IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "SMC" : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA.No.2740/Del./2018
Assessment Year 2011-2012
Shri Inder Jeet, The Income Tax Officer,
Sohna, Gurgaon,
PAN AIWPJ1144N Ward 2 (5),
C/o. Shri Kapil Goel, vs.
Advocate, F-26/124,
Gurgaon.
Sector-7, Rohini, Delhi-085.
(Appellant) (Respondent)
For Assessee : Shri Kapil Goel, Advocate
For Revenue : Shri S.L. Anuragi, Sr. D.R.
ITA.No.1384 & 2647/Del./2018
Assessment Year 2008-2009
Shri Ashok Kumar, The Income Tax Officer,
Ghaziabad. U.P.
PAN BVSPK8805K Ward 1 (1),
C/o.M/s. Sanjeev Anand & vs.
Associates, 77, Navyug
Ghaziabad.
Market, Ghaziabad-201001.
(Appellant) (Respondent)
For Assessee : Shri Somil Aggarwal, Advocate
For Revenue : Shri S.L. Anuragi, Sr. D.R.
Date of Hearing : 08.11.2018
Date of Pronouncement : 03.12.2018
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
ORDER
I have heard the Learned Representatives of both
the parties and perused the material available on record. The
issues are common in all the appeals. Therefore, all appeals
are decided through this consolidated order as under.
ITA.No.2740/Del./2018 (Shri Inder Jeet) :
2. This appeal by Assessee has been directed against
the Order of the Ld. CIT(A)-1, Gurgaon, Dated 15.03.2008, for
the A.Y. 2011-2012, challenging the reopening of the
assessment under section 148 of the I.T. Act, 1961 and
addition of Rs.39 lakhs on account of cash deposited in the
bank account.
3. Briefly facts of the case are that A.O. received
information that the assessee had deposited cash in his bank
account. The Assessing Officer accordingly recorded reasons
and issued notice under section 148 of the I.T. Act, 1961.
There was no compliance to the notice issued by the Assessing
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
Officer. Thereafter the Assessing Officer provided number of
opportunities through issue of notice under section 142(1) but
there were no compliance. Final notice issued under section
142(1) was received back with the comments `refused'. The
Assessing Officer, therefore, treated it to be deemed service
and completed the assessment under section 144/147 of the
I.T. Act, dated 01.02.2016, thereby making addition of
Rs.39,00,000/-on account of unexplained cash deposit in the
bank account.
3.1. The assessee challenged the above addition before
Ld. CIT(A) and it was contended that no notice have been
received by the assessee. The assessee also raised the
additional ground of appeal challenging the reopening of the
assessment under section 148 of the I.T. Act. It was contended
that mere cash deposit in bank account cannot be treated as
undisclosed income as a reason for income escaping
assessment. There is no nexus between the prima facie
inference arrived in the reasons recorded and information
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
available with the Assessing Officer. The reasons recorded
were highly vague, far-fetched and cannot be any stretch of
imagination lead to a conclusion of escapement of income and
there were merely presumption in nature. The Ld. CIT(A),
however, did not admit the additional ground of appeal.
However, the Ld. CIT(A) proceeded to decide the additional
ground of appeal on merit as well. The Ld. CIT(A) noted that
assessee has not filed return of income and has no valid
source of income to prima facie explain source of the cash
deposited in the bank account. Therefore, reopening of the
assessment was found valid. The Ld. CIT(A) held that A.O. was
fully justified in initiating the proceedings under section
147/148 of the I.T. Act, 1961. On merit also addition was
confirmed. The appeal of assessee was accordingly dismissed.
4. Learned Counsel for the Assessee as regards
reopening of the assessment submitted that the reasons do
not disclose escapement of income and that mere cash deposit
in bank account is not sufficient to presume that it is a case of
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
escapement of income. He has relied upon the Order of ITAT,
Delhi Bench in the case of (1) Shri Bhajan Lal, Delhi vs. ITO,
Ward-2, Narnaul, Haryana in ITA.No.3984/Del./2017, Dated
20.09.2018, (2) Order of ITAT, Delhi Bench in the case of Smt.
Swati Verma, New Delhi vs. ITO, Ward 3(4), Noida in
ITA.No.42/Del./2018, Dated 01.08.2018 and (3) Order of
ITAT, Delhi Bench in the case of Shri Jagat Singh, Noida vs.
