BALDEV SINGH,VILLAGE JANDLI,AMBALA vs. INCOME TAX OFFICER WARD-3, AMBALA, AMBALA CANTT

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeals by two assessees have identical facts. First, we take up appeal of Shri Teja Singh (ITA No.889/Chandi/2025) for Assessment Year (AY) 2007-08 which arises out of an order of learned Addl. / Joint Commissioner of Income Tax (Appeals) - 4, Mumbai [CIT(A)] dated 30-06-2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 147 of the Act on 30-03- 2015. The assessee is aggrieved by confirmation of addition of cash deposits for Rs.32,75,333/- as made by Ld. AO in the assessment order. 2. The Ld. AR advanced legal arguments as well as arguments on merits and supported the case of the assessee. It has been argued that the case was reopened beyond four years without alleging any failure on the part of the assessee as mandated under the statute. The Ld. AR also argued that approval of appropriate authority to reopen the case of the assessee was obtained on wrong facts. The Ld. Sr. DR also advanced arguments and supported the orders of lower authorities. Having heard rival submissions and upon perusal of case records, our adjudication would be as under. Proceedings before lower authorities 3.1 The assessee filed his return of income on 29-07-2008 which was assessed in scrutiny assessment proceedings u/s 143(3) on 31-12- 2009. However, the case was reopened beyond 4 years on the basis of AIR information that the assessee deposited cash of more than Rs.10 Lacs in its bank accounts and earned capital gains during the year. To verify the same, the case was reopened and notice u/s 148 was issued on 12-03-2014 after taking approval of appropriate authority i.e., Ld. Commissioner of Income Tax, Panchkula. 3.2 It transpired that the assessee deposited cash of Rs.32,75,333/- between 16-06-2006 to 04-07-2006 in his SB account as maintained with Union Bank of India. The cash was stated to be sourced out of agricultural produce as well as out of advances received by the assessee against sale of certain land. In support, agreement to sale and copy of bank account was furnished. The assessee was directed to corroborate the fact that the cash was deposited out of purported land advance. It was stated by the assessee that the sale deed was executed as per collectors’ rate and the difference between the actual sale price and sale deed price was received in cash. The Ld. AO rejected the claim on the ground that the assessee failed to file original agreement to sell and also could not produce the buyer for verification. Finally, the impugned cash deposits were added to assessee’s income as income from undisclosed sources. Aggrieved, the assessee preferred further appeal against the assessment order. 3.3 During appellate proceedings, the assessee assailed reopening on the ground that as per proviso to s.147, extended period of 6 years is applicable only in a case of a failure of the assessee to fully and truly disclose material facts in the return of income. This allegation was required to be made by Ld. AO at the time of recording the reasons while reopening the case of the assessee but the same was not done. Reference was made to various case laws to support the same. The assessee also assailed impugned addition on merits. However, Ld. CIT(A) rejected the legal grounds by relying upon the decision of Hon’ble Supreme Court in the case of Raymond Woollen Mills Ltd. (236 ITR 34) and also rejected merits of addition since the assessee could not substantiate its claim. Finally, the assessment was confirmed against which the assessee is in further appeal before us. Our findings and Adjudication 4. From the facts, it could be seen that the assessee’s return of income for this year was scrutinized u/s 143(3) vide order dated 31-12- 2009. During the course of assessment proceedings, notices were issued u/s 142(1) requiring the assessee to substantiate its return of income. The assessee duly responded to the same and after due consideration thereof, Ld. AO framed the assessment. The impugned bank account was duly disclosed by the assessee in its return of income. Subsequently, the case has been reopened beyond four years on the ground that the issue of deposit of cash of Rs.32,75,333/- was not looked into during the course of original assessment proceedings. The copy of reasons has been placed on Page No.5 of the paper-book. It has been observed by Ld. AO therein that during verification of AIR information, the assessee filed photocopy of 2 registries and the assessee was having 1/3rd share in the said transactions. The land was within municipal limits and thus capital assets u/s 2(14)(iii). In view of the same, the assessee earned capital gains which were not considered during regular assessment proceedings u/s 143(3). Therefore, the aforesaid cash deposit remained unexplained. The reasons were recorded on 12-02-2014 and Ld. AO sought approval of appropriate authority to reopen the case of the assessee. In Column No. 7 of the approval form (placed on Page Nos.4 & 5), it has been mentioned by Ld. AO that the provisions of Sec. 147(b) of the Act are applicable to the case of the assessee and the assessment is proposed to be made for the first time. However, the actual fact is that the assessee was already assessed u/s 143(3) and the case of the assessee was covered under Explanation-2 clause (c) and not under clause (b) as mentioned / stated by Ld. AO in the approval form. The clause (b) is applicable only in a case where no assessment was made in assessee’s case earlier. In our considered opinion, the approval has been taken by Ld. AO on erroneous facts and these vital facts could have materially impacted the decision of approving authority while granting the approval to reopen the case of the assessee. Since the approval has been obtained on wrong facts, it could not be said that the reopening had valid approval of the appropriate authority.