VIPAN KUMAR THAMMAN,DERABASSI vs. INCOME TAX OFFICER, WARD-2(5),CHANDIGARH, CHANDIGARH

From the facts, it clearly emerges that the impugned bank account which form the very basis of reopening was not disclosed by the assessee during the course of regular assessment proceedings. The same was not considered while preparing the cash flow statement as furnished during the course of regular assessment proceedings. Subsequently, certain information was received by Ld. AO with respect to cash deposit in the said bank account and accordingly, the case was reopened and the assessee was required to explain the sources of the deposits in the stated bank account. The case was reopened vide notice u/s 148 dated 27-01-2016 which is placed in the paper book. As per this notice, the assessee was required to file return of income within 20 days from the day of service of this notice. However, the assessee has failed to do so. In our considered opinion, this notice put the reassessment proceedings in motion qua the assessee and the assessee was required to follow the mandate of this notice. However, the said notice has remained non-complied with by the assessee until 15-07-2016 when the assessee raised objection to reopening and offered the already filed return of income in response to this notice. The assessee has clearly failed to adhere to the terms of notice of Sec.148. The copy of reasons recorded was thereafter served by Ld. AO on 18-07-2016. Therefore, the legal arguments are urged by Ld. AR are found to be without much substance.

Proceeding further, we find that before issuing notice u/s 148, due approval has been taken by Ld. AO from Addl. CIT, Range-II. Chandigarh which is kept on Page No.4 of the paper book. Along with this notice, Ld. AO has quantified the quantum of probable income which has escaped assessment. The reasons leading to formation of belief of escapement of income were enclosed with the proposal as a separate annexure. In the annexure, the details of deposits in the said bank accounts have duly been specified and it was observed that the above noted bank account was not furnished by the assessee during the course of original assessment. The necessary enquiry was made u/s 133(6). Upon perusal of assessee’s submissions thereto, it was found that the assessee failed to offer any explanation with regard to non-disclosure of said bank account and the source of cash deposits in the said bank account. On these facts, a belief was formed that income of Rs.183.05 Lacs escaped assessment for this year.

After due consideration of all the above stated facts, we are of the considered opinion that the assessee’s case was validly reopened and the reassessment jurisdiction of Ld. AO could not be faulted with. It could clearly be seen that the formation of belief of escapement of income was on the basis of tangible material and a concrete proposal was put forward by Ld. AO before approving authority before reopening the case of the assessee. It was the primary obligation of the assessee to disclose all the bank accounts during the course of regular assessment proceedings but the assessee failed to do so. The said bank account was not taken into account while preparing cash flow statement as filed during the course of regular assessment proceedings. There is clear escapement of income. The Ld. AR has relied on various case laws to support the legal grounds. However, upon perusal of the same, we find these case laws to be distinguishable on facts. In the present case, a valid approval was given by approving authority with due application of law and the same could not be faulted with. The legal ground as urged by Ld. AR stand dismissed. The legal ground relating to non-issuance of notice u/s 143(2) has not been pressed during hearing before us. Now, we proceed on the merits of the case.

The prime argument of the assessee is that the deposits have been received in the said bank account in the capacity of association of persons (AOP) consisting of 20 members. The AOP decided to purchases certain property and each of the members contributed and deposited their respective share in the said bank account. The assessee also obtained bank loan of Rs.12 Lacs which was withdrawn and deposited in the said bank account. However, Ld. AO rejected the same on the ground that considering the time gap, no prudent person would keep interest-bearing money idle. The deposits of Rs.59.50 Lacs are stated to be sourced out of advances given by M/s UT Builders & Promoters Ltd. In support, the assessee has furnished affidavit of director of that entity. However, Ld. AO rejected the same on the ground that there were no withdrawals in the bank account of the lender. Similar findings were rendered for other deposits. Upon due consideration of factual matrix, we are of the considered opinion that the primary obligation to prove the source of cash deposit was on the assessee but the assessee failed to do so. At the same time, Ld. AO has not conducted any independent enquiries to rebut the documents of the assessee. On these facts, we restore the issue on merits, back to the file of Ld. AO for fresh adjudication with a direction to the assessee to plead and prove the source of impugned cash deposit of Rs.109.50 Lacs. The corresponding grounds stand allowed for statistical purposes.

The appeal stands partly allowed for statistical purposes. Order pronounced on 16-09-2025.