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2024 (2) TMI 395
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....ed income; more so, when sources of cash deposits need not necessarily be income; reassessment proceedings cannot be initiated only to examine the facts of the case unless there is a reason to believe rather than suspect; the impugned reassessment proceedings u/s 147/148 is liable to be quashed." "2. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the making addition u/s. 69A of Rs. 53,41,000/- on the count of cash deposits into bank account treating it as explained, which is arbitrary and is liable to be deleted." "3. On the facts and circumstances of the case and in law, the Id CIT(A) has erred in sustaining the application of sec.15BBE on the alleged addition of Rs. 53,41,000/-." 3. Brief facts of the case culled out from the record are that the assessee is engaged in the business of cable and HB wire binding manufacturing and filed his return of income for A.Y. 2014-15 on 29.11.2014 declaring total income of Rs. 6,92,760/-. On the basis of reason recorded that, the assessee has deposited cash of Rs. 53,41,000/- in various bank accounts, proceedings u/s 147 were initiated and notice u/s 148 was issued to the asses....
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....O proceeds on a fallacious assumption that bank deposits constitute undisclosed income and overlooks the fact that the source of the deposit need not necessarily be the income of the assessee, reassessment proceedings (assessment proceedings in the present case) are required to be set aside. 40. Now, the AO recorded the following reasons for initiating assessment proceedings u/s 147 in the present case: "Brief reasons to issue notice u/s 148 As per information available with this office, the assessee is found to maintain savings bank account with SBI, Khajurla, Tehsil Phagwara, in which the assessee, has inter alia, made following cash deposits during the account period 1-4-05 to 31-3-06: dated 28-4-05; amount Rs. 2,60,000/- To verify the source of above cash deposit enquiry letter was issued to the assessee on 13-3-08 which was received by Smt. Tejpal Kaur on behalf of the assessee. The assessee has failed to turn up on the date of hearing i.e., 26-3-08. As per database available with this office, neither the assessee is assessed to IT nor the return for the AY u/c has been filed by him. Therefore, under the circumstances, the above deposit rema....
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....osits made by the assessee in his bank account. 46. Bir Bahadur Singh Sijwali (2015) (Del-Trib) makes reference to Hindustan Lever Ltd (2004) (Bom), to hold that the reasons recorded for reopening the assessment are to be examined on a standalone basis and nothing can be added to the reasons. It was also observed that the Reasons must point out to an income escaping assessment and not merely need of an enquiry which may result in detection of an income escaping assessment. It was observed that 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; that merely because some further investigations have not been carried out, which, if made, could have led to detection of an income escaping assessment, this cannot be reason enough to hold the view that the income has escaped assessment; and that there has to be some kind of cause and effect of relationship between the reasons recorded and the income escaping assessment. The observations of Lakhmani Mewal Das (1976) (SC), were repro....
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.... 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 assessment." 48. Bir Bahadur Singh Sijwali (2015) (Del-Trib) the Tribunal concluded thus: "9. ...but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does not lead to income being taxed in the hands of the assessee. Ld DR 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 is existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. 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 ra....
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....s 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 assessment. 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 AO, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings." [as extracted from Bir Bahadur Singh Sijwali (2015) 53 taxmann.com 366 (Del-Trib)] 1.6. It is submitted that 0m Prakash Shukla (2018) (Lkw-Trib) dt. 30-11-18, held as under: "....