ITO, Ward-1(3), Ghaziabad, Dated 04.09.2018.
5. On the other hand, Ld. D.R. produced the
assessment record and filed copy of the reasons recorded
under section 148 on record and relied upon the Orders of the
authorities below.
6. I have considered the rival submissions and
perused the material available on record. The A.O. in this case
recorded the reasons for reopening of the assessment under
section 147/148 of the I.T. Act on 25.03.2015 which reads as
under :
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
"Reasons for initiating proceedings under section
147/148 of the Income Tax Act, 1961.
As per information available with this office that
assessee has deposited cash Rs.10,00,000/- and
above in his saving bank account during the financial
year 2010-11 . The assessee has to filed return of
income for the assessment year 2011-12 as per
provisions of section 139(1) of the I.T. Act. As per
record, assessee has not filed return of income for the
Assessment year 2011-12. The above income is
chargeable to tax under the provisions of the Income
Tax Act 1961. Therefore ,the income amounting to Rs.
10,00,000/- which is chargeable to tax under the
provisions of I.T. Act and any other income
subsequently comes to the notice of the AO during
course of assessment proceedings which is
chargeable to tax has escaped assessment.
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
Notice under section 148 of the Income Tax Act, 1961
is being issued.
Sd/-
(Shamsher Singh)
Income Tax Officer
Ward 2(5), Gurgaon."
6.1. The ITAT, Delhi Bench in the case of Shri Bhajan
Lal, Delhi vs. ITO, Ward-2, Narnaul, Haryana (supra), on
identical facts in paras 3 to 8 held as under :
3. Notice u/s 148 for A.Y. 2007-08 was issued to the
assessee on 16.03.2012 by the Income Tax Officer, Ward-
2, Rewari having territorial jurisdiction to the assess the
income of the assessee after recording the following
reasons:
"As per AIR information for the F.Y. 2006-07 received in
this office the assessee has made cash deposits of
Rs.19,00,000/- in his bank account with PUNJAB
NATIONAL Bank REWARI. A query notice was issued to
the assessee on 24.01.2012. But no response has been
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
received from the assessee. I, therefore, have reason to
believe that the assessee has deposited cash in his bank
account out of his income from unexplained sources.
Accordingly income to the extent of Rs.19,00,000/- and
any other income which subsequently comes to the notice
of the undersigned has escaped assessment within the
meaning of section 147 of the I.T. Act, 1961. Issue notice
u/s 148 of I. T. Act, 1961 for the assessment year 2007-08."
Sd/- (O. P. Punia)
Income-tax Officer,
Ward-2, Rewari."
In response to notice u/s 148, no return of income
was filed by the assessee. Again notice u/s 142(1)
was issued on 17.08.2012 asking the assessee to
file his return of income but no return was filed in
compliance to this notice also and only power of
attorney of the advocate was filed. Later on the
jurisdiction of the case was assigned to the Income
9
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
Tax Officer, Ward-2, Narnaul by the Joint
Commissioner of Income Tax, Rewari Range, Rewari
vide office order dated 04.02.2013. Notice u/s 142(1)
calling the return of income along with query letter
was issued for 15.02.2013 and in response to this
assessment proceedings were attended by the
counsel of the assessee but no return of income was
filed. But afterwards return of income declaring Nil
income was filed as well as written replies were filed
by the assessee's counsel. The Assessing Officer
observed that as per information available on record,
the assessee made cash deposit of Rs. 12,50,000/-
on 08.05.2006 and Rs. 6,50,000/- on 11.05.2006 in
his bank account maintained with branch office Ateli.
The assessee was asked a query dated 06.02.2013
as to explain the source of these cash deposits with
documentary evidence. The assessee vide reply
dated 11.03.2013 submitted that the deposit in the
bank account was out of the cash received from the
10
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
agreement to sale. The Assessing Officer rejected the
plea of the assessee on the ground that no sale
deeds of the land 4 ITA No. 3984/Del/2017 was
executed till date for which alleged agreements were
made. The Assessing Officer observed that as per
material available on record during the F.Y. 2006-7
relevant to A.Y. 2007-08, the assessee sold his share
of agricultural land situated in the revenue estate of
VII-Padiyawas for Rs. 19,06,250/-. The Assessing
Officer held that the land sold by the assessee is
covered in the definition of capital assets in view of
the Notification issued by CBDT on 06.01.1994 F.No.
