TaxTMI 
TaxTMI 
2026 (5) TMI 221
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..... 3. Since the notice issued u/s 148 dated 31.03.2024 was issued by the Jurisdictional Assessing Officer, ITO Ward-1, Warangal, and not in a faceless manner as mandated, the notice is invalid and all consequential proceedings are bad in law. 4. The Learned CITIA), NFAC ignored that the assessment is based on wrong facts and incorrect figures mechanically adopted from the Insight Portal, as the AO neither verified the mismatch nor examined the data and documentary evidence submitted before him and still made an addition of Rs. 1,33,22,500 u/s 68 without reconciling it with the assessee's actual cash deposits of only Rs.19,50,000. 5. The Learned CITIAL, NFAC failed to appreciate that the Ld AO assumed cash deposits of Rs. 133,27,500 though the assessee's bank statements show actual cash deposits of only Rs. 19,50,000 and the assessee had filed a detailed reply on 03.02.2024 in response to 148A(b) with documentary evidences but the AD ignored the reply without any enquiry and the objections were not disposed of a speaking order rendering the action invalid in law. 6. The Learned CITIA), SPAC failed to appreciate that the notice issued u/s 14....
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....see for adjudication. 5. In ground no.6 the assessee challenged the validity of the notice issued by the Assessing Officer u/sec. 148 of the Act being barred by limitation as issued after 03 years from the end of the assessment year under consideration whereas the alleged income escaped assessment on account of cash deposit in the bank account of the assessee is only Rs. 19,50,000/- which is below Rs.50 lakhs. 6. The learned Authorised Representative of the Assessee has referred to the notice issued by the Assessing Officer u/sec.148A(b) of the Act dated 05.03.2024 and submitted that the Assessing Officer has issued the show cause notice for reopening of the assessment in respect of cash deposit in two bank accounts of the assessee with IDBI bank whereas the actual amount of cash deposit during the year under consideration is only Rs.19,50,000/- and the other transactions of Rs.1,13,72,500/- as referred by the Assessing Officer does not represent the cash deposit by the assessee in the bank account of the assessee. The learned Authorised Representative of the Assessee has further submitted that the assessee has filed reply to the notice issued by the Assessing Officer u/sec. ....
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....f Home Finders Housing Ltd. v Income-tax Officer Ward 2(3), Chennai [2018] 93 taxmann.com 371 (Madras-HC) as well as Judgment of Hon'ble Calcutta High Court in the case of Girdhar Gopal Dalmia v. Union of India [2022] 141 taxmann.com 251 (Calcutta-HC). 8. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has issued show cause notice u/sec.148A(b) of the Act dated 05.03.2024 which reads as under: ANNEXURE 1. Whereas I have information which suggests that income chargeable to tax for the Assessment Year 2017-18 has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. The details of information/enquiry conducted on which reliance is being placed is tabulated hereunder: 1. A Notice of Enquiry u/s. 148A(a) of the I.T. Act, 1961 dtd. 12-01-2024 has been issued under the category of High Risk Non-filer under RMS Cycle-2, communicating the information available with the Income tax Department as you have entered into the specified financial transaction(s) during the F.Y. 2016-17 relevant to the A.Y. 2017-18 as tabulated hereunder: Information Code Type of Deposit Infrom....
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.... both the accounts the total cash deposit during the year was Rs. 19,50,000/-. Copies of the bank account of the assessee are also placed at page nos.5 to 8 of the paper book as under: 8.2. Thus, it is clear from the bank account statement of the assessee that there is a cash deposit of Rs.6,50,000/- in the Savings Bank A/c and Rs.13,00,000/- in the loan account both maintained with IDBI Bank total amounting to Rs. 19,50,000/-. This fact of cash deposit is evident from the bank account statements of the assessee which were available with the Assessing Officer as filed by the assessee in response to the notice u/sec.148A(a) of the Act dated 12.01.2024. When the total cash deposit in the 02 bank accounts of the assessee was only Rs. 19,50,000/- then, the notice issued by the Assessing Officer u/sec.148A(b) and the Order passed u/sec.148A(d) and notice issued u/sec. 148 of the Act are based on incorrect and non-existing transactions. The Assessing Officer though initiated the re-assessment proceedings on the issue of cash deposit in the bank account however, to bring the notice u/sec. 148 within the limitation period, the entire transaction of credit in the bank accounts of the ass....
