TaxTMI 
TaxTMI 
2023 (7) TMI 1254
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....f cash found deposited in the bank account of the assessee. That all assessments resulted in treating the cash deposits as unexplained and thus income of the assessee from undisclosed sources along with several other additions made. The ld.counsel for the assessee contended that the facts and circumstances leading to the additions in all the cases were identical, and therefore, all the appeals be taken up together for hearing and adjudication. The ld.DR fairly agreed to this, and therefore all the appeals were heard together and are being disposed of by this common consolidated order. 3. The ld. counsel for the assessee pointed out that in the appeals filed by the assessee for each of the assessment years involved in ITA No.1461 to 1463/Ahd/2019, the assessee has challenged the validity of the assessment framed under section 147 of the Act. Therefore, the appeals of the assessee were taken up first for hearing. ITA No.1461 to 1463/Ahd/2019,Assessees Appeals A.Y 2010-11 to 2012-13 4. The assessee has in all the appeals raised identical legal ground challenging validity of the assessment framed under section 147 of the Act in ground no.1. For the sake of brevity and convenie....
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....ded that this plea had been raised by him before the Ld.CIT(A) also and in support reliance had been placed on the decision of the ITAT Ahmedabad Bench *in the case of Mariyam Ismail Rajwani vs ITO in ITA No. 676 /Ahd/2016 dated 09/08/2016.Ld.Counsel for the assessee pointed out that the Ld.CIT(A) dismissed this contention at para 5.2 to 5.11 of his order and while doing so distinguished the decision relied upon by the assessee in support of his contention at para 5.5 (ii) of the order as under: "In this decision, the Hon'ble ITAT, SMC Bench, Ahmedabad has allowed the appeal of the assessee stating that mere cash deposit in the bank account will not be the basis of reopening of the case. Here it is pertinent to mention that the appellant has been very irregular in compliance of his legal obligations as far as Income Tax provisions are concerned. The entire sequence of events has been narrated by the AO in his letter dated 31-07- 2017 by specifically mentioning the failure on the part of the appellant in true disclosure of the particulars of his income. The subsequent enquiries made by the AO justifies this action which is being discussed in this order." He pointed o....
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....of Smt A Sridevi [2018] 100 taxmann.com 434 wherein it is held as under: " 69, read with sections 147 and 149, of the Income-tax Act, 1961 - Unexplained investment (Loans/advances) - Assessment year 2009- 10 - Assessee filed her return of income which was processed under section 143(1) - Subsequently, case was reopened by issuing a notice under section 148 and, further, reassessment order was passed making addition in respect of unexplained cash credit - Later on, Income Tax Officer, once again reopened assessment by issuing notice under section 148 - Reason furnished for reopening of assessment was that assessee had given certain advance to one, 'SN' for purchase of property and source of amount so paid was not : explained - Assessee raised an objection that there was full and true disclosure of all material facts as when earlier reassessment proceedings took place; she had filed all necessary details including cash flow, which reflected payments made to SN as advance, and, therefore, reopening of assessment was not permissible - It was noted that merely because a cash flow statement was appended by assessee it could not be taken to be established that assessee ha....
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....elief of escapement of income and thus the jurisdiction assumed to reopen the cases of the assessee for the impugned years by the AO was not in accordance with law. As is evident from the reasons recorded by the AO for reopening the case of the assessee, the only information in the possession of the AO was cash found deposited in the bank account of the assessee amounting to Rs. 15,80,000/- for Asst. Year. 2010-11; Rs. 12,16,500 for Asst. Year 2011-12 and Rs. 18,46,500/- for Asst. Year 2012-13 along with fact that for Asst. Year 2010-11 and A.Y 2011-12 the assessee had filed return of income. Thereafter, he proceeded to state that the assessee has not disclosed source of fund for depositing cash in the bank account of the assessee; that there was failure to fully and truly disclose all income for taxation. 13. Firstly, the AO has not mentioned in his reasons recorded where and how such disclosure was mandatorily required to be made by the assessee. The Ld.DR was also unable to point out the same and the Ld.Counsel for the assessee maintained that no such disclosure was required to be made in the return of income filed. In the absence of any requirement to disclose source of d....
