JITENDRA SINGH SHAKHTAWAT,AJMER vs. ITO, AJMER

PER VIJAY PAL RAO, JM :

These two appeals by two assesses who are father and son are arising from two separate orders of the ld. CIT (A) both dated 4th January, 2017 for the

assessment year 2011-12. Common grounds have been raised in these appeals.

The ground raised in the appeal in ITA No. 189/JP/2017 are reproduced as under :-

2 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

“ 1. On the facts and in the circumstances of the case, the learned CIT(A) has legally and factually erred in dismissing appellant’s ground of appeal challenging ex parte assessment order u/s 147/144 of the I.T. Act, 1961 without appreciating the fact that the appellant was prevented by reasonable cause from making the required compliance of the statutory notices issued to him from time to time. Thus, the decision of ld. CIT (A) dismissing this ground of appeal is factually and legally incorrect and deserves to be quashed summarily.

The assessees have also filed an application raising additional ground in both the

cases. The additional ground sought to be raised by the assessees reads as under :-

“ Under the facts and circumstances of the case the learned A.O. has erred in facts and law in initiating proceeding u/s 147/148 without having sufficient reasons to believe, without application of mind, without examination about correctness of the information in his possession for reopening the case, which is illegal and bad in law. So kindly quash the entire proceeding and assessment order on the basis of a notice which is illegal & bad in law.”

3 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

assessment is not valid as the AO has reopened the assessment in both the cases on

the basis of information received without application of mind and without

examination of the correctness of the facts in respect of the alleged escaped income.

In support of his contention he has relied upon various decisions wherein it has been

held that the mere deposit of cash in the bank itself cannot be a reason to believe

that income assessable to tax has escaped assessment, rather it is only a reason to

suspect that the deposits made in the bank account may be an income escaped

assessment. Thus the ld. A/R has submitted that the additional ground may be

admitted and the reopening of the assessment may be quashed as bad in law.

any return of income for the year under consideration nor any return of income in

any of the assessment years prior to the year under consideration. Further, even in

respect to notice under section 148 the assessees have not filed any return of

income, therefore, the assessees cannot be allowed to challenge the validity of

notice issued under section 148 of the IT Act.

record. There is no dispute that the assessees before us never filed any return of

income and the information was received by the AO that the assessees have

deposited cash in the bank account to the tune of Rs. 45,16,000/- and Rs.

25,19,000/- respectively. Accordingly, the AO initiated the proceedings under section 147/148 by issuing notice under section 148 on 27th June, 2013 after

recording the reasons. In response to the notice under section 148, the assessee

4 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

did not prefer any return of income and consequently the reassessments were

passed under section 144 read with sec. 147 of the IT Act whereby the amounts

found deposited in the bank account of the assessees were assessed as total income

of the assessee. The assessees challenged the action of the AO before the ld. CIT

(A) on the ground that the assessees are having very large chunks of agricultural

lands and the deposits made in the bank account are from agricultural income of the

assessees. The ld. CIT (A) did not accept this explanation of the assessees on the

ground that the assessees did not produce any record in support of explanation of

source of deposits made in the bank account. Now the assessees have raised this

additional ground challenging the validity of notice under section 148 of the IT Act.

It is pertinent to note that the validity of notice under section 148 can be challenged

at the initial stage by filing the writ petition before the Hon’ble High Court or it can

be objected before the AO by filing the objections and then in the appellate

proceedings. The objections against notice under section 148 can be filed only after

the return of income in response to notice under section 148 is filed by the assessee.

In the case in hand when the assessees have not filed any return of income in

response to notice under section 148 of the IT Act, then the assessees cannot raise

an objection against the notice issued under section 148 of the Act as per the

decision of Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs.

ITO, 259 ITR 19 (SC). There is no quarrel on the point that a legal issue can be

raised at the appellate stage and before this Tribunal irrespective of the fact that the

same was not raised before the authorities below. However, such a plea can be

raised before the Tribunal subject to the condition that the same ought to have been

5 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

raised by the assessee before the authorities below but could not be raised due to

some bonafide reasons. Once a legal plea raised by the assessee does not require

any investigation of new facts, then the same can be raised at this stage. However,

the plea of challenging the validity under section 148 cannot be raised before the AO

due to the reason that the assessee did not file return of income in response to the

notice under section 148. Moreover, the assessee before us also not filed any return

of income under section 139(1) of the Act. Hence in the facts and circumstances of

the case where the assessees have neither filed any return of income under section

139(1) nor in response to notice under section 148, then the assessee could not

raise any objection before the AO against the notice under section 148 of the Act

and consequently the said objection cannot be raised before the appellate authority.

Hence, we decline to admit the additional ground raised by the assessee. The same

is rejected.

issue, the ld. A/R of the assessee has submitted that the assessee produced

additional evidence before the ld. CIT (A) in support of source of deposits made in

the bank account. The ld. A/R has referred to the record which shows that the land

holding of the assessees as well as affidavits of the assessees wherein the source of

deposits made in the bank account has been explained. The ld. CIT (A) has not

admitted the additional evidence filed by the asessee. Thus the ld. A/R has

submitted that the assessees have also filed an application for admission of the

additional evidence along with the affidavits of the assessees and pleaded that the

6 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

additional evidence sought to be produced by the assessee may be admitted for

verification and examination at the end of the A.O.

additional evidence and submitted that the assessees did not file any return of

income and also not appeared before the AO during the assessment proceedings.

Therefore, the assessees were never co-operative in the proceedings before the AO.

He has relied upon the orders of the authorities below.

record. We note that the assessees are agriculturists by occupation and there is no

record or allegation that the assessees are doing any other activities of generating

any income. Once the assessees are agriculturists and holding a substantial amount

of land in their personal names as well as in the names of the family members, then

the entire deposit made in the bank account cannot be treated as taxable income of

the assessees. The assessees filed the additional evidence in the shape of revenue

record showing the land holding in the names of the assessees as well as their

family members. The land holding of the assessees are more than 16 hectares in

case of the father and about 6 hectares in case of son. Therefore, we find that

though the assessees did not produce these evidences before the A.O, however,

once the evidences produced by the assessee is the official record which can be

independently verified, then the same is required to be verified and considered for

the purpose of explaining the source of deposits made in the bank account. Prima

facie, the assessees have shown more than sufficient land holding in support of the

agricultural income, however, since the additional evidence which was not produced

7 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.

before the AO and has not been examined, therefore, in the facts and circumstances

of the case and in the interest of justice, we admit the additional evidence filed by

the assessee and remit the matter to the record of the AO for conducting a proper

enquiry in respect of the claim of land holding and agricultural income of the

assessees to explain the source of deposits made in the bank account. Needless to

say that the assessees be given an appropriate opportunity of hearing before

passing the fresh order.

Order is pronounced in the open court on 12/12/2018.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Jaipur Dated:- 12/12/2018. Das/

आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

8 ITA No.s 189 & 190/JP/2017 Shri Jitendra Singh Shakhtawat & Shri Rajdeep Singh Shakhtawat.