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Income Tax Appellate Tribunal, JAIPUR BENCHES “A”, JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 734/JP/2019
ORDER PER: SANDEEP GOSAIN, J.M. This appeal has been filed by the assessee against the order of the ld. CIT(A)-I, Jaipur dated 05/03/2019 for the A.Y. 2008-09, wherein following grounds have been taken: “1. The ld. CIT(A) has erred on facts and in law in upholding the validity of order passed by A.O. U/s 147 of IT Act, 1961.
2. The ld. CIT(A) has erred on facts and in law in confirming the addition of Rs. 6,29,044/- by treating the income from sale of property as short term capital gain as against income from business and profession claimed by the assessee. 2.1 The ld. CIT(A) has erred on facts and in law in confirming the above addition by applying provision of Section 50C of the Act without considering the fact that assessee purchased the property in auction from UCO Bank for Rs. 9,02,021/- on 2 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 18/09/2007 and sold the same on 26/09/2007 for Rs. 9,81,000/-, therefore, under these peculiar circumstances value adopted by stamp authorities at Rs. 15,98,915/- cannot be considered as deemed sales consideration. He has further erred in applying the provisions of Section 50C without referring the matter to DVO. 3. The appellant craves to alter, amend and modify any ground of appeal
4. Necessary cost be awarded to the assessee.”
2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic.
3. The brief facts of the case are that the assessee is an advocate and is engaged in legal practice. He filed his return of income on 31.07.2008 with ITO, Ward-7(1), Jaipur at total income of Rs.1,40,840/-. The ITO, Ward-2(3) issued notice u/s 148 of the Income Tax Act, 1961 (in short, the Act) on 27.03.2015. The assessee objected to the notice issued u/s 148 vide letter dated 19.08.2015 on various grounds like lack of jurisdiction, reopening of assessment on the basis of information received from DIT (I & CI) and non-filing of return. The AO, however, rejected the same and completed the assessment on 30/03/2016 u/s 148/143(3) of the Act assessing total income of Rs. 7,69,880/- by making various additions.
Being aggrieved by the order of the A.O., the assessee carried the matter before the ld. CIT(A), who after considering the submissions of 3 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO both the parties as well as material placed on record, upheld the validity of the order by holding that case of the assessee was transferred by the Ld. PCIT-1, Jaipur u/s 127 of the Act passed on 20.05.2015 to ITO, Ward-2(2), Jaipur. Once the jurisdiction is specifically assigned u/s 127 of the Act, it supersedes the general jurisdiction u/s 124 of the Act. Thus, there is no defect of jurisdiction in the assessment order passed by the AO. Against which the assessee is in further appeal before the ITAT on the grounds mentioned above.
The ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied on the written submissions filed before the Bench and the same is reproduced below:
“At the outset it is submitted that notice u/s 148 is issued without jurisdiction. The assessee is regularly filing return of income before ITO, Ward-7(1), Jaipur. Therefore, notice issued u/s 148 by ITO, Ward- 2(3) is without jurisdiction. The Ld. CIT(A) held that the case of assessee was transferred by the Ld. PCIT-1, Jaipur u/s 127 of the Act to ITO, Ward-2(2), Jaipur and once the jurisdiction is specifically assigned u/s 127 of the Act, it supersedes the general jurisdiction u/s 124 of the Act. However, while holding so he ignored the fact that the order u/s 127 was passed on 20.05.2015 as mentioned at Pg 1 of assessment order) while the notice u/s 148 was issued on 27.03.2015. Thus, at the time of issuance of notice u/s 148, jurisdiction of assessee lies with ITO, Ward-
4 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 7(1) and not with ITO, Ward-2(2). Hence, the notice issued by ITO, Ward-2(2) is illegal & bad in law. It is a settled law that an order passed by an officer having no jurisdiction to pass such order is void ab initio and deserves to be annulled. The defect in this order is not curable and it cannot be rectified even by sending the matter back to the concerned officer. For this proposition, reliance is placed on the decision of Hon'ble Rajasthan High Court in case of CIT Vs. Poonam Chand Surana (2014) 221 Taxman 0151. In this case survey u/s 133A was conducted at business premises of assessee and notice u/s 148 was issued by ITO at Suratgarh. CIT(A) held that pecuniary or territorial jurisdiction as contemplated u/s 124 was not applicable as assessee was filling his return of income with ITO at Chennai. Hon'ble ITAT held that assessee was regularly filing his returns of income at Chennai and at time of issuance of notice under section 148, ITO at Suratgarh had no jurisdiction over assessee. Hon'ble High Court held that no error or illegality is found in observations of CIT(A) as approved by ITAT. ITO at Suratgarh got jurisdiction over assessee only on 21.08.2007 and prior to that he had no jurisdiction over assessee when he was filing returns of income with ITO at Chennai. Proposal for transfer of jurisdiction over assessee, from Chennai to Suratgarh, materialized only on 21.08.2007 and proceedings initiated prior to such date by issuance of notice under section 148 was not authorized and competent. When proceedings were sought to be adopted by ITO at Suratgarh, jurisdiction for assessment in relation to assessee was being exercised at Chennai. High Court was unable to find any cogent reason to entertain appeal so as to interfere with concurrent orders passed by CIT(A) and ITAT. Hence, revenue's appeal was dismissed.