164/03/87ITAI, hence land in question is liable to
capital gain. Thus, the Assessing Officer made an
addition of Rs. 18,17,621 as capital gain of the
assessee.
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
4. Being aggrieved by the Assessment Order, the
assessee filed appeal before the CIT(A). The CIT(A)
dismissed the appeal of the assessee.
5. The Ld. AR submitted that on identical i.e. exact
wordings the reasons recorded in the present case
has been dealt by the Tribunal in case of Krishan
Kumar vs. ITO (ITA No. 3985/Del/2017 A.Y. 2007-08
dated 15.12.2017) wherein the appeal of the
assessee is allowed as reassessment proceedings
initiated by the AO are held to be void. Therefore, the
Ld. AR submitted that on the legal ground itself the
appeal be allowed.
6. The Ld. DR relied upon the Assessment Order
as well as the order of the CIT(A), but could not
distinguish the facts of the case decided by the
Tribunal in case of Krishan Kumar (supra).
7. We have heard both the parties and perused
all the relevant material available on record. It is
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
pertinent to note here that the facts of the case in
case of Krishan Kumar (Supra) and in the present
case are identical in nature. In fact, the figures of
amount, Bank name and the notice issuing date are
exactly the same as well as the Assessment Year is
also the same. The Ld. DR also could not point out
any distinguishing factor with the order of the
Tribunal in case of Krishan Kumar and in present
assessee's case. The Tribunal held as under:
"9. I have considered the rival arguments made
by both the sides, perused the orders of the AO and
Ld. CIT(A) and the paper book filed on behalf of the
assessee. I have also considered the various
decisions cited before me. A perusal of the reasons
recorded by the AO as reproduced by him in the
assessment order shows that the reopening was
made on account of cash deposit of Rs. 19 lakh in
the bank account of the assessee. However, the AO
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
in the assessment order has made addition of
Rs.36,26,500/- on account of capital gain and
interest income. Thus, there is no addition on
account of which the assessment was reopened by
issue of notice u/s 148 of the I.T. Act. Hon'ble Delhi
High Court in the case of Ranbaxy Laboratory Ltd.,
vs CIT(supra) has held that the assessing officer has
the jurisdiction to reassess the issues other than
issues in respect of which proceedings were
initiated. But he was not justified when the reasons
for the initiation of those proceedings seized to
survive. Since, in the instant case, there was no
addition made in the assessment order on account
of which the assessment was reopened but some
other additions have been made by the AO,
therefore, the AO does not have jurisdiction to
make such other additions in absence of any
addition made for which the assessment was re-
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
opened in the light of the decision of Hon'ble Delhi
High Court in the case of Ranbaxy Laboratory Ltd.
(supra). Therefore, the re-assessment proceedings
have to be quashed.
10. Even otherwise, also the reopening was made
on the basis of AIR information received that the
assessee has made cash deposit of Rs. 19 lakhs. I
find identical issue had come up before this bench
of the Tribunal in the case of Mahavir Prasad
(supra). The Tribunal vide ITA no. 924/Del/2015
order dated 09.10.2017 for assessment year 2007-08
had quashed such re-assessment proceedings by
observing as under :
"9. After going through the reasons
recorded by the ITO, Ward-2, Rewari,
am of the view that there is no nexus
between the prima facie inference
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
arrived in the reasons recorded and
information; the information was
restricted to cash deposits in bank
account but there was no material much
less tangible, credible, cogent and
relevant material to form a reason to
believe that cash deposits represented
income of the assessee; that even the
communication dated 24.1.2012 could
not be made a basis to assume
jurisdiction in view of the fact that such
an enquiry letter is an illegal enquiry
letter and thus cannot be relied upon;
that the proceedings initiated are based
on surmises, conjectures and suspicion
and therefore, 7 ITA no. 3985/Del/2017
the same are without jurisdiction; that
the reasons recorded are highly vague,
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
far-fetched and cannot by any stretch of
imagination lead to conclusion of
escapement of income and these are
merely presumption in nature; that it is
a case of mechanical action on the part
of the AO as there is non-application of
mind much less independent application
of mind so as to show that he formed an
opinion based on any material that such
deposits represented income. Keeping in
view the facts and circumstances of the
present case and the case law applicable
in the case of the assessee, I am of the
considered view that the reopening in
the case of the assessee for the asstt.
