TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 289
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 inference arrived in the reasons recorded and information a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 notice was issued to the assessee on 24.01.2012. But no response has been received from the assessee. I, therefo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....994 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. It is pertinent to note here that the facts of the case in case of Krishan Kumar (Supra) and in the present case are identical in nature. In fact, the figures of amount, Bank name....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icted 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 view the facts and circumstances of the present case and the case law applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the asstt. Ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 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 asstt. year 2012-13. Ld. Representatives of both the parties mainly argued in asstt. year 2011-12 and have submitted that issues are same in both the appeals. Therefore for purpose of disposal of both the appeals 1 decide the appeal of assessee for asstt. year 2011-12 as under :- 2. I have heard Ld. Representatives of both, the par ties and perused the material on record. 3. In this appeal a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 proceedings to tax these transaction in the hand of the assessee by presuming\that these are not disclosed to Income Tax Department. The assessee even after receiving the letter himself, did not tendered any reply till date and till now. This is sufficient fact to establish that these transaction/deposits are not disclosed in the regular return of income of assessee. Therefore, it is clear that amount of Rs. 63,27,996/- has not been brought to tax by the assessee. Accordingly, I have re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed 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 notice dated 23rd January, 2012. The ITAT Amritsar Bench has dealt with this issue elaborately and recorded a finding that under the income tax Act, there is no such procedure to conduct an enquiry for collecting the information without pendency of assessment proceedings. If this reasoning is being excluded from the copy of the reasons given by the AO, then, nothing will remain with the AO except the information' transmitted by AIR Wing. Apart from the above, it is to be seen that in the reasons the AO has nowhere alleged escapement of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 while recording the reasons for reopening of the assessment recorded in correct facts in the reasons for reopening of assessment. Therefore reopening of the assessment u/s 147 is clearly invalid and bad in law. I rely decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries 180 ITR 319. Further the AO after obtaining the AIR information wanted to verify the same and issued a letter of enquiry to the assessee. The AO thus did not apply in his independent mind to the information received from AIR. Since no proceedings were pending before AO w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment. 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 clear that the A.O. in this case recorded in the assessment order that as per information available on record, assessee has made cash deposit of Rs. 39 lakhs in his bank account and on that basis, A.O. recorded reasons for reopening of the assessment reproduced above. Further, in the reasons, A.O. has recorded about information available with him of cash deposit of Rs. 10 lakhs only. Thus, there is a contradiction in the statement recorded in the assessment order as well as in the reasons above. The A.O. without verifying the information has recorded the reasons for reopening of the assessment. Thus, the A.....