From the reasons recorded it can be noted that that notice u/s 148 is issued solely on the basis of information received from DIT(I & CI),
5 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO Jaipur wherein it is stated that assessee has sold property P. No. C-27, 1st Floor, Lal Kothi Yojana, Jaipur for sale consideration of Rs.9,81,000/- which was registered by Sub-Registrar, Jaipur at Rs.16,20,599/- for stamp duty purpose. On this basis AO concluded that income to the extent of Rs.16,20,599/- has escaped assessment. However, the Sub-Registrar for stamp duty purpose has valued the property at Rs.15,98,915/- as mentioned in sale deed (back of PB 38). Thus, it is evident that only basis for reopening the assessment is the information received from DIT(I & CI), Jaipur. From the date of receipt of information by the AO to the date of issue of notice u/s 148, AO has not made any further enquiry. The primary condition for initiating action u/s 147 is that AO must have reason to believe that any income chargeable to tax has escaped assessment. This satisfaction must be of AO himself and not a borrowed satisfaction. Reason to belief cannot be at the instance of audit party or investigation conducted by others or third party statement etc. Hence, reopening of assessment only at the instance of DIT (I & CI), Jaipur is illegal and bad in law. For this purpose, reliance is placed on the following cases:- (i) Pioneer Town Planners Pvt. Ltd. Vs. DCIT (2018) 170 DTR 237 (Del.) (Trib.) (ii) Deepraj Hospital Pvt. Ltd. Vs. ITO (2018) 65 ITR 663 (Agra) (Trib.) (iii) Smt. Sunita Jain Vs. ITO (2017) 49 CCH 0330 (Ahd.) (Trib.) (iv) Devansh Exports Vs. ACIT (2019) 176 DTR 17 (Kol.) (Trib.) The ld. AR has further submitted that from the reasons recorded it can be noted that AO issued notice u/s 148 for the reason that assessee has not filed the return whereas assessee is regularly filing his return with ITO, Ward-7(1), Jaipur. No efforts have been made to ascertain whether assessee has filed the return or not. Thus, the very reason for reopening the assessment that assessee has not filed the return of income is 6 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO incorrect and therefore, the notice issued u/s 148 is illegal and bad in law as held in the following judicial pronouncements:- (i) Sh. Kulwant Singh vs. ITO order dt. 20.12.2018 (Jaipur) (Trib.) (ii) PCIT Vs. RMG Polyvinyl (I) Ltd. (2017) 156 DTR 79 (Del.) (HC) In view of above, notice issued u/s 148 and consequent order passed u/s 147 is illegal and bad in law and the same be quashed.
On the other hand, the ld. DR has vehemently supported the orders of the revenue authorities and also relied on the following decisions:
(i) Advantage Strategic Consulting (P) Ltd. Vs Pr.CIT (2017) 88 taxmann.com 104 (Mad.) (ii) CIT Vs Nova Promoters & Finlease (P) Ltd. (2012) 18 taxmann.com 217 (Del) (iii) Phool Chand Bajrang Lal Vs ITO (1993) 69 Taxman 627 (SC) (iv) CIT Vs Bidhu Bhusan Sarkar (1967) 63 ITR 278 (SC) (v) Abhishek Jain Vs ITO (2018) 94 taxmann.com 355 (Del) 7. We have considering the rival contentions of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. The Assessing Officer has reopened the assessment by recording the reasons as under: "In this case, information has been received from Director of Income tax (I & CI), Rajasthan, Jaipur that the assessee has sold property P.