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....e financial year under consideration and as a result of enquiry conducted as per Section 148A(a) of the Act. 4. You are requested to file your submissions along with necessary evidences in support of your claim, on or before the date mentioned in the notice, failing which it would be considered that you have nothing to explain about your transactions and the undersigned will be constrained to proceed with initiating further proceedings as per the provisions of section 148A(d) of Income Tax Act, 1961, on the basis of the information available on record. SRINIVASA RAO TUMMALAPALLI WARD 6(1), HYDERABAD 6.1. Thus, the Assessing Officer proceeded on the basis of the three transactions of cash deposit to reopen the assessment of the assessee. Thereafter, the Assessing Officer has passed an Order u/sec. 148A(d) of the Act on 23.03.2023 and then issued notice u/sec. 148 of the Act on 24.03.2023 reads as under: Order under clause (d) of section 148A of the Income-tax Act, 1961 Specific information was flagged as per Risk Management Strategy formulated by the CBT through Insight Portal under the category 'RMS - High Risk Non-Filer' for the Financia....
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....ieve that the assessee has no proper explanation with respect to the above transactions and therefore, income escaped to the extent of the unexplained transactions. 6. In the light of the above facts and on the basis of material available on record, it is decided that the case of the assessee is a fit case for issuance of notice under section 148 of the Act for the A. Y. 2016-17. The income chargeable to tax, represented in the form of asset, amounting to Rs.50 lakhs or more has escaped assessment. 7. This order is passed with the prior approval of the specified authority as per the provisions of section 151 of the Act and by duly following the procedural requirements as detailed in case history/noting's in the ITBA. 6.2. Thus, it is clear that even at the time of passing the Order u/sec. 148A(d), the Assessing Officer has considered the same amount of cash deposits without even verifying the bank account statement of the assessee. In the assessment order the Assessing Officer finally held that the only transaction of cash deposit during the year is Rs.38,10,000/- which is added to the total income of the assessee as under: "Finding of the ca....
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....cts and hence, the period of limitation provided u/sec. 149(1)(b) of the Act cannot be enlarged or extended on the basis of incorrect facts or non-existing facts. It is a case of non- existing transaction of cash deposit which are considered by the Assessing Officer and not a case that the transaction of deposit is rightly considered by the Assessing Officer however, the assessee was able to explain the source during the assessment proceedings and finally the Assessing Officer after accepting the source of cash deposit made an addition which is less than Rs. 50 lakhs. Therefore, there is no quarrel on the point that the addition finally made by the Assessing Officer in the assessment would not necessarily render the case of the assessee in the category of 'income escaped assessment is less than or more than Rs.50 lakhs' but the primary facts are relevant to consider whether the income escaped assessment is less than or more than Rs.50 lakhs. The Assessing Officer relied upon the Judgment of Hon'ble Allahabad High Court in the case of ARB Hotels Resorts (P.) Ltd., vs. Pr. CCIT (supra) however, the Hon'ble Allahabad High Court has made a specific observation in Para n....
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....d bank statement also for the relevant financial year. I have considered the reply of assessee and the same is not acceptable because of the following reasons: Though the assessee stated as the cash deposit again deposited as fixed deposit, the details of bank statement and others need to be verified. Thus income in the form of asset has escaped assessment is not less than Rs. 50 lakhs." 5. It is evident from the above that the assessing officer failed to examine the bank statement so as to verify whether the cash deposits were used for purposes of creating the fixed deposit. In spite of the assessee providing the bank statement, this exercise was not undertaken. Without undertaking this exercise, it cannot be rationally determined as to whether income in the form of an asset of the value not less than Rs 50,00,000/- had escaped assessment during the relevant assessment year. 6. On perusal of the bank statement, it appears that the petitioner has an arguable case to contend that the cash deposits were used for purposes of creating the fixed deposit. Therefore, the matter warrants reconsideration. Consequently, the impugned order under Se....
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.... passing the order under section 148A(d) of the Act of 1961. The same thus clearly indicates lack of application of judicious mind to the material on record. The amount of Rs. 40,00,000/- as mentioned in the notice issued on 23-3-2022 under section 148A(b) thus deserves to be excluded from consideration. 7. As regards deposit of cash of Rs. 16,20,000/- is concerned, the petitioner had sought disclosure of the material of the source of information on the basis of which such notice was issued. The petitioner denied having deposited the aforesaid amount in his bank account. The material/source of information was not supplied to the petitioner. Be that as it may, even if the amount of Rs. 40,00,000/- as mentioned in the notice dated 23-3-2022 is excluded from consideration for the reason that the petitioner is not the purchaser of the property in question, the amount remaining for consideration is Rs. 20,71,500/- and Rs.16,20,000/- thus totaling Rs. 36,91,500/-, In this regard, if the provisions of Section 149(1)(b) of the Act of 1961 are considered, it is seen that only if the amount in question that is likely to have escaped assessment is Rs. 50,00,000/- or more, the time li....
