TaxTMI 
TaxTMI 
2023 (10) TMI 1275
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....irming the action of assessing officer in passing ex-parte order u/s 144 of the I.T. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A), NFAC has erred in confirming the action of assessing officer in making addition of Rs. 2,52,05,768/- u/s 68 as unexplained cash credit under the IT Act. 4. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal." 3. At the outset, Ld. Counsel for the assessee informs the Bench that assessee does not wish to press ground no.2, therefore we dismiss the ground no.2, as not pressed. 4. Succinct facts qua the issue are that assessee before us is an individual and had not filed his original return of income for assessment Year (A.Y.) 2011-12, u/s 139 of the Act. The Assessing Officer observed that assessee's return was appearing in NMS data Cycle-2 and as per the AIR information available in the assessee`s case, it was gathered that the assessee had deposited cash of Rs. 55,73,500/- ....
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....CIT(A) noted that assessee has failed to explain the source of debit and credit entries in the bank account, therefore NFAC/ld CIT(A) confirmed the addition made by the Assessing Officer. 8. Aggrieved by the order of NFAC/ld. CIT(A), the assessee is in further appeal before us. 9. Shri Sapnesh Sheth, Learned Counsel for the assessee, vehemently argued that there is no whisper in the reasons recorded, of any tangible material which came to the possession of the Assessing Officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred u/s 147 of the Act. The ld Counsel further contended that Assessing Officer was not having any material information to form "a reason to believe" that there was an escapement of income. The ld Counsel further submitted that cash deposit in the bank account is not an income of the assessee, which has escaped assessment, for that ld Counsel relied on the judgment of Hon'ble ITAT, Delhi bench in the cases of Bir Bahadur Singh Sijwali v. ITO 68 SOT 197 and Mahavir Parsad v ITO- ITA No.924/Del/2015 dated 09.10.2017. The ld Counsel also stated that Assessing Officer was not having sufficient material to form t....
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....f income either in the earlier years or in the current AY. Whether the sources of cash deposits are subjected to tax or exempted from tax, the same must be reflected in the return of income in the year of receipt. If the assessee had past savings, the same will be known from the earlier returns of income. In fact, the assessee himself had admitted before the AO that in the earlier years, he had meager incomes. So, he can't take a hypothetical stance and say that he may be having the savings or exempted incomes to make cash deposits in the bank account. Further, there must be a source of information in front of the AO before recording the reasons to believe that there is an escapement of income. Though the assessee had not fulfilled the conditions to obtain the reasons recorded such as not filing the return in response to the notice issued u/s 148. To be fair and showing unbiased nature of action, the AO had supplied the reasons for the reopening suo moto. The copy of the reasons is not submitted for examination during the appeal proceedings. Therefore, to adjudicate the appeal I have to depend solely on the assessment order. The reasons made available in the assessment order ar....
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.... The AO cross verified the information received with the relevant year records of the assessee available with the Department. The case was considered for reopening based on the credible information uploaded by the bank and the same is made available by the Department for action by the respective AO. There is no iota of doubt in this case to show that the AO had relied on some gossip, rumour from any corner or reopened the case merely on suspicion. Since the assessee had not filed the return and deposited huge amounts in bank account, there is a basis for belief on good faith to arrive a right conclusion of income escaped from assessment. * The expression "believe" in Section 147 requires an objective satisfaction based on definite material and information, howsoever insufficient it is. The sufficiency of the material cannot be gone into, but relevancy certainly can be gone into. The reasons for the belief should have a rational connection or a relevant bearing on the formation of the belief and should not be extraneous or irrelevant. That is, there must be live nexus between information, assesses and escaped income: - The AO had information in his hand about the deposits made i....
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.... primary duty of the AO to analyse the information received from any source. For such purpose he has to compare the information with the records available with him. If the prima facie examination of fresh information leads to a foundation for inference of income escapement, the AO can write a brief reason and reopen the case. The proceedings initiated with such a foundation be enough to treat for fulfilling the conditions laid down in the Sec. 148. Since the amounts of income admitted in the earlier years by the taxpayers in the cases relied on by the appellant are not available for comparison, the same cannot be blindly followed. Suppose, if any taxpayer had submitted a return with Rs. 10's of lakhs in the earlier year and deposited an amount of Rs. 4 to 5 lakhs in his bank account without filing the return for the AY relevant to the cash deposits, the act of reopening of the case can be said to be made on suspicion not based on reasons to believe. The case of the assessee is not having such facts. The admission of meager incomes in the earlier AY returns certainly forms a basis for belief that there is an escapement of income in the assessee's case. Therefore, the ground of a....
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....ng that he was in the cheque discounting business. 17. We note that in the course of appellate proceedings, it was submitted that during the course of assessment proceedings it was clearly explained that assessee is engaged in job work activity and also explained that due to cash crunch assessee has discounted self cheques and cash/cheque received from Shroff was deposited in bank. Such transactions were frequently done so as to ensure that cheques given to Shroff for discounting is subsequently cleared and the business requirement is met. It was also pointed out that there was not much balance in his bank account and therefore, the modus operandi stands explained. On perusal of bank statement of assessee, it is quite evident that after cash/cheque deposit, cheques have been issued immediately. In respect of such transactions, it is not possible to file any documentary evidences and inference has to be drawn on the basis of modus operandi of the transaction and the circumstantial evidences. Here, reliance is placed on following case laws wherein under identical facts, cheque discounting activity has been taken into consideration and entire cash/cheque deposit has not been regarded....