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2016 (3) TMI 90
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.... and rejecting the same on mere conjectures and surmises and hearsay. Addition beyond reasons : Low household withdrawals reduced to Rs. 55,000 3. That on the facts and in the circumstances of the case and in law, Ld CIT-A erred in not fully deleting part addition sustained of Rs. 58,000 on account of alleged low household withdrawals beyond the scope of reopening and without any cogent material on records. That the appellant craves leave to add, to, amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal. a. That on mere cash deposit without anything more reasons are farmed which is invalid without looking to available ROI/ITR filed on 31/3/2007 with ITO Ward 25(2) New Delhi etc (page 2 of impugned order); b. As evident from pages 5/6 of impugned order Ld AO has simply acted on farfetched information supplied by investigation wing without independent application of mind; c. That affixture service made of jurisdictional notice u/s 148 as apparent and vivid from inspector report on records is patently bad on face of it; (page 6/7 of impugned order)....
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....vide acknowledgement dated 31st March 2007. The ld AR has pointed out that in the binging of the assessment order the AO itself has admitted this fact that the manual return declared an income of Rs. 1,12,030/- was filed on 31st March 2007 with ITO Ward-25(2), New Delhi. Thus the ld AR has submitted that the AO has proceeded under wrong presumption of fact that the assessee has not filed return of income and accordingly proposed to reopen the assessment by issuing a notice u/s 148 on the basis of information received from ITO (Investigation) regarding deposit of cash amounting Rs. 6 lac in the bank account of the assessee. The ld AR has further contended that from the reasons recorded by the AO it does not indicate how a deposit of Rs. 6 lac in the bank account of the assessee can be an income assessable to tax and has escape assessment. The AO has not received any new material or information which was not already with the AO to believe that this amount of Rs. 6 lac is an income of the assessee which has escaped assessment. In order to form the believe there must be direct nexus or link between the material coming to the notice of the AO and formation of the believe that there has ....
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....tion is received by this office from the ITO (Inv), Unit-V(1), New Delhi vide his letter dated 28.03.2013 therein stating that M/s Shalimar Trading Corp. had deposited cash amounting to Rs. 6,00,000/- in Bank A/c No.1819 maintained with Ramgarhia Co-operative Bank Limited, Desh Bandu Gupta Road, Pahar Ganj, New Delhi, the sources of which are not in commensurate with his business activities. Further, sources of cash 'deposited and its utilization is not known and remained unexplained. After perusal of the details received from the ITO (Inv), Unit-V(1), New Delhi, the details of Income tax Return filed by M/s Shalimar Trading Corp. for A.Y. 2006-07 were tried to be taken out from lTD System. However, the same were not found available there. Thus, as per our record, the assessee has not filed any return income for A.Y,2006-07. Therefore, I have reasons to believe that income chargeable to tax amounting to Rs. 6.00.000/- for the F.Y. 2005-06 relevant to A.Y. 2006-07 has escaped assessment and it is a fit case for initiation of proceedings u/s 147 of the Act. Proposal in the prescribed form for the A.Y. 2006-07 (F.Y. 2005-06) is submitted herewith for kind conside....
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....such investigation to ascertain where income assessable to tax has escaped assessment. It is apparent that the reason for reopening was only on information of deposit of cash of Rs. 6 lac in the bank account. Therefore the reason for reopening was for further investigation to find out the source of the cash deposit by the assessee as the AO has not recorded anything that this deposit of cash is from particular source which is not disclosed by the assessee in the books of account or in the return of income. The deposit of cash in the bank account of the assessee does not establish any live nexus between the information and formation of the believe that there was escapement of the income by the assessee. There may be end number of reasons and sources of deposit of cash in the bank which may not constitute the same as income of the assessee and therefore merely deposit of cash in bank itself would not lead to the conclusion or believe that the said amount is assessable income of the assessee and escapement of assessment. In the case in hand there are number of withdrawals and deposits in the bank account of the assessee in question. It is clear from the details of the bank account tha....
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....son records along with the third paragraph, would amount to the Assessing Officer concluding that the difference between the purchase price of the property and income of the assessee in that year was the reason for which reassessment notice was given, is not worthy of acceptance. Definite and specific reason have to be recorded by the Assessing Officer before the issuance of notice under section 148 of the Act, as reply has to be given by the assessee to such reason which are recorded in the notice. Nothing can be left for the party to conjecture and then presume that such could be a reason for the Assessing officer to believe that there has been escapement of income from assessment to tax." 10. Thus, it is clear that the Hon'ble High Court has made a clear distinction between the definite/specific reasons and mere mentioning the income of the assessee without having a direct nexus or live link between the material which has come to the notice of the AO and form a believe that there was escapement of the income by the assessee. A coordinate bench of this Tribunal in the case of Bir Bahadur Singh Sijwali Vs ITO (supra) while dealing and observed in Para 8 to 10 as under:- ....
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....an authority on the legal issue which did not even come up for specific adjudication before Their Lordships. As for her reliance on Hon'ble Supreme Court's judgment in the case of Phool Chand Bajrang Lal Vs ITO [(1993) 203 ITR 456], that was case in which Their Lordships concluded that the AO "rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assessment" and we are unable to see anything on the facts of the present case which are materially similar to the facts of the said case. As regards her reliance on the decision of a coordinate bench in the case of Mithila Credit Services Limited Vs ITO order dated 23.5.2014), it is important to bear in mind the fact that it was a case in which the Assessing Officer had reopened the assessment on the basis of receipt of information from Directorate of Investigation, and, as noted by the Assessing Officer in the reasons recorded for reopening....
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.... manner in which those very entries were provided in the accounts of the Assessee, which must have been tendered along with the return, which was filed on 14th November 2004 and was processed under Section 143(3) of the Act. Without forming a prima facie opinion, on the basis of such material, it was not possible for the AO to have simply concluded: "it is evident that the assessee company has introduced its own unaccounted money in its bank by way of accommodation entries". In the considered view of the Court, in light of the law explained with sufficient clarity by the Supreme Court in the decisions discussed hereinbefore, the basic requirement that the AO must apply his mind to the materials in order to have reasons to believe that the income of the Assessee escaped assessment is missing in the present case. 13. Mr. Sawhney took the Court through the order of the CIT(A) to show how the CIT (A) discussed the materials produced during the hearing of the appeal. The Court would like to observe that this is in the nature of a post mortem exercise after the event of reopening of the assessment has taken place. While the CIT may have proceeded on the basis that the reopening ....