7 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO No. C-27, 1st Floor, Lal Kothi Yojana, Jaipur for a sale consideration of Rs.9,81,000/- during the F.Y. 2007-08. This transaction was registered by Sub-Registrar-4, Jaipur at value of Rs.16,20,599/- for stamp duty purpose. The assessee has not filed his return of income for A.Y. 2008- 09, hence taxability of capital gain is not ascertainable. Since the assessee has not filed return of income for the relevant assessment year, the above transaction entered by the assessee is not verifiable. I have reason to believe that the income to the extent of Rs.16,20,599/- has escaped assessment within the meaning of section 147 of the IT Act, 1961. Therefore, notice u/s 148 is to be issued." We observe from perusal of the record that the assessee is regularly filing return of income before ITO, Ward-7(1), Jaipur, therefore, notice issued u/s 148 of the Act by the ITO, Ward-2(3) is no means. The Ld. CIT(A) held that the case of assessee was transferred by the Ld. PCIT-1, Jaipur u/s 127 of the Act to ITO, Ward-2(2), Jaipur and once the jurisdiction is specifically assigned u/s 127 of the Act, it supersedes the general jurisdiction u/s 124 of the Act. However, while holding so he ignored the fact that the order u/s 127 was passed on 20.05.2015 as mentioned at Page No. 1 of assessment order while the notice u/s 148 was issued on 27.03.2015. Thus, at the time of issuance of notice u/s 148, jurisdiction of assessee lies with ITO, Ward-7(1) and not with ITO, Ward-2(2).. It is a settled law that an order passed by an officer having no jurisdiction to pass such order is void ab initio and deserves to be annulled. The defect in this order is not curable and it cannot be rectified even by sending the matter back to the concerned officer. In 8 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO this regard, we rely on the decision of Hon'ble Rajasthan High Court in case of CIT Vs. Poonam Chand Surana (2014) 221 Taxman 0151. In this case survey u/s 133A was conducted at business premises of assessee and notice u/s 148 was issued by ITO at Suratgarh. CIT(A) held that pecuniary or territorial jurisdiction as contemplated u/s 124 was not applicable as assessee was filling his return of income with ITO at Chennai. The ITAT held that assessee was regularly filing his returns of income at Chennai and at time of issuance of notice under section 148, ITO at Suratgarh had no jurisdiction over assessee. Hon'ble High Court held that no error or illegality is found in observations of CIT(A) as approved by the ITAT. The ITO at Suratgarh got jurisdiction over assessee only on 21.08.2007 and prior to that he had no jurisdiction over assessee when he was filing returns of income with ITO at Chennai. Proposal for transfer of jurisdiction over assessee, from Chennai to Suratgarh, materialized only on 21.08.2007 and proceedings initiated prior to such date by issuance of notice under section 148 was not authorized and competent. When proceedings were sought to be adopted by ITO at Suratgarh, jurisdiction for assessment in relation to assessee was being exercised at Chennai. Hon’ble High Court was unable to find any cogent reason to entertain appeal so as to interfere with concurrent orders passed by CIT(A) and ITAT.
9 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 8. From the reasons recorded it can be noted that that notice u/s 148 is issued solely on the basis of information received from DIT(I & CI), Jaipur wherein it is stated that assessee has sold property P. No. C- 27, 1st Floor, Lal Kothi Yojana, Jaipur for sale consideration of Rs.9,81,000/- which was registered by Sub-Registrar, Jaipur at Rs.16,20,599/- for stamp duty purpose. On this basis AO concluded that income to the extent of Rs.16,20,599/- has escaped assessment. However, the Sub-Registrar for stamp duty purpose has valued the property at Rs.15,98,915/- as mentioned in sale deed. Thus, it is evident that only basis for reopening the assessment is the information received from DIT(I & CI), Jaipur. From the date of receipt of information by the AO to the date of issue of notice u/s 148, the AO has not made any further enquiry. The primary condition for initiating action u/s 147 is that AO must have reason to believe that any income chargeable to tax has escaped assessment. This satisfaction must be of AO himself and not a borrowed satisfaction. Reason to belief cannot be at the instance of audit party or investigation conducted by others or third party statement etc. The Coordinate Bench of Delhi Tribunal in the case of Pioneer Town Planners Pvt. Ltd. Vs. DCIT (2018) 170 DTR 237 (Del.) (Trib.) has held as under:
10 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO AO having formed the belief that assessee's income has escaped assessment only on the basis of some material received from the Investigation Wing without making any effort to examine and discuss the material received from the Investigation Wing and without application of the mind to the same, it follows that he initiated the reassessment proceedings on the basis of borrowed satisfaction without application of his own mind and therefore, reassessment proceedings and all consequent proceedings and orders including impugned reassessment are bad in law and not sustainable.