Year in dispute is bad in law and
deserves to be quashed".
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
11. In view of the above discussion, the reassessment
proceedings initiated by the AO are held to be void. Since
assessee succeeds on this legal ground i.e. validity of
reassessment proceeding, therefore, grounds on merit
become academic in nature and therefore are not being
adjudicated.
12. In the result, the appeal filed by the assessee is
allowed."
Thus, the issue contested herein is identical in the
present appeal. Thus, the assessee succeeds in the
legal ground regarding validity of reassessment
proceeding, therefore, we are not adjudicating the
grounds on merit as the same becomes academic in
nature. The appeal of the assessee is allowed.
8. In result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 20th
September, 2018".
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
6.2. The ITAT, Delhi Bench in the case of Arvind Yadav,
New Delhi vs. ITO, Ward-1(1), New Delhi in
ITA.No.1508/Del./2017, Dated 07.07.2017 in paras 6 to 8
held as under :
6. I have considered the rival submissions. It is well
settled law that the validity of the reassessment
proceedings is to be determined on the basis of the
reasons recorded by the Assessing Officer. The copy of the
reasons is filed at page 1 of the paper book and the same
reads as under: -
"Name & address of the assessee : Sh. Arvind Kumar Yadav
S/o Sh Harish Chander, Ghaziabad.
Assessment Year 2008-09 PAN - NA
Reasons for issue of notice u/s 148 of I.T. Act, 1961
16.03.2015: In this case Non PAN AIR Information
has been received the assessee has deposited cash of
Rs.41,00,000/- in his S.B. A/c during F.Y. 2007-08.
Since, the PAN of the assessee is not known and also
the return the A.Y. 2008-09 is not available on record,
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
to verify the transaction, q letters were issued to the
assessee to furnish, the particulars of PAN, 1TR etc. to
explain the source of cash deposit in bank account.
However, no response has been received from the
assessee till date. Thus, the cash credited to the I
account of the assessee remains unexplained.
Therefore, I have reason to believe that on
account of failure on the part the assessee to furnish
his return of income/to disclose his correct and
income, the income chargeable to tax for the
assessment year 2008-09 escaped assessment
within the meaning of section 147 of the I.T. Act,
1961.
ITO, W -1(l),
GZB"
7. The Id. counsel for the assessee relied upon
the order of the ITAT Delhi SMC Bench in the case of
Tejendra Kumar Ghai vs. ITO (supra) in which on
identical issues, reassessment has been quashed.
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
The order up to the para 10 is reproduced as under:-
"IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH -`SMC' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITANos. 970,97l/Del/2017
ASSESSMENT YEARS: 2011-12, 2012-2013
Tajendra Kumar Ghai
C/o M/s. RRA Taxindia,
D-28, South Extension Part-1
New Delhi - 110 049
PAN ALUPG5605N (Appellant)
Vs.
IT O - 1(5)
Rudrapur (Respondent)
Per BHAVNESH SAINI, Judicial Member
ORDER
Both the appeals by the same assessee are
directed against different orders of Ld. CIT(A) dated 3rd
November, 2016 for asstt. Year 2011-12 and dated 16th
November, 2016 for asstt. year 2012-13. Ld.
Representatives of both the parties mainly argued in asstt.
year 2011-12 and have submitted that issues are same in
21
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
both the appeals. Therefore for purpose of disposal of both
the appeals 1 decide the appeal of assessee for asstt.
year 2011-12 as under :-
2. I have heard Ld. Representatives of both, the par ties
and perused the material on record.
3. In this appeal assessee challenged the assumption
of jurisdiction u/s 147 to 151 of the I.T. Act and additions
of Rs.13,91,657/-.
4. Briefly the facts of the case are that assessee filed
return of income declaring income at Rs.2,37,940/- on 29th
March, 2013. The AO noticed that there were total cash
deposits of Rs.63,27,996/- in assessee's saving bank
account with Punjab National Bank, Corporation Bank
and Axis Bank, Rudrapur. The assessee was asked to
explain the cash deposits within the time. However no
reply is filed. The Assessing Officer thereafter recorded the
reasons for the opening of the assessment and issued a
notice u/s. 148 of the I.T. Act on 16th March, 2014. No
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
assessee did not explain the source of the cost deposit in
the bank accounts. The AO as per information obtained
u/s 133(6) from the aforesaid banks calculated peak of
the said accounts and made the addition of Rs. 13,91,
657/- treated the same as income from business for year
under consideration.
