TaxTMI 
TaxTMI 
2025 (9) TMI 1624
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....ion that the assessee had deposited cash of Rs. 15,42,000/- in the bank account maintained with Oriental Bank of Commerce during the year under consideration. Therefore, notice u/s. 148 was issued on 27.3.2019 after obtaining the necessary approval from the PCIT, Ghaziabad. The assessee submitted that the source of cash was sale of flats by him. AO thereafter asked for the source of addition of Rs. 9,01,205/- to the capital account of the appellant. Since the appellant failed to submit the source of addition to the capital account, the AO made an addition of Rs. 9,01,205/- to the income of the appellant. The AO also made an addition of Rs. 28,318/- on account of interest paid on unsecured loan. 3. Against the Order of the AO, assessee appealed before the Ld. Addl/JCIT(A)-7, Mumbai, who vide impugned order dated 30.1.2025 has dismissed the appeal of the Assessee. 4. Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal for challenging the legal issue, as aforesaid. 5. At the time of hearing, Ld. Counsel of the assessee has only argued the afore-stated legal ground and stated that AO has erred in making addition to income on the basi....
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....d loans and has forwarded huge loans to others, for which no reason and source was furnished. Since the loans have been given to related parties and no interest has been received on such loans, interest paid by the assesse is hereby disallowed. Since the assessee has concealed particulars of his true income, hence, penalty proceedings u/s. 271(1)(c) are being initiated for concealment of income." 7.2 After perusing the aforesaid paragraphs of the assessment order, I find force in the contention of the Ld. AR that AO has erred in making addition to income on the basis of Additional Capital introduced by the Assessee even though it was not having any mention in the AIR information moreover the information of AIR on the basis of which 147 was invoked was found to be duly declared in the books of account. 7.3 I note that in the case of Bir Bahadur Singh Sijawali reported in 68 SOT 197 (Del) it has been held as under:- "Section 68, read with sections 147 and 148, of the Income-tax Act, 1961 - Cash credits (Bank deposit) - Assessment year 2008-09 - Assessee deposited certain sum in his saving bank account but no return of income was filed by him - Assessing Officer issued ....
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...., 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 the Hon'ble Supreme Court in the case of 'ITO vs. Lakhmani Mewal Das', 103 ITR 437 (SC), were reproduced. as under: "the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that....
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....hen 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. Learned Departmental Representative 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 rather than desirability of further probe in the matter which may or may not lead to income escaping the assessment, in our humble understanding, cannot be drawn." 49. Now, in keeping with 'Bir Bahadur Singh Sijwali' (supra), this "information cannot form a valid basis for initiating assessment proceedings under section 147 of the LT. Act. As observed in 'Bir Bahadur Singh Sijwali' (supra), the mere fact that the deposits had been made in the bank account does ....