TaxTMI 
TaxTMI 
2022 (10) TMI 454
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....cts and circumstances of the case, the Learned Assessing officer ought to have appreciated that only Non-filing of Return does not amounts to escapement of income and therefore, the reasons recorded for reopening only on the basis of Non-filling of Return is bad in law and therefore, the Notice issued U/s 148 is void-ab-initio 3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 23,05,222/- towards Cheques deposited in the Bank Account by the Assessee without appreciating that the Rs. 8,15,000/- amount were transferred from another Bank Account of the Assessee and amount of Rs. 14,00,000/- was received from his wife for which confirmation and all details were filed. 4. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 13,51,500/- on account of Cash Deposited in the Savings Account without appreciating that the complete source of Cash along with the documentary evidences were produced before both the authorities. 5. On the facts and circumstances of the case, the Learned Commissioner of Income T....
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.... are also on record, therefore, we proceed to decide the same. The learned Departmental Representative (learned DR'), in all fairness, did not raise this technicality either. 5. During the course of hearing, learned Authorised Representative (learned AR') submitted that the assessee had no taxable income during the year and therefore no return of income was filed. The learned AR further submitted that merely on the basis that cash has been deposited by the assessee, proceedings under section 147 were initiated by the AO. The learned AR also submitted that the reasons recorded by the AO for issuing notice under section 148 of the Act doesn't provide the complete information on the basis of which such notice was issued and the same merely makes reference to some internal codes of the Department. 6. On the other hand, learned DR submitted that no return was filed by the assessee for the year under consideration and after receipt of the information from ITD system, facts were verified and it was noticed that assessee has entered into certain transactions viz. cash deposit of Rs. 50,000 and more, share transaction of Rs. 20,000, or more and TDS return in respect of int....
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....d "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 Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether th....
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....aised in assessee's appeal, is pertaining to addition on account of cheque and cash deposited in the bank accounts of the assessee. 11. The brief facts of the case pertaining to this issue, as emanating from the record, are: Vide notice issued under section 142 (1) of the Act assessee was asked to file the details of bank accounts held along with the copies of bank statements. The assessee was also asked to file copies of personal balance sheets, profit and loss account etc. In response, assessee disclosed the following bank accounts: Name of Bank A/c No. A/c Type Ownership 1. HDFC Bank Ltd. (Malad West, Mumbai) 00471330003555 Saving A/c Single 2. HDFC Bank Ltd. (Goregaon East, Mumbai) 02122100000104 Overdraft A/c Single 3. SVC Bank Ltd. (Goregaon West, Mumbai) 1519 Saving A/c Single 12. The AO, on perusal of return of income filed by the assessee in response to notice issued under section 148 of the Act, found that the assessee had disclosed only the aforesaid 3 bank accounts. Verification of bank statements, submitted by the assessee, revealed that there were several entries of frequent fund transfers to....
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....ansactions to tally the balance sheet. The AO further held that the in respect of money transferred from wife's account, the assessee has not explained the nature of receipts nor filed her confirmation, bank statement, copy of return, her source of payment. Regarding the cash deposits in the aforesaid two undisclosed bank accounts, the AO observed as under: "vii) The explanation of the assessee with regard to the source of cash deposits that these were sourced out of withdrawal by the daughters and brother is self serving and falls flat on logic and facts. The assessee is citing withdrawals by the daughters' made in FY 2007-08 and 2008-09 to explain the deposits by him in 2009-10. It is pertinent to mention that the assessee is regularly maintaining the books of accounts and such cash transfers from the daughters should have been recorded in the books if at all were genuine. It is also seen that one of the daughter of the assessee is not filing her return of income and her source of income is explained to be tuition. Most importantly the assessee lamely tried to explain that a cash corpus was kept ready by the family for the medical treatment of his brother and wif....
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....plained with credible evidences. The subsequent effort of the assessee to explain the sources out of the cash available with his daughter who does not file a return, savings from the year before or from the cash deposited by his brother for medical treatment or cash corpus of Rs. 15,00,000/- credited for medical treatment of assessee's wife and brother and maintained by the family with him is clearly a story which is far-fetched, away from the facts and cannot be given much credence. It is also the fact that the assessee has tried his level best to keep these undisclosed accounts under the wraps and when faced with the investigation by the AO has made efforts to explain such money from the sources such as savings of daughter, wife, brother etc. In this regard, it is also mentioned that the assessee clearly maintains proper cash book, he has personal balance-sheet and trades and deals in stocks and shares. It is also noted that during the course of the instant proceedings, the assessee himself represented his case. These facts show that assessee is well aware of the nuances of the accounting and is familiar with the provisions of the Income-tax Act if all these transactions whic....
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....existence of aforesaid two undisclosed bank accounts came to light. The AO noted that in the aforesaid two undisclosed bank accounts there are various credit transactions both through cash and cheque. As per the assessee, the amounts were deposited through cheque from the bank accounts maintained by him and his wife in HDFC bank, while the cash has been deposited from the personal savings and corpus generated to meet the medical treatment of his wife and his brother. In this regard, during the course of hearing, the learned AR referred to the bank account statements of the assessee and his wife maintained with HDFC Bank vide account no. 02122100000104 and 0060210011578 respectively. During the appellate proceedings before the learned CIT(A), assessee provided following details of cheque received in aforesaid two undisclosed bank accounts : ASHOK KUMAR SANGHI STATEMENT SHOWING CHEQUES RECEIVED FROM PARTIES IN NGGSB A/C-16650 & VAISHYA SAHAKARI BANK A/C-6217 S.N Party Name Bank Name Cheque No. Date Amount A) NKGSB Bank - A/c-16650 1. A.K. Singhi HDFC OD A/C....
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....C Bank was an overdraft account and the closing overdraft balance on this account tallied with the 'Bank OD A/c' on the liability side of the assessee's balance sheet. Further, in the return of income filed in response to notice issued under section 148 of the Act, the assessee returned the above figures of overdraft. Therefore, in view of the above, insofar as the cheque transactions amounting to Rs. 8,15,000 in the aforesaid two undisclosed bank accounts, which are duly corroborated with the assessee's overdraft bank account maintained with HDFC bank, we find the same to be duly explained. Therefore, to this extent we direct the AO to delete the addition made under section 69A of the Act. 19. However, as regards wife's bank account no. 0060210011578, the nature of receipts and source of deposit in her account are not explained and the assessee merely submitted that the deposits in aforesaid two undisclosed bank accounts are also from wife's account maintained with HDFC Bank. Further, since the source of deposits in wife's bank account maintained with HDFC Bank, from where amount of Rs. 14,00,000 was transferred through cheque in the aforesaid two un....
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..... 3 is partly allowed for statistical purpose, while ground No. 4 raised in assessee's appeal pertaining to cash deposit of Rs. 13,51,500 is dismissed. 23. The issue arising in ground No. 5, raised in assessee's appeal, is pertaining to addition of Rs. 6,31,000 in respect of peak cash deposit in HDFC bank account. 24. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the course of assessment pursuant to notice under section 148 of the Act, while examining the entries in the disclosed bank accounts of the assessee it was observed that there are several entries of cash deposits. The assessee was asked to file source of such cash deposits along with copy of cash book Ledger. In reply, the assessee filed two cash book Ledgers. One as per the books of account maintained and other accounting for the undisclosed bank accounts. The AO vide order passed under section 143(3) r/w section 147 of the Act observed that the cash book Ledger as per books maintained did not show any opening or closing balance. However, as on 21/07/2009 the assessee's cash book had peak credit balance of Rs. 6,31,000. Further, till 27/07/2090 has shown ....