DHEERAJ YADAV,GURGAON vs. ITO WARD - 46(5), NEW DELHI

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ITA 6701/DEL/2019Status: DisposedITAT Delhi01 January 2021AY 2011-1218 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the reopening of assessment was based on incorrect and unsubstantiated facts, as the cash deposits per se do not constitute income and the AO failed to apply his mind to the facts. The Tribunal quashed the reassessment proceedings.

What were the facts?

The Assessing Officer (AO) initiated reassessment proceedings under section 147/148 of the Income Tax Act, 1961, based on information that the assessee had deposited cash of Rs. 11,07,160/- with ICICI Bank and received commission. The AO made additions for unexplained money and interest, and the CIT(A) dismissed the assessee's appeal.

What were the issues?

Whether the reopening of assessment under Section 147/148 was valid based on the reasons recorded by the AO, and if the cash deposits in the bank account per se could be treated as unexplained income.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 144,Section 69A,Section 149(1)(b),Section 151(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(6)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCHES “SMC-1” : DELHI

Before: SHRI BHAVNESH SAINI & SHRI ANIL CHATURVEDI

Hearing: 23.12.2020Pronounced: 01.01.2021

therefore covered in favour of assessee by order of ITAT

SMC Delhi Bench in the case of Tajendra Kumar Ghai

(supra). In view of this matter, I am of the view that the Assessing Officer has wrongly assumed jurisdiction u/s 147 of the Income Tax Act for the purpose of reopening of the assessment. I accordingly set aside the orders of the authorities below and quash the reopening of the assessment in the matter. Resultantly, the addition made in the reassessment would stand deleted.

8. In the result, the appeal filed by the assessee is allowed.”

7.1. The issue is, therefore, covered in favour of the assessee by the decision of the Delhi Tribunal in the case of Shri Arvind Yadav (supra). Following the reasons for decision for the same, I set aside the orders of the authorities below and quash the reopening of the assessment in the matter.

Resultantly, the addition made in the re-assessment would stand deleted and appeal of assessee is allowed.

8.

In the result, appeal of the assessee is allowed.”

14 ITA.No.6701/Del./2019 Shri Dheeraj Yadav, Gurgaon. 4.2. He has submitted that A.O. has not made any addition on account of commission payment in the re- assessment order, therefore, A.O. has recorded wrong facts in the reasons for reopening of the assessment and there was a complete non-application of mind. Therefore, the reopening of the assessment may be quashed. He has relied upon the Judgments of Hon’ble Delhi High Court in the case of Pr. CIT vs., G & G Pharma India Ltd., [2016] 384 ITR 147 (Del.), Pr. CIT vs., RMG Polyvinyl [2017] 396 ITR 5 (Del.).

5.

On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that A.O. has correctly recorded reasons for reopening of the assessment because there was a cash deposit in the ICICI Bank Account of the assessee, therefore, reopening of the assessment is justified in the matter.

6.

We have considered the rival submissions. It is well settled Law that validity of the reopening of the assessment is to be determined with reference to the reasons recorded for reopening of the assessment. The assessee has filed copy of the reasons recorded for 15 ITA.No.6701/Del./2019 Shri Dheeraj Yadav, Gurgaon. reopening of the assessment in the paper book which is reproduced above in which the A.O. has mentioned that he has information that assessee has deposited cash amounting to RS.11,07,160/- with ICICI Bank Ltd., and also received commission of Rs.2,533/- and thus, there is an escapement of income to the tune of Rs.11,09,693/-. The assessee has filed copy of the reply filed before the Ld. CIT(A) in the paper book in which it is clearly explained that A.O. has wrongly assumed that entire cash deposited in the ICICI Bank account was income of the assessee as there are deposits and withdrawals multiple times throughout the year for business purposes. It was also explained that assessee in the business during the relevant year because assessee deals in Hardware, Sanitary and Sanitary-ware at Chawdi Bazar, Delhi. These facts clearly show that total cash deposited in the Bank Account of the assessee with ICICI Bank Ltd., per se may not be the income of the assessee. The ITAT, Delhi Bench in the case of Shri Abrar Ahmad Qasimi, Delhi vs., ITO, Ward-46(5), New Delhi (supra), following other decisions of the Tribunal has held

16 ITA.No.6701/Del./2019 Shri Dheeraj Yadav, Gurgaon. that deposits in the bank account per se cannot be the income of the assessee. Thus, it was a mere suspicion of the A.O. based on incorrect facts that income chargeable to tax has escaped assessment. Further, Learned Counsel for the Assessee has filed details of the deposits in ICICI Bank to show that there are cash deposits in ICICI Bank at Rs.11,49,750/- as against Rs.11,07,160/- stated by the A.O. in the reasons for reopening of the assessment. Thus, wrong and incorrect facts are also recorded in the reasons recorded for reopening of the assessment. Thus, A.O. has recorded wrong and non-existing and incorrect facts in the reasons for reopening of the assessment. Thus, the A.O. would not get jurisdiction to reopen the assessment on such wrong facts recorded in the reopening of the assessment.

The A.O. has also not applied his mind to the facts of the case and merely based on information without verifying the same recorded reasons for reopening of the assessment.

Thus, the reopening of the assessment cannot be sustained in Law. We are fortified in our view by the Judgments of the Hon’ble Punjab & Haryana High Court in the case of CIT vs.,

17 ITA.No.6701/Del./2019 Shri Dheeraj Yadav, Gurgaon. Atlas Cycle Industries [1989] 180 ITR 319 [P&H], Judgment of Hon’ble Delhi High Court in the case of Pr. CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.), Judgment of Hon’ble Delhi High Court in the case of Shamshad Khan vs., ACIT [2017] 395 ITR 265 (Del.) and Judgment of Hon’ble Bombay High Court in the case of Siemens Information Systems Ltd., vs., ACIT & Others [2007] 293 ITR 548 [Bom.].

It may also be noted here that though A.O. has referred to the commission earned by the assessee in assessment year under appeal, but, no addition have been made in the re- assessment order. Considering the above facts in the light of above Judgments and Order of the Tribunal in the case of Shri Abrar Ahmad Qasimi, Delhi vs., ITO, Ward-46(5), New Delhi (supra), it is clear that A.O. has recorded incorrect, wrong and non-existing reasons for reopening of the assessment and also failed to verify the information received by him before recording the reasons for reopening of the assessment. Thus, there was clearly non-application of mind on the part of the A.O. to initiate the re-assessment proceedings. The A.O. would not get assumption of 18 ITA.No.6701/Del./2019 Shri Dheeraj Yadav, Gurgaon. jurisdiction legally to frame the re-assessment under section 147/148 of the I.T. Act, 1961. In view of the above, we set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. The other issues on merit are left with academic discussion only. Accordingly, the appeal of the Assessee is allowed.

7.

In the result, appeal of the Assessee allowed.

Order pronounced in the open Court.

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