Retired Teacher's Rs 1.33-Crore Deposit Sparks ITAT Ruling on Reassessment Notice Timing

A former Mysore school teacher has been embroiled in a contentious tax dispute after his bank accounts. Which accumulated Rs 1.33 crore, were flagged by the Central Board of Direct Taxes as part of its risk management strategy. The Income Tax Department has initiated reassessment proceedings against him, citing an outstanding ITR for the relevant fiscal year.

Notably, the department's investigation reveals a significant cash influx without corresponding records of income earned during this period.

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Following a series of cash deposits, the department launched an investigation into the senior citizen's unreported income for the 2015-16 fiscal year. The Assessing Officer served the individual with a Section 148 notice. Mandating them to file their tax return within 30 days of receipt.

A cash deposit of Rs 13 lakh in a savings bank account fell within the category of cash deposits of Rs 10 lakh or more. A cash deposit of Rs 60 lakh, also reported under the same category, was another transaction flagged by the department.

Bank interest: Rs 12,701 recorded under "Interest other than Interest on Securities", Section 194A.

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The first notice was issued to the senior citizen under Section 148A(b) on March 26, 2022. However, the Section 148 notice in this case was issued on April 26, 2022, 26 days after the limitation period had ended.

The SMC Bench of the ITAT heard the senior citizen's appeal on April 15, 2026. Later, passed its order in his favour on July 10, 2026. The tribunal quashed the Section 148 notice and the reassessment order passed under Section 147, allowing the assessee's appeal.