5. The assessee challenged the reopening of the
assessment as well as addition on merit before Ld. CIT(A).
However the Ld. CIT(A) dismissed both the grounds of
appeals of the assessee in principle, however, AO was
directed to compute the income of a ssessee after giving
credit to the turn over already disclosed u/s 44 AD of the
I.T. Act. The appeal of assessee was thus partly allowed.
6. Ld. Counsel for assessee referred to the reasons
recorded for reopening of assessment as are reproduced
in para 3 .3 of the appellate order the same reads as
under :
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
"In this case on AIR information was received that assessee has
been entered into transaction worth Rs. 63,27,996/- in his bank
account.
In order to verify the genuineness and correctness of this AIR
information a verification was issued on dated 16.1.2014 and
17.2.2014 to the assessee which were duly served up on the
assessee itself. Through this verification letter the assessee was
required to furnish following information
(i) Details of cash deposit of Rs. 63/27,996/ - during the
F.Y. 2010-11. Also produced other details of investment other than
mentioned above effected during the year with full details.
(ii) Produce your statement of all Bank Account in your name or
in name of your dependent family members. Also give detailed
narration of each credit and debit entry reflecting in Bank Statement
explaining the source/purposes thereof.
(iii) If you are farmer, furnish copy of khasra-khatuni evidencing
ownership proof and also the proof of selling of agriculture produce
relating to the period under consideration.
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
(iv) If you are assessed to tax, then furnish your PAN, copy of
relevant years ITR, whether it was shown or not, copy of capital a/c,
balance sheet, P & L a/c as the case may be.
(v) You are required to furnish the details within one week of
receipt of this letter. Please note that non-compliance of this letter may
attract the penal action as per the provision of the Income Tax Act,
1961. It is to be mentioned in the verification letter itself that non-
furnishing of information may constitute the reasons for initiating the
proceedings to tax these transaction in the hand of the assessee by
presumingthat these are not disclosed to Income Tax Department. The
assessee even after receiving the letter himself, did not tendered any
reply till date and till now. This is sufficient fact to establish that these
transaction/deposits are not disclosed in the regular return of income
of assessee.
Therefore, it is clear that amount of Rs. 63,27,996/- has not been
brought to tax by the assessee. Accordingly, I have reason to believe
that income to that tune of Rs. 63,27,996/ - has been escaped
assessment.
25
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
Accordingly notice u/s 148 is being issued for initiating the
proceeding of the I. T. Act, 1961."
7. Ld. Counsel for assessee submitted that no
proceedings were pending before AO when AO issued the
letter of enquiry. The inquiry letter is not valid in eyes of
law. The assessee is not under obligation to respond to
this invalid and non est so-called letter of enquiry. The AO
merely in the absence of reply of the assessee formed the
opinion for reopening of the assessment. The deposit in the
bank account by itself would not give reasons to the AO to
believe income has escaped assessment. Mere deposit in
the bank account would not prima facie makes out a case
of reopening of the assessment. He has further submitted
that the AO in the reasons recorded incorrect fact of
deposits of Rs. 63,27,996/ - despite the total deposits
were only to the tune of Rs. 41.15 lacs. This fact is
considered favourably by Ld. CIT(A) and his findings are in
para 5.3 of the appellate order. Therefore wrong facts are
26
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
recorded in reasons for reopening of assessment. Therefore
assumption of jurisdiction u/s 147 of I.T .Act is bad in law.
He has relied upon following orders :
1. Order of ITAT Amritsar Bench in the case of Amrik
Singh vs. ITO 1591TD 329 (Amritsar) in which it was held
as under :
"When the assessment proceedings u/s 147 are initiated
on the fallacious assumption that the bank deposits
constituted undisclosed income, over-looking the fact that
the source of the deposits need not necessarily be the
income of the assessee, the proceedings is neither
countenanced, nor sustainable in law."