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....the following ground: During the financial year 2007-08, the assessee has made transaction of Rs 10,24,100 (deposits in cash) in his saving bank account but no return of income was filed by the assessee. As such, it was reason to believe that there is an escapement of income at Rs 10,24,100 on the part of the assessee. Therefore, in the light of the above fact that the income chargeable to tax for the assessment year 2008-09 has escaped assessment within meanings of section 147 of the Income Tax Act, notice was issued under section 148 on 14.9.2009 which was served upon the assessee through his counsel Sri Arun Kumar Agarwal, Advocate, on 14/09/2009. 4. The short question that we are required to adjudicate is whether or not, on the basis of the above reasons, reassessment proceedings can be lawfully initiated. This aspect of the matter was not examined by the CIT(A), but, as is the settled legal position in the light of Hon'ble Supreme Court's judgment in the case of National Thermal Power Co. Ltd Vs CIT [(1198) 223 ITR 383], the assessee is not precluded from raising this legal issue at this stage, on the ground that the same has not been raised before the author....
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....f-explanatory and should not keep the assessee guessing for reasons. Reasons provide link between conclusion and the evidence....". Therefore, the reasons are to be examined only on the basis of the reasons as recorded. The next important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment. Undoubtedly, at the stage of recording the reasons for reopening the assessment, all that is necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of income having escaped assessment is proved to the hilt. What is, however, necessary is that there must be something which indicates, even if not establishes, the escapement of income from assessment. It is only on this basis that the Assessing Officer can form the belief that an income has escaped assessment. Merely because some further investigations have not been carried out, which, if made, could have led to detection to an income escap....
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.... reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The Assessing Officer has opined that an income of Rs 10,24,100 has escaped assessment of income because the assessee has Rs 10,24,100 in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedin....
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....o income being taxed in the hands of the assessee. Learned Departmental Representative has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, there cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather than desirability of further probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn. 10. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, a....
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....ent of income was vis-à-vis unexplained loans and advances particulars relating to which, had not been disclosed truly and fully in the financial statement of the assessee. In the present case, the case of the AO is that the assessee was required to disclose the source of cash deposited in the return of income, while the fact is that there is no such requirement in law to disclose such information. Therefore, the said decision of Hon'ble Madras High Court is not applicable to the facts of the present case and has been incorrectly applied by the ld.CIT(A) while upholding sufficiency of the reasons recorded in the present case. 18. The ld.CIT(A), we have noted, while dismissing the assessee's contention of insufficiency of reasons while challenging validity of jurisdiction assumed by AO to reopen the case of the assessee, and while distinguishing decision of Mariyam Ismail Rajwani (supra) ,has relied on the fact that the assessee is very irregular in compliance of his legal obligations as far as income-tax provisions are concerned, and sequence of events narrated by the AO in his letter dated 31.7.2017 specifically mentioned the failure of the assessee to disclose particula....
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....rther, the appeals of the Revenue also become infructuous since the assessment order itself has been set aside. 20. In the result, all appeals of the assessee are allowed in above terms; while all appeals of the Revenue are dismissed. Order pronounced in the Court on 6^th March, 2023 at Ahmedabad. ============= Document 1 481 REASONS RECORDED FOR ISSUE OF NOTICE US. 143 OF THE I.T.Act, 1961. formation in this case shows that during the F.Y. 2009-10, the Assessee had igh value cash deposits amounting to Rs. 15,80,000/- maintained with HDFC Bank Limited, However, the Assessee has fited the Return of Income but has not offered income for taxation, and also not disclosed the source of fund for depositing such amounts in the Bank Accounts. Thus there was failure on the part of the Assessees to disclose fully and truly all the income for Taxation, Therefore, to verify the source of income and transactiori, I have reason to believe that the income chargeable to tax had escaped assessment to that . extent, for A.Y.2010-11, within the meaning of Section 147 of the Act . Hence, in my opinion, this is a fit case for re-opening of a....