SHRI HARSHADBHAI VALLABHBHAI PATEL,VALSAD vs. INCOME TAX OFFICER WARD-3, VALSAD

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 1 of 13 आयकरअपीलीयअिधकरण,सुरत�यायपीठ,सुरत IN THE INCOME TAX APPELLATE TRIBUNAL-SURAT-BENCH- SURAT BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUTANT MEMBER आ.अ.सं/.I.T.A No.194/SRT/2017 & 356/SRT/2019 िनधा�रणवष�/Assessment Year:2009-10 & 2010-11 Shri Harshadbhai Vallabhai V. Income Tax Officer, Patel , Ward- 3, Valsad At & Post Tighra, Nava Falia, Via- Dungari Valsad 393 375 PAN: [AFSPP 8443 F] अपीलाथ� Appellant ��यथ�/Respondent Shri Rajesh M. Upadhyay, ITP िनधा�रतीक�ओरसे /Assessee by Mrs. Anupama Singla, Sr.D.R. राज�वक�ओरसे /Revenue by 09.12.2019 सुनवाईक�तारीख/ Date of hearing 10.12.2019 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER O. P. MEENA, AM: 1. The above captioned two appeal by the assessee are directed against the separate orders of the learned Commissioner of Income tax (Appeals)- Valsad [in short “the CIT(A)”] dated 06.09.2017 and 20.05.2019 pertaining to Assessment Year 2009-10 and 2010-11 respectively, which in turn has arisen from the separate assessment orders passed under section 143 (3) read with section 147 of Income Tax Act, 1961 (in short ‘the Act’) by the Income Tax Officer, Ward- -3, Valsad (in short “the AO”).

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 2 of 13 I.T.A.No. 194/SRT/2017/A.Y. 2009-10:- 2. Ground No.1 is against the reopening of assessment u/s.147 and issue of notice under section 148 of the Act. 3. Learned Counsel referred Paper Book Page No. 9 and submitted that the notice under section 148 of the Act dated 25.03.2016 has been issued by the Income Tax Officer, Ward- 3, Vapi whereas the assessment has been made by the Income Tax Officer, Ward- 3 Valsad. Thus, the Income Tax Officer, Ward-3, Vapi had issued the notice under section 148 of the Act, who had no jurisdiction over the assessee, as the jurisdiction was lying with Income Tax Officer, Ward-3, Valsad. Therefore, notice under section 148 of the Act, is not sustainable in law hence, assessment proceedings may be quashed. 4. Au contraire, the ld. Sr. D.R. submitted the assessee has filed his return of income with Income Tax Officer, Ward- 1, Vapi (PB-1 to 4) and as per PAN database; the jurisdiction was lying with the Income Tax Officer, Ward- 3 Vapi at the relevant time. Therefore, without specifically intimating the new address to the AO with respect to change of address, and without getting PAN database changed in not enough. The learned D.R. support her view by placing reliance in the case of Pr.CIT v. M/s. IVen Interactive Limited [ Civil Appeal No. 8132 of 2019 dated

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 3 of 13 18.10.2019] of Hon’ble Supreme Court, copy filed notice issued under section 148 of the Act is issued on valid jurisdiction. 5. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has filed his return of income on 25-11-2009 showing address as Plot No. 197, Saurabh Society, Opp. DIP Kiran Society, Gunjan, Vapi, Gujarat with Income Tax Officer, Ward- 1, Vapi. Thus, the assessee himself stated his jurisdiction with Income Tax Officer, Ward- Vapi. The PAN database also shown same address. Therefore, notice under section 148 of the Act has been validly issued by the AO, who was having correct jurisdiction once the assessee on correct address as per address shown in return of income. There is no evidence on record whether the assessee has intimated change of address.Therefore, where the assessee not intimated change of address and not carried out change in PAN database, the AO has correctly exercised his jurisdiction for issue of notice under section 148 of the Act. This view is supported by the decision of Hon`ble Supreme Court in the case of Pr.CIT v. M/s. IVen Interactive Limited [Civil Appeal No. 8132 of 2019 dated 18.10.2019] wherein it has been laid down that unless the assessee changed his address in PAN database and intimated the change of address to the AO, such notice issued is

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 4 of 13 valid in law. In view of these facts and circumstances, this grounds of appeal is therefore, dismissed. 6. Ground No. 2 is against confirmation of addition of Rs. 10, 87,975 being cash deposits by the assessee in bank account with ICICI Bank Ltd. 7. Facts apropos of this ground are that there was an AIR information. According to which the assessee had cash deposits of Rs. 10,87,975 in his bank account with ICICI Bank Ltd. , which has not been disclosed in return of income. The assessee has explained that the said cash deposits are out of agricultural income, for which extract of 7/12 was also filed. However, the AO noted that the 7/12 does not show the land in the name of the assessee. Therefore, the assessee was show caused. In response to which, it was submitted that land is inherited one and appearing in the name of father being head of family in which the assessee has is having his share. The assessee has had been carrying on agricultural activity on said land. Therefore, agricultural income shown by the assessee is correct and cash deposits is out of the said agricultural income. However, the AO did not accept the explanation on the ground that no agricultural income is shown in return of income. The explanation submitted after reopening of assessment. Having

