Loading judgment…
Facts
The assessee, a non-filer, deposited Rs. 27 lakhs in her bank account, leading the AO to reopen her assessment for AY 2012-13 under Sections 144 and 147. An addition of Rs. 18,90,600 was made under Section 69A for unexplained investment. The assessee contended the re-opening was invalid due to lack of concrete material and improper notice service, and that the deposit was from the sale of agricultural land for Rs. 19 lakhs.
Held
The Tribunal upheld the re-opening of assessment, stating that as a non-filer, the bank deposits constituted a prima-facie reason for examination, and no error was found in the re-opening procedure. However, on merits, the Tribunal found that the assessee sold agricultural land for Rs. 19 lakhs (though stamp duty was paid on Rs. 9.35 lakhs) and that the AO failed to investigate this source. Inferring no other source of income, the Tribunal deleted the addition.
Key Issues
1. Whether the re-opening of assessment under Section 147, initiated based on AIR information without complete details or proper notice service, was valid. 2. Whether the addition made under Section 69A for unexplained bank deposits, allegedly from the sale of agricultural land, was justified.
Sections Cited
144, 147, 69A, 151, 282
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI MANOJ KUMAR AGGARWAL
आदेश/ORDER PER RAJPAL YADAV, VP
The assessee is in appeal before the Tribunal against the order of ld. Commissioner of Income Tax [in short ‘the CIT’] dated 26.11.2024 passed for assessment year 2012-13.
The assessee has taken six grounds of appeal, however, her grievance revolves around two issues, namely, (a) ld. CIT
ITA 131/CHD/2025 A.Y. 2012-13 2 (Appeals) has erred in upholding the re-opening of assessment, (b) ld. CIT (Appeals) has erred in upholding the addition made by the AO on account of unexplained deposits in the bank account.
The brief facts of the case are that assessee has not been filing any return of income. The Annual Information Report Wing has transmitted an information that assessee had made deposits of Rs.27 lacs in her bank account with State Bank of India. The AO has recorded the reasons and issued notice upon the assessee. However, according