SHREE SHYAM BUILDSTRUCTURE PRIVATE LIMITED,SIKAR vs. ITO WARD-1 SIKAR, SIKAR

The brief facts of the case are that the Assessing Officer (in short, “the AO”) received information that the assessee has got cash deposits of Rs. 55,00,000/- in its bank account. The Assessing Officer asked the assessee to explain source of such cash deposits. However, since the AO did not receive any reply from the assessee, he, therefore, formed the belief that the aforesaid amount of cash deposits was out of unexplained source of the assessee, which has escaped assessment; he,

During the course of reassessment proceedings, the assessee stated to the AO that there were no such cash deposits of Rs. 55,00,000/- in its bank account during the year; that only an amount of Rs. 15,000/- was deposited as cash in its bank account, the source of which was explained to the AO. The AO therefore, did not make any addition on account of any cash deposits in the bank account of the assessee. However, the AO, observing that there was an amount of Rs. 55,00,000/- credited through banking channel in the bank account of the assessee, treated the said amount as income of the assessee from the other sources and made the impugned addition.

Being aggrieved by the said addition made by the Assessing Officer, the assessee preferred the appeal before ld. CIT(A). The assessee furnished the relevant documents to explain the source of the aforesaid amount received through banking channel, stating that the out of the amount of Rs.55,00,000/-, a sum of Rs. 35,00,000/- was received as unsecured loan from Ms. Kamlesh-sister of the Director of the assessee company. Further, that an amount of Rs. 20,00,000/- was received as advance against the sale of property. The ld. CIT(A), however, refused to look into the aforesaid contentions of the assessee, observing that the same was additional evidence furnished by the assessee and thereby confirmed the addition so made by the AO.

We have heard the rival contentions and gone through the record. At the outset, ld. Counsel for the assessee has invited our attention to the sanction obtained by the AO u/s 151 of the Act for reopening of the assessment and submitted that the said sanction letter has not been signed by the JCIT, either manually or digitally. He has further invited our attention to the date mentioned on the said sanction letter, which is dated 31st March, 2021. The Ld. Counsel has further brought our attention to page 6 of paper book, which is copy of the ‘reasons recorded by the AO’ for reopening of the assessment. He has brought our attention to the last line of the reasons recorded, wherein, it is mentioned in para 6 as under:- “This case is within four years from the end of the assessment year under consideration. Hence, necessary sanction to issue the notice u/s 148 has been obtained separately from Joint/Addl. Commissioner of Income Tax as per the provisions of section 151 of the Act.” 9. Ld. Counsel, therefore, has submitted that in the reasons recorded dated 30.03.2021, the AO has mentioned that the sanction to issue notice u/s 148 of the Act has already been obtained, whereas, alleged sanction letter of the ld. JCIT is dated 31.03.2021(of the next day), which is also unsigned. Thereafter, the notice u/s 148 of the Act issued on 31.03.2021, which has been digitally signed by the AO at 3:21 PM on the said date was without sanction of the competent authority. A perusal of the all events would show that the reopening of the

Even during the assessment proceedings, when the assessee explained that there were deposits through transfer by banking channel in the bank account of the assessee, the AO, without giving any opportunity to the assessee to explain the source of the amount received through check/banking entries, presumed that the aforesaid credits were income of the assessee from other sources. There is not a single line discussion as to why Assessing Officer came to the conclusion that the aforesaid amount received through banking channel was income of the assessee from other sources. Even ld. CIT(A) has also miserably failed to correctly appreciate the facts of the case. We are of the view that in

Before parting, it is pertinent to mention here that the assessee in this appeal has taken a legal ground relating to the limitation to issue the notice u/s 148 of the Act, however, the said ground has not been pressed during the arguments.

In view of the above discussion, the appeal of the assessee is allowed. Reopening of the assessment is held to be bad in law hence, the consequential assessment order passed u/s 143(3)/147 of the Act is hereby quashed. The impugned additions are, accordingly, stand deleted.

In the result, the appeal of the assessee stands allowed.