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 5 of 13 bills and expenditure in the name of the assessee does not make one as agriculturist. Accordingly, the cash deposits were taxed as per provisions of section 115BBE and 69 of the Act. 8. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A).Wherein it was contended that the assessee has showed sale of agricultural products in cash of Rs. 15, 90,622and net agricultural income of Rs. 9, 54,373. In ICICI bank, there are cash deposits of Rs. 10, 87,975 and cheque deposit of Rs. 45,879. This cash deposits is out of agricultural income earned. The assessee has filed copy of 7/12, and claimed that land belonged to the father of the assessee who is 95 years old, mother is 90 years old ., one brother Dinkarn expired and another brother is Chandrakant is non-resident settled in London. Thus, the assessee is only doing agricultural activity. Hence, the agricultural income shown by the assessee is correct. The assessee filed a certificate from Talati, Village Tighra certifying thatmangoes and chikoo trees are being grown on the land. The assessee is only person who is looking after financial affairs and hence, agricultural income from inherited land is shown as his agricultural income. The assessee has also filed some additional evidence in form 7/12 etc. which were sent to the AO for remand report. The CIT (A) after considering these

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 6 of 13 evidence and remand report, observed that the assessee has made share transaction with Marwadi shares which have been done out of cash deposits in bank account immediately before such transaction. Further, cash deposits cannot be linked with earning from mango as mango season ends in mid-June and the season of chickoo is from October to March of particular year. The cash deposits does not match with season of crop. Hence, explanation of the assessee was rejected and this ground of appeal was dismissed. 9. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee has drawn our attention to Paper Book Page No. 4, whichis copy of agricultural income and expenditure account for A.Y. 2008-09 showing agricultural turnover of Rs.15,90,622 and net agricultural income of Rs.9,54,373. The Paper Book Page No. 5 shows details of sale of agricultural products consisting Chikoo, Mango, Bananas, Langado to various parties during the period from 01.4.2008 to 31.03.2009 amounting to Rs.15,90,622 by the assessee. The learned counsel for the assessee referred a letter dated 10.08.2016, placed at Paper Book Page No.40 , which was submitted to the AO enclosing therewith copy of Gram Namuna 7 & 12, Copy of Gram Namuna 8A and copy of bills for

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 7 of 13 agricultural income. These details are placed at Paper Book Page No. 41 to 67 showing agricultural land holding in the name of Shri Vallabhabhai Patel, (father of the assessee who is 95 years old), Maniben Vallabhai Patel (mother of the assessee, who is 90 years old) HarshadbhaiPatel (the assessee) and Hemal Harshadbhai Patel (wife of the assessee) Chandrakantbhai Patel (brother of the assessee). During remand report proceedings, the assessee has also filed a certificate dated 19.06.2017 from Talati Cum Mantri of Gram Panchayat-Tighra certifying the agricultural land held by the assessee and his family members.Learned Counsel contended that the agricultural land belonged to HUF and the assessee is the only person who is looking after the agricultural products as his mother and father are very old one and one brother has died and other is non-resident residing in London. It was submitted that ample evidence has been furnished of land holding and even if the agricultural income were to be divided among, even there would be no tax implication as agricultural income is exempt. However, the facts is that the agricultural income of family members is shown by the assessee in his return of income and out of which cash deposits in the bank account has been made. The said bank account is reflected in balance sheet as on 31.03.2009. Hence,

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 8 of 13 no and under section 69 could be made. In the alternate, it was submitted that if agricultural income is considered of the family members, then the same may be treated as loan to the assessee and for explaining the source of cash deposits. Therefore, CIT(A) was wrongly sustained the addition made by the AO. 10. Per contra, the ld. Sr. D.R. submitted the agricultural land does not stand in the name of the assessee nor it is disclosed in return of income. The pattern of cash deposits in bank account is not commensurate with sale of crop asper season. The assessee is trading in shares where these cash deposits have been used. Therefore, CIT (A) was justified in upholding the addition made by the AO. 11. We have heard the rival submissions and perused the relevant material on record. We find that the AO did not accept the claim of agricultural income on the ground that the agricultural land is not in the name of the assessee. However, the perusal of additional evidence filed during the course of remand report proceedings, shows that the assessee is also owning some agricultural land. We observe that the agricultural land holding is sufficient but same is appearing in the Revenue records in the name of various family members of the assessee being his father who is 95 years old, mother who is 90 years old