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....in Amrik Singh (2016) (Asr-Trib), to hold, inter alia, as follows: "Para 45 to 50." 10. Bir Bahadur Singh Sijwali (2015) (Del-Trib) and Amrik Singh (2016) (Asr-Trib) were followed in Munni Devi (2016) (Del-Trib) and Harmeet Singh (2017) (Del-Trib). 11. No decision contrary to the above decisions has been cited before me. 12. In view of the above, finding merit in the grievance raised by the assessee by way of the additional ground of appeal, the reasons recorded by the AO for issuance of notice u/s. 148 are held to be invalid, being reasons not sufficient to form belief of escapement of income, based on vague information. All proceedings pursuant thereto, including notice issued u/s.148, the assessment order dt.18-3-14 and the impugned order dt.28-9-16, are thus, annulled and cancelled. No other issue survives for adjudication, nor was anything else argued." [as extracted from 0m Prakash Shukla (2018) ITA No.763/Lkw/2016 (Lkw-Trib)] 1.7. It is submitted that in Braham Prakash Lakra (2019) (Del-Trib) dt.19-11-19, held as under: "4 that assessment proceedings u/s.147 were initiated on the basis of information received from t....
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....see; and that as such, the reasons recorded were not sufficient to believe escapement of income; that rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s. 148. 12. A similar view was taken by Bir Bahadur Singh Sijwali (2015) (Del-Trib). The relevant findings read as under: "8. . . . All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs. 10,24,100 have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for 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....
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....u/s 144 by alleging that the assessee did not furnish ITR for the year u/c and made an addition of Rs. 27,43,000/- in the hands of the assessee. 5. After perusing the written submissions as well as the documentary evidence, it is noted that the AO has issued the notice u/s148 merely on the basis of non-compliance of the verification letters issued by him for verifying the cash deposits in the bank account of the assessee. The relevant extract of the assessment order read as under: "...To verify the genuineness of financial transaction, verification letters dt.27-4-16, 14-9-16, 9-12-16 & 25-1-17 were issued to the assessee through speed post. In response to these notices no compliances were made by the assessee. Subsequently sec147 were invoked and after obtaining necessary approval from the Appropriate Authority, statutory notice u/s148 dt.23-3-16 was issue to the assessee..." 6. On perusal of the above order, it is evident that the AO reopened the case of the assessee merely on the basis of suspicion that the income of the assessee has escaped assessment. It is a settled that notice u/s148 cannot be issued merely on the basis of the insufficient....
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....an income has escaped assessment. 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 AO, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings." 7. Keeping in view of the facts and circumstances of the case as explained above and respectfully following the precedent, as aforesaid, I am of the view that the reassessment proceedings initiated by the AO are bad in law and liable to be quashed. [as extracted from Harish Tyagi (2020) ITA No.3849/Del/2019 (Del-Trib)] 1.9. It is submitted that in Smt Swaroopma Tripathi (2020) (Lkw-Trib) dt.15-1-20, held as under: "2. A copy of the reasons of the AO for formation of belief of escapement of income has been filed. These reasons read as follows: "dt.5-3-15, As per AIR information available in the office it is noticed that during the year relevant to the AY. 2000-11, the assessee had made cash deposits to the tune of Rs. 13,19,000/- in her SB account maintained with PNB. The source of money deposited in SB acco....
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...." 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 AO, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings." 6. Thus, as per Bir Bahadur Singh Sijwali (2015) (Del-Trib), the material forming the basis of the AO's belief of escapement of income must indicate income escaping assessment, rather than desirability of further probe in the matter which may, or may not, lead to income escaping assessment. On the other hand, in the reasons recorded in the present case, as reproduced hereinabove, the AO himself states that: "...The source of the deposit of Rs. 13,19,000, the extent of business, nature and source(s) of the deposits are required to be examined in the case of the assessee.." 7. The AO further states in the reasons that: "...I have reason to believe that deposits to the tune of Rs. 13,19,000 has escaped assessment for the relevant AY." and that "hence, proceedings u/s147 are being initiated." 8. Here, again, Bir Bahadur Singh Sijwali (....
