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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 07.06.2019 passed by ld. CIT(A)-8, Pune in relation to assessment year 2008-09. 2. The first ground challenges initiation of re-assessment proceedings. 3. Pithily put, the factual matrix of the case is that the assessee is a real estate agent, who furnished his original return. Thereafter, the Assessing Officer (AO) received information from DDIT(Inv) Unit II(1), Pune indicating that the assessee held an account with
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HSBC, Bund Garden Road, Pune branch jointly with his wife, in which deposits of Rs.33.31 lacs and withdrawals of Rs.53.14 lacs were made. On the basis of above information, the AO recorded reasons and issued notice u/s 148 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) requiring the assessee to furnish return. The assessee replied to the AO submitting that his original return may be taken as a return in response to the notice u/s 148. Thereafter, the assessment was completed determining the total income at Rs.5,31,500. The assessee remained unsuccessful before the ld. CIT(A) - both on legal issue as well as merits. Aggrieved thereby, an appeal has been preferred before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. The AO recorded reasons, before initiating re-assessment proceedings, reading as under: “Reasons for the belief that income has escaped assessment:- The DDIT Investigation, Unit-II (I), Pune has forwarded the information w.r.t. STR in the case of Shri Lalchand M. Jagwani vide Letter No.DDIT(INV)/U-II (1)/STR/LJ/2014-15/1145 dated 03/02/2015. Vide above referred letter, DDIT(Inv) informed that “Shri Lalchand Jagwani is a partner in M/s T.J. International & M/s P.D. Wines & holds an account in HSBC Bank Bund Garden Road branch, jointly with his wife. During the period from
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November, 2007 to January 2009 there were cash deposits of Rs.33.31 lack whereas during the same period cash withdrawal amounting to Rs.53.14 lack in his account. He has submitted that the source of above cash deposit is rental income & withdrawal from the firms M/s P.D. Wines. He has further stated that the cash withdrawals were utilized for purchase of bunglow at Kalyani Nagar for Rs.86,00,000/- in Financial Year 2008-09 and the source of purchase of above flats are shown as under: Personal savings (rental income and Withdrawals from M/s P D Rs.33,00,000 Wines) Loan from Citibank Rs.46,44,357 Sale of Gold Rs.06,99,979 Total Rs.86,44,336 Further the entire bank account of Shri Lalchand Jagwani for A.Y. 2008-09 and A.Y. 2009-10 was examined and the findings are as under: A.Y. 2008-09 A.Y. 2009-10 Deposits in Rs. Withdrawals in Rs. Deposits in Rs. Withdrawals in Rs. Cash Cheque Cash Cheque Cash Cheque Cash Cheque 22,00,89 1,04,96,08 50,94,65 67,61,57 19,94,965 64,12,28 20,96,00 54,88,83 4 1 0 2 1 0 0 2. It is verified from the ITD application that the Shri Lalchand Jagwani has furnished the return of income for the A.Y. 2008-09 declaring total income of Rs.3,32,500/- only. In the return, he has shown the income of Rs.4,90,000 under the head House Property only and claimed deduction of Rs.1,00,000/- under Ch.VIA of the I.T. Act, 1961. In the return furnished by him for A.Y. 2009-10, he has declared total income of Rs.11,57,130/-. In the return, he has shown the income of Rs.1,21,600 under the head House Property and Rs.11,60,530/- and Rs.11,60,530/- as business income and claimed Rs.1,25,000/- as deduction under CH.VIA of the I.T. Act, 1961. 3. Since the bank account of Shri Lalchand M. Jagwani has received credits by way of cash / cheques, the above transactions have to be verified. For this purpose, it is necessary to reopen the case for A.Y. 2008-09 and A.Y. 2009-10.
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In view of the above, I have reasons to believe that there is an escaped assessment within the meaning as per the provisions of section 147 of the IT Act, 1961, for the assessment year 2008- 09, 2009-10.”
A bare perusal of first para of above reasons transpires that the assessee tendered an explanation about the source of cash deposits in the bank and also withdrawals made therefrom for purchasing a house at Kalyani Nagar for Rs.86 lacs. The second para of above reasons indicates the factual details about the income shown by the assessee in the return. Para 3, which contains the crux of the reasons for reassessment, is that the AO initiated the proceedings to verify the debit and credit entries in the bank account. This fact gets graphically clear from recording made by the AO in the reasons to the effect that “the above transactions have to be verified”. Thus, it is evident that the AO initiated re- assessment proceedings just to verify the transactions of deposits and withdrawals in/from the bank account. 6. Section 147 of the Act, dealing with the reassessment, opens with the words “If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income ….”. It is ostensible that the
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action u/s 147 can be taken when the AO has formed reasons to believe that some income chargeable to tax has escaped assessment. Ex consequenti, belief of the AO about any income escaping assessment is sine qua non for initiating re-assessment. No jurisdiction can be assumed for framing assessment u/s 147 of the Act absent such reasons to believe about the escapement of income. 7. On going through the reasons, as reproduced above, it is palpable that the AO initiated re-assessment proceedings just to verify the deposits and withdrawals from the bank account of the assessee. There is no whisper in the reasons as to reason to doubt, much less the reason to believe, about the escapement of income. In view of the fact that the re-assessment has been initiated simply to verify the transactions in the assessee‟s bank account, which does not fulfill the jurisdictional condition of belief about the escapement of any income, we are satisfied that action of the AO lacks validity. We, therefore, set aside the initiation of reassessment and the consequential order passed u/s 147.
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In view of our decision on the legality of initiation of re- assessment proceedings, there remains no need to dispose off the grounds on merits. 9. In the result, the appeal is allowed. Order pronounced in the Open Court on 19th December, 2022.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; नदिधांक Dated : 19th December, 2022 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलधर्थी / The Appellant; प्रत्यर्थी / The Respondent; 2. 3. The CIT(A)-8, Pune 4. The Pr.CIT-4, Pune, 5. नवभधगीय प्रनिनिनर्, आयकर अपीलीय अनर्करण, पुणे “A” / DR „A‟, ITAT, Pune 6. गधर्ा फधईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अनर्करण ,पुणे / ITAT, Pune
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Date 1. Draft dictated on 19-12-2022 Sr.PS 2. Draft placed before author 19-12-2022 Sr.PS 3. Draft proposed & placed before the JM second member 4. Draft discussed/approved by Second JM Member. 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *