LALCHAND MEHRUMAL JAGWANI,,PUNE vs. INCOME-TAX OFFICER, WARD - 7 (3),, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by assessee is emanating out of the order of 1. Commissioner of Income Tax (Appeals) – 8, Pune dated 07.06.2019 for A.Y. 2009-10.

Assessee is an individual having income from business, house property, and other sources. In this case, AO issued notice u/s 148 of the Act dt.27.03.2015 and it was served upon the assessee. In response to which assessee inter-alia submitted that the original

return of income filed by the assessee for A.Y. 2009-10 be considered

as return of income in response to notice u/s 148 of the Act.

Thereafter, the case of the assessee was taken up for scrutiny and

assessment was framed u/s 147 r.w.s 143 of the Act vide order dated

09.02.2016 and the total income was determined at Rs.14,23,530/-.

Aggrieved by the order of AO, assessee carried the matter before

Ld.CIT(A), who vide order dated (in appeal No.PN/CIT(A)-8/ITO

Wd.7(3)/413/18-19) dismissed the appeal of the assessee. Aggrieved

by the order of Ld.CIT(A), assessee is now in appeal and has raised the

following grounds :

“1. The reassessment proceedings initiated by issuing notice u/s 148 of the Act are ab-initio void, invalid and unsustainable in law. The Assessing Officer has reopened the assessment merely for verification of transactions of credits in the bank accounts of the assessee. The reassessment proceedings cannot be initiated for verification. In the reasons recorded for reopening the assessment, the Assessing Officer has not mentioned as to what income that was chargeable to tax has escaped assessment and what is the basis for that. 1.1 The Ld. Commissioner of Income Tax (Appeals) has erred in holding that the Assessing Officer had reasons to believe that income has escaped within the meaning of Section 147 of the Act. 2. The Ld. Commissioner of Income Tax (Appeals) has erred in holding that the Assessing Officer has rightly treated the cash deposits of Rs.3,88,316/- as income from other sources, instead of the income from house property. The Ld. Commissioner of Income Tax (Appeals) should have held that the income of Rs.3,88,316/- was assessable under the head income from house property.”

re-assessment proceedings, submitted that in this case, assessee had

originally filed his return of income for A.Y. 2009-10 on 09.03.2010

declaring total income of Rs.14,23,530/-. The case was selected for

scrutiny and thereafter assessment was framed u/s 143(3) of the Act

vide order dated 11.10.2011 and the total income was determined at

Rs.15,76,320/-. He pointed to the copy of the assessment order

placed at Pages 6 to 9 of the Paper Book. He submitted that

subsequently, notice u/s 148 of the Act was issued to the assessee.

He pointing to the copy of the reasons which are placed at Pages 10

and 11 pointed to the fact that the case has been re-opened for

verification of the cash and cheque deposits in the bank account. He

submitted that admittedly, notice u/s 148 of the Act was issued

beyond a period of four years and when the assessment is sought to

be re-opened beyond a period of 4 years, then an additional condition

needs to be satisfied namely that there must be failure on the part of

the assessee to fully and truly disclose all material facts necessary for

assessment. He submitted that in the present case in the reasons

recorded for re-opening, there is no allegation on the part of the

assessee of failure to disclose material facts and therefore, the

condition of 1st proviso of Sec.147 of the Act has not been satisfied. He

pointed to the copy of the computation of income which is placed at

Page 2 of the Paper Book and pointed to the income from rent shown

by the assessee. He submitted that the AO in the re-assessment order

has held the income to be under the head of income from other

sources and that there is no material to indicate that the income was

assessable under income from other sources. He further submitted

that the re-opening of the assessment cannot be made for verification.

He therefore submitted that the re-assessment order passed by the AO

be set aside. Ld. D.R. on the other hand supported the order of lower

authorities.

record. The issue in the present ground is with respect to re-opening

of the assessment. The law on re-opening of an assessment under the

Act, is fairly settled. The Assessing Officer can re-open an assessment

only in accordance with the express provisions provided in Section

147/148 of the Act. It is only on the Assessing Officer strictly

satisfying the provisions of Section 147 of the Act that he acquires

jurisdiction to re-open an assessment. Section 147 of the Act, clothes

the Assessing Officer with jurisdiction to reopen an assessment on

satisfaction of the following: (a) The Assessing Officer must have

reason to believe that (b) Income chargeable to tax has escaped the

assessment and (c) In cases where the assessment sought to be

reopened is beyond the period of four years from the end of the

relevant assessment year, then an additional condition is to be

satisfied viz: there must be failure on the part of the Assessee to fully

and truly disclose all material facts necessary for assessment.

on 27.03.2015 in relation to A.Y. 2009-10. Hence, the re-opening of

assessment is beyond the period of four years from the end of relevant

assessment year. In such a scenario, as per the 1st proviso to Sec.147

of the Act, no action for initiation of re-assessment proceedings for

A.Y. 2009-10 could have been taken unless the AO had reason to

believe that income chargeable to tax had escaped the assessment for

a reason of failure on the part of assessee to disclose fully and truly

all material facts necessary for assessment. The reading of the

reasons placed by the assessee in the Paper Book shows that there is

not even an allegation that there was any failure on the part of the

assessee to disclose any material facts which lead to any income

chargeable to tax had escaped the assessment. Further, even on the

reading of the reasons recorded, it cannot be said that it suggests

about any failure on the part of the assessee to disclose truly and fully

all material facts necessary for assessment. It is now well settled that

the reasons which are recorded by the A.O. for reopening the

assessment are the only reasons which can be considered and no

substitution or deletion is permissible. The reasons which are recorded

by the Assessing officer for reopening an assessment are the only

reasons which can be considered when the formation of the belief is

impugned. Further, the reading of the reasons for re-opening of the

assessment, it is seen that the notice has been issued and re-

assessment has been sought for verification of the cash and cheque

transactions in the bank account of the assessee. I find that the

Hon’ble Gujarat High Court in the case of Inductotherm (India) P. Ltd.

Vs. M. Gopalan, reported in 2013 356 ITR 481 has observed that for a mere verification of the claim, the power of re-opening of the

assessment could not be exercised and it further observed that AO

under the guise of power to re-open the assessment cannot seek to

undertake an undertaking a fishing or roving inquiry or seek to verify

the claim as if he is the scrutiny officer.

decision cited herein above, I am of the view that in the present case,

notice for re-opening of the assessment u/s 147 of the Act is not as per

the mandate of Sec.147 of the Act and therefore the re-opening is not

permissible. I am therefore of the view that the notice issued for re-

opening has to be set aside and the same deserves to be quashed. I

therefore quash the impugned re-assessment proceedings for A.Y. 2009-10 and thus, set aside the same. Since I have hereinabove set aside the assessment framed u/s 143(3) r.w.s 147 of the Act and held it to be void and therefore, the issue on merits have been rendered academic and requires no adjudication. Thus, the ground No.1 of the assessee is allowed.

Order pronounced on 16th day of October, 2019.

/- Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 16th October, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-8, Pune. 4. Pr. CIT-4, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / 5 DR, ITAT, “SMC” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.