TaxTMI 
TaxTMI 
2018 (4) TMI 427
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....at the ld. AO completely ignored his own records as the return for the AY 2007-08 was already available with him as filed by the assessee manually on 21.05.2008 vide acknowledgment no. 2611000925 with ITO-6(1) Jaipur. It was submitted that the reasons to believe are de hors, vague and does not lead to formation of belief for the escapement of income on the part of the assessee. It was submitted that the reasons to believe has no nexus and live link with the escapement of income of the assessee. It was submitted that the assessee had deposited cash amounting to Rs. 10,57,000/- in bank account out of the contractual receipts duly disclosed in the return of income filed u/s. 44AD of the Act. It was submitted that the Assessing Officer has formed the belief without verifying the facts and circumstances and as such the reassessment proceedings are bad in law and without application of mind on the facts available on record. 4. It was further submitted that even the requisite sanction u/s. 151 obtained is nothing but a mechanical sanction by the higher authorities without applying their mind towards the facts of the case. 5. It was further submitted that the Assessing Officer has pr....
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....of assessment proceedings and not at the time of formation of belief for initiation of the proceedings u/s. 147 of the Act. It was submitted that the ld. CIT (A) has ignored the settled position of law that the reasons as recorded for re-opening the assessment were required to be examined on a standalone basis only and nothing can be added/deleted to the reasons so recorded as decided by Hon'ble Bombay High Court in the matter of Hindustan Lever Ltd. v. R.B. Wadker [2004] 268 ITR 332. 10. The ld. AR further relied on the decision of Hon'ble Delhi High Court in case of CIT v. Indo Arab Air Services [2016] 283 CTR 92 where it was held that when the Assessing Officer had received certain information from Enforcement Directorate that in books of assessee, there were huge cash deposits which were not explained, he could not reopen assessment on basis of said information alone without even examining as to whether amount in question was reflected in return filed by assessee. 11. The ld. AR has further relied on decision of Hon'ble Gujarat High Court in case of Sagar Enterprises v. Asstt. CIT [2002] 257 ITR 335 where it was held that notice issued u/s. 148 on the basis of factuall....
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....levant to note the said return of income was not filed in pursuance to issuance of notice u/s. 148 but the same was the return of income which was originally filed by the assessee u/s. 139 of the Act. It is therefore clear that the whole foundation of the Revenue's reasoning is contradictory and self-defeating where at the time of issuance of notice u/s. 148, it says that the assessee has failed to file his return of income and subsequently, during the proceedings u/s. 147, it admits that the assessee has filed his return of income originally under section 139. On this ground itself, the assumption of jurisdiction u/s. 147 cannot be sustained and the subject proceedings are liable to be quashed. 15. Now, coming to the reasons which have been recorded by the ITO Ward 6(1), Jaipur for initiating proceedings u/s. 147 of the Act which are reproduced as under: "As per AIR information generated from the system, the assessee has made investment of Rs. 1057000/- for purchase of units and SB Account during FY 2006-07 relevant for AY 2007-08. Since as per system no return of income has been filed for A Y 2007-08 the above transaction is not verifiable. I have, therefore,....
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....the ED gave information regarding cash deposits being found in the books of the Assessee, the AO did not state that he examined the returns filed by the Assessee for the said AY and detected that the said cash deposits were not reflected in the returns. In fact, the AO contradicted himself in the reasons recorded by him by noticing the information of the ED to the above effect and then stating that on perusal of the records for the AY in question it was noticed that the Assessee "had not disclosed these transactions in its books of account." Further the AO refers to the ED's information that Mr. Chetan Gupta, partner of the Assessee, failed to explain the sources of the cash deposits as shown in the books of account. However, that by itself could not have led the AO to even prima facie conclude that income of the Assessee had escaped assessment. The explanation or the lack of it of the entries in the books of account may have certain relevance as far as ED is concerned but that by itself does not provide the vital link for concluding that for the purposes of the Act any part of cash deposits constituted income that had escaped assessment. There is a long distance to travel....