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....n the bank account is less than Rs. 50 lakhs then, the same is barred by limitation. A notice issued u/sec. 148 of the Act and the actual facts of transaction of cash deposit in the bank account are juxtaposed then, the period of limitation for issuing the notice u/sec.148 would be considered by considering the correct facts and not on the basis of the non- existing facts. Hence, an invalid notice issued u/sec. 148 of the Act on account of barred by limitation cannot be converted to a valid notice by enlarging the limitation based on non-existing facts. Accordingly, in the facts and circumstances of the case, when the actual transaction of cash deposit is Rs. 19,50,000/- only then, the notice issued u/sec. 148 of the Act would be barred by limitation being issued beyond 03 years from the end of the assessment year under consideration. The decisions relied upon by the learned DR would not help the case of the Revenue in the facts of the present case. Since we have set aside the notice issued by the Assessing Officer u/sec. 148 of the Act which also vitiates the re-assessment order passed by the Assessing Officer. Therefore, the other grounds including the additional ground raised by....
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....F 23-08-2016 23-08-2016 Chrgs for RTGS Cust Pymnt:IBKLR92016082300072525 INR 35.00 2,496.00CR. 23-08-2016 23-08-2016 229391 RTGS/IBKLR92016082300072525/OM SAI TRADERS INR 00,000:00 2,531.00CR. 22-08-2016 22-08-2016 WARANGAL :- CASH RECEIPT Page 1 of 1 Help 0.00 CR.P.Q 0.00 DR.C 3,00,000.00) 30 January, 2024 | User 133169 | 210 | Menu Shortcut: 08-03-2016 A/c. Status Date Aic. Close Date Available Amt A/c. Type Afc. ID 0210104000167246 INR 210 RAJENDAR DOULTHABAJI -0.00 CR. Universal Banking Solution from Infosys 08-03-2016 ACTIVE 10400 Account Ledger Inquiry Finacle PA 26-12-2016 A/c. Open Date Afc. Status Scanned with OKEN Scanner 5 Page 2 of 2 3 25-08-2016 25-06-2010 Int .: 01-04-2016 To 25-08-2018 INR 11.00 2.531 00CR. 17-05-2018 17-05-2010 220225 WARANGAL :- SELF INR 9,72,000,00 2,520.00CR 17-05-2018 17-05-2016 220224 WARANGAL : SELF INR 9.72,000.00 9,74,520.00GR. 17-05-2016 17-05-2018 220223 WARANOAL : SELF INR 9,72,000.00 19,40.520.00GR. 17-05-2016 17-05-2016 220222 WARANGAL :- SELF INR 9.72.000.00 29.18,520.00CR 17-08-2016 17-05-2018 220221 WARANGAL : SELF INR 9....
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....14.00 13,89,434.00DR. Rs. 06-12-2016 06-12-2016 BY ARUNA TRADERS INR 3,50,000.00 12,16,720,00DR. : 06-12-2016 06-12-2016 BY OM SAI TRADERS INR 3,50,000.00 15,65,720.00DR. | 06-12-2016 06-12-2016 BY OM SAI TRADERS INR 3,50,000.00 19,15,720.00DR. 03-12-2016 03-12-2016 BY ARUNA TRADERS/145107 AXIS BANK DT 30/11/2016 INR 6,00,000.00 22,65,720.00DR. 17-05-2016 17-05-2016 WHR DSBMT OF D RAJENDAR INR 28,65,720.00 61100128.85.720.00DR. A/c. Status A/c. Open Date 0210671100039774 17-05-2016 INR 210 RAJENDAR DOULTHABAJI A/c. Status Date A/c. Close Date 22-12-2016 GL Subhead 67110 Alc. Type CUSTOMER ACCOUNT Opening Bal. INR 0,00 CR. Available Amt. INR 0.00 CR Closing Bal. INR 0.00 CR. Effective Available Amt. INR 0.00 DR.ELF Funds in Clg. INR 0.00 CR. Float Bal. INR 0.00 CR. Page 1 of 1 ) Go A/c. ID 0210671100039774 INR 210 RAJENDAR DOULTHABAJI Help 2 30 January, 2024 | User 133169 | 210 | Menu Shortcut: DOULTHABAJI A/c. Status Date A/c. Close Date 0210671100039774 I Finacle Universal Banking Solution from Infosys Account Ledger Inquiry Document 3 GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT OFFICE....