TaxTMI 
TaxTMI 
2025 (3) TMI 2018
X X X X Extracts X X X X
X X X X Extracts X X X X
....AC has failed to appreciate that the onus is on the department to prove the service of notice u/s 148 and in absence thereof the whole proceedings is vitiated in law. 4. For that the Ld. CIT(A), NFAC has erred in holding that the appellant has not raised objection regarding non-service of notice u/s 148 any time during assessment proceedings. 5. For that the Ld. CIT(A), NFAC has erred in not allowing opportunity of virtual hearing as mandated u/s 250(2) of the Act read with Sub-section (6B) and the guidelines prescribed in the Faceless Appeal Scheme, 2021 vide notification dated 28.12.2021.7 6. For that the Ld. CIT(A), NFAC has erred in confirming addition of Rs. 12,00,000/- out of total addition of Rs. 14,50,000/-. 7. For that the Ld. CIT(A), NFAC has erred in restoring addition of Rs. 8,00,000/- for verification by the Assessing Officer out of total addition of Rs. 16,00,000/-. 8. For that the Ld. CIT(A), NFAC has no power to set aside any addition for verification by the Assessing Officer and hence the restoration of addition for verification by the Assessing Officer is colorable exercise of power and contrary to the mandate of law. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of period of relevant year under consideration. During the course of assessment proceeding nature and source of above deposit was explained as gift from father. The appellant father is an agriculturist having 7 acres of well fertile and irrigated land. In support of above assertion, a copy of land revenue receipt with detailed description crops which is grown on the aforesaid land were furnished. Besides that, additional sources of father income were stated to be milk sold by him as result of cow farming. Further the learned A.O. was requested to take statement of oath of father. But the learned A.O. disbelieved arbitrarily and discarded the aforesaid positive evidence without bringing cognate evidence on record which could contradict the above positive evidence. Above all the learned A.O. falsify the above evidence produced in support of sources of father's income in signal word that reply submitted in connection with source of income is not satisfactory and thus acted mechanically in order to justify his action treating deposit appeared in bank account was unexplained. In the instant case was reopened u/s 147 of the income tax Act 1961. A notice u/s 148 dated 01.08.2018 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessment framed in the absence of notice u/s. 143(2) of the Act. After all, in the above case re assessment was complete on 09/12/2019 making addition of Rs. 30,50,000/-. Being aggrieved from order passed by learned the learned A.O appellant prefers this appeal before your honor for equitable justice." 4. Brief facts of the case are that from OCM data of ITBA module, a large value of cash deposit was found in IDBI Bank, Anishabad Branch, Patna A/c No. 2078104000009492 during the demonetization period in the name of the assessee. Since the assessee had not filed any return of income, proceeding u/s 147 of the Act was initiated after obtaining prior approval of the competent authority and a notice u/s 148 of the Act dated 01.08.2018 was generated and issued to the assessee for filing the return of income within 30 days from the service of the notice. But the assessee did not comply to the notice. Subsequent notices u/s 142(1) of the Act dated 02.05.2019 and a reminder letter dated 23.05.2019, another notice u/s 142(1) of the Act dated 08.07.2019 and reminder letters dated 25.07.2019 and 01.08.2019 were issued but there was non-compliance to all the notices as no respon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otice u/s 143(2) of the Act was issued. The assessment order was sent by Post but the same was not sustainable. Apparently, no such issue was however raised before the Ld. AO but was raised before the Ld. CIT(A) for the first time. The finding of the Ld. CIT(A) is as under: "7.1 In the Ground No.1 to 4 of the appeal, the assessee has raised objection basically on two issues the first being that notice u/s.148 was never served on to him and no notice u/s.143(2) was ever issued to him by the AO. Though, the appellant is making open statement that notice u/s148 was never served upon him but he is completely silent as to whether this issue was ever raised by him before the AO while participating in the assessment proceedings. If so, is there any written document/letter available with him and why the copy of same is not being filed during the course of appeal proceedings. From the body of assessment order, it is clear that a notice u/s.148 dated 01.08.2018, was duly generated and issued by the AO. It is also clear from the assessment order that in response to show cause notice dated 09.10.2019, the appellant did file written submission thereby participating in the assessment pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....redits found credited in the bank account of appellant. It is imperative to look upon the ratios laid down by the various Hon'ble Courts in respect of unexplained credit/money found credited in the books/bank accounts of the assessee. 8.1 The fundamental question involved is that whether or not the AO was justified in making the addition of Rs. 30,50,000/- under section 69A in the hands of the assessee, and the most critical thing to be examined in this regard is explanation of the assessee with respect to these credits. There is no, and there cannot be any, dispute on the fundamental legal position that the onus is on the assessee to prove 'bonafides' or 'genuineness' of the money credited in his bank account. This approach finds support from the scheme of Section 68/69, which provides that where any sum is found credited in the books/bank accounts of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, such sum may be charged to income tax as the income of that assessee for that previous y....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available.....In our opinion, the majority opinion after considering surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant's claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably". 