SHRI BHUP SINGH, ,BHARATPUR vs. ITO, WARD-2, , BHARATPUR

Additional ground: (i) That the ld. AO erred in law in initiating proceedings u/s 147/148 on the basis of AIR information without any independent application of mind without even examining the truthfulness of the information. Therefore, the proceedings initiated simply on the basis of AIR information without any verification etc., on the basis of wrong facts is bad in law, void ab initio and deserves to be quashed. (ii) The ld. Pr. CIT, Alwar has also accorded approval u/s 151(1) in a routine and mechanical manner without any application of mind and without going through the relevant information having wrong facts and figures. The proceedings deserve to be quashed on this count also.”

Briefly, the facts of the case are that the assessment was completed U/s 144 r.w.s. 147 of the Act dated 04.12.2018 wherein the Assessing Officer has made an addition of Rs. 61,32,671/- towards unexplained U/s 69A of the Act. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A) and requested for admission of additional evidence under Rule 46A of the Income Tax Rules.

During the course of hearing, the ld. AR submitted that the assessee is having 27 bighas of agricultural land and no other source of income except agricultural income. It was submitted that Rs. 2,40,000/- was deposited in his bank account out of his agricultural income and proof regarding the land holding and the source of such deposit has been confirmed by way of an affidavit of the assessee which has not been properly appreciated by the lower authorities. It was further submitted that Rs. 4,60,000/- was received by the assessee from his son Shri Mahaveer Singh by way of a gift who had sold a plot of agricultural land on the same day and in support, copy of sale deed of land sold by the assessee and affidavit of assessee’s son was submitted before the ld CIT(A) which has again not been properly appreciated. It was further submitted that rest Rs. 40,000/- was deposited out of previous cash withdrawal of Rs. 50,000/- from the same bank on 16.12.2010. It was accordingly submitted that the AO in his remand report, the ld CIT(A) in his appellate order have not controverted the submissions of the assessee, contents of the affidavit and other documentary evidences furnished by the assessee, therefore, the addition of Rs. 7,00,000/- sustained by the ld. CIT(A) may kindly be deleted. 4 Shri Bhup Singh vs. ITO

Per contra, the ld. DR submitted that the assessment in this case was originally completed U/s 144 of the Act. Therefore, there is no information available before the Assessing Officer regarding the source of such deposits and accordingly the addition was made by the Assessing officer. It was further submitted that during the appellate proceedings, the assessee submitted certain additional evidences and matter was remanded to the Assessing Officer wherein the latter has confirmed that the assessee has made fresh cash deposits of Rs. 7,00,000/- during the year. It was further submitted that the ld. CIT(A) has dully considered the submission of the assessee as well as the affidavits and other documentary evidences with regard to source of such deposits in para 5.7 of his order and since the same were found not credible, the ld AR contention is devoid of any merit. It was accordingly submitted that the assessee’s submissions as well as evidences submitted during the appellate proceedings have been duly considered by the ld. CIT(A) and the contention of the ld. AR that the same have not been duly considered is not correct. He accordingly supported the findings by the ld. CIT(A).

We have considered the rival contentions and perused the material available on record. The limited issue under consideration is whether the assessee has offered satisfactory explanation in support of cash deposit of Rs 7 lacs in his bank account during the year and whether such explanation is supported by any verifiable evidence on record or not. The assessee has submitted that the source of such cash deposit is out of his agriculture income, gift received from his son and from previous cash withdrawals. In support, it is claimed that the land 5 Shri Bhup Singh vs. ITO holding, affidavit of the assessee, the affidavit of son of the assessee, copy of the sale deed have been submitted before the lower authorities and which have not been properly appreciated and have not been controverted. On the other hand, the contention of the ld DR is that the same have been duly considered and not found credible, hence rejected by the ld CIT(A). In order to appreciate the rival contentions, during the course of hearing, we asked the ld AR whether the documentary evidences have been furnished before us. In response, he submitted that the same have not been submitted for the reason that the same have not been controverted and thus accepted by the lower authorities. Given that the documentary evidence in support of the assessee’s explanation is not available before us, we are unable to take a view in the matter and we deem it appropriate that the matter is set-aside to the file of the ld CIT(A) who shall examine the same afresh and pass a speaking order after providing reasonable opportunity to the assessee. In the result, the ground no. 1 is allowed for statistical purposes.

In ground no. 2, the assessee has challenged the action of the ld CIT(A) in giving directions u/s 150(1) of the Act to bring to tax interest on FDRs without any show-cause notice. Since we have set-aside the other matter, this matter is also set-aside to the file of the ld CIT(A) to decide the same afresh after providing reasonable to the assessee. In the result, the ground is allowed for statistical purposes.

In the additional grounds of appeal, the assessee has challenged the initiation of proceedings u/s 148 and approval granted by the ld Pr 6 Shri Bhup Singh vs. ITO CIT u/s 151 of the Act. It was submitted that the AO has issued notice U/s 148 on the basis of some AIR information for verification of the source of FDRs of Rs. 40,32,671/- and cash deposits of Rs. 21,00,000/- in the bank account of the assessee. As per him the escaped income in the case of the assessee for the A.Y. 2011-12 was Rs. 61,32,671/- for which he has issued notice U/s 147/148. Whereas, on the basis of submissions of the assessee and statement of grandson of the assessee recorded by AO, the AO has admitted that during the year there were fresh cash deposits of Rs. 7 lakhs only and the assessee had acquired FDRs of Rs. 10 lakhs only, that too out of maturity amounts of FDRs of earlier year. The proceedings initiated by the AO U/s 147/148 on the basis of wrong facts, simply for verification of source of bank deposits and without any tangible material are bad in law and deserve to be quashed. It was submitted that the approval has been accorded by the ld Pr CIT, Alwar on basis of wrong facts without any application of mind.

We find that it is a case where the assessee has not filed any return of income prior to the issue of notice u/s 148 of the Act. Basis information received from AIR that there are deposits in the assessee’s bank accounts, the AO again issued notices to the assessee, however there was no compliance on part of the assessee. Therefore, basis such AIR information, the notice u/s 148 has been issued. It is therefore a case where there is tangible information in possession of the AO that there are deposits in the assessee’s bank account and thereafter, the AO has taken steps to reach out to the assessee to verify such deposits and to file his return of income, however, there has been complete non- 7 Shri Bhup Singh vs. ITO compliance on part of the assessee, therefore, in such circumstances, where the AO forms a prima facie belief that the income has escaped assessment and issue notice u/s 148, we donot see any infirmity in the action of the AO in exercising his jurisdiction u/s 147 of the Act and in the action of the ld Pr CIT in according his approval. As far as variation in the quantum of deposits as stated in the reasons and finally assessed pursuant to the first appellate proceedings is concerned, we find that the quantum of deposits is based on the information shared by the bank with the Revenue department and forms part of the AIR information and where based on subsequent examination during the assessment and appellate proceedings, there is variation in such quantum of deposits, the same cannot be a basis to hold the very initiation of reassessment proceedings as bad in law. The decisions relied upon by the ld AR are distinguishable on facts and thus, doesn’t support the case of the assessee. In the result, the ground of appeal is dismissed.