2. Order of IT AT Delhi Bench in the case of Smt. Rajni
vs ITO and others in ITA No. 854/Del/2016 dated
6.11.2017 in which in para 12 it was held as under :-
"12. With the assistance of the Ld. Representatives, I have
[
gone through the record carefully. Section 147 of the Act
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
contemplates that `'if the AO has reason to believe that
any income chargeable to tax has escaped assessment for
any assessment year, he may, subject to the provisions of
section 148 to 153, assessee or re-assess such income ' A
perusal of this section would show that in order to harbor
a belief that income has escaped assessment , the
Assessing Officer ought to have formed an opinion on the
basis of the material possessed by him exhibiting the facts that
income has escaped assessment. A perusal of the reasons
extracted above would indicate that the Ld. AO has basically not
made reference to any material possessed by him except the AIR
communicated to him. It is pertinent to observe that he has not
analysed the information in right perspective and he sought to
reopen by conceiving a fact that the assessee failed to respond to
the query raised about this investment. As noticed in the
submissions of Ld.Counsel for the assessee, 1 am of the view
that there was no proceedings pending before the AO when he
sought the clarification of the assessee vide alleged query notice
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ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
dated 23rd January, 2012. The ITAT Amritsar Bench has dealt
with this issue elaborately and recorded a finding that under the
income tax Act, there is no such procedure to conduct an
enquiry for collecting the information without pendency of
assessment proceedings. If this reasoning is being excluded
from the copy of the reasons given by the AO, then, nothing will
remain with the AO except the information' transmitted by AIR
Wing. Apart from the above, it is to be seen that in the reasons
the AO has nowhere alleged escapement of income. The thrust
of the reasoning would show that he want to make an enquiry
about the investment. No doubt, for reopening of an assessment,
he has to just form a prima facie opinion and not to arrive at a
firm conclusion, but, the formation of a prima facie opinion
should also depict escapement of income. It is also pertinent to
observe that when all these pleas were raised before the first
appellate authority, then, the Ld. First appellate authority has not
dealt with a single proposition and rather dealt with the issue in
an altogether different manner whether notice u/s 148 was
served or not, copy of reasoning was provided or not, the
29
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
procedure contemplated through the decision of the Hpn'ble
Supreme Court in the case of GKN Driveshaft was followed or
not. The Ld. CIT(A) has not addressed the contention of the
assessee that reopening of assessment in itself is bad. because
there is no nexus between reasons vis-a-vis formation of belief ''
exhibiting the escapement of income. Taking into consideration
all these aspects, I am of the view that the AO is not justified in
reopening of the assessment afresh. I allow this ground, of
appeal and quash the assessment. As far as other issues are
concerned, since reopening of assessment has been held as bad
aqd not. in accordance with the law, therefore, I deem it not
necessary to deal with the other grounds of appeal as they have
become infructuous. "
3) Order of ITA Delhi Bench in the case of Raj Kumar
Dugar (HUF) vs. ITO 12 DTR 16 in which it was held as
under :-
"Reason recorded by the AO that assessee had not filed IT
return for asstt. year 1998-99 being based on incorrect
30
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
facts because assessee had in fact filed IT return for the
said year, issuance of notice under section 148 and
consequent assessment could not be sustained; further,
assessment could not be reopened in the absence of any
fresh material to show that income has escaped
assessment and reopening for making fishing inquiry was
not valid. "
8. On the other hand Ld. DR submitted that prima
facie case was made out for reopening of the assessment.
Therefore AO correctly reopened the assessment and
relied upon decision of the Hon'ble Supreme Court in the
case of Raymond Woollen Mills Ltd. 236 ITR 34.
9. I have considered rival submissions. It is not in
dispute that assessee filed return of income prior to
issue of notice u/s 148 of the I.T. Act. The notice u/s
148 was issued on 16th March 2014. It is well settled law
that validity of the reassessment proceedings is to be
31
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
determined on the basis of the reasons recorded by the
AO. The reasons are reproduced above in which AO
mentioned that as per AIR information it was found
that assessee deposited cash of Rs.63,27,996/- in his
bank accounts. However the assessee contended before
Ld. CIT(A) that the total aggregate deposits in bank
accounts were only 41.15 lacs and not Rs. 63,27,996/-.
