TaxTMI 
TaxTMI 
2019 (8) TMI 227
X X X X Extracts X X X X
X X X X Extracts X X X X
....o having been completed without service of any Notice under section 143(2) of the 'Act' upon the 'Appellant'. WITHOUT PREJUDICE TO THE ABOVE 4. BECAUSE, 'appellant' has no 'undisclosed sources' of Income, therefore, no addition could be made for 'unexplained deposit'. 5. BECAUSE, 'appellant' has sufficiently and satisfactorily explained the cash deposits in his bank account and the addition has been made on presumptions and surmises in utter ignorance of the settled legal position that in re-assessment proceedings the onus is on the 'LEARNED ASSESSING OFFICER' to prove that cash deposits represents 'Income' which has escaped assessment. 6. BECAUSE, in any case and in any view of the matter impugned additions/disallowances and impugned assessment order is bad in law, illegal, unjustified barred by limitation, contrary to facts and law based upon incorrect assumption of facts and further without allowing adequate opportunity of hearing in violation of principals of natural justice and therefore, the additions made deserves to be quashed. 7. BECAUSE, the 'appellant' denies levy of interest under section 234B amounting to Rs. 18,414/, of the 'Act'. Alternatively the Intere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....58/- 2011-12 4,00,000/- The Bank Statement of A/c No. 86551010001097 of the Assessee for the period of F.Y.-2008-09 to 2011-12 were called for from the Branch Manager, Syndicate Bank, Etawah. On going through the statement it is found that there was -NIL- balance in the bank, whereas assessee deposited premium of Rs. 2,74,518/- in F.Y.-2008- 09 for which assessee has not furnished any explanation. As per reply of the assessee as well as from ITD system it is seen that assessee had submitted her return of income showing income of Rs. 1,54,680/- for A.Y.-2009-101, whereas she deposited Rs. 2,74,518/- against premium of insurance policies. In view of the facts of the case, I am left with no option but to form a strong belief that income amounting to Rs. 2,74,518/- has escaped assessment within the meaning of section 147 of Income tax Act, 1961. Proposal is being sent to the Principal Commissioner of Income Tax- II, Agra through Additional Commissioner of Income tax, Range-5, Firozabad for seeking approval to issue notice u/s 148 of Income tax Act, 1961." 4. Per contra, the Ld. D.R Shri Waseem Arshad, made a preliminary objection submitting that assessee since had not challen....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a purely legal objection and in view of the Hon'ble Apex Court judgment in the case of "NTPC Vs CIT", (1998) 229 ITR 383 (SC) (APB-9-12) it can be raised at this stage even for the first time. The Hon'ble Supreme Court while dealing with ground raisedbefore the ITAT for the first time relating to legal issue has held that Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. It was also held that under section 254 of the Act the Tribunal has jurisdiction to examine a question of law which thought not arose before lower authorities but arose before it from facts as found by lower authorities and having a bearing on tax liability of assessee. 7. In the case of Shri Abdul Majid Vs CIT(2006) 153 Taxman 131 (All.)(APB-24-26)the Hon'ble Allahabad High Court framed following question of Law for its consideration at the instance of appeal preferred by the assessee: "1. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT, was in law justified in rejecting the additional grounds challenging the validity of assessment order on the basis of illegal initiation of proceedings u/s 148 wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 9. The Ld. Sr. D.R placed heavy reliance to the Judgment of Hon'ble Delhi High Court and CIT vs. Safetag International India Pvt. Ltd.(supra) perusal of the case reveals that it nowhere lays down any proposition of law for which the Ld. Sr. D.R has sought to rely upon it. In this case assessee did not ask for the reasons recorded, participated in the assessment proceedings and raised objection before the Ld. CIT(A) about the validity of Notice under section 148 of the Act. However, the Hon'ble High Court directed the Revenue to supply copy of reasons to the assessee within four weeks and upon receipt of reasons assessee was required to make submission before CIT(A) based upon such reasons challenging the validity of re-assessment proceedings and CIT(A) shall decide this issue on merits after hearing the parties. From the reading of the Judgment it is not understood as to how reference to this case help the cause of the revenue in the case on hands. Therefore, the case is distinguishable on facts. 10. Further reliance on the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO (2002) 125 Taxman 963 for the proposition that the Hon'ble Supreme Court has require....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er own understanding over the issue. Therefore, it cannot be said that assessee is challenging the legality of reopening for the first time before the Hon'ble ITAT. Thus, the objection raised by the Sr. D.R is rejected being based on without consideration of fact available on record. 13. Now coming to the validity of reopening based on reasons recorded. From the perusal of the reasons recorded it is evident that escapement is assumed on account of alleged non furnishing of sources of investment in policy premiums of Birla Sun Life Insurance Co. Limited , which was allegedly questioned vide Letter dated 14.08.2015. Letter dated 14.08.2015 has been filed which was issued under section 133(6) of the Act (APB-17) which nowhere requires the assessee to prove the sources of investment in premiums paid against policy of Birla Sun life Insurance. Vide this notice the learned Assessing officer has only called upon the assessee to furnish year wise and policy wise break up of premiums paid against policy of Birla Sun life Insurance. In fact this notice refers to a notice dated 05.06.2015 which was issued by the learned Assessing officer in past and remained non-complied with. Copy of notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....we revert to the reasons recorded, they contain two elements. The assessee had purchased two immovable properties valued at Rs. 61.76 lacs and Rs. 54.59 lacs respectively, whereas, he had filed return disclosing income of Rs. 2.47 lacsonly. The Assessing Officer was of the opinion that when assessee had purchased two properties at such sizable cost, he could not have shown income of only Rs. 2.44 lacs. He therefore, concluded that 'income to the extent of huge transaction of Rs. 1,16,35,500/- ... had escaped assessment for AY 2008-09 ...'