2025 (11) TMI 1586

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....ing with the mandatory conditions of section 147 to 151 of the Income Tax Act, 1961 and without recording valid reasons as per law and without obtaining valid approval as per law and in any case reopening of the assessment and framing of the reassessment order was contrary to law. 3. Brief facts of the case are that the assessee is engaged in the business of wholesale and trading of readymade garments under the name and style of proprietary concern of assessee namely M/s Fancy Cloth House. The AO received information that the assessee has made cash deposits during the financial year 2009-10 relating to the present assessment year 2010-11 in a saving bank account maintained with Dena Bank Ltd. amounting to Rs. 1,12,55,000/- and assessee has not filed his return of income and also did not respond to query letter issued to him. Hence, AO recorded the reasons on 22.03.2017 which reads as under:- "There is information with the department that the above mentioned assessee has made cash deposits amounting to Rs. 1,12,55,000/- in his saving bank account maintained with Dena Bank Ltd. during the FY 2009-10 relevant to AY 2010-11. The assessee has not filed any ITR for the AY 201....

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....ded by the AO u/s 147 of the Act. It is noted from the record that the AO was having definite information on record that the appellant has made cash deposits in the bank account maintained with Dena Bank which were not prima facie explanation. The AO has drawn such inference on the strength of specific information obtained from the bank. Thus, there was prime facie material before the AO to draw the inference that the income has escaped assessment within the meaning of section 147 of the Act. At the stage of formation of belief u/s 147 of the Act, it is necessary to have existence to believe that income has escaped assessment, their sufficiency cannot be examined at that stage. Clearly in this case the AO was having tangible material to draw such inference. Reliance is placed upon the decision of Hon'ble Supreme Court in the case of RAYMOND WOLLEN MILLS LTD. Vs. ITO 236 ITR 34 (SC) and ACIT VS. RAJESH JHAVERI STOCK BROKERS (P) LTD. 291 ITR 500 (SC), PHOOL CHAND BAJRANG LAL AND ANOTHER VS. ITO &ANOTHER 203 ITR 456 (SC) and Hon'ble Madras High Court in the case of STERLITE INDUSTRIES (INDIA) LTD. V ASSISTANTCOMMISSIONER OF INCOME-TAX AND ANOTHER [2008] 302 ITR 275 (MAD.). It ....

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....us items of the profit and loss account, the particulars regarding the auditor and the audit report u/s 44AB of the Act in the ITR filed. All such columns have been left blank. On this basis the AO drew the conclusion that the explanation of the appellant regarding the source of cash deposits in his bank account out of sales proceeds of garments was an after-thought. The Ld. AR during the appellate proceedings could not put on record any evidence to contradict the observations made by the AO. In the paper book during the appellate proceedings the Ld. AR has furnished copies of the purchase bills from different entities. Ongoing through the same, peculiar observations have been made. The appellant has claimed as having made purchases from Ms. Alka Chawla, Ms. Komal Chawla, M/s Graintech Engg Pvt. Ltd., M/s CJ Exim Pvt. Ltd., Sh. Raj Kumar Rathi. All the purchase invoices have been printed from the same computer having similar format complete description of the goods has not been given in the purchase invoices. Though the purchase invoices have been issued by the different persons with the names as above but the invoice are running in the same serial number for all such persons. For ....

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....arding the said transaction, vide which, the assessee has been asked to furnish his PAN also, which clearly indicates that the then AO did not have PAN details of the assessee. The Assessee has failed to furnish any reply in response to the said notice, so at that time PAN details of assessee was not available with the then AO. Further, this fact is also strengthened by the fact that, in reason also, recorded by the then AO, no PAN has been mentioned, as PAN details were not available with the then AO. As the PAN of the assessee was not available at that time, till recording reasons, issuing of notice u/s. 148 and till the issuance of notice u/s. 142(1) on 16.05.2017, so there was no way with the AO to know whether the assessee had filed his ITR or not. So, this must be the reason as to why it had been mentioned in the reasons recorded by the AO that the assessee had not filed his ITR. So, the reasons were recorded by the then AO after proper application of mind on the basis of information available on records." 8. In view of the above, Ld. Sr. DR stated that the reasonable belief found by the AO for recording reasons, which is as per provisions of law as unexplained cash deposi....