The Coordinate Bench of Agra Tribunal in the case of Deepraj Hospital Pvt. Ltd. Vs. ITO (2018) 65 ITR 663 (Agra) (Trib.) has held as under: If the reopening is based on information received from the investigation dept, the reasons must show that the AO independently applied his mind to the information and formed his own opinion. The AO, in the reasons, has just stated the information received and his conclusion about the alleged escapement of income. As to what the AO did with the information made available to him is not discernible from the reasons. The reasons must also paraphrase any investigation report which may form the basis of the reasons and any enquiry conducted by the AO thereon as also the conclusions thereof. Further where the reasons make a reference to any document, such document and / or relevant portion thereof must be enclosed along with the reasons. Therefore, reasons recorded by the AO are found to be not in accordance with law. Consequently, the reassessment proceedings, culminating in the order under appeal, are also not sustainable in the eye of law and 11 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO they too are cancelled. Nothing further survives for adjudication. In the absence of the link between the information available with AO and formation of belief by AO for reassessment, reassessment proceedings are not valid. The Coordinate Bench of Ahmadabad Tribunal in the case of Smt. Sunita Jain Vs. ITO (2017) 49 CCH 0330 (Ahd.) (Trib.) has held as under:
The Hon'ble ITAT after relying on the decision of Gujarat High Court in case of Harikishan Sunderlal Virmani Vs. DCIT, quashed the assessment framed u/s 147. The Hon'ble High Court in its case held that the material on the basis of which the AO seeks to assume the jurisdiction under section 147 of the Act is the information received from the external source viz. the Principal Director of Income Tax (Investigation), Ahmadabad. It cannot be disputed that on the basis of the information received from another agency, there cannot be any reassessment proceedings. However, after considering the information/ material received from other source, AO is required to consider the material on record in case of the assessee and thereafter is required to form an independent opinion on the basis of the material on record that the income has escaped assessment. Without forming such an opinion, solely and mechanically relying upon the information received from other source, there cannot be any reassessment for the verification.
The Coordinate Bench of Kolkata Tribunal in the case of Devansh Exports Vs. ACIT (2019) 176 DTR 17 (Kol.) (Trib.) has held as under:
12 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO The information given by DIT(Inv.) can only be a basis to ignite/ trigger "reason to suspect". The AO has to carry out further examination to convert the "reason to suspect" into "reason to believe". If the AO acts on borrowed satisfaction and without application of mind, the reopening is void.
It is worthwhile to mention that, from the reasons recorded it can be noted that AO issued notice u/s 148 for the reasons that assessee has not filed the return whereas assessee is regularly filing his return with ITO, Ward-7(1), Jaipur. No efforts have been made to ascertain whether assessee has filed the return or not. Thus, the very reason for reopening the assessment that assessee has not filed the return of income is incorrect. In this regard, we draw strength from the decision of the Coordinate Bench of this Tribunal in the case of Sh. Kulwant Singh vs. ITO order dated 20.12.2018 (Jaipur) (Trib.) wherein it has been held as under:
We have considered the rival submissions as well as the relevant material on record. The Assessing Officer has reopened the assessment by recording the reasons as under: “Reason for issuance of Notice U/s 148 Read with section 147 In this case the assessee has not filed the return of Income for A.Y.2011-12. As per information available on record the assessee has deposited a sum of Rs. 15,20,500/- in the Saving Bank account held with State Bank of Patiala during the F.Y.2010-11. Since the assessee has not filed the return of Income for A.Y.2031-12. Therefore, I have the reason to believe that income of Rs.
