AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 1496
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....does not have any other income. It was submitted that the ancestral agricultural land was sold to one Mr. Haji Mohd. Momin S/o Mr.Shokat Ali at Rs. 7 lakhs per biga and thereafter on behalf of Mr.Haji Mohd. Momin, the agreement holder, the land was sold in favour of Mr Giriraj Kishore, S/o Shri Shivcharan Lal. In other words it was contended that the amount in question is nothing but sale proceeds of ancestral agricultural land. The Ld.CIT(A) found inconsistencies in the claim of the assessee, as value of sale consideration disclosed in the registered sale deed is much less than the amount mentioned in the unregistered agreement. Affidavit and other evidences produced by the assessee were rejected and addition confirmed. 3. Aggrieved the assessee is before us challenging the reopening of assessment by issue of notice under section 148 of the Act as well as the addition on merits. 4. After hearing Rival contentions I find that the reasons recorded by the A.O. that income subject to tax may have escaped assessment is based on AIR information that certain Bank deposits found in the account of the assessee with Punjab National Bank, Muzaffarnagar. The issue is whether the A.O. can co....
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....recorded in the reasons that the assessee has not filed return of income for the Assessment Year 2006-07. This fact recorded by the AO that the assessee has not filed the return of income for the Assessment Year under consideration has turned out to be incorrect as the assessment order begins with the narration of fact that manual return declared Rs. 112030/- filed on 31.03.2007. Thus at the time of passing the assessment order the AO was aware that return for the year under consideration filed on 31st March 2007. Therefore, it is clear that the AO proceed to reopen assessment on the basis of incorrect assumption of the fact that the assessee has not filed any return income for the year under consideration. This wrong assumption of fact also lead to the consequential reopening by the AO without verifying the record available with the AO as filed by the assessee being return of income and the other details and record along with return of income. Thus, it is clear that the AO reopen the assessment under wrong presumption of fact and without verifying the material information already available with the AO in the shape of return of income filed by the assessee. This fact of filing o....
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.... by the assessee or the assessee is not in a position to disclose the source. Accordingly the reopening is nothing but to investigate the matter to ascertain whether this deposit would constitute the income of the assessee which has escaped the assessment or not. In the case of the C.M. Mahadeva Vs. CIT, Hon'ble Karnataka High Court while dealing with identical facts of reopening has observed in Para 16 to 19 has under:- "16. The facts of the aforesaid case are quite similar to the one on hand. In the present case also the reason for reopening is for further investigation to find out the source of investment for the purchase of the property, which is not permissible in law. 17. Further in the case of Income Tax Officer Vs. Lakhmani Mewal Das reported in (1976) 103 ITR 439, the Apex Court has held that "the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of the income of the assessee f....
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....Accordingly, income to the extent of Rs. 49,42,000/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s. 148 of the I.T. Act, 1961 for the assessment year 2007-08. Sd/- (O.P. Poonia) Income Tax Officer, Ward-2, Rewari" 12. After going through the reasons recorded by the ITO, Ward-2, Rewari, I am of the view that there is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, the same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch o....
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....he fallacious assumption of the AO that bank deposits constituted undisclosed income, over-looking the fact that the source of the deposits need not necessarily be the income of the assessee, the reassessment proceedings cannot be sustained. In the present case, similarly, the basis of initiation of the assessment proceedings U/S 147 was the information with the Department, of the deposits made by the assessee in his bank account. 46. 'Bir Bahadur Singh Sijwali' (supra), makes reference to 'Hindusan Lever Ltd. vs. R.B. Wadkar'. 26R TTR 332 (Born.), to hold that the reasons recorded for reopening the assessment are to be examined on a standalone basis and nothing can be added to the reasons. It was also observed that the reasons must point out to an income escaping assessment and not merely need of an enquiry which may result in detection of an income escaping assessment. It was observed that it is necessary that there must be something which indicates, even if it does not establish, the escapement of income from assessment; that it is only on that basis that the AO can form a prima-facie belief that an income has escaped assessment; that merely because some furth....
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....ed is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The Assessing Officer has opined that an income of Rs.l 0,24, 1 00/- has escaped assessment of income because the assessee has Rs.l0,24,100/- in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escapement assessment." 48. The Tribunal concluded thus: "but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does not lead to income being taxed in the hands of the assessee. Learned Departmental Representat....
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....ed jewellery and diverse sums of money from Sita Devi and she claimed that these were gifts made out of love and affection. The case of the appellant was that the receipts did not fall within the taxing provision: it was not her case that being income the receipts were exempt from taxation because of a statutory provision. It was therefore for the department to establish that these receipts were chargeable to tax." D. ITAT, Delhi Bench decision in case of Praveen Kumar Jain v ITO in ITA No. 1331/D/2015 for Assessment year 2006-07 dated 22.1.2015 wherein it has been held as under:- "12. Thus it is clear that the basic requirement for reopening of assessment 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 was found to be missing when the AO proceed to reopen the assessment which is in nature of a post mortem exercise after the event of reopening of the assessment. Therefore the reopening of the assessment was found to be invalid as it does not satisfy the requirement of law that prior to the reopening of the assessment the AO has to apply his mind to the material and conclude that he has rea....