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 9 of 13 and one non-resident brother who is residing in London. Thus, the facts remains that the agricultural land holding is hereditary agricultural land and standing in the name of various members of the HUF, including the assessee,on which agricultural operations is being carried out by the assessee and expenses thereon being incurred by the assessee and sale proceeds of same has been used for cash deposits in bank account by the assessee. Since the assessee is the only person looking after financial affairs of the family therefore, it is but natural that sale proceeds of agricultural products have been used for cash deposits in his bank account. Therefore, considering the agricultural land holding of the family, bills of agriculture products, and the assessee is only person who looking after financial affairs and circumstantial surrounding circumstances, we are of the considered opinion that said agricultural income has been used for cash deposits made in the ICICI Bank account. In view of this matter, the addition sustained by the Ld. CIT (A) is therefore, deleted. This ground is therefore, allowed. 12. Ground No. 3 is against sustaining addition of Rs. 6,643 on account of bank interest from S/B account of ICICI Bank Ltd. 13. We have heard the rival submissions and perused the relevant material on record. We find that the AO made addition

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 10 of 13 of interest of Rs.1, 306 from ICICI bank, Rs.1, 340 from Bank of Baroda, Rs.3, 997 from Union Bank of India as same was not shown by the assessee. These were agreed to be added. However, in appeal these were contested as bank interest up to Rs. 10,000 is exempt under section 80L of the Act. However, CIT (A) held the provision of section 80L was omitted with effect from 01.06.2006 and equivalent provision was introduced u/s. 80TTA with effect from 01.04.2013. Hence, confirmed the same. In view of these circumstances and facts that the assessee has agreed for addition during the course of assessment proceedings, we do not find any merit in this ground, hence, it is dismissed. 14. In the result, the appeal of the assessee is partly allowed. I.T.A.No. 356/SRT/2019/A.Y. 2010-11:- 15. Ground No.1 is against the reopening of assessment u/s.147 and issue of notice under section 148 of the Act. 16. Learned Counsel submitted that reopening of assessment has been made on the basis of cash deposits in bank account which cannot be basis for reopening of assessment as held in the case of Shri Ravindrasinh N Gohil v. ITO Wd-1(1) Bhavnagar [I.T.A.No. 33343&3344/AHD/2015 dated 04.09.2019 and Shri Bahadur Singh Sijwali v. ITO [I.T.A.No. 3814/Del/11 dated 20.01.2015].

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 11 of 13 17. Per contra, the ld. Sr. D.R. submitted that bank account was not disclosed in the return of income filed by the assessee and same was having substantial cash deposits. Further, as held by the Hon`ble Supreme Court in the case of ACIT v Rajesh Jhaveri Stock Brokers (P) Ltd. [2007] 291 ITR 500 (SC) the prima- facie reasons for reopening of assessment is to be looked at the stage of reopening of assessment. The ld. Sr. D.R. also relied in the case of Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) in support of her contentions. 18. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has not disclosed bank account with ICICI Bank Ltd. in his return of income, which was showing substantial amount of cash deposits as per AIR information received by the AO. The perusal of reasons recorded for reopening of assessment shows that the AO had issued a query letter dated 10.01.2017 to the assessee asking the explanation of the source of cash deposits in said bank account. However, the assessee has has not responded to said letter. Therefore, the AO has rightly arrived at the conclusion that income chargeable to tax has escaped assessment. In view of this matter, we hold the reopening of assessment as valid and in accordance with law. So far, reliance

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 12 of 13 on the decision of Co-ordinate Bench of tribunals as above, we note that in said decisions, the AO had not made any preliminary enquiries regarding source of cash deposits in bank account. In view of these facts, the above-cited decisions are distinguishable on fact and in law hence, the ratio of the same is not applicable. Further, in the case of Raymond Woollen Mills Ltd. v. ITO[1999] 236 ITR 34 (SC), the Hon`ble Supreme Court held that in determining whether commencement of reassessment proceedings was valid, it has only to be seen whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at such stage. Considering all the circumstances, we are of the considered opinion that the AO was justified in reopening of assessment. Accordingly, same is upheld. This ground is therefore, dismissed. 19. Ground No. 2 is against the confirmation of addition of Rs.12,79,500 out of total addition of Rs.12,97,500 made by the AO on account of cash deposits in bank account with ICICI Bank Ltd. under section 69 of the Act. 20. Both parties are agreed that the facts of this year are also identical as in assessment year 2009-10. Therefore, our findings

Harshadbhai Vallabhai Patel v. ITO-WD-3 Valsad/ I.T.A.No. 194 & 356/SRT/2017& 2019/A.Y. 09-10 & 10-11 Page 13 of 13 as recorded in assessment year 2009-10 in respect of Ground No.2 thereon would mutatis mutandis apply to this ground of appeal. Since, we have allowed this ground of appeal in assessment year 2009-10 is earlier part of this order. Accordingly, considering same findings, this ground is allowed. 21. In the result, the appeal of the assessee is partly allowed. 22. In the result, the appeal of the assessee for assessment year 2009-10 in I.T.A.No.194/SRT/2017 and for assessment year 2010-11 in I.T.A.No.356/SRT/2019 are partly allowed. 23. The order pronounced in the open Court on 10.12.2019.

Sd/- Sd/- (SANDEEP GOSAIN) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat: Dated: 10th December, 2019/opm Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/ Guard file of ITAT. By order // TRUE COPY // Assistant Registrar, Surat