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....) in accordance with CBDT's instructions dated 04.03.2021. The details have been analyzed on the basis of information submitted by the assessee in response to a summon u/s 131(1A), wherein according to the Ld. AO, the assessee failed to explain about the cash deposit in the bank and accordingly the basis for reason to believe has formed, thereby it is construed that the income has escaped assessment. Under such circumstances, the contention of the assessee that the jurisdiction assumed by the Ld. AO u/s 147 of the Income Tax Act was invalid on account of insufficient reasons to believe and on the basis of fallacious assumption cannot be accepted. Ld. CIT(A) has, thus, rightly decided the issue against the assessee, which, therefore, does not require any interference. In the result ground no. 1 of the assessee stands dismissed. 11. While arguing on ground no. 2 of the present appeal, it is the submission of Ld. AR that the contention raised before the LD. CIT(A) have not been dealt with properly. The assessee has duly explained the source of cash deposit into bank; however, Ld. CIT(A) has dismissed the ground of appeal. For the sake of clarity, the submission of the assessee and ....
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....ithdrawn cash amount to Rs. 4,50,000/- from these banks, i.e., Rs. 9 lakhs on 27-3-12 & Rs. l lakh on 28-3-12 from BOI A/c No.947310100000554 and Rs. 34,50,000/- on 26-3-2012, 27-3-2012, 28-3-12, 29-3-12 & 30-3-12 from ICICI bank A/c No.028201516791; thereafter, this amount of cash withdrawal has been used by the assessee (cash book for FYI 1-12 enclosed at Pg.160 to 163) for giving land advance of Rs. 49,00,000/- on 31-3-12 to Shri Shyam Lal Rajak for purchase of land of 13,080 sq. ft. situated at Shubham Vihar, Bilah, Bilaspur through an agreement dt.31-3-12 (enclosed at Pg.53 & 54); 2.5 thereafter, in the FY13-14, the above purchase agreement with Shri Shyam Lal Rajak was got cancelled on 1-9-13 and Rs. 49,00,000 has been received back by the assessee (enclosed at Pg.55) and this cash of Rs. 49 lakhs alongwith cash balance available with him and withdrawal from bank at Rs. 4,41,000 has deposited total cash into bank account of Rs. 53,41,000; for this purpose cash book for FY. 2013-14 and bank ledger alongwith bank statement is enclosed at Pg. 166 to 169 for your honors kind consideration; 1.10. From the above, it is clear that during the year u/c the assessee h....
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....osits worth Rs. 53,41,000/- remained unexplained before the Assessing Officer and before me in the appellate proceedings. Hence, the addition of the Assessing Officer is confirmed, and appeal of the appellant is dismissed. 12. Based on aforesaid facts, it is the submission of Ld. AR that Ld. CIT(A) has erred in decided the issue on the basis that the agreement of purchase, which was subsequently cancelled were not registered, though the same were duly notarized and are substantially supported with the evidence like copy of ownership document of proposed land from land revenue records and other relevant papers, thereby disbelieving the same without confronting Mr. Shyam Lal Rajak, the seller of the land, for which the assessee has requested before the revenue authorities to summon the seller party for personal attendance to check the genuineness of the transaction through the impugned purchase agreement and cancellation agreement / verification of the document so submitted. However, Ld. CIT(A) who is having powers coterminous with that of the Ld. AO have not taken cognizance of such request of the assessee which was ignored by the Ld. AO but have summarily accepted the verdict of....
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.... cancellation agreement by treating them fabricated and invalid documents. It is the submission that if the seller party would have been summoned and confronted with the documents, the veracity of the documents and the genuineness of the transaction would have been established. It is the prayer that the addition made by Ld. AO was against the principal of natural justice and the confirmation of the same by the Ld. CIT(A) has further perpetuated the arbitrary decision of the Ld. AO, ignoring the request of the assessee, thus, the addition made on the basis of arbitrary surmise is liable to be struck down. 14. Per contra Ld. Sr. DR vehemently supported the order of Ld. CIT(A) and the Ld. AO. 15. We have considered the rival submission and perused the material available on record. In the present case admittedly, the assessee has requested the Ld. AO for verification of the veracity of documents i.e., agreements duly signed by assessee, seller party and the witnesses. Since the agreements were not registered the same were treated as fabricated, invalid and afterthought. Ld. AO have not considered it appropriate to summon the seller or to call them for personal hearing to check th....