TaxTMI 
TaxTMI 
2018 (12) TMI 289
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....rmation that the assessee had deposited cash in his bank account. The Assessing Officer accordingly recorded reasons and issued notice under section 148 of the I.T. Act, 1961. There was no compliance to the notice issued by the Assessing Officer. Thereafter the Assessing Officer provided number of opportunities through issue of notice under section 142(1) but there were no compliance. Final notice issued under section 142(1) was received back with the comments 'refused'. The Assessing Officer, therefore, treated it to be deemed service and completed the assessment under section 144/147 of the I.T. Act, dated 01.02.2016, thereby making addition of Rs. 39,00,000/-on account of unexplained cash deposit in the bank account. 3.1. The assessee challenged the above addition before Ld. CIT(A) and it was contended that no notice have been received by the assessee. The assessee also raised the additional ground of appeal challenging the reopening of the assessment under section 148 of the I.T. Act. It was contended that mere cash deposit in bank account cannot be treated as undisclosed income as a reason for income escaping assessment. There is no nexus between the prima facie inferenc....
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....rd, assessee has not filed return of income for the Assessment year 2011-12. The above income is chargeable to tax under the provisions of the Income Tax Act 1961. Therefore ,the income amounting to Rs. 10,00,000/- which is chargeable to tax under the provisions of I.T. Act and any other income subsequently comes to the notice of the AO during course of assessment proceedings which is chargeable to tax has escaped assessment. Notice under section 148 of the Income Tax Act, 1961 is being issued. Sd/- (Shamsher Singh) Income Tax Officer Ward 2(5), Gurgaon." 6.1. The ITAT, Delhi Bench in the case of Shri Bhajan Lal, Delhi vs. ITO, Ward-2, Narnaul, Haryana (supra), on identical facts in paras 3 to 8 held as under : 3. Notice u/s 148 for A.Y. 2007-08 was issued to the assessee on 16.03.2012 by the Income Tax Officer, Ward-2, Rewari having territorial jurisdiction to the assess the income of the assessee after recording the following reasons: "As per AIR information for the F.Y. 2006-07 received in this office the assessee has made cash deposits of Rs. 19,00,000/- in his bank account with PUNJAB NATIONAL Bank REWARI. A query not....
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....ng Officer held that the land sold by the assessee is covered in the definition of capital assets in view of the Notification issued by CBDT on 06.01.1994 F.No. 164/03/87ITAI, hence land in question is liable to capital gain. Thus, the Assessing Officer made an addition of Rs. 18,17,621 as capital gain of the assessee. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that on identical i.e. exact wordings the reasons recorded in the present case has been dealt by the Tribunal in case of Krishan Kumar vs. ITO (ITA No. 3985/Del/2017 A.Y. 2007-08 dated 15.12.2017) wherein the appeal of the assessee is allowed as reassessment proceedings initiated by the AO are held to be void. Therefore, the Ld. AR submitted that on the legal ground itself the appeal be allowed. 6. The Ld. DR relied upon the Assessment Order as well as the order of the CIT(A), but could not distinguish the facts of the case decided by the Tribunal in case of Krishan Kumar (supra). 7. We have heard both the parties and perused all the relevant material available on record. ....
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....ough the reasons recorded by the ITO, Ward-2, Rewari, 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, 7 ITA no. 3985/Del/2017 the same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and these are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. Keeping in vi....
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....account of failure on the part the assessee to furnish his return of income/to disclose his correct and income, the income chargeable to tax for the assessment year 2008-09 escaped assessment within the meaning of section 147 of the I.T. Act, 1961. ITO, W -1(l), GZB" 7. The Id. counsel for the assessee relied upon the order of the ITAT Delhi SMC Bench in the case of Tejendra Kumar Ghai vs. ITO (supra) in which on identical issues, reassessment has been quashed. The order up to the para 10 is reproduced as under:- "IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH -'SMC' NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITANos. 970,97l/Del/2017 ASSESSMENT YEARS: 2011-12, 2012-2013 Tajendra Kumar Ghai C/o M/s. RRA Taxindia, D-28, South Extension Part-1 New Delhi - 110 049 PAN ALUPG5605N (Appellant) Vs. IT O - 1(5) Rudrapur (Respondent) Per BHAVNESH SAINI, Judicial Member ORDER Both the appeals by the same assessee are directed against different orders of Ld. CIT(A) dated 3rd November, 2016 for asstt. Year 2011-12 and dated 16th November, 2016 for asst....
