Referred Sections:
Section 147 of the Income Tax Act, 1961.
Section 147/148 of the Income Tax Act
Section 69A of the I.T. Act
Referred Cases / Judgments:
Shri Abrar Ahmad Qasimi, Delhi vs. ITO,
Shri Arvind Yadav vs. ITO, Ward-1(1), New Delhi ITA.No.1508/Del./2017 for the A.Y. 2008-2009,
Shri Abrar Ahmad Qasimi, Delhi vs. ITO, Ward-46(5),
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "SMC": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA.No.6003/Del./2018
Assessment Year 2010-2011
Shri Saurabh Saini,
H.No.488/5, 1st Floor, The Income Tax Officer,
Near Suchita Memorial, vs., Ward-4(2),
Public School, Sector-5,
Gurgaon 122001. Gurgaon.
PAN BCAPS2542E
(Appellant) (Respondent)
Shri Ved Jain, Sr. Advocate
For Assessee : And
Ms. Surbhi Goyal, C.A.
For Revenue : Shri S.L. Anuragi, Sr. D.R.
Date of Hearing : 22.08.2019
Date of Pronouncement : .09.2019
ORDER
This appeal by assessee has been directed against
the order of Ld. CIT(A)-1, Gurgaon, Dated 15th June, 2018
for the assessment year 2010-2011.
2. Briefly the facts of the case are that Department
was in possession of the information that assessee had
made cash deposits of Rs.9 lacs in his savings bank account
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Saini, Gurgaon.
maintained with Standard Chartered Bank and also made
investment in purchase of shares of various companies
amounting to Rs.11,87,530/- during the assessment year
under appeal. It was found that assessee has not filed
return of income for assessment year under appeal.
Therefore, source of the aforesaid cash deposit and
purchase of shares remains unexplained by failure of
assessee to file return of income. The assessment was
reopened under section 147 of the Income Tax Act, 1961.
The assessee claimed before assessing officer that he has
made cash deposits of Rs.7,50,000/- on three dates only.
The assessing officer accordingly made the addition of
Rs.7,50,000/-.
3. The assessee challenged the addition before the
Ld. CIT(A). The explanation of assessee and source is
reproduced in the appellate order. The Ld. CIT(A), however,
given benefit of Rs.40,000/- only on account of cash
withdrawal from the account and confirmed the addition of
Rs.7,10,000/-.
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
4. The assessee in the present appeal challenged the
initiation of re-assessment proceedings under section 147/
148 of the Income Tax Act and addition of Rs.7,10,000/-.
5. I have heard the Learned Representatives of both
the parties and perused the material on record. It is well
settled Law that validity of the re-assessment proceedings is
to be determined with reference to the reasons recorded for
reopening of the assessment. Learned Counsel for the
Assessee filed copy of the reasons recorded for reopening of
the assessment under section 148 of the income Tax Act.
The same reads as under :
Sh Saurabh Saini,
"Name & Address of the H.No.139, Sector-5, Part-III,
Assessee Opp. Vardhman Hospital,
Gurgaon 122 001.
Assessment Year 2010-2011
PAN BCAPS2542E
Status Individual
Date 09.03.2017
Reasons to issue notice U/s.148 of the I.T. Act, 1961
This is an NMS case. The Income tax Department has
received information on financial activities relating to
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
financial transaction of the assessee for the financial
year 2009-10 relevant to assessment year 2010-11. As
per this information the assessee has made cash
deposits amounting to Rs.9,00,000/- to his savings
bank account maintained with Standard Chartered
Bank Grindlays Ltd., SCF-77. Sector-14, Gurgaon and
has also made investment in purchase of shares of
various companies amounting to Rs.11,87,530/-. From
the ITD data base, it is found that assessee has not
filed his return of Income for the A.Y. 2010-11. In this
respect, NMS notice was issued to the assessee but no
reply has been filed by the assessee.
As the assessee has not filed the return of Income,
the source of cash deposits as well as investment in
shares of various companies remains unexplained.
