TaxTMI 
TaxTMI 
TaxTMI 
2024 (11) TMI 557
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....ri Bank Ltd' ['MSBL' hereinafter] and was in receipt of certain interest of Rs. 1.625 Lakhs from Mr Vinod Jain the case of the assessee after recording the reasons and obtaining prior approval of competent authority was re-opened u/s 148 of the Act vide notice dt. 30/03/2019. 2.2 In the event of non-compliance from the assessee, the Ld. AO invoking the provisions of section 133(6) of the Act obtained a bank statement from MSBL which revealed him actual cash deposits for the year under consideration were to the extent of Rs. 54,75,000/- as against the information received through Annual Information Return ['AIR' hereinafter] on the basis of which case was re-opened. The assessee vide various notice issued to him u/s 148 & followed by 142(1) of the Act was called upon to explain nature & source such cash deposits. 2.3 In pursuance of notices issued the assessee filed his return of income ['ITR' hereinafter] declaring total income of Rs. 1,68,257/- after considering the gross receipts/income received against (i) interest income, including interest received on balance advanced to two parties viz; M/s Vinod Construction & M/s BU Bhandari, (ii) brokerage income and (ii) saving bank int....
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....ubstantial basis for reopening. It is contended that, since the Ld. AO did make no addition on account of cash deposits made by the assessee which was predominant element in forming the reasons to believe escapement of income, therefore any other addition in view of amended provision of section 147 of the Act r.w.s. explanations thereto is impermissible in law. To drive home this contention the Ld. Mr Upasani pressed into service the decision of Hon'ble jurisdictional High Court rendered in case of 'CIT Vs Jet Airways (I) Ltd.' [2010, 331 ITR 236 (Bom)]. Insofar as the merits of the case is concerned, referring to paper book & other material placed on records, the assessee reiterated its version of contentions as were laid before both the tax authorities below and prayed for deletion of balance addition sustained in first appeal. 4. Per contra, without objecting admission of legal ground raised first-time in present proceedings, the Ld. DR Mr Rajpurohit averred that, said legal ground shall buy no relief to the assessee as while invoking reassessment jurisdiction cash deposit was not only the sole issue but also the interest income undisclosed by the assessee. The notice issued u/....
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....Ahmedabad Electricity Co. Ltd. v CIT' [1993, 199 ITR 351(Bom)]. Ergo, same is admitted and advanced accordingly. 7. We shall now deal with the admitted legal ground which seeks to quash the reassessment for the reason that when no addition of income is made on the basis of which reasons for escapement was recorded for issuance of notice u/s 148 of the Act, then Ld. AO ceased to possess any legal jurisdiction u/s 147 of the Act to tax any other income. In the instance case, we observed that, while recording the reasons for invocation of reassessment jurisdiction the Ld. AO had information from AIR which explicitly spelt-out two items viz; (1) cash deposits of Rs. 44.75 Lakhs and (2) interest of Rs. 1.625 Lakhs. Admittedly, no addition was made on account of cash deposits being fully explained by the assessee with cogent evidences. However, when reassessment order u/s 144 r.w.s. 147 was passed, the Ld. AO besides making a token addition of interest income of out of the reasons recorded was also made two bullet additions which newly came to his notice during such reopened proceedings; (1) Rs. 10 Lakhs on account of discrepancies in loans advanced to M/s Vinod Construction as unexplai....
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.... 9 SCC 1 (SC)] we say so because if the limit of escaped income set in 149 of the Act is considered to be inclusive of BEL, then it would grant license to the Revenue to issue notice u/s 148 of the Act invariably against all the persons [as defined u/s 2(31) r.w.s. 139(1)(b) of the Act] for their failure to file return in the grip of escapement who may not have earned even a 'penny' as income. This interpretation of the law would have draconically defeated the purpose & intent of both section 139(1)(b) and 149(1) of the Act. 11. Now coming to present case, we note that, the total income of the appellant for the year under consideration from all sources (interest & brokerage) did not exceed the BEL, hence admittedly the assessee was neither under obligation nor did he file return of his income u/s 139 of the Act. When the case of the appellant u/s 148 r.w.s. 149(1)(b) of the Act was reopened alleging that there has been escapement income of Rs. 46,37,500/- arisen to him from two grounds / items i.e., (1) cash deposits of Rs. 44,75,000/- (2) interest income of Rs. 1,62,500/-, the assessee did file his return in response thereto declaring net taxable income of Rs. 1,68,257/-. The mat....
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....0/- by Ld. CIT(A) is floccinaucinihilipilification, hence to be given no consideration, treated & advanced accordingly. 13. Admittedly in the reassessment, the Ld. AO had made no addition in relation to first ground/item despite the fact that he had reason to believe that cash deposits had escaped assessment in the hands of the assessee which was sought to be taxed as per the reasons recorded. The second item 'interest' per se was insufficient to give rise to escapement of income on solitary basis so as to trigger the invocation of reassessment jurisdiction u/s 148 r.w.s. 149(1)(b) r.w.s. 139(1)(b) of the Act. Hence, when the very basis of reasons recorded 'cash deposits' by the Ld. AO was ultimately not added, then the primary reason to believe that income had escaped assessment fails and such reassessment cannot be treated as a valid order in the eyes of law. 14. The above issue for our consideration is no longer res integra, as the Hon'ble Jurisdictional High Court after sumptuous consideration of explanation 3 to section 147 of the Act, while adjudicating the issue in 'CIT Vs Jet Airways (I) Ltd.' (supra) held that when reasons are recorded for bringing to tax 'X'....