TaxTMI 
TaxTMI 
2021 (4) TMI 815
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....posit in bank account u/s 69A of the Act. 2. It is therefore prayed that above addition made by Assessing Officer and confirmed by CIT(A) may please be deleted. 3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. Assessee has also raised additional grounds of appeal before the Bench by way of letter dated 20.10.2020 which is reproduced below: "On the facts and in circumstances of the case as well as law on the subject, learned Assessing Officer has erred in in re-opening assessment u/s 147 by issuing notice u/s 148 of the IT. Act, 1961." 3. At the outset, ld Counsel for the assessee requested the Bench that additional ground raised by the assessee goes to the root of the matter therefore it should be adjudicated first. In such additional ground, the assessee has challenged the validity of reopening the assessment under section 147 of the Act. 4. Ms. Anupama Singla, Ld DR for the Revenue objected the additional ground raised by the assessee and stated before the Bench that at this stage the assessee cannot raise the additional ground. She pleaded that during the appellate pro....
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....round of appeal of the assessee for adjudication. 6. Facts of the case which can be stated quite shortly are as follows: Before us, assessee is an individual. As per AIR information available with the department, it was noticed by the assessing officer that the assessee has deposited cash of Rs. 22,77,550/- in his saving bank account of ICICI Bank during the Financial Year 2006-07, relevant to Assessment Year 2007-08 and the assessee has not furnished any return of income for Assessment Year 2007-08. Therefore, the assessee`s case was reopened under section 147 of the Income Tax Act. The notice under section 148 of the Income Tax Act was issued on 26/03/2014 and duly served upon the assessee on 28/03/2014. In response to the notice issued under section 148, the assessee has not furnished his return of income in the prescribed time, as held by the assessing officer, vide para 2 of assessment order. The notice under section 142(1) of the Act, was issued on 05/09/2014 and served upon the assessee, however, the assessee has not furnished any details/information, in response to notice issued under section 142(1) of the Income Tax Act. Therefore, assessing officer proceeded to make....
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....s that the assessee has filed his return of income vide paper book page no.7 wherein the assessee submitted the copy of the income tax return for AY.2007-08, therefore one of the reasons for reopening the assessment under section 147 of the Act that assessee has not filed return of income is not correct, therefore the reasons recorded by the Assessing Officer on this count is defective and has to fail. 12. In order to examine the validity of reopening the assessment under section 147/148 of the Act, let us, first of all, we should examine the reasons for reopening the assessment, which is placed at paper book page no.5, and the same is reproduced below: "11. Reasons for the belief that income has escaped assessment: In this case the assessee has cash deposit Rs. 22,77,550/- in ICICI Bank. A query letter was issued to the assessee on 03.01.2014 requesting the assessee to furnish copy of return of income filed for AY.2007-08 with necessary evidence of cash deposit. The letter was duly served upon the assessee. The assessee has not replied till this date. In this case the A.Y. for 2009-10, 2010-11 & 2011-12 has been finalized and unexplained cash has been added in....
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....unt could not be basis for holding the view that income has escaped assessment. The assessee may have deposited the cash out of his sale of capital asset, sale of property and sale of investment etc. Therefore, reasons recorded by the Assessing Officer are not valid and hence the reassessment proceedings initiated based on the reasons recorded is bad in law. We note that on the similar facts the Co-ordinate Bench of Surat in the case of Rinakumar A. Shah (in ITA No.172/AHD/2017 for AY.2007-08, order dated 30.04.2019, held the reassessment proceedings an invalid. The findings of the Coordinate Bench are reproduced below: "10. We have heard the rival submissions and perused the relevant material on record. The learned counsel for the assessee has alleged that the AO in his reason record for reopening of assessment stated that the assessee has not filed any return of income for the assessment year under consideration whereas the assessee has duly filed return of income for the assessment year under consideration. Therefore, the AO has assumed wrong facts, hence, reassessment proceeding are liable to be quashed. In order to appreciate the facts in proper perspective, it would ....
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.... of 2017-dated 21.03.2018] (supra) the notice for reopening of assessment is liable to be quashed. The Hon'ble High Court observed as under:- "However, on verification from ITD system, it is seen that the assessee has not filed return of income for A.Y. 2010-11. Since, the assessee has not filed return of income, capital gain earned on the sale of immovable property has not been offered for taxation by the assessee. Therefore, the property sale transactions made by her during the financial year 2009-10 are unexplained/undisclosed. In view of the above facts, the AO had reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the IT for A.Y. 2010-11 by an amount of Rs. 39, 65,000/-and it is a fit case for reopening the assessment for A.Y. 2010-11." The Honourable Court observed that "11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 1,18, 95, 000/- and two; the assessee has not filed the return that therefore his one 3rd share out of the sale proceeds was not offered to tax. Both these factual grounds are totally in....
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....case of Sunrise Education Trust v. Income Tax Officer [2018] 92 Taxman 74 (Gujarat) (supra) wherein it was held that when the AO in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute that the assessee did file the return of income for the assessment year under consideration, which was duly acknowledged by the department, then, it has to be held that the entire reasoning thus proceeded on the wrong premises that the assessee had never filed the return. This, itself would be sufficient to annual the notice of reopening the assessment. In view of the above and in the light of ratio laid down by the Hon`ble High Courts of Gujarat as quoted above and respectfully following the same, we hold that entire reasoning recorded by the AO for initiation of reassessment proceeding and issuance of notice under section 148 of the Act was on the wrong and incorrect facts that the assessee has never filed the return of income, and in fact, it was filed. This view is further supported by decision of Co-ordinate Bench of Surat Tribunal in the case of Vishal Dilip Rai v. ITO Valsad [I.T.A.No. 1863/Ahd/2016/SRT da....
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....e of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax," As such, I have a reason to believe that an income of Rs. 10,07,400/- as stated above has escaped assessment in the hand of the assessee for the year under consideration. I am satisfied that the case of the assessee is a fit case for action u/s. 147 of the Act by reason of assessee's failure to disclose fully and truly all the material facts necessary for assessment. Place : Navsari Sd/- S.D. Parmar Income Tax Officer, Ward-2, Navsari." Date : 07.03.2017. 4.1. He has submitted that mere cash deposit in the bank account would not disclose escapement of income. He has submitted that there was no taxable income in the case of assessee, therefore, no return was filed. No proceedings were pending before A.O, therefore, query letter dated 03.02.2017 could not have been issued to the assessee. It was, therefore, illegal and there is no application of mind by the A.O. Similar issue have been considered by the ITAT, Delhi SMC-Bench in the case of Mahavir Prasad vs. ITO in ITA.No.924/Del./2015 ....
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.... letter dated 03.02.2017 asking the assessee to furnish copy of the return of income and explanation of cash deposit. Since the assessee did not respond to the query letter of the A.O, A.O. presumed that there is escapement of income. It is an admitted fact that no return of income was filed for the assessment year under appeal and at the time of issue of query letter by the A.O. no proceedings were pending before A.O, therefore, there was no justification for the A.O. to issue query letter to the assessee asking the explanation of assessee. Since query letter was illegal, therefore, assessee was not bound to reply to the same. It may also be noted here that cash deposit per se would not be income of the assessee. An identical issue has been decided by the ITAT, Delhi SMC Bench in the case of Mahavir Prasad (supra). Thus, the A.O. in the absence of reply from the side of the assessee which assessee was not bound to reply, merely presumed that there is escapement of income. There is, thus, no application of mind on the part of the A.O. to record reasons as per Law. The initiation of re-assessment proceedings are beyond the jurisdiction of the A.O. into the matter. We, therefore, do ....