TaxTMI 
TaxTMI 
2023 (4) TMI 277
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....peals. ITA No. 182/Asr/2019 is taken as a lead case. 2. Assessee has filed an application for condonation of delay of 02 days wherein, assessee has stated that delay has occurred due to postal delay which was not control of the assessee. The delay for 02 days for filing the appeal before the ITAT is prayed for condone. The Ld. Sr. DR has not made any strong objection against the condonation of delay. Therefore, the delay of 02 days is condoned. ITA No. 182/Asr/2019 3. The assessee has taken the following grounds: "1. In the facts and circumstances of the case the Ld. AO has erred in opening of the assessment by recording false reasons under section 148(1) of the Income Tax Act. 2. The Ld. AO has erred in recording reasons on the basis of surmises and conjectures, ignoring the fact on record. 3. The Ld. AO, while recording reasons, has erred in treating cash deposits in bank a/c and payment against credit card as income of the assessee, which is wholly outside the purview of meaning of Income defined u/s. 2(24) of the Act. 4. The AO has erred in opening of the assessment by recording arbitrary and irrational reasons, not based on relevant....
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.... the CIT(A) and the assessee remained unsuccessful. Being aggrieved the assessee filed appeal before us. 5. The case was called for hearing; none was present on behalf of the assessee. ITA No. 182/Asr/2019 and 183/Asr/2019 were requested to take on basis of the written submission by the Ld. counsel for the assessee. Only ITA No. 184/Asr/2019 was prayed for adjournment. But there is no such a reasonable ground for the adjournment of hearing. The adjournment petition was rejected and ITA No. 184/Asr/2019 is taken for adjudication with the consent of the Ld. Sr. DR. 6. The Ld. counsel for the assessee has filed a written submission which is taken on the record. The grievance of the assessee is related to legal grounds and the factual grounds. The assessee challenged the jurisdiction of the Ld. AO for reopening of the case u/s. 148 of the Act and claimed that the entire recorded reasons is false, and the assessment order is liable to be quashed. Ground No. 1 to 8 & 10 are purely related to the legal grounds which were already agitated before the Ld. CIT(A). Only the ground No. 9 is factual ground and ground No. 11 is general in nature. 7. The Ld. Sr. DR vehemently argued and f....
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....assessment by recording false reasons under section 148(1) of the Income Tax Act". i. It is submitted that the Assessing Officer has recorded "reasons to believe that income chargeable to tax has escaped assessment", relying on provisions of para (a) of Explanation 2 to Sec 147 of the Income Tax Act reproduced as under: Explanation 2.--For the purposes of the section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:--(a) where no return of income has been furnished by the assessee although her total income or the total income of any other person in respect of which he is assessable under the Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; ii. While recording reasons u/s. 148(2) of the Act, the AO has stated that: "it has been verified and found that the assessee has failed to file her return of income for the financial year 2009-10 relevant to assessment year 2010-11, therefore I have reason to believe that an income of Rs. 48,35,500/- has escaped assessment in terms of provisions of section 147 of the Income Tax Act 1961. Accordingly I am....
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....hanical action on the part of the Ld. AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that the cash deposits and payments of credit card bills represented income. The Ld. AO, while recording reasons, has erred in treating cash deposits in bank a/c as income of the assessee, which is wholly outside the purview of meaning of Income defined u/s. 2(24) of the Act. i. The Assessing Officer has reopened the assessment wrongly presuming that cash deposited in Bank a/c amounting to Rs. 48,35,500.00/- has escaped assessment. AO proceeded on fallacious assumption that bank deposits constituted undisclosed income. The reassessment proceedings could not be resorted to unless there was reason to believe, rather than suspect, that income had escaped assessment. ii. The AO has overlooked the fact that the sources of deposit or payment need not necessarily be income of the assessee. Though, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a ca....
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....k and payment of credit card bills as per the AIR information. The cash deposits in bank and payment of credit card bills do not necessarily constitute income. Thus, it was a mere suspicion of the AO that prompted him to initiate assessment proceedings under section 147 for the purpose of making a roving and fishing inquiry, which is neither countenanced, nor sustainable in law ii. It is submitted that the AO cannot reopen the assessment for making a roving and fishing inquiry. To reopen the assessment, it is necessary that there must be something which indicates, even if it does not establish, the escapement of income from assessment. That it is only on that basis that the AO can form a prima-facie belief that an income has escaped assessment. Merely because some investigations if made, could have led to detection of an income escaping assessment, cannot be reason enough to hold the view that the income has escaped assessment. There has to be some kind of cause and effect of relationship between the reasons recorded and the income escaping assessment. iii. It is apparent that on the basis of AIR Information, the AO has reason to suspect and not reason to believe ....
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....for the assessment year under consideration. ii. It is well settled that the reasons recorded for reopening the assessment have to speak for themselves. They have to spell out that (i) there was a failure of the Assessee to disclose fully and truly all the material facts necessary for the assessment and (ii) the reasons must provide a live link to the formation of the belief that income had escaped assessment. Ground No. 7 In the facts and circumstances of the case, the Ld. AO has erred in proceeding to assess income of the assessee by rejecting the objection without application of mind. i. The assessee has filed "objections to reasons recorded" as per Apex Court ruling in the case of Gkn Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. But the assessing officer did not dispose of the same on merit as per law. On the other hand the Ld. AO proceeded to assess income of the assessee by rejecting the objection without application of mind and holding the "false reasons" recorded as "correct reasons" ii. It is well settled that the reasons recorded for reopening the assessment have to speak for themselves. They have to spell out that ....
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....tion for reopening the assessment is that there must be income chargeable to tax and which should have escaped assessment. As per reasons recorded, the Ld. AO has treated the cash deposit in bank a/c as income of the assessee. But the deposit of cash in bank a/c itself is not income within meaning of "income" as per provisions of section 2(24) of the Act. Therefore, assessment reopened without application of mind is invalid ab initio as per settled position of law. The Hon'ble Supreme Court In ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 has held that "it is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening the assessment. At the same time, it is to be borne in mind that it is not any and every material, howsoever vague and indefinite or distant, remote or far-fetched, which would warrant the formation of the belief relating to escapement of the income from the assessment". v. It is submitted that there is no direct nexus or live link between reasons recorded and the AO's formation of he....
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.... same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and farfetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment." 9. Related to factual ground, the assessee was unable to bring true fact before the revenue authorities. In the written submission the assessee has mentioned that the assessee filed the return voluntarily on 31st March 2011 with acknowledgment No. 8611008992 and declaring total income at Rs. 4,50,000/- and paid due tax. The assessee was also the partner of M/s. Kash Ind Roller Flour Mills and was fully associated with the firm. The entire addition of cash deposit amount of Rs. 13,82,500/- in HDFC Saving Bank a/c, cash deposited amount of Rs. 30,12,654/- in ICICI Saving Bank a/c and Rs. 13,44,000/- is also deposit cash in ICICI Saving Bank a/c was added back with total income. The assessee claimed that mere deposit of cash cannot be taken as income of the assessee. In ITA No. 184/Asr/2019, the assessment order was passed u/s. 144 of the Act. The assessee has raised two legal points related to jurisdiction of the Ld. AO for is....