2021 (3) TMI 840

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....nder Section 148 of the Act. 2.3 At the request of the writ applicant, reasons recorded have been furnished to the writ applicant, which reads as under : "2. In this case, the NMS (Non-filer Monitorine System) information regarding cash deposited of Rs. 18,00, 000/in the Development Credit Bank Lid. during the F.Y.2011-12 relevant to A. Y. 2012-13. 3. A system generated letter was issued by the NMS Administrator vide Letter No. NMS/AAQCS6335H dated 05-12-2013. Further, notice u/s 1336 of the Act was issued by the undersigned on 12.02.2019 and served by speed post on 22.02.2019. Vide above letter, the assessee was asked to provide the details of cash deposits/cash transactions in Development Credit Bank Ltd. account of Rs. 18.00,000/- during the year along with documentary evidences and source from which this transaction made and tax treatment thereof within three days from receipt of this letter. In response to the above letter dated 12.02.2019, the assessee has filed reply dated 28.02.2019 (received on 01.03.2019) and stated that cash deposit from opening cash balance. However, on verification of submission filed on 01.03.2019, it is ascertained that the asses....

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....Monitoring System) regarding cash deposition of Rs. 18,00,000/- in the Development Credit Bank during A.Y. 2012-13. It is case of the revenue that the assessee was required to file correct return of income in its return of income for the year under consideration and assessee failed to furnish supporting evidence and the source of income with regard to cash deposit of Rs. 18,00,000/. 5. In the objection filed against the reopening of the assessment, the assessee had explained the source of cash deposit, stating inter-alia that there was a sufficient cash balance with the company as during the year 2010-11 and Rs. 18,00,000/- cash was withdrawn from the account of DCB Bank and the same amount was redeposited during the year under consideration. 6. We have heard Mr. S.N. Divatia, the learned counsel appearing for the writ applicant and Mr. Manish Bhatt, learned Senior Counsel assisted by Mrs, Mauna Bhatt, the learned Standing Counsel appearing for the revenue. 7. Mr. S.N. Divatia, the learned counsel appearing for the writ applicant raised the following contentions: 7.1 It was submitted that the impugned notice as well as the order disposing of the objections are bad in la....

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....cer that on what basis he has come to the conclusion that the assessee failed to explain the source of cash deposit. Therefore, without any discussions or explanation with regard to material evidence submitted by the assessee, the crucial link between material and formation of belief with regard to escapement of assessment is missing. 8. Heavy reliance has been placed on the decision of this Court in case of Swati Malav Divatia (98 taxmman.com 447) (Guj), it was contended that in the cited case, the assessee was asked to explain the source of cash deposits and the assessee had disclosed that she had withdrawn the amount from her account and the Assessing Officer in the reasons recorded did not consider the explanation for the availability of the cash on hand. In this circumstances, the Division of this High Court held that the reasons lacked validity and department proceeded on erroneous premise. 9. In the aforesaid contention raised by the learned counsel for the writ applicant, he prays that there being a merit in the writ application, it may be allowed. 10. Mr. M.R. Bhatt, the learned Senior Counsel assisted by Mrs. Mauna Bhatt, the learned Standing Counsel appearing fo....

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....idered the submission filed by the assessee and drew the inference that the assessee failed to submit supporting evidences and source of income with regard to cash deposits. In this regard, the Assessing Officer has noted that the assessee also failed to disclose the fully and truly the material facts of its correct income in the return of income for the year 2012-13 and formed the opinion that the income has escaped assessment to the extent of Rs. 18,00,000/. 16. The contention is that the Assessing Officer has not discarded the documentary evidence submitted during the inquiry and there is no reference to this effect in the reasons recorded by the Assessing Officer. 17. After careful reading of the reasons recorded, as referred to above, we are of the view that after receiving the information from the NMS the Assessing Officer has verified the documents and explanation offered by the assessee and was not agree with the explanation and based on the outcome of the verification, drew the inference that the transactions of cash deposit was not shown in the return of income for the year under consideration and noted that the true facts of transactions having not been disclosed b....

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....sessee failed to disclose true facts of the transactions in the return of income and income has escaped assessment. In this context, we may refer to and rely the case of Asst. Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Broker Ltd (2007) 291 ITR 500 SC, wherein, the Apex Court in Para-16 observed thus : "16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662],....

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....f reasons recorded. In fact, the reasons recorded completely ignored the Assessing Officer's query and the response made by the assessee to such queries. In other words, the Assessing Officer in the reasons recorded has simply kept aside the assessee's explanation for the availability of cash on hand for deposit post demonetization. The reasons thus clearly lacked validity and proceeded on erroneous premise." 23. The contention of Mr. Divatia is that in the case on hand, in response to the notice issued to his client under Section-133 (6) of the Act, all the necessary documentary evidence was furnished for the perusal of the Assessing Officer with necessary comments on the specific queries raised in the notice issued under Section133(6) of the Act. According to Mr. Divatia, if the Assessing Officer has any reason to discard such disclosures and still form a belief that the cash deposit of Rs. 18,00,000/remains unexplained, then the Assessing Officer should have stated so specifically in the reasons assigned for the reopening. In other words, the reasons recorded has completely ignored the response made by the assessee to such queries. 24. We are afraid, we are not in a positi....