REMA DIVAKARA PANICKER GOPAKUMAR,CHENNAI vs. INCOME TAX OFFICER, NON CORPORATE WARD 8(2), CHENNAI, CHENNAI

The Assessee raised the following grounds of appeal : “1 The Order of the National Faceless Appeals Centre (Hereinafter referred to as CIT(A)) is contrary to the law, facts and circumstances of the case and in any case violative of the principles of equity and natural justice.

Briefly the facts of the case are that appellant is an Individual. No regular return of income for the Assessment Year 2015-16 was filed by the appellant under provisions of section 139(1) of the Act. Based on the information that the appellant made cash deposits in the bank account to the tune of Rs.23,90,000/- and also time deposit to the tune of Rs.32 lakhs, the Assessing Officer formed an opinion that income escaped assessment to tax. Accordingly, a notice u/s.148 was issued on 06.04.2022 after complying with the procedure laid down u/s.148A of the Act. In response to notice u/s.148, the appellant filed the Return of Income for the A.Y.2016-17 on 17.02.2023 declaring income of Rs.7,54,820/-. Against the said return of income, the assessment was completed by the e-Assessment Unit of the Department(hereinafter called ‘Assessing Officer’) vide order dated 08.12.2023 passed u/s.147 r.w.s 144B of the Income Tax Act at a total income of Rs.7,54,820/-. While doing so, Assessing Officer made addition of Rs.16,54,784/- being the cash deposits in the bank account for inability of the assessee to explain the source of cash deposits rejecting the explanation of the appellant that a sum of Rs.10 lakhs was received as a Gift from his Father Mr.Diwakar Panicker in cash which was deposited by him in his bank account during the previous year relevant to assessment under consideration and also rejecting the explanation of the appellant that a sum of Rs.6,54,785/- earned abroad was brought back to India and deposited in the bank account.

Being aggrieved by the above assessment order, an appeal was filed before the ld.CIT(A) who vide impugned order confirmed the action of the Assessing Officer.

Being aggrieved, appellant filed an appeal before us in the present appeal. The appellant raised additional ground of appeal challenging the very validity of the reassessment proceedings by filing additional ground of appeal. It is submitted that this ground of appeal was not raised before the Lower Authorities. However, since this is purely legal issue which goes to the very root of the jurisdiction, the ground of appeal may be admitted for adjudication. It is submitted that the reassessment proceedings were bad in law as the Assessing Officer had resorted to the reassessment proceedings without conducting proper enquiry by merely aggregating the cash deposits and time deposits to allege that income of more than Rs.50 lakhs cash escaped assessment to tax. It was submitted that the cash deposits amounting to Rs.23,95,000/- deposits in the bank account were utilized for the purpose of making time deposits of Rs.32 lakhs. Therefore, it is submitted that the appellant made only cash deposits of Rs.15,90,000/- in the bank account maintained with Kerala Gramin Bank during the previous year relevant to Assessment Year under consideration and the same was utilized for the purpose of making the time deposits, fixed deposits of Rs.24 lakhs only and not Rs.32 lakhs as alleged by the Assessing Officer. Thus, he submitted that prima-facie it is manifest that the alleged escaped income from assessment to tax is less than Rs.50 lakhs and the reopening of the assessment beyond the period of three years from the expiry of the relevant to assessment year is bad in law.

On the other hand, ld.Departmental Representative opposed the above submission.

We heard rival submissions and perused the material available on record. We shall now take up the addition ground of appeal filed which reads as under : “Ground No.2-The re-opening was resorted to without enquiry by aggregating cash deposits and the time deposits made out of those deposits (including deposits which matured and were re-invested) to allege that the assessing officer has information that more than 50 lakhs had escaped assessment. This has been found incorrect as would be evident from the bank statements and the assessment order. Since the re-opening is initiated without enquiry and on assumptions, the re- opening is bad-in-law.”

We shall take up this ground of appeal at first instance as this ground of appeal goes to the root of the jurisdiction, it is the contention of the ld.Counsel that the impugned notice u/s.148 dated 06.04.2022 is barred by limitation as the period of four years had elapsed for A.Y.2015-16 by 31.03.2022. It is further contended that the allegation of income of more than Rs.50 lakhs escaped assessment to tax is incorrect as the appellant made a cash deposits of Rs.23,95,000/- and the time deposits cannot be aggregated for simple reason that the cash deposits were utilized for the purpose of making the time deposits. Thus, it was contended that the reassessment proceedings were merely initiated based on conjectures and surmises and therefore, reassessment proceedings are bad in law and become null and void. The appellant also filed copy of the bank statement at page no.17 to 21 wherein, it is shown that the appellant made two cash deposits of Rs.5 lakhs each on 26.06.2014 and again two cash deposits of Rs.5 lakhs each on 26.06.2014 and again a sum of Rs.5,90,000/- on 02.07.2014 made two fixed deposits of Rs.8,00,000/- each on 25.09.2014 and two fixed deposits of Rs.4 lakhs each on 29.12.2014, thus it is also evident that the cash deposits made were utilized for the purpose of making fixed deposits which is evident on the mere perusal of the bank statement. Thus, it is crystal clear that the allegation of income of more than Rs.50 lakhs got escaped assessment to tax is patently incorrect. The income escaped assessment to tax would not exceed Rs.24 lakhs. That being the case, the notice u/s.148 should have been issued on or before 31.03.2022 under New Regime Governing the reassessment proceedings. Thus, reassessment notice is also clearly barred by limitation. As a result, we hold that the reassessment proceedings are bad in law and the consequential assessment made by the Assessing Officer is here by quashed. Accordingly, grounds of appeal raised by the assessee are allowed.

In the result, appeal of the assessee stands allowed. Order pronounced in the open Court on 27th April, 2026.