The contention of the assessee was found correct by the
Ld. CIT(A). It is therefore clear that the AO while
recording the reasons for reopening of the assessment
recorded in correct facts in the reasons for reopening of
assessment. Therefore reopening of the assessment u/s
147 is clearly invalid and bad in law. I rely decision of
Hon'ble Punjab & Haryana High Court in the case of
CIT vs. Atlas Cycle Industries 180 ITR 319. Further the
AO after obtaining the AIR information wanted to
verify the same and issued a letter of enquiry to the
assessee. The AO thus did not apply in his
32
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
independent mind to the information received from
AIR. Since no proceedings were pending before AO
when he issued the letter of enquiry to the assessee,
therefore such enquiry letter was not valid in eyes of
law. The assessee was not required to respond to this
invalid and non est letter of inquiry issued by the AO.
The AO in the absence of reply from the assessee
presumed that income to the extent of deposits had
escaped assessment. The deposit in the bank accounts
per se cannot be the income of assessee. It was mere
suspicion of the Assessing Officer based on incorrect
facts, that income chargeable to tax has escaped
assessment. According to Section 147 of the I.T. Act the
AO shall have reason to believe that any income
chargeable to tax has escaped assessment. Therefore,
the belief of the A.O. should be based upon some
specific and tangible material for the purpose of
reopening of the assessment. The course adopted by
33
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
the AO was wholly unjustified in recording the
incorrect facts in the reasons for reopening of the
assessment. The decision cited by the Ld. Counsel for
assessee would clearly support the contention of the
assessee that reopening of the assessment is bad in law.
In this view of the matter I am of the view that AO has
wrongly assumed jurisdiction u/s 147 of -the I.T. Act
for the purpose of reopening of the assessment. I
accordingly set aside the orders of the authorities
below and quash the reopening of the assessment in
the matter. Resultantly the addition made in the
reassessment order would stand deleted and need not
to be adjudicated on merit.
10. In the result appeal of assessee is allowed. "
8. In this case the Assessing Officer after obtaining
the AIR information wanted to verify the same and
issued a letter of enquiry to the assessee. The Assessing
34
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
Officer thus did not apply his independent mind to the
information received from AIR. Since no proceedings were
pending before the Assessing Officer when he issued a
letter of enquiry to the assessee, therefore, such enquiry
letter was not valid in eyes of law. Therefore, the
assessee was not required to respond to invalid letter of
enquiry issued by the Assessing Officer. The Assessing
Officer in the absence of reply of the assessee presumed
that cash deposited in the bank account has escaped
assessment. The deposit in the bank account per se
cannot be income of the assessee. It is mere suspicion of
the Assessing based on incorrect fact that income
chargeable to tax has escaped assessment. The issue is
therefore covered in favour of assessee by order of ITAT
SMC Delhi Bench in the case of Tajendra Kumar Ghai
(supra). In view of this matter, I am of the view that the
Assessing Officer has wrongly assumed jurisdiction u/s
147 of the Income Tax Act for the purpose of reopening of
the assessment. I accordingly set aside the orders of the
35
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
authority below and quash the reopening of the
assessment in the matter. Resultantly, the addition made
in the reassessment would stand deleted."
6.3. Considering the facts of the case in the light of
above decisions, it is clear that the A.O. in this case recorded
in the assessment order that as per information available on
record, assessee has made cash deposit of Rs.39 lakhs in his
bank account and on that basis, A.O. recorded reasons for
reopening of the assessment reproduced above. Further, in
the reasons, A.O. has recorded about information available
with him of cash deposit of Rs.10 lakhs only. Thus, there is a
contradiction in the statement recorded in the assessment
order as well as in the reasons above. The A.O. without
verifying the information has recorded the reasons for
reopening of the assessment. Thus, the A.O. has not applied
his independent mind to the information received in this
regard. The deposit in the bank account per se cannot be
income of the assessee. It is mere suspicion of the A.O. based
36
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
on an incorrect fact that income chargeable to tax has
escaped assessment. In the similar circumstances, the ITAT,
Delhi Bench in the cases of Shri Bhajan Lal, Delhi vs. ITO,
Ward-2, Narnaul, Haryana in ITA.No.3984/Del./2017, Dated
20.09.2018, and Arvind Yadav, New Delhi vs. ITO, Ward-1(1),
New Delhi in ITA.No.1508/Del./2017, Dated 07.07.2017 did
not approve reopening of the assessment in the matter.
Following the above decisions, I am of the view that the A.O.
has wrongly assumed jurisdiction under section 147 of the
I.T. Act for the purpose of reopening of the assessment. I,
accordingly, set aside the Orders of the authorities below and
quash the reopening of the assessment in the matter.