13 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 15,20,500/- chargeable to tax has escaped assessment for the A.Y.2011-12 and thus it is a fit case to initiate proceeding within the meaning of section 147 of Income Tax Act,1951. Notice u/s 148 of Income Tax Act,1961 is issued accordingly.” Thus, it is manifest from the reasons recorded by the Assessing Officer that the Assessing Officer begins with the statement that the assessee has not filed return of income for the A.Y. 2011-12. Further while forming the belief, again the Assessing Officer has stated that the assessee has not filed return of income and therefore, he has reason to believe that the income of Rs. 15,20,500/- to be deposited in the bank account chargeable to tax, has escaped assessment. This statement of the Assessing Officer in the reasons recorded is the basis for formation of belief is factually incorrect as the Assessing Officer himself has recorded this fact in the assessment order and stated that the return of income was filed by the assessee through e-filing on 05/9/2011 declaring total income of Rs. 2,26,290/-. Further when the assessee has declared the turnover of more than Rs. 31.00 lacs then the deposits in the bank account would not ipso facto a reason to belief that the entire amount is the income assessable to tax. We find that the Assessing Officer has reopened the assessment in a mechanical manner without application of mind and solely on the basis of information. The Assessing Officer has not taken the pain to verify the return of income filed by the assessee. An identical issue has been considered by this Tribunal in the case of Narain Dutt Sharma Vs ITO (supra) in para 13 to 19 as under:
“13. We have heard the rival contentions and perused the material available on record. Firstly, it is noted that in the instant case, the notice under section 148 in exercise of powers under section 147 has been issued on 23.03.2014 after the expiry of period of four years from the end of the impugned assessment 14 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO year i.e., AY 2007-08. In terms of proviso to section 147 of the Act, an action under the said provisions can be taken by reason of failure on the part of the assessee to file his return of income or to disclose fully and truly all necessary facts necessary for his assessment for the subject assessment year. The contention of the Revenue at the time of recording the reasons was that the assessee had failed to file his return of income for the impugned assessment year and the same was not reflected in the IT system. Per contra, the Id AR has submitted that return of income for the AY 2007-08 was filed by the assessee manually with ITO Ward 6(1) Jaipur vide acknowledgment no. 2611000925 on 21.05.2008. It is relevant to note that the return of income so filed manually is with ITO Ward 6(1) who is the same officer who has subsequently issued the notice u/s 148 of the Act and therefore, Revenue cannot take the plea that return was filed wrongly by the assessee with another officer not having jurisdiction over the assessee. The related contention of the Revenue that the return so filed manually not uploaded in the IT system therefore cannot be accepted more so in the context of reassessment proceedings and where there is fault on the part of the assessee in filing his return of income.
Interestingly, during the course of reassessment proceedings, the ITO in his reassessment order stated clearly in Para 5 that "in the return of income filed under the head Business, you have declared income of Rs 175,510 on gross receipts of Rs 21,93,870 u/s 44AD." It is relevant to note the said return of income was not filed in pursuance to issuance of notice u/s 148 but the same was the return of income which was originally filed by the assessee u/s 139 of the Act. It is therefore clear that the whole foundation of the Revenue's reasoning is contradictory and self-defeating where at the time of issuance of notice u/s 148, it says that the assessee has failed to file his return of income and subsequently, during the proceedings u/s 147, it admits that the assessee has filed his return of income originally under section 139. On this ground itself, the assumption of jurisdiction u/s 147 cannot be sustained and the subject proceedings are liable to be quashed.
15 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 15. Now, coming to the reasons which have been recorded by the ITO Ward 6(1), Jaipur for initiating proceedings u/s 147 of the Act which are reproduced as under: "As per AIR information generated from the system, the assessee has made investment of Rs. 1057000/- for purchase of units and SB Account during FY 2006-07 relevant for A Y 2007-08. Since as per system no return of income has been filed for A Y 2007-08 the above transaction is not verifiable. I have, therefore, reasons to believe that on account of not filing of return by the assessee, income chargeable to tax has escaped assessment Therefore, it is requested to accord approval for issuance of notice u/s 148 of the Act."
The reasons so recorded by the ITO refers to information gathered from AIR database of the Revenue department whereby certain data/information regarding purchase of units and its linkage with the assessee's saving bank account during the financial year 2006-07 has been reported by the concerned Bank. As per ITO, said information is not verifiable for the reason that assessee has failed to file its return of income for the subject assessment year as per the Revenue's department IT system. The basis of formation of belief by the ITO that the assessee's income for the impugned assessment year has escaped assessment is therefore the receipt of certain AIR information from an external source i.e., banking institution with which the assessee maintains his saving bank account and the fact that assessee has failed to file his return of income for the impugned assessment year. In this regard, we refer to the decision of the Hon'ble Gujarat High Court in case of Harikishan Sunderlal Virmani vs. Dy. CIT (supra) where it was held as under: " 5.03......It cannot be disputed that on the basis of the information received from another agency, there cannot be any reassessment proceedings. However, after considering the information and material received from other source, AO is required to consider the material on record in the case of the assessee and thereafter is required to form an independent opinion that the income has escaped assessment. Without forming such an opinion, solely and mechanically, relying upon the information received from other source, there could not be any reassessment for verification."
