AI Drafter 
TaxTMI 
TaxTMI 
2024 (1) TMI 262
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....cts on the record and hence the same kindly be deleted in full." 2.1 In Ground-1, the assessee has challenged the action taken u/s 147/148 being without jurisdiction and prayed to quash the notice u/s 148 as also the impugned assessments order dated 29.02.2015 mainly on the plea that there was no valid service of the notice u/s 148 and that the AO had reason to suspicion than reason to believe. The submissions so made by the ld. AR of the assessee are detailed below:- "Submission: 3.1 It is submitted that the law contemplates a valid service of a notice u/s 148, which is a condition precedent for a valid assumption of jurisdiction by the concerned AO. If it is established that there was no valid service/service of such a notice, the AO cannot assume jurisdiction and consequently the assessment made by him pursuant thereto has to be quashed. 3.2 In the impugned order, the ld. AO has stated that the impugned notice u/s 148 dated 25.03.2015 was served upon the assessee through postal authority vide Receipt No. ER267470372 dated 27.03.2015 at the address given in the PAN data. However, as a matter of facts the impugned notice was never served upon the asse....
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.... 3.4.2 The above decision was followed in the case of Mrs. Shubhashri Panickeer vs. CIT (2018) 166 DTR (Raj) 403 ITR 434 (HC)(DPB 1-11). There are several other decisions taking this view. 3.5 The fact that the impugned notice u/s 148 was sent through registered post even does not provide any support of the provisions of S. 27 of the General Clauses Act, 1897, (otherwise also not so claimed Jin as much as the same merely provides a rebuttable presumption and the moment such presumption. is rebutted, onus again shifts upon the revenue. The scope of this provision has been explained in Harcharan Singh vs. Shiv Rani, AIR 1981 SC 1284, as under: "Sec. 27 of the General Clauses Act, 1897 deals with the topic Meaning of - service by post' and says that where any Central Act or regulation authorizes or requires any document to be served by post, then unless a different intention appears, the service shall be deemed to be effected by properly addressing, prepaying and posting it by registered post, a letter containing the document, and unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of....
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....s ground No. 2 of the assessee, the A.O. during the course of assessment proceedings and on the basis of information noticed that the assessee has deposited cash of Rs. 29,98,450/- in his saving bank accounts with ICICI Bank Ltd but alleging that the assessee failed to explain the source of the cash credit found in the bank account which remained unexplained u/s 68 and added the entire deposit made on different dates totaling to Rs. 29,98,450/- as the income from undisclosed sources. The relevant findings of the AO at para 7 of his order are as under:- 7. Under the facts and circumstances of the case and relying upon the above judgement, it is deduced that the assessee has failed to explain the source of cash deposit/credit to his bank account and he has offered no proper, reasonable and acceptable explanation to the source of cash credit of Rs. 29,98,450/- in the bank account. Therefore, in view of the above, it is fairly construed that the assessee has absolutely failed to explain the source of cash credit which remains unexplained u/s 68 of the Income Tax Act, 1961. Accordingly, the credit of Rs. 29,98,450/- is treated as unexplained income of the assessee out of undisc....
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....u/s 69 of the Act. 3.3 During the course of hearing, the ld. AR of the assessee prayed for deletion of addition and to this effect he filed a detailed written submission as under:- "Submission: 1. No addition Legally Sustainable u/s 68 w.r.t bank deposits. The facts are not denied that this assessee is an employee as admitted by lower authorities and in particular by the ld. CIT (A) who categorically recorded this fact in the operative part at page 2 para 2.1 that and the appellant did not file its ROI (Page 11 para 3.1.2). In any case the authorities have never said that the appellant has maintained the regular books of accounts and therefore, the law is well settled that for invoking of S.68, the subjected amount must be found credited in the accounts regularly maintained. In this case it is admitted that no accounts were maintained hence, there was no question of invoking of S.68. 1.1.1 Supporting Case laws: In CIT vs. P. Mohan Kala (2007) 291 ITR 278 (SC) held "The question is what is the nature and scope of S. 68 of the Act? When and in what circumstances Sec. 68 of the Act would come into play? That a bare reading of S. 68 suggests that there has....
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....ly, the addition made on account of the impugned amount was not justified." 1.3 The ld.-CIT (A) at page 32 para (vii ) has held as under: "It may be mentioned that the AO has made addition on account of unexplained deposits in the saving bank account of the appellant without stating the section of the Act. Since, I am having the powers co terminus with the AO, it is, therefore held that the addition on account of unexplained deposits in the saving bank account is being made u/s 69 of the Act." Firstly, it is wrong to say that the AO did not state any Section in much as the AO very clearly made the addition u/s 68 only as a cash credit addition as evident from his findings recorded at page 6.1 para 6 followed by various case laws which also refers to 8.68 only and thereafter he concluded in para 7 page 8 where he finally made the addition of Rs. 29,98,450/- as unexplained cash credit u/s 68 of the Act. Thus, to say that the AO did not mention the section is factually wrong and is a fact twisted by Id. CIT (A) to suit his own convenience. Secondly, the use by the first appellate authority of co-terminus power is not open in a case where the appella....