Resultantly, the additions made in the re-assessment would
stand deleted.
7. In the result, ITA.No.2740/Del./2018 of the
Assessee is allowed.
37
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
ITA.No.1384/Del./2018 (Shri Ashok Kumar, Ghaziabad) :
8. This appeal by Assessee has been directed against
the Order of the Ld. CIT(A)-2, Noida, Dated 23.01.2018, for
the A.Y. 2008-2009, challenging the reopening of the
assessment under section 147/148 of the I.T. Act, 1961, and
addition of Rs.27,49,400/- on account of cash deposited in
the bank account.
9. In this case also, A.O. noted that PAN of assessee
is not available on record and information have been received
that an amount of Rs.48,24,200/- has been deposited in the
bank account of the assessee. Query letter was issued to the
assessee to explain the deposit in the bank account, but, no
compliance to the query letter was made. The A.O, therefore,
framed the re-assessment and made addition of
Rs.48,24,200/-. The assessee challenged the reopening of the
assessment and above addition before Ld. CIT(A). The Ld.
38
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
CIT(A) confirmed the reopening of the assessment in the
matter, however, restricted the addition to Rs.27,49,400/-.
10. After considering the rival submissions, I am of the
view that the issue is same as have been decided by me in
ITA.No.2740/Del./2018 in the case of Shri Inder Jeet, Delhi,
hereinabove. In this case, the A.O. recorded the following
reasons for reopening of the assessment.
Name & Address of the Shri Ashok Kumar,
Assessee Vill. & P.O. Harsaon,
Ghaziabad.
Assessment Year 2008-09
PAN NA
Reasons for issue of notice u/s. 148 of the I.T. Act, 1961 .
16.03.2015 : In this case, Non PAN AIR information has
been received that the assessee has deposited cash of
Rs.48,24,200/- in his S.B. A/c during the F.Y. 2007-08.
Since, the PAN of the assesse is not known and also the
return for the A.Y. 2008-09 is not available on record, to
verify the transaction, query letters were issued to the
39
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
assessee to furnish' the particulars of PAN, ITR etc. and to
explain the source of cash deposit in bank account.
However, no response has been received from the assesse
till date. Thus, the cash credited to the bank account of the
assessee remains unexplained.
Therefore, I have reason to believe that on account of
failure on the part of the assessee to furnish his return of
income/to disclose his correct and true income, the income
chargeable to tax for the assessment year 2008-09 has
escaped assessment within the meaning of section 147 of
the I.T. Act, 1961.
Sd/-
ITO W-1(1), GZB."
10.1. The issue is, therefore, covered by the Order of this
Bench in the case of Shri Inder Jeet, Delhi vs. ITO, Ward 2(5),
Gurgaon in ITA.No.2740/Del./2018 (supra). Following the
reasons for decision in the same, I set aside and quash the
reopening of the assessment under section 148 of the I.T. Act.
The addition stand deleted. Appeal of Assessee is allowed.
40
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
11. In the result, ITA.No.1384/Del./2018 of the
Assessee is allowed.
ITA.No.2647/Del./2018 (Shri Ashok Kumar, Govindpuram,
Ghaziabad, U.P.) :
12. This appeal by Assessee has been directed against
the Order of the Ld. CIT(A), Ghaziabad, Dated 19.02.2018, for
the A.Y. 2008-2009, challenging the levy of penalty under
section 271(1)(c) of the I.T. Act, 1961.
13. The A.O. levied the penalty on account of addition
made of unexplained cash deposit of Rs.48,24,000/-. Since
the re-assessment have been quashed and addition have been
deleted, therefore, penalty proceedings would not survive. I,
accordingly, set aside the Orders of the authorities below and
cancel the penalty.
14. In the result, ITA.No.2647/Del./2018 of the
Assessee is allowed.
41
ITA.No.2740, 1384 & 2647/Del./2018 Shri Inder Jeet, Delhi,
And Shri Ashok Kumar, Ghaziabad.
15. To sum-up, all the appeals of the Assessees are
Allowed.
Order pronounced in the open Court.
Sd/-
(BHAVNESH SAINI)
JUDICIAL MEMBER
Delhi, Dated 03rd December, 2018
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `SMC' Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
|