JAYABEN KARSANBHAI DALVADI,SURENDRANAGAR vs. ITO WARD -1, SURENDRANAGAR, SURENDRANAGAR

Succinctly, the factual panorama of the case is that assessee before me is an Individual. The assessee filed the return of income for assessment year (AY) 2015-16 on 20.02.2023, declaring total income of Rs.5,040/-. The assessee was a non-filler. As per the information available on record, the assesse has made cash deposit of Rs. 38,00,000/- during the financial year (F.Y.) 2014-15. It was also noticed by the assessing officer that assessee has received interest to the tune of Rs. 13,109/-. Therefore, there was reason to believe that the income of the assessee of Rs. 38,13,109/-,chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Therefore, a notice u/s 148 of the Act, was issued to the assessee on 31/03/2022, after obtaining the requisite approval of the competent authority. Another notice u/s 142(1) of the Act along with questionnaire dated 17/01/2023 and 03/02/2023 was also duly served on the assessee.

In response to above notices, the assessee submitted her reply on 21/02/2023 along with copy of computation of income, Balance sheet, Profit and loss account and statement of Saurashtra Gramin Bank account no. 78006441032, showing the banking transaction during the year. It is claimed by the assessee that she is an agriculturist since last 25 years and derives the income from agricultural only.

However, the assessing officer rejected the above reply of the assessee and held that the assessee has derived net agricultural income of Rs. 8,47,988/-, therefore, it cannot be believed that she could have saved some income considering her joint family's expenses for maintenance. The assessee has not produced any proof regarding the agricultural produce. In this situation, it is hard to believe the assessee's contention that the cash deposits were made out of past savings and agricultural income, thus, it is clear that the assessee has failed to establish the source of the cash deposit of Rs. 20,00,000/-. Therefore, assessing officer treated the cash deposit of Rs. 20,00,000/-, as income from other source, as "unexplained money" u/s. 69A of the Act.

Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has confirmed the action of the assessing officer. The ld.CIT(A) noticed that the procedural grounds raised regarding reassessment by the assessee are general in nature, unsupported by facts, and do not affect the validity of the order, as no material has been placed on record to controvert the findings of the Assessing Officer.

On merit, the learned CIT(A) noticed that assessee claimed that the cash deposits were made out of agricultural income, however, no credible evidence was furnished to substantiate such claim. From the land holding documents, the assessee failed to produce any proof of actual agricultural activity, such as crop details, yield, sale pattis, bills, vouchers, expenditure on seeds, fertilisers, pesticides, labour, or other agricultural operations. The alleged vouchers submitted were self-made, in identical handwriting, lacking quantities, and lacking any statutory market deductions, rendering them unreliable. Accordingly, the addition of Rs.20,00,000/-, as unexplained money under section 69A of the Act, was upheld.

Aggrieved by the order of the Ld. CIT(A), the assessee is in further appeal before this Tribunal.

Shri Kalpesh Doshi, Learned Counsel for the assessee submitted that during the assessment proceedings, the assessing officer has recorded the reasons stating that income of the assessee was above Rs.50 Lakhs, therefore, the assessment of the assessee can be reopened under section 147 of the Act, as in the assessee’s case, income has escaped assessment. However, this finding of the assessing officer is wrong, as the actual income of the assessee, was Rs.38 lakhs, only, which has escaped from assessment and not Rs.50 Lakhs. Therefore, as per Section 149(1)(b) of the Act, where the escaped income is below Rs.50 Lakhs, then assessment cannot be reopened, after expiry of 3 years. Therefore, Ld. Counsel for the assessee submitted that on this technical ground, the addition made by the assessing officer should be deleted. The Ld. Counsel further submitted that this issue is also covered by the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Rajeev Bansal, [2024] 167 taxmann.com 70 (SC), as the assessment order involved in the assessee’s case is for the assessment year ( A.Y.) 2015-16 wherein if the income escaped from assessment is more than Rs.50 Lakhs, then only the re-assessment proceedings can be initiated up to 10 years. For that, Ld. Counsel for the assessee relied on the judgment of the Rajeev Bansal (supra), wherein it was held as follows: “49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assessees. 50.Another important change under section 149(1)(b) of the new regime is the increase in the monetary threshold from Rupees one lakh to Rupees fifty lakhs. The old regime prescribed a time limit of six years from the end of the relevant assessment year, if the income chargeable to tax which escaped assessment was more than Rupees one lakh. In comparison, the new regime increases the time limit to ten years if the escaped assessment amounts to more than Rupees fifty lakhs. This change could be summarized thus: Regime Time limit Income chargeable to tax which has escaped assessment Old regime Four years but not more than Rupees one lakh or more six years New Three years but not more Rupees fifty lakhs or more regime than ten years 51. Given Section 149(1)(b) of the new regime, reassessment notices could be issued after three years only if the income chargeable to tax which escaped assessment is more than Rupees fifty lakhs. The proviso to Section 149(1)(b) limits the retrospectivity of that provision with respect to the time limits specified under section 149(1)(b) of the old regime.” 10. Learned Counsel further submitted that this issue is also covered by the judgment of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal, [2022] 138 taxmann.com 64 (SC), wherein it was held as follows:

Therefore, Ld. Counsel for the assessee, submitted that in assessee’s case, the income escaped from the assessment is below Rs.50 Lakhs, that is, it is only Rs.38 Lakhs, therefore, reopening of the assessment is not possible and hence, the re-assessment proceedings should be quashed.

On the other hand, the Ld. DR for the Revenue relied on the finding of the Assessing Officer.

We have heard the rival parties and have gone through the material placed on record. The assessee is an individual, and engaged in agriculture activity since past many years. The assessee was served with the show cause notices u/s 148A(b) of the Act, on 17/03/2022. The annexure containing the reasons for reopening is pasted hereunder for ready reference:

Further, vide para 7.1 of the said circular, it has been expressly stated by the CBDT that if the income escapement or the likelihood of income escapement does not exceed Rs. 50,00,000/- and more than 3 years have been elapsed from the end of assessment year, than no assessment shall be reopened in the case of such assessees. The relevant paragraph of such circular is reproduced below, for ready reference:

I note that the issue is pertaining to assessment year (A.Y.) 2015-16 and the show-cause notice for reopening the assessment is issued on 17/03/2022 and the notice u/s 148 of the Act is issued on 31/03/2022, that is, the notice has been issued after the lapse of 3 years from the end of relevant assessment year, therefore, the reopening of assessment in the case of assessee is barred by limitation. The Department can reopen the assessment beyond the specific time- limit of 3 years only, if the conditions as prescribed u/s 149(1)(b) of the new Act are fulfilled and the Department can reopen the assessment only if the escapement or likelihood of income escapement is Rs. 50,00,000/- or more. In the light of the above facts, relevant provision of section 149(1)(b) of the Act is reproduced below for ready reference:

In view of the reasons set out above, as also bearing in mind entirety of the case, I am of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. To reopen the assessment, after the expiry of 3 years, the income escaped from assessment should be Rs. 50,00,000/- or more, whereas in the assessee’s case under consideration, the income, as escaped from assessment is only to the tune of Rs. 38,00,000/-. I, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous.

In the result, the appeal of the assessee, is allowed in the terms indicated above. Order is pronounced in the open court on 15/05/2026.