Therefore, 1 have reason to believe that on account of
failure on the part of the assessee to explain the source
of cash deposits and investment in shares, income to
the tune of Rs. 20,87,530/-, has escaped
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
assessment for the A.Y. 200-11 within the meaning
of Section 147 of Income Tax Act, 1961.
In view of above proceedings u/s. 147 of the
I.T. Act, 1961, are hereby initiated against the
assessee for the assessment year 2010-11 to bring
to tax the undisclosed income of Rs.20,87,530/-.
Sd/- V.K. Jain
Income Tax officer,
Ward 4(2), Gurgaon."
5.1. Learned Counsel for the Assessee submitted that
the assessing officer has recorded wrong facts in the
reasons that assessee has made cash deposits of Rs.9 lacs
in his savings bank account though it was only
Rs.7,50,000/-. He has submitted that no amount has
escaped income on account of purchase of shares as the
assessing officer has accepted the claim of assessee. He
has submitted that cash deposit by itself would not disclose
that income has escaped assessment. He has submitted
that issue is covered by the Order of ITAT Delhi SMC-Bench
in the case of Shri Abrar Ahmad Qasimi, Delhi vs. ITO,
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
Ward-46(5), New Delhi, for the assessment year 2007-08
Dated 1st June 2018 in which it was held as under :
"This appeal by assessee has been directed
against the order of the Ld. CIT(A)-16, New Delhi, dated
06th March, 2017, for the A.Y. 2007-2008.
2. Briefly, the facts of the case are that in this
case notice under section 148 for reopening of the
assessment was issued on 21.02.2014 after obtaining
the approval of JCIT, New Delhi. The assessee in
response to the notice, filed return of income declaring
income of Rs.99,200/-. During the year, assessee had
declared salary income only. The reasons for reopening
of the assessment have been provided to the assessee.
The assessee was asked to explain nature of source of
entry of Rs.14,75,000/- in S.B. account of the assessee.
The A.O. noted that assessee has not filed satisfactory
explanation regarding cash deposit in Axis Bank,
therefore, it was treated as unexplained deposit under
section 69A of the I.T. Act and made the addition of
Rs.14,75,000.
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
3. The assessee challenged the above addition
before Ld. CIT(A) and it was submitted that assessee is
Maulvi for Arabic Religious and Teacher and teaching
Arabic in the Masjid. He has prestige in the society and
trustworthy in the community. People coming to him for
pious purposes, giving money for safe deposit and take
back whenever required. The assessee deposited the
amount in bank account which was later on withdrawn
and returned to them. Assessee gets salary from Waqf
Board, Delhi.
4. At the appellate stage, assessee was asked
to produce lenders for their statements. The assessee
produced some of the persons at the appellate stage.
Their statements were recorded in which they have
confirmed to have given amounts to the assessee. Ld.
CIT(A), however, do not accept the contention of
assessee because lenders are not having enough money
and that they themselves have bank account, therefore,
there were no reason to deposit amount in the bank
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
account of the assessee. Appeal of the assessee has
been dismissed.
5. The assessee in the present appeal
challenged the reopening of the assessment as well as
addition of Rs.14,75,000/-. Learned Counsel for the
Assessee submitted that assessee obtained reasons for
reopening of the assessment under RTI Act, 2005, copy
of which is filed on record, in which, A.O. has recorded
reasons for reopening of the assessment. The same
reads as under :
"As per information available in ITD System of the
Income Tax Department, Sh Abrar Ahmad Qasimi
during the financial year 2006-07 relevant to A.Y. 2007-
08 has made cash deposit of Rs.14,75,000/- in saving
bank account. The assessee has not filed Tax return for
A.Y. 2007-08. After examination of information
available in ITD system by independent application of
mind, I have reason to believe that income of
Rs.14,75,000/-for Financial Year 2006-07 relevant to
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
Assessment Year 2007 -08 has escaped assessment with
in meaning of sec 147 of Income Tax Act, 1961. The
case for assessment year 2007 -08 is taken up for
assessment u/s. 147 of I. Tax Act, 1961."
