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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-I’, NEW DELHI
Before: SHRI H.S. SIDHU
This appeal is filed by the Assessee against the impugned order dated 27.11.2019 for the assessment year 2011-12 on the following grounds:- 1(i) That on facts and circumstances of the case, the Ld. CIT(A) was not justified in upholding validity of notice uls 148 even though same was issued without recording proper reasons in terms of provisions of section 147 of the Act. (ii) That the reasons being factually incorrect and merely on the basis of information available on ITBA database, the same are mechanical and without application of mind. (iii) That the assessing officer having failed to even verify the information regarding cash deposit or prove existence of undisclosed income, the reopening is merely for the purpose making roving enquiry and same is illegal and without jurisdiction in absence of tangible material.
(iv) That the notice uls 148 having been issued without proper approval ul s 151, the same is invalid and void ab initio 2(i) That on facts and circumstances of the case, the Ld. CIT(A) has grossly erred in upholding the validity of reassessment proceedings u/s 147 in total disregard to the fact that assessment order was passed without issuing mandatory notice uls 143(2) of the Act. (ii) That the return of income having been filed in response to notice u/s 148 and within time limit prescribed ul s 139(4), the Ld. CIT(A) has misconstrued and misapplied the law while treating the return as invalid. iii) That assessing officer having accepted the fact of filing of return in the remand report and even in the assessment order, issuance of notice u/ s 143(2) was sine qua non before passing of assessment order. iv) That in absence of issuance of mandatory notice u/ s 143(2), the assessment order passed u/ s 147 is illegal, invalid and not sustainable under the law. 3(i) That on facts and circumstances of the case, the Ld. CIT(A) was not justified in confirming addition of Rs. 13,78,850/- u/ s 69A of the Act being cash deposit in the bank account even though same is supported from relevant documents and there is no case of unexplained income. (ii) That deposit of Rs. 10,00,000/- is gift from maternal Grandfather and Grandmother and same being supported from relevant affidavit, the provisions of section 69 A are not applicable. (iii) The deposit of Rs. 3,78,850/- being out of past accumulated savings and earning from teaching profession which is also reflected in ITR, there is no case of unexplained income. (iv) That provisions of section 69A have been applied on arbitrary basis without appreciating the facts of the case and documentary evidence.
4. That orders passed by lower authorities are not justified on facts and are bad in law.
5. That the appellant craves leaves to add, alter, amend, forgot any of the grounds of appeal
at the time of hearing.
2. Facts narrated by the revenue authorities are not disputed by both the parties, hence, the same are not repeated here for the sake of convenience.
3. At the time of hearing, Ld. Counsel for the Assessee has drawn my attention towards page no. 18-19 of the Paper Book and stated that in the reasons recorded by the AO for reopening of the case of the assessee u/s. 147 of the I. T. Act, 1961 for assessment year in dispute was for the cash deposit in the savings bank account amounting to Rs. 25,78,850/-, but the AO while completing the assessment vide order dated 19.12.2018 u/s. 147 of the Act read with section 144 of the Act has made the addition of Rs. 13,78,850/- meaning thereby that AO has not applied his mind while recording the reasons and reopened the assessment of the assessee. He stated that this issue has already been adjudicated and decided in favour of the assessee by the various orders of the ITAT. In support of his contention, he produced a copy of the ITAT, Delhi SMC Bench order dated 07.6.2017 in the case of Tajendra Kumar Ghai vs. ITO 1(5), Rudrapur relevant for the assessment years 2011-12 & 2012-13. He requested that the addition in dispute may be deleted and reopening in dispute may be quashed by following the aforesaid order.
On the contrary, Ld. DR relied upon the orders passed by the revenue authorities.
I have heard both the parties and perused the orders passed by the revenue authorities alongwith the reasons for reopening the assessment u/s. 147 of the Act of the Assessee for the assessment year in dispute which the assessee has attached at Page No. 18-19 of the Paper Book and alognwith assessment order dated 19.12.2018 passed by the Assessing Officer u/s. 147 of the Act read with section 144 of the Act wherein, the case of the assessee was reopened on account of cash deposits in the savings bank account amounting to Rs. 25,78,850/-, however, the AO had made the addition of Rs. 13,78,850/- meaning thereby the AO has not applied his mind and therefore, I set aside the orders of the authorities below and quash reopening of assessment. Resultantly the addition made in the reassessment order would stand deleted and need not be adjudicated on merit. My aforesaid view is fortified by the following decision ITAT, Delhi SMC Bench order dated 07.6.2017 in the case of Tajendra Kumar Ghai vs. ITO 1(5), Rudrapur relevant for the assessment years 2011-12 & 2012-13 wherein the Tribunal has held as under:- “9. I have considered rival submissions. It is not in dispute that assessee filed return of income prior to issue of notice u/s. 148 of the I.T. Act. The notice u/s 148 was issued on 16th March 2014. It is well settled law that validity of the reassessment proceedings is to be determined on the basis of the reasons recorded by the AO. The reasons are reproduced above in which AO mentioned that as per AIR information it was found that assessee deposited cash of Rs. 63,27,996/- in his bank accounts. However the assessee contended
before Ld. CIT(A) that the total aggregate deposits in bank accounts were only 41.15 lacs and not Rs. 63,27,996/-. The contention of the assessee was found correct by the Ld. C!T(A). It is therefore clear that the AO while recording the reasons for reopening of the assessment recorded incorrect facts in the reasons for reopening of assessment. Therefore reopening of the assessment u/s 147 is clearly invalid and bad in law. I rely decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries 180 ITR 319. Further the AO after obtaining the AIR information wanted to verify the same and issued a letter of enquiry to the assessee. The AO thus did not apply in his independent mind to the information received from AIR. Since no proceedings were pending before AO when he issued the letter of enquiry to the assessee, therefore such enquiry letter was not valid in eyes of law. The assessee was not required to respond to this invalid and non-est letter of inquiry issued by the AO. The AO in the absence of reply from the assessee presumed that income to the extent of deposits had escaped assessment. The deposit in the bank accounts per se cannot be the income of assessee. It was mere suspicion of the AO based on incorrect facts that income chargeable to tax has escaped assessment. According to section 147 of the I.T. Act the AO shall have reason to believe that any income chargeable to tax has escaped assessment. Therefore the belief of the AO should be based upon some specific and tangible material for the purpose of reopening of the assessment. The course adopted by the AO was wholly unjustified in recording the incorrect facts in the reasons for reopening of the assessment. The decision cited by the Ld. Counsel for assessee would clearly support the contention of the assessee that reopening of the assessment is bad in law. In this view of the matter I am of the view that AO has wrongly assumed jurisdiction u/s 147 of the I.T. 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 order would stand deleted and need not to be adjudicated on merit.
In the result appeal of assessee is allowed.”
In the result, the appeal filed by the Assessee is allowed.
The decision is pronounced on 05.05.2020.