16 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO 17. Similar proposition has been laid down by the Hon'ble Delhi High Court in case of CIT-Central-1 vs. Indo Arab Air Services (supra) wherein it was held as under: “20. Keeping the above legal position in view when the cases on hand are examined, it is seen that as far as Indo Arab is concerned white the AO set out the information received from the ED, he failed to examine if that information provided the vitaI link to form the 'reason to believe' that income of the Assessee had escaped assessment for the A Y in question. While the AO has referred to the fact that the ED gave information regarding cash deposits being found in the books of the Assessee, the AO did not state that he examined the returns filed by the Assessee for the said AY and detected that the said cash deposits were not reflected in the returns. In fact, the AO contradicted himself in the reasons recorded by him by noticing the information of the ED to the above effect and then stating that on perusal of the records for the AY in question it was noticed that the Assessee "had not disclosed these transactions in its books of account" Further the AO refers to the ED's information that Mr. Chetan Gupta, partner of the Assessee, failed to explain the sources of the cash deposits as shown in the books of account However, that by itself could not have led the AO to even prima facie conclude that income of the Assessee had escaped assessment. The explanation or the lack of it of the entries in the books of account may have certain relevance as far as ED is concerned but that by itself does not provide the vita! link for concluding that for the purposes of the Act any part of cash deposits constituted income that had escaped assessment There is a long distance to travel between a suspicion that income had escaped assessment and forming reasons to believe that income had escaped assessment. White the law does not require the AO to form a definite opinion by conducting any detailed investigation regarding the escapement of income from assessment, it certainty does require him to form a prima facie opinion based on tangible material which provides the nexus or the link to having reason to believe that income has escaped assessment."
In the instant case, pursuant to receipt of AIR information from an external agency that cash has been found deposited in assessee's savings bank account, there has been no further examination by the AO as to whether the cash so found deposited in the assessee's bank account has been reflected or has any 17 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO connection with the reported turnover in the return of income so filed by the assessee. The reason for the said action on part of the AO is not hard to found out as the AO has concluded that the assessee has not filed any return of income after looking at the Department's IT system and without verifying the physical records maintained by the department which shows that the assessee has filed the return of income. When such a conclusion has already been reached, where is the question of examination of such information and its linkage with the return of income. As we have noted above, there is a clear contradiction on part of the AO to hold that assessee has not filed his return when the records so filed before us shows, and a fact which remain undisputed, that the return of income has been filed even though manually and which has been duly acknowledged. In the instant case, the AO has thus failed to examine the AIR information so received which would have provided the nexus or the vital link to form a prima facie opinion that income of the assessee had escaped assessment for the impugned assessment year. In absence of necessary nexus between the tangible material and formation of belief, the reassessment proceedings cannot be sustained in the instant case.
In light of above discussions, we are of the view that the jurisdictional required as provided in section 147 read with the proviso has not been fulfilled in the instant case. In the result, the reassessment proceedings are hereby quashed and set-aside. In the result, ground no. 1 of the assessee's appeal is allowed.” Accordingly, in the facts and circumstances of the case, where the Assessing Officer has reopened the assessment mechanically without application of mind and as well as following the decision of this Tribunal in the case of Narain Dutt Sharma Vs ITO (supra) we hold that the reopening of the assessment is not valid and the same is quashed.”
The case laws relied upon by the ld. DR has no help to the Revenue, therefore, in the facts and circumstances of the case, where the 18 ITA 734/JP/2019_ Satish Kr. Khandelwal Vs ITO Assessing Officer has reopened the assessment mechanically without application of mind and jurisdiction, we hold that the reopening of the assessment is not valid and the same is hereby quashed.
Since we have quashed the reopening of the assessment and consequential reassessment, therefore, we do not propose to go into the other grounds regarding the additions sustained by the ld. CIT(A).
In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 16th April, 2021.
Sd/- Sd/- ¼foØe flag ;kno½ ¼lanhi x®lkÃa½ (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 16/04/2021 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Satish Kumar Khandelwal, Jaipur. 1. izR;FkhZ@ The Respondent- The I.T.O., Ward 2(2), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 734/JP/2019) 6. vkns'kkuqlkj@ By order,
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