5.1. He has submitted that mere deposit of the
cash in the bank account is not sufficient to believe that
income chargeable to tax has escaped assessment,
therefore, reopening of the assessment is bad in law. It
was submitted that the issue is covered in favour of
assessee by order of ITAT, SMC-Bench in the case of
Shri Arvind Yadav vs. ITO, Ward-1(1), New Delhi
ITA.No.1508/Del./2017 for the A.Y. 2008-2009, Dated
07.07.2017, in which the Tribunal on identical facts, set
aside the orders of the authorities below and quashed
the reopening of the assessment vide order dated
07.07.2017. Copy of the order is placed on record.
6. Ld. D.R. relied upon the orders of the
authorities below.
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
7. After considering rival submissions, I am of
the view that reopening of the assessment is bad in
law. The A.O. merely noted in the reasons that since
there is an information available on ITD System of the
Department that assessee has made cash deposits of
Rs.14,75,000/- in his Bank Account, therefore, income
chargeable to tax has escaped assessment. The ITAT,
Delhi Bench in the case of Shri Arvind Yadav (supra)
considering the identical facts held that the deposit in
the bank account per se cannot be the income of the
assessee. This is a mere suspicion of the A.O. based on
incorrect fact that income chargeable to tax has escaped
assessment and accordingly, quashed the reopening of
the assessment. The findings of the Tribunal in para 8
of the Order are reproduced as under:
"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
Officer thus did not apply his independent mind to the
information received from AIR. Since no proceedings
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
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 Officer 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 authorities
below and quash the reopening of the assessment in
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
the matter. Resultantly, the addition made in the
reassessment would stand deleted.
8. In the result, the appeal filed by the assessee is
allowed."
7.1. The issue is, therefore, covered in favour of
the assessee by the decision of the Delhi Tribunal in the
case of Shri Arvind Yadav (supra). Following the
reasons for decision for the same, I set aside the orders
of the authorities below and quash the reopening of the
assessment in the matter. Resultantly, the addition
made in the re-assessment would stand deleted and
appeal of assessee is allowed.
8. In the result, appeal of the assessee is
allowed."
5.2. He has, therefore, submitted that re-assessment
is liable to be quashed.
6. On the other hand, Ld. D.R. relied upon the
Orders of the authorities below.
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
7. Considering the facts of the case in the light of
Order of the Tribunal in the case of Shri Abrar Ahmad
Qasimi, Delhi vs. ITO, Ward-46(5), New Delhi (supra), I am
of the view that the issue is covered in favour of the
assessee by the aforesaid decision of the Tribunal. The
assessing officer in the reasons recorded incorrect facts that
assessee made cash deposit of Rs.9 lakhs, despite assessing
officer has accepted that assessee made cash deposit of
Rs.7,50,000/- only. The assessing officer while recording
the reasons has not applied mind to the material on record.
Further, source of purchase of shares have been accepted
by the assessing officer, which was also found factually
incorrect. Further the deposit in the bank account per se
cannot be income of the assessee. It is mere suspicion of the
assessing officer based on incorrect facts that income
chargeable to tax has escaped assessment. Following the
reasons for the decision in the case of Shri Abrar Ahmad
Qasimi, Delhi vs. ITO, Ward-46(5), New Delhi (supra), I set
aside the orders of the authorities below and quash the
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ITA.No.6003/Del./2018 Shri Saurabh
Saini, Gurgaon.
reopening of the assessment in the matter. Resultantly, the
addition made in the re-assessment would stand deleted.
8. In the result, appeal of Assessee allowed.
Order pronounced in the open Court.
Sd/-
(BHAVNESH SAINI)
JUDICIAL MEMBER
Delhi, Dated 05th September, 2019
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "SMC" Bench
6. Guard File
// BY Order //
Asst. Registrar : ITAT Delhi Benches :
Delhi.
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