petitioner also furnished the bank statement for the relevant period to substantiate the claim. However, in the impugned order under Section 148A(d), the assessing officer rejected the explanation, stating that the details of the bank statement and related records required verification. On that basis, it was concluded that income in the form of assets exceeding ₹50,00,000 had escaped assessment.
Before the Court, the petitioner argued that despite submission of the bank statement, the assessing officer erroneously recorded that verification was still required and failed to examine whether the cash deposits were actually used to create the fixed deposit. The revenue contended that the burden was on the assessee to establish that the escaped income was below ₹50,00,000 and argued that both the cash deposit and the time deposit qualified as assets that could be aggregated.