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....r appealed against", and the case reported in CIT vs. Rai Bahadur Hardutroy Motilal Chamaria (supra) wherein it has been held that, "It is not, therefore, open to the AAC to travel outside the record, i.e., the return made by the assessee or the assessment order of the ITO, with a view to finding out new sources of income and the power of enhancement under s. 31(3) is restricted to the sources of income which have been the subject-matter of consideration by the ITO from the point of view of taxability. Their Lordships considered the meaning of the word 'consideration' and held that, "Consideration' does not mean, incidental' or 'collateral' examination of any matter by the ITO in the process of assessment, therefore, there must be something in the assessment order to show that ITO applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection". In the instant case, the AAC has, after issuing notice, himself considered the new material and has gone into new sources of income the consideration of which he had no jurisdiction. 8. In fact, w....
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.... by AO u/s 68 he made addition u/s 69 though did not gave any mathematical effect thereto. Therefore, without giving statutory notice u/s 251(2), this part of the impugned order deserves to be quashed without taking any cognizance thereof. Thus, the legal contention of the assessee as made above deserves full consideration and adjudication. Alternatively, and without prejudice 2. On Merits: 2.1 Detailed submissions (PB 6-11) and Additional submissions (PB16-17)were made explaining the source of cash deposits. w.r.t the summary of the cash withdrawals vis-a-vis the cash deposits (PB-5), which are fully reproduced in the order of the CIT(A) and are strongly relied upon. The appraisal of the summary reveal that there is no negative cash balance on any date of deposit. Further in absence of establishing utilization of the available cash elsewhere, the onus of which was upon the AO, no addition was legally possible as was held in various cases already cited in our submissions (PB 6-17) before the CIT (A). Pertinently, even the ld. CIT(A) has recorded a categorical finding on this- aspect at pg.31 para(VI) stating that in the instant case under consideration, n....
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....leaving a meager Rs. 7,250/- which could be met by the opening cash in hand of Rs. 50,000/- accepted by the CIT(A). This working was submitted to him on 20.10.2016 (encl. here with) but perhaps ignored. 2.3. His further objection that in absence of Shri Sunil Sharma the additional evidence could not be proved at pg.30, is again a purported misconception of law. While filing the certificate, we have already stated in para 1.2 page 25 of CIT(A) order during the course of the appellate proceeding the CIT(A) himself required the certificate. His findings are contradictory as on one hand he alleges the same to be additional evidence but at the same time he has also considered and adjudicated the evidence so filed which implies that he has admitted certificate and on merit he did not give full benefit of the same to the appellant. 2.4. As regard the claimed opening cash in hand of Rs. 2.50 lakh as on 01.04.2007 the ld.CIT (A) partly accepted the plea at pg.31 pr. VI alleging lack of evidence and because appellant was not filing ROI hence he estimated the same at Rs. 50,000/-. Thus, evidently the ld.CIT(A) accepted the contention of availability of opening cash in hand, ....
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.... such credits could not be ignored/denied. The very fact that the credits were on account of bank transfers/RTGS from third parties itself prima facie proved the bona fides & genuineness of the source in the hands of the appellant. The claim of withdrawals in cash and utilization towards deposits can't be denied. No other material has been referred to or relied upon by the AO to justify a different conclusion. It is not alleged that the bank transfers were a made up affair and in reality it was the Assessee's undisclosed income introduced. It is also not the case of the revenue that they made inquiries from those parties. Thus, we find no justification behind denial to consider availability of the various bank transfers to the credit of the bank account of the assessee which were rightly used as a source for subsequent cash deposits made by the assessee. It is noticed that major credits/transfers were from one RJ which is the proprietary concern of Shri Sunil Sharma, of Rs. 22.92 lakhs. Since the AO did not provide any opportunity or confronted of his doubt with regard to those transferring parties, the assessee filed a certificate dated 05.10.2016 from RJ before the CIT(A) pla....
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....hat the AO chose not to make any inquiry directly from those parties who transferred funds but merely suspected. It may be clarified that the Id CIT(A) has not denied the admission of the certificate from RJ which he has even discussed and adjudicated. Moreover, all other additional evidences submitted by the assessee were duly admitted and considered. We thus, find no justification behind the allegation of not proving the certificate given by RJ. The ld CTT(A) therefore, was not justified in excluding the cash withdrawals Rs. 9,90,000/-, Rs. 1 lakh, Rs. 4,02000/, Rs. 5 lakhs and Rs. 3 lakhs made on 11.12.2007, 01.03.2008, 04.03.2008, 06.03.2008 and 25.03.2008 respectively shown by the assessee in its cash flow statement. At the same time, we fully agree with the contention of the ld CIT(A) based on the decisions in the cases of Sind Medical Store(Supra) and Eshwardas Mutha (Supra) by Hon'ble Rajasthan High Court holding that when any amount is paid and later on withdrawn from the bank, such cash would be available for recycling and rotation unless otherwise established as invested elsewhere by the revenue. Hence, the onus is upon the AO to prove that unless the cash withdrawal....