AI Drafter 
TaxTMI 
TaxTMI 
2020 (9) TMI 254
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....e ld. AO is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 2. Rs. 9,19,000/-: the ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs. 9,19,000/- made by the ld. AO on account of alleged unexplained cash deposits in the bank accounts u/s 68. Hence, the addition so made by the ld. AO and confirmed by the ld. CIT(A) is being totally contrary to the provisions of law and facts on the record and hence the penalty may kindly be deleted in full. 3. The ld. AO has grossly erred in law as well as on the facts of the case in charging interest u/s 234 A,B,C. The appellant totally denies its liability of charging of any such interest. The interest, so charged, being contrary to the provisions of law and facts, may kindly be deleted in full. 4. The appellant prays your honours indulgence to add, amend or alter all or any of the grounds of the appeal on or before the date of hearing." 4. Ground No. 1 of the appeal is regarding validity of reopening of the assessment and particularly the issuance of notice U/s 148 of the Act. The....
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....reshold limit of income assessable to tax, therefore, the A.O. was having tangible material to form a belief that the income assessable to tax has escaped assessment. The ld DR has further submitted that it is not a simple case of information regarding deposit of cash in the bank account but the Investigation Wing has conducted a proper enquiry on the source of deposit and only after response/reply of the assessee was considered. The said information was sent to the A.O. for taking appropriate action. Thus, The A.O. was having report of the Investigation Wing and specific information of deposit of cash by the assessee in the bank account as well as the stand of the assessee regarding source of deposit. The reasons recorded by the A.O. manifests the application of mind on the part of the A.O. and therefore, it is a good prima facie case to forming the belief that the income chargeable to tax has escaped assessment. The ld. Pr.CIT has approved the reasons recorded by the A.O. which are part and parcel of the performa which was sent by the A.O. for approval/sanction. Thus, the sanction granted by the ld. Pr.CIT is based on the reasons recorded by the A.O. and not merely on the proposa....
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....e assessee on 01/04/2016. The notice issued on 31/03/2016 is well within the period of limitation provided in the provisions of Section 149 of the Act which contemplates that no notice U/s 148 shall be issued inter alia not more than six years have elapsed from the end of the relevant assessment year. For ready reference, we reproduce Section 149 of the Act as under: Time limit for notice. ^28 149. ^29[(1) No notice under section 148 shall be issued^30 for the relevant assessment year,- ^31[(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) ^32[or clause (c)]; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has ^33escaped assessment amounts to or is likely to amount to one lakh rupees or more^33 for that year;] ^34[(c) if four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] ....
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....A.O. sent the proposal in the performa for approval/sanction of the ld. Pr.CIT which contains the details including the reasons recorded by the A.O. Once the reasons recorded by the A.O. are found to be having a direct nexus with the information and formation of belief that the income assessable to tax has escaped assessment then the Pr.CIT need not to given separate reasons for his satisfaction. In the case in hand, the assessee has not filed any return of income U/s 139 of the Act and the A.O. received information from the DIT(Inv.), Jaipur regarding the deposit of cash of Rs. 9.19 lacs in the bank account of the assessee that too after an enquiry conducted by the Investigation Wing regarding the source of the said deposit and only when the reply of the assessee was not found to be satisfactory the said information was sent to the A.O. for appropriate steps. In view of these facts as well as the decisions relied upon by the ld DR, we are of the considered opinion that when the reasons recorded by the A.O. prima facie lead to the formation of belief that the income assessable to tax has escaped assessment then the ld. Pr.CIT is not required to record separate satisfaction as the r....
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....ce is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receiving of reasons, the notice is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order, in the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in respect of the above said five assessment years." Moreover, considering the facts & circumstances of the case and relying upon various judgments of Hon'ble Supreme Court and Hon'ble High Courts on the issuance & service of notice u/s 148 within the limitation period, it is mandatory upon the AO to issue notice u/s 148 sending for delivery of service upon the assessee in view of the provisions of Section 282 of the Act, which has done by the AO before the expiry of the limitation period of 6 years. It has further been held that it is mandatory to issue and service of notice upon the assessee before starting of the assessment/ reass....