8.7 An addition under Section 69A can be made where any sum is found credited in the bank account for any previous year, and the assessee either offers no explanation about the nature and source as regards the same, or the explanation offered by him in the opinion of the assessing officer is not found to be satisfactory. That before adverting further, the relevant extract of the aforesaid statutory provision, viz. Section 69A, which reads as under:- "Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bulli....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the submission of appellant is nothing but an attempt to try to explain the source of cash deposit by making self-serving statements. 8.9.1 The appellant has submitted that Rs. 14.50 lacs was the past savings of his father who is an agriculturist. Now, it is a matter of common knowledge, that every person saves money/ funds received by them, for the rainy days. In fact, considering this aspect into mind, the Hon'ble Prime Minister during the Demonetization Scheme 2016, had declared that the revenue will not probe the accounts of individuals. housewives if the deposits made in the bank account were below Rs. 2,50,000/-. The CBDT too issued a public notice dated 18th Nov 2016 and guidelines for Verification of Cash deposit during demonetization to the AO, vide Instruction No. 03/2017 Dated 21st of February, 2017 and annexure thereof issued under section 119 of Income Tax Act. The relevant excerpts of F.No. 225/100/2017/ITA-11, Annexure "Source Specific General Verification Guidelines is reproduced as under: "1. Cash out of earlier income or savings 1.1 In case of an individual (other than minors) not having any business income, no further verification ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould be evident from the said bank account that the clearing of Rs. 8,00,000/- on 19/09/2016 was reversed by debit of the same amount on that very day due to return of the cheque for the reason "Image not clear" and the bank has directed to present the instrument of Rs. 8,00,000/- again and accordingly Rs. 8,00,000/- was credited on 21/09/2016. Thus, the A.O. without proper examination and verification of the bank account has added Rs. 16,00,000/- as against actual credit of Rs. 8,00,000/- on 21/09/2016." In support, the appellant has submitted the copy of impugned bank account, the perusal of which prima-facie shows the contention of the appellant to be correct. It appears that the credit amount of Rs. 8,00,000/- on 19.09.2016 vide Instrument No. 45970, was reversed due to some technical issue and the same was again credited on 21.09.2016. Thus, if the both credit amounts are being brought to tax by the AO, the same will tantamount to double addition of the same amount. Accordingly, the AO is directed to verify the contention of the appellant vis-à-vis the bank account and allow relief if the claim of the appellant is found correct. Further, regarding the source of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be allowed the opportunity of virtual hearing under sub-section (2) of section 250 of the Act as no hearing was provided. 9. At this point it is imperative to examine the provision relating to hearing which as per section 2(23C) of the Act is as under: "(23C) "hearing" includes communication of data and documents through electronic mode." 10. The Ld. DR countered this argument of the assessee by saying that the assessee was mixing two issues. Subsection (2) of section 250 of the Act provides a right of an opportunity of being heard which was done by the Ld. CIT(A) by issuing the notices and the assessee filed the reply in electronic mode. The request for virtual mode was not made and if the same was not asked for it could not have been granted. The Ld. AR relied upon the decision of Hon'ble Jurisdictional High Court in the case of Commissioner of Wealth-tax vs. Sri Jagdish Prasad Choudhary [1995] 211 ITR 472 (Patna)[19-05-1994] in this regard. As regards notice u/s 143(2) of the Act the Ld. CIT(A) has discussed this issue in his order in para 7.1.1 (supra) that if no return was filed in response to the notice u/s 148 of the Act there was no requirement of issuin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to reopen an assessment subject to service of notice within the prescribed period Therefore, service of notice within limitation was the foundation of jurisdiction. The same view has been taken by this court in Jani v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 as also in CIT v. Robert [1963] 48 ITR 177 (SC). The High Court, in our opinion, went wrong in relying upon the ratio of Banarsi Debi v. ITO [1964] 53 ITR 100, in disposing of the case in hand. The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149, in the 1961 Act. A clear distinction has been made out between " issue of notice" and "service of notice" under the 1,961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 shall be issued after the prescribed limitation has lapsed Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of making the assessment is governed from the date of service of the notice. It is also held by the Hon'ble Supreme Court in the case cited (supra) that once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. Further, in this case the Ld. CIT(A) has partly allowed the appeal and has set aside the matter related to double addition in the guise of verification by the Ld. AO, which power is not available to the Ld. CIT(A) with effect from 01.06.2001 hence Ground Nos. 7 and 8 of the appeal are allowed. Even though section 292BB of the Act deems the notice to be valid in certain circumstances, however, since there is no evidence of service of the notice nor any mention in the assessment order and the assessee responded only in response to the final show cause notice issued but did not respond to any of the earlier notices therefore, it cannot be said that the notice was validly served upon the assessee. Since the notice was allegedly not served, this could justify the non-filing of the return of income. However, the assessment has been made u/s 143(3) of the Act while it ought to have been made u/s 144 of....