AI Drafter 
TaxTMI 
TaxTMI 
2019 (8) TMI 1484
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.... that cash deposit per se cannot be treated as income of the assessee. Therefore, reopening of assessment is illegal and bad in law. He has submitted that ITAT Delhi 'SMC' Bench in the case of Tajendra Kumar Ghai Vs ITO in ITA Nos. 970, 971/Del/2017 vide order dated 07.06.2017 quash the reopening of assessment. Copy of which is filed at page 11 of the paper book. He has, therefore, submitted that the issue is covered by aforesaid decision of the Tribunal. 5. On the other hand, the ld. DR relied upon the orders of authorities below and submitted that reopening of assessment is justified in the matter. 6. I have considered the rival submissions. It is well settled law that validity of reassessment proceedings is to be determined on the basis of the reasons recorded by the AO. In this case, the AO has recorded reasons for reopening of assessment. Copy of which is filed at page 1 of the paper book. The same reads as under: "11. Reasons for the belief that income has escaped Assessment:- On the basis of AIR information that assessee has deposited cash of Rs. 26,40,000/- in the saving bank account during the F.Y 2009-10, verification letter dt: 05.04.2016 was issu....
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....the same as income from business for year under consideration. 5. The assessee challenged the reopening of the assessment as well as addition on merit before Ld. CIT(A). However the Ld. CIT(A) dismissed both the grounds of appeals of the assessee in principle, however, AO was directed to compute the income of assessee after giving credit to the turn over already disclosed u/s 44AD of the I.T. Act. The appeal of assessee was thus partly allowed. 6. Ld. Counsel for assessee referred to the reasons recorded for reopening of assessment as are reproduced in para 3.3 of the appellate order the same reads as under:- "In this case on AIR information was received that assessee has been entered into transaction worth Rs. 63,27,996/- in his bank account. In order to verify the genuineness and correctness of this AIR information a verification was issued on dated 16.1.2014 and 17.2.2014 to the assessee which were duly served upon the assessee itself. Through this verification letter the assessee was required to furnish following information :- (i) Details of cash deposit of Rs. 63,27,996/- during the F.Y. 2010-11. Also produced other details o....
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..... He has further submitted that the AO in the reasons recorded incorrect fact of deposits of Rs. 63,27,996/- despite the total deposits were only to the tune of Rs. 41.15 lacs. This fact is considered favourably by Ld. CIT(A) and his findings are in para 5.3 of the appellate order. Therefore wrong facts are recorded in reasons for reopening of assessment. Therefore assumption of jurisdiction u/s 147 of I.T .Act is bad in law. He has relied upon following orders :- 1. order of ITAT Amritsar Bench in the case of Amrik Singh vs. ITO 159 ITD 329 (Amritsar) in which it was held as under :- "When the assessment proceedings u/s 147 are initiated on the fallacious assumption that the 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 proceedings is neither countenanced, nor sustainable in law." 2. Order of ITAT Delhi Bench in the case of Smt. Rajni vs ITO and others in ITA No. 854/Del/2016 dated 6.11.2017 in which in para 12 it was held as under :- "12. With the assistance of the Ld. Representatives, I have gone through the record carefully. Section 1....
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....Ld. CIT(A) has not addressed the contention of the assessee that reopening of assessment in itself is bad because there is no nexus between reasons vis-à-vis formation of belief exhibiting the escapement of income. Taking into consideration all these aspects, I am of the view that the AO is not justified in reopening of the assessment afresh. I allow this ground of appeal and quash the assessment. As far as other issues are concerned, since reopening of assessment has been held as bad and not in accordance with the law, therefore, I deem it not necessary to deal with the other grounds of appeal as they have become infructuous." 3) order of ITA Delhi Bench in the case of Raj Kumar Dugar (HUF) vs. ITO 12 DTR 16 in which it was held as under :- "Reason recorded by the AO that assessee had not filed IT return for asstt. year 1998-99 being based on incorrect facts because assessee had in fact filed IT return for the said year, issuance of notice under section 148 and consequent assessment could not be sustained; further, assessment could not be reopened in the absence of any fresh material to show that income has escaped assessment and reopening for making fishi....
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....f reopening of the assessment. The course adopted by the AO was wholly unjustified in recording the incorrect facts in the reasons for reopening of the assessment. The decision cited by the Ld. Counsel for assessee would clearly support the contention of the assessee that reopening of the assessment is bad in law. In this view of the matter I am of the view that AO has wrongly assumed jurisdiction u/s 147 of the I.T. Act for the purpose of reopening of the assessment. I accordingly set aside the orders of the authorities below and quash the reopening of the assessment in the matter. Resultantly the addition made in the reassessment order would stand deleted and need not to be adjudicated on merit. 10. In the result appeal of assessee is allowed. ITA No. 971/DEL-17 Assessment year : 2012-13 11. In this appeal the assessee similarly challenged assumption of jurisdiction u/s 147/148 of the I.T. Act and addition of Rs. 5,53,112/- on account of deposits in the bank accounts of assessee. Admittedly the issues are same as have been considered in ITA No. 970/Del/17. Following the reasons for the decision for the same year, I set aside the orders of autho....