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....assessee is invalid and all the proceedings carried on in pursuance of that notice are invalid and can be quashed. Further A.O. recording reasons and issuing notice has to be same person. Reference may be made to 93 TTJ Chennai 537, 147 TTJ(Ahd)730. (ii) Section 151 provides for the sanctions to be obtained before issuing of the notice u/s 148. If original assessment has been framed u/s 143(3) or section 147 has been made for any relevant assessment year no notice can be issued by an A. 0. below the rank of ACIT or DC/T unless the JC/T has given a sanction on the reasons recorded by the A.O. that it is fit case for issue of notice. Provided that after the expiry of four years in such case from the end of relevant asst year no notice without the sanction of CTT or CC1T can be issued. In cases other than stated aforesaid no notice shall be issued by an A. 0. below the rank of JCIT after the expiry of four years from the end of relevant assessment year without the sanction of JCIT. However only sanction is required from the JCIT, CIT & CCIT as required and notice need not be issued by them. In case where notice u/s 148 is issued in violation of the provisions of section 151 d....
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....his objections to the reasons recorded with the A.O. It is important to note here that objections must be filed within a reasonable time before the initiation of the reassessment proceedings. In case the assessee files his objections the objections must be disposed off by the AO by way of a speaking order. This procedure was will settled by the Hon'ble Apex Court in the famous case of GKN Drive Shaft reported in 259 ITR (SC )19. In view of the above, it is construed that the .AO has issued u/s 148 after following the provisions of Section 147 read with Section 151(2) & Section 149(1) and sent for delivery of service of the notice within the limitation through the postal authority in view of the provisions of Section 282 of the Act. Moreover, the assessee has furnished no evidence supporting to his claim of issuance of notice in contrary of the provisions of Section 148 read with Section 151(2) & Section 149(1) and further service of the notice as per the provisions of Section 282 of the Act before starting of assessment/reassessment proceedings. A copy of reasons recorded u/s 147 has already been provided to the assessee. Therefore, it is averred that the abov....
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.... as provided in the law. It is also seen that the AO has complied the guidelines laid down by the Hon'ble Apex Court in the case of M/s GKN Driveshafts vs. ITO (2003) 259 ITR 19 (SC). The appellant is challenging the sufficiency of the reasons recorded. It may be mentioned that the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs ITO [1999] 236 ITR 34 (SC), wherein it was held by their lordship that: "In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new fac....
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....ultural land for Rs. 53,00,000/- in the year 2007. The claim of the assessee is not found reasonable & acceptable under the manipulation of facts and giving self-serving statement in affidavit in contrary to any documentary evidence that the source of cash deposit in the bank accounts in the year 2008-09 is from the sale proceeds. The assessee has failed to establish the receipt' of sale proceeds through cheque or draft etc and thereafter, to make deposit in the bank accounts. The assessee has not furnished any evidence of source of wife's income which has been claimed to have deposited in the above bank account. It is revealed that the assessee unsuccessfully makes statement in affidavit form at different levels without any substantia, evidence in supported to the claims) and thus, such statement lacks verification of the true & correctness of the facts. It is revealed that the assessee used to take different stand at different level without substantial evidence which cannot be substituted by giving self-serving statement. In the objection letter dated 20/10/2016, the assessee has categorically submitted as under: - "That at present I am not having physic....