. This reason completely lacks logic. There is no direct co- relation between the purchase of properties by the assessee and his disclosure of the income during a particular period. The reason is vague and relies on the presumptions on the part of the Assessing Officer. He seems to be presuming that when the assessee had made purchase worth such huge amounts, he must disclose sizable income" 17. Hon'ble Bombay High Court in the case of CIT VsSmt. Maniben Valji Shah reported as (2006) 283 ITR 453 (Bom.)found reopening to invalid in law where proceedings under section 147 was initiated to verify the source of Investment made in purchase of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d assessment. However, it cannot be said that if there is any investment it is sufficient to believe that the income to that extent escaped assessment because there may be so many sources for making investment and it is not necessary that only on the basis of investment it can be presumed that the income to that extent escaped assessment. There should be a concrete finding before coming to the conclusion that any income has escaped assessment and merely on the basis of the information provided by any another Wing of the Income-tax Department, the Assessing Officer cannot believe that there was income which has escaped assessment" 20. The ITAT, Delhi Bench in the case of Anil Singhal Vs ITO in ITA No. 2044/Del/2017 vide order dated 04.10.2017 was called upon to examine the legality of action initiated under section 147 where 'reasons' recorded were, as reproduced in the ITAT order in para-2 were as under: "In this case as per information available with this office the assessee has purchased an immovable property for Rs. 1,15,00,000/- during f.y 2007-08 relevant to A.Y 2008-09. To verify the source of investment in the property, letters dated 27.01.2015 & 06.02.2015 were issu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined 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. 10,24,100 has escaped assessment of income because the assessee has Rs. 10,24,100 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 escaped assessment. 9. Learned Departmental Representative has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings, all that is to be seen as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, there cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather than desirability of further probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn." 23. The text of the reasons recorded do proves that virtually there has been no application of mind by the learned Assessing officer so as to form 'satisfaction' that any income has escaped assessment. The text of the reasons recorded do virtually proves that the reasons recorded in the case in hands are no reasons in the eye of law. The so called 'reasons' instead of being 'reasons to believe' are solely 'reasons to suspect'. The investment in premium paid need not necessarily come from the income. It may be out of past savings, loans, gifts, liquidation of investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovided by certain individuals/companies. He had not applied his mind. He did not even care to see the apparent mistake in the particulars where three entries were repeated twice each. There was nothing on record to show that the assessee had not disclosed all material particulars or had suppressed any information. Reassessment noticewas thus held to be rightly quashed by the ITAT. It is not understood as to what purpose it serves for the revenue to rely upon this Judgement rendered in favour of the assessee. 27. The case of'M/s Kays Jewels Private Ltd. vs Union of India', inWrit Tax No. 721 of 2015by the Hon'ble Allahabad High Court is also misplaced as in this case as evident from the limited text reproduced in the Synopsis referring to Para-14, it is apparent that the case was decided by the Hon'ble High Court on 'change of opinion' that too in favour of the assessee, which is not the case in appeal on hands. Therefore, the case is distinguishable on facts. 28. Reliance to 'CIT vsShriShyam Sunder Infrastructure', ITA 236/2014 - Delhi High Court is misplaced as in this case assessee therein challenged the legality of Notice under section 148 on the ground of lack of territori....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are entirely different as evident from the reading of the Judgment. In the referred case appellant, before the Hon'ble High Court in Writ submitted that during the course of the assessment under Section 143(3), the AO had issued a Notice under Section 142 requiring the assessee inter alia to furnish a disclosure in respect of the share applicants, the amounts received and the source, the mode in which payments were received together with confirmatory letters and PAN card details of the investors. It has been stated that in response thereto the assessee had by its letter (Annexure 3) made a disclosure including that in regard to the four companies which are now alleged to be bogus. Hence, it has been submitted that there was no failure on the part of the assessee to disclose fully and truly all the necessary facts relevant to the assessment and in view of the proviso to Section 147(1), the reopening of the assessment beyond the period of four years is contrary to law.The Hon'ble High Court while sustaining Notice under section 148 held though the reopening of the assessment in the present case is beyond the period of four years but the Assessing Officer was satisfied that the condi....