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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SAKTIJIT DEY
This is an appeal by the assessee against order dated 01.08.2019 of learned Commissioner of Income Tax (Appeals)-13, New Delhi, for the assessment year 2010-11.
In ground nos. 1, 2 and 3, the assessee has challenged the validity of reopening of assessment under section 147 of the Income-tax Act, 1961 (in short ‘the Act’). Whereas, in ground no. 5 the assessee has challenged the merits of the addition made of Rs.44,06,470/- under section 68 of the Act. Rest of the grounds raised are either general in nature or consequential, hence, do not require specific adjudication.
Briefly the facts are, the assessee is a resident individual.
Based on Annual Information Report (AIR) the Assessing Officer noticed that during the year under consideration, the assessee had deposited cash amounting to Rs.44,06,470/- in an account held with HDFC Bank. Alleging that for the assessment year under dispute, the assessee did not file any return of income under section 139(1) of the Act, the Assessing Officer reopened the assessment under section 147 of the Act. As alleged by the Assessing Officer, the assessee neither responded to the notices issued under section 148 and 142(1) of the Act, nor participated in the assessment proceeding. Therefore, invoking the provisions of section 144 of the Act, he proceeded to complete the assessment, to the best of his judgment. While doing so, he added back the amount of Rs.44,06,470/- by treating it as unexplained cash credit under section 68 of the Act. Against the assessment order so passed, the assessee preferred an appeal before learned Commissioner (Appeals). However, the appeal was dismissed.
I have considered rival submissions and perused the materials on record. At the outset, I will address the legal issues 2 | P a g e raised by the assessee challenging the validity of reopening of assessment under section 147 of the Act. On perusal of the reasons recorded, a copy of which is placed at page 35 of the paper-book, it is observed that the Assessing Officer has reopened the assessment assuming that the assessee did not file a return of income for the impugned assessment year, whereas, she had deposited cash amounting toRs.44,06,470/- in her bank account.
However, from the materials placed on record, it is observed, the assessee, in fact, had filed the return of income under section 139(1) of the Act on 15.10.2010 offering income of Rs.3,02,190/-.
The aforesaid fact clearly reveals that the Assessing Officer has reopened the assessment on erroneous assumption of fact.
Though, the assessee had raised specific grounds challenging the validity of reopening of assessment under section 147 of the Act, learned Commissioner (Appeals) has not given any finding on those grounds. Thus, prima facie, it appears, the reasons recorded are not based on the facts available on record. When the assessee has filed a return of income voluntarily under section 139(1) of the Act, formation of belief that income has escaped assessment cannot be arrived at without examining the return of income filed by the assessee. This is essential because, only after 3 | P a g e verifying the return of income the Assessing Officer can come to know whether a particular item of income has been offered to tax or not.
In the facts of the present appeal, admittedly, the Assessing Officer has proceeded to reopen the assessment assuming that the assessee had not filed any return of income under section 139(1) of the Act. Therefore, the formation of belief regarding escapement of income does not have any nexus with the material on record. For this reason alone, the reopening of assessment under section 147 of the Act has to be declared as invalid.
Accordingly, I do so. Consequently, the impugned assessment order is quashed and the order of learned Commissioner (Appeals) is set aside.
Since, I have decided the appeal on legal issue, the ground raised on merits, having become academic, is not adjudicated.
In the result, the appeal is allowed, as indicated above.
Order pronounced in the open court on 25th October, 2022