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....closed. ii. Maru Ram Makhan Lal vs. CIT [2008] 300 ITR 12 (P&H) Reference held the question of law for cash credit and burden of proof on the assessee to prove genuineness of credits; assessee not able to prove credits were genuine then addition made to income held just filed. iii. SHIV RICE AND GENERAL MILLS v. COMMISSIONER OF INCOME TAX , [2008]300 ITR 19(P&H) Burden of proof on assessee to prove identity of creditor, his creditworthiness and genuineness of transaction - cash credits not proved by assessee, addition held justified u/s 68 of Income Tax Act 1961. iv. INDUS VALLEY PROMOTERS LTD. v. COMMISSIONER OF INCOME-TAX [2008]305 ITR 202 (DELHI) Cash credits-Assessee failing to prove identity or creditworthiness of creditors and source of deposits -Additions justified u/s 68 of Income-tax Act, 1961 v. CHAND PRAKASH VIJ v. C1T [ITR NO. 626 OF 2008, DECIDED ON 12.12.2008]/[2009] 16 CPT 570 (PUNJ. & HAR.) Tribunal's finding that assessee had not been able to explain source of cash deposit in bank account, is a finding of facts vi. CIT vs. P. MOHANAKALA (2007) 291 ITR 278 (SC) Cash credits....
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....ed no proper, reasonable and acceptable explanation to the source of above cash credit in the bank accounts. Therefore, in view of the above, it is fairly construed that the assessee has absolutely failed to explain the source of cash credit which remains unexplained u/s 68 of the Income Tax Act, 1961. Accordingly, the credit of Rs. 9,19,000/- is treated as unexplained income of the assessee made out of undisclosed sources of income and the same is added to the total income of the assessee. (vi) Thus, in the assessment order, the AO elaborately dealt the submissions of the appellant and also discussed the relevant judicial pronouncements. During the appellate proceedings, the appellant again relied on its claim that the cash was deposited out of sale consideration of the property sold by his father Shri Tarachand Ajmera. The appellant filed copy of sale deed in support of above claim. From the sale deed, it is seen that the above property was sold for Rs. 53,00,000/- on 04.06.2007. Shri Tarachand Ajmera received Rs. 33,00,000/- vide cheque No. 059082 dated 14/05/2007 and Rs. 20,00,000/- vide cheque No. 068902 dated 14.05.2007 drawn on Citi Bank, Jaipur. The appellant has n....
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.... having evidentiary value and in absence of any contrary record, the same should have been accepted. The ld AR has submitted that once the assessee has explained the source of amount much more that the deposit made in the bank account then the addition made by the A.O. and confirmed by the ld. CIT(A) is not justified and the same may be deleted. In support of his contention, he has relied upon the following decisions: i) Mehta Pareek & Co. 30 ITR 181 (SC) ii) ITO Vs Dr. Tejgopal Bhatnagar 20 TW 368 (JP) iii) paras cotton Company Vs CIT (2003) 30 TW 168 (JD) iv) CIT Vs Lunard Dimond Ltd. 281 ITR 1 (Del). v) CIT Vs Bhawani Oil Mills (P) Ltd. 239 CTR 445. vi) Sh. Chhitar Singh Gurjar Vs ITO in ITA No. 594/JP/2016 dated 26/09/2016. vii) ITO, Kishangarh Vs Sh. Pushpendra Kumar Jain ITA No. 289/JP/2012 dated 01/01/2016 9. On the other hand, the ld DR has submitted that the assessee has taken stand that the source of deposit is the sale proceeds of the land by the assessee. However, the ld. CIT(A) has recorded the fact that the entire sale consideration was received by the father of the assessee through cheque and the asses....
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....erty in the year 2007 for a consideration of Rs. 53.00 lacs and the assessee is the only legal heir then the possibility of the source of deposit in the bank account of the assessee from the sale proceeds of the property of the father is not ruled out. However, the assessee has not produced the details of the bank account of father to support the fact that there was a withdrawal of cash from the bank account of the father. Therefore, in these facts and circumstances, we find that this issue requires a detailed and proper verification regarding source of deposit. Further to the extent of income declared by the assessee as well as the claim of wife of the assessee regarding the deposit of Rs. 2,72,500/- cannot be rejected. Therefore, to the extent of income declared by the assessee as well as the wife of the assessee has to be considered as source of deposit. Hence, we set aside this issue to the record of the A.O. for proper verification of the facts regarding the source being the sale proceeds of the property sold by the father of the assessee. The assessee is also directed to furnish details of bank account of father of the assessee for the purpose of conducting the proper enquiry....