HASMUKHBHAI B.PATEL,NA vs. ARIVS.ITO- WARD-3,NAVSARI, NAVSARI

PER BHAVNESH SAINI, J.M.

This appeal by assessee has been directed against

the Order of the Ld. CIT(A), Valsad, Dated 27.02.2019, for the

A.Y. 2012-2013, challenging the reopening of the assessment

under section 147/148 of the I.T. Act, addition of

Rs.10,07,400/- on account of unexplained deposit in bank

2 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

account and addition of Rs.1,95,975/- on account of

unexplained other deposits.

reopened on the basis of information available with the

department that assessee has made cash deposit of

Rs.10,07,400/- in assessment year under appeal in his bank

account. The assessee did not file return of income. The A.O.

issued query letter to the assessee to furnish copy of the ITR

and details/explanation regarding cash deposit in the bank

account. However, assessee did not furnish any reply. The

A.O, therefore, reopened the assessment under section 147

of the I.T. Act. The A.O. made the addition of Rs.10,07,400/-

on account of unexplained cash deposit in the bank account.

The A.O. further made addition of Rs.1,95,975/- on account

of unexplained investment. The Ld. CIT(A) partly allowed the

appeal of assessee.

both the parties.

3 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

which is reasons for reopening of the assessment. The same

reads as under:

Reason for the brief that the income has escaped

assessment:-

As per AIR information, the assessee has

deposited cash amounting to Rs.10,07,400/- in his

saving bank account during the F.Y. 2011-12 relevant to

the A.Y. 2012-13. On verification of the details in ITD, it

is seen that the assessee has not filed his return of

income for the A.Y. 2012-13. Therefore a query letter

dated 03/02/2017 was issued to the assessee to furnish

the copy of return of income filed for the A.Y. 2012-13.

The same was duly served upon the assessee by Speed

Post on 09/02/2017. The proof of the same has been

placed on record. However, the assessee has not

furnished any reply in this regard. Thus, it is noticed from

details available on records that the assessee has

deposited cash of Rs.10,07,400/- from his undisclosed

4 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

income and the assessee has not offered the same for

tax.

In view of the above, the assessee’s case falls

within the explanation 2(a) of the section 147 of the I.T.

Act, i.e. “where no return of income has been furnished

by the assessee although his total income or the total

income of any other person in respect of which he is

assessable under this Act during the previous year

exceeded the maximum amount which is not chargeable

to income-tax,” As such, I have a reason to believe that

an income of Rs.10,07,400/- as stated above has

escaped assessment in the hand of the assessee for the

year under consideration. I am satisfied that the case of

the assessee is a fit case for action u/s. 147 of the Act by

reason of assessee’s failure to disclose fully and truly all

the material facts necessary for assessment.

Place : Navsari Sd/-S.D. Parmar Date : 07.03.2017. Income Tax Officer, Ward-2, Navsari.”

5 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

4.1. He has submitted that mere cash deposit in the

bank account would not disclose escapement of income. He

has submitted that there was no taxable income in the case

of assessee, therefore, no return was filed. No proceedings

were pending before A.O, therefore, query letter dated

03.02.2017 could not have been issued to the assessee. It

was, therefore, illegal and there is no application of mind by

the A.O. Similar issue have been considered by the ITAT,

Delhi SMC-Bench in the case of Mahavir Prasad vs. ITO in

ITA.No.924/Del./2015 for the A.Y. 2007-2008 in which

reopening of the assessment have been quashed vide Order

dated 09.10.2017. The relevant findings in para-9 of the

Order is reproduced as under :

“9. After going through the reasons recorded by the

ITO, Ward-2, Rewari, I am of the view that there is

no nexus between the prima facie inference arrived

in the reasons recorded and information; the

information was restricted to cash deposits in bank

account but there was no material much less

tangible, credible, cogent and relevant material to

6 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

form a reason to believe that cash deposits

represented income of the assessee; that even the

communication dated 24.1.2012 could not be made

a basis to assume jurisdiction in view of the fact

that such an enquiry letter is an illegal enquiry letter

and thus cannot be relied upon; that the

proceedings initiated are based on surmises,

conjectures and suspicion and therefore, the same

are without jurisdiction; that the reasons recorded

are highly vague, far-fetched and cannot by any

stretch of imagination lead to conclusion of

escapement of income and there are merely

presumption in nature; that it is a case of

mechanical action on the part of the AO as there is

non-application of mind much less independent

application of mind so as to show that he formed an

opinion based on any material that such deposits

represented income. Keeping in view the facts and

circumstances of the present case and the case law

applicable in the case of the assessee, I am of the

7 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

considered view that the reopening in the case of

the assessee for the asstt. Year in dispute is bad in

law and deserves to be quashed.”

of the authorities below and submitted that A.O. received

information that assessee made cash deposit in the bank

account which is not explained, therefore, reopening of the

assessment is valid in the matter.

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 by A.O. for reopening

of the assessment. The reasons for reopening of the

assessment are reproduced above in which the A.O. has

mentioned that as per AIR information assessee made cash

deposit of Rs.10,07,400/- in his S.B. Account. A.O. has

issued query letter dated 03.02.2017 asking the assessee to

furnish copy of the return of income and explanation of cash

deposit. Since the assessee did not respond to the query letter

8 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

of the A.O, A.O. presumed that there is escapement of

income. It is an admitted fact that no return of income was

filed for the assessment year under appeal and at the time of

issue of query letter by the A.O. no proceedings were pending

before A.O, therefore, there was no justification for the A.O.

to issue query letter to the assessee asking the explanation of

assessee. Since query letter was illegal, therefore, assessee

was not bound to reply to the same. It may also be noted here

that cash deposit per se would not be income of the assessee.

An identical issue have been decided by the ITAT, Delhi SMC-

Bench in the case of Mahavir Prasad (supra). Thus, the A.O.

in the absence of reply from the side of the assessee which

assessee was not bound to reply, merely presumed that there

is escapement of income. There is, thus, no application of

mind on the part of the A.O. to record reasons as per Law.

The initiation of re-assessment proceedings are beyond the

jurisdiction of the A.O. into the matter. We, therefore, do not

subscribe to the view of the Ld. D.R. that reopening of the

assessment is valid into the matter. We, accordingly, set aside

the Orders of the authorities below and quash the reopening

9 ITA.No.193/SRT/2019 Shri Hasmukhbhai B. Patel, Navsari.

of the assessment under section 147/148 of the I.T. Act.

Resultantly, all the additions stand deleted. Appeal of

assessee allowed.

Order pronounced in the open Court.

Sd/- Sd/- (O.P.MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Surat, Dated 24th July, 2019

VBP/-

Copy to

//By Order//

Asst. Registrar, ITAT, Surat Bench Bench.