Tribunal quashes reassessment order citing procedural lapses and lack of verification

Nadeem Hasan Versus ITO, Ward 46 (4) New Delhi.

Nadeem Hasan Versus ITO, Ward 46 (4) New Delhi. - TMI Issues Involved:
1. Legality of the order passed by the Ld. CIT(A).
2. Validity of the initiation and completion of proceedings under Section 147 and 144/147 of the Income Tax Act.
3. Incorrect factual premise regarding the filing of the return of income.
4. Non-application of mind by the AO and the Ld. PCIT.
5. Procedure for framing the assessment under Section 144.
6. Addition on account of cash deposit in bank accounts.

Issue-wise Detailed Analysis:

1. Legality of the order passed by the Ld. CIT(A):
The assessee contended that the order of the Ld. CIT(A) was bad in law and against the facts and circumstances of the case. The Tribunal examined the grounds raised by the assessee and found that the Ld. CIT(A) upheld the reopening of assessment and the addition made under Section 69A of the Income Tax Act.

2. Validity of the initiation and completion of proceedings under Section 147 and 144/147 of the Income Tax Act:
The assessment was reopened based on AIR/CIB Information indicating cash deposits of Rs. 28,83,000/- in the assessee's bank account during FY 2010-11. The reassessment was completed under Sections 144/147, treating the amount as unexplained money under Section 69A. The Tribunal noted that the reasons recorded for reopening were undated, and there was no verification of facts by the AO. The AO acted on AIR Information without independently applying his mind, rendering the reassessment proceedings void ab initio.

3. Incorrect factual premise regarding the filing of the return of income:
The AO initiated proceedings on the incorrect premise that the assessee had not filed any return, while the assessee had filed a return on 30.07.2011. The Tribunal found that the AO's assumption was factually wrong, as the return filing was recorded in the ITS dated 10.03.2018. The AO's belief that income had escaped assessment was based on this incorrect fact, invalidating the reopening.

4. Non-application of mind by the AO and the Ld. PCIT:
The Tribunal observed that both the AO and the Ld. PCIT acted mechanically without due application of mind. The reasons recorded by the AO were based solely on AIR Information without verification. The approval granted by the Ld. PCIT was also undated and mechanical. The Tribunal cited several judicial precedents, including PCIT vs. Meenakshi Overseas Pvt. Ltd., to support the view that reassessment without independent application of mind is invalid.

5. Procedure for framing the assessment under Section 144:
The assessee argued that the AO failed to follow the procedure under Section 144. The Tribunal did not specifically address this issue in detail, as it quashed the reassessment on preliminary grounds of jurisdiction.

6. Addition on account of cash deposit in bank accounts:
The AO treated the cash deposits of Rs. 28,83,000/- as unexplained money. The Tribunal noted discrepancies in the AO's reasons, including the incorrect statement that deposits were made only in ICICI Bank, while they were also made in HDFC Bank. The Tribunal found no live link between the material available and the reasons for belief that income had escaped assessment. The reassessment order was quashed, making the issue of addition academic.

Conclusion:
The Tribunal quashed the reassessment order under Sections 144/147, holding it bad in law due to the incorrect factual premise, non-application of mind by the AO and the Ld. PCIT, and procedural lapses. The appeal of the assessee was partly allowed, and other grounds raised were not decided as they became academic.