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TaxTMI 
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TaxTMI 
2023 (7) TMI 1254
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.... 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 convenience, we are reproducing Ground No.1 raised by the a....
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....o 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 out that theld.CIT(A) has distinguished the said case stating that consequen....
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....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 had made full and true disclosure of advance paid to SN - Further, assessee had not filed balan....
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....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 deposit, the non disclosure of the same cannot lead to the inference that assessee has failed to make any materia....
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.... 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 authorities below. Learned Departmental Representative, in all fairness, did not raise this technicality either. We, therefore, proceed to examine thi....
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....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 escaping assessment, cannot be reason enough to hold the view that income has escaped assessment. It is also important to bear in mind the subtle but important distinctio....
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.... 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 proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped....
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....f 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, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous." 14. In the present case, the mere information of cash deposit, we ho....
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....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 particulars of income and further that subsequent inquiries by the AO justified this action. The letter dated 31.7.2017 has been placed before us in PB filed on 1.9.2022 at page no.57 onwards, have been gone thr....