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....owing information (i) Details of cash deposit of Rs. 63/27,996/ - during the F.Y. 2010-11. Also produced other details of investment other than mentioned above effected during the year with full details. (ii) Produce your statement of all Bank Account in your name or in name of your dependent family members. Also give detailed narration of each credit and debit entry reflecting in Bank Statement explaining the source/purposes thereof. (iii) If you are farmer, furnish copy of khasra-khatuni evidencing ownership proof and also the proof of selling of agriculture produce relating to the period under consideration. (iv) If you are assessed to tax, then furnish your PAN, copy of relevant years ITR, whether it was shown or not, copy of capital a/c, balance sheet, P & L a/c as the case may be. (v) You are required to furnish the details within one week of receipt of this letter. Please note that non-compliance of this letter may attract the penal action as per the provision of the Income Tax Act, 1961. It is to be mentioned in the verification letter itself that nonfurnishing of information may constitute the reasons for initiating the proceedi....
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...."12. With the assistance of the Ld. Representatives, I have gone through the record carefully. Section 147 of the Act contemplates that ''if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of section 148 to 153, assessee or re-assess such income ' A perusal of this section would show that in order to harbor a belief that income has escaped assessment , the Assessing Officer ought to have formed an opinion on the basis of the material possessed by him exhibiting the facts that income has escaped assessment. A perusal of the reasons extracted above would indicate that the Ld. AO has basically not made reference to any material possessed by him except the AIR communicated to him. It is pertinent to observe that he has not analysed the information in right perspective and he sought to reopen by conceiving a fact that the assessee failed to respond to the query raised about this investment. As noticed in the submissions of Ld.Counsel for the assessee, 1 am of the view that there was no proceedings pending before the AO when he sought the clarification of the assessee vide alleged query notic....
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....not be reopened in the absence of any fresh material to show that income has escaped assessment and reopening for making fishing inquiry was not valid. " 8. On the other hand Ld. DR submitted that prima facie case was made out for reopening of the assessment. Therefore AO correctly reopened the assessment and relied upon decision of the Hon'ble Supreme Court in the case of Raymond Woollen Mills Ltd. 236 ITR 34. 9. I have considered rival submissions. It is not in dispute that assessee filed return of income prior to issue of notice u/s 148 of the I.T. Act. The notice u/s 148 was issued on 16th March 2014. It is well settled law that validity of the reassessment proceedings is to be determined on the basis of the reasons recorded by the AO. The reasons are reproduced above in which AO mentioned that as per AIR information it was found that assessee deposited cash of Rs. 63,27,996/- in his bank accounts. However the assessee contended before Ld. CIT(A) that the total aggregate deposits in bank accounts were only 41.15 lacs and not Rs. 63,27,996/-. The contention of the assessee was found correct by the Ld. CIT(A). It is therefore clear that the AO ....
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....m AIR. Since no proceedings were pending before the Assessing Officer when he issued a letter of enquiry to the assessee, therefore, such enquiry letter was not valid in eyes of law. Therefore, the assessee was not required to respond to invalid letter of enquiry issued by the Assessing Officer. The Assessing Officer in the absence of reply of the assessee presumed that cash deposited in the bank account has escaped assessment. The deposit in the bank account per se cannot be income of the assessee. It is mere suspicion of the Assessing based on incorrect fact that income chargeable to tax has escaped assessment. The issue is therefore covered in favour of assessee by order of ITAT SMC Delhi Bench in the case of Tajendra Kumar Ghai (supra). In view of this matter, I am of the view that the Assessing Officer has wrongly assumed jurisdiction u/s 147 of the Income Tax Act for the purpose of reopening of the assessment. I accordingly set aside the orders of the authority below and quash the reopening of the assessment in the matter. Resultantly, the addition made in the reassessment would stand deleted." 6.3. Considering the facts of the case in the light of above decisions, it is c....
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....assessment and made addition of Rs. 48,24,200/-. The assessee challenged the reopening of the assessment and above addition before Ld. CIT(A). The Ld. CIT(A) confirmed the reopening of the assessment in the matter, however, restricted the addition to Rs. 27,49,400/-. 10. After considering the rival submissions, I am of the view that the issue is same as have been decided by me in ITA.No.2740/Del./2018 in the case of Shri Inder Jeet, Delhi, hereinabove. In this case, the A.O. recorded the following reasons for reopening of the assessment. Name & Address of the Assessee Shri Ashok Kumar, Vill. & P.O. Harsaon, Ghaziabad. Assessment Year 2008-09 PAN NA Reasons for issue of notice u/s. 148 of the I.T. Act, 1961. 16.03.2015 : In this case, Non PAN AIR information has been received that the assessee has deposited cash of Rs. 48,24,200/- in his S.B. A/c during the F.Y. 2007-08. Since, the PAN of the assesse is not known and also the return for the A.Y. 2008-09 is not available on record, to verify the transaction, query letters were issued to the assessee to furnish' the particulars of PAN, ITR etc. and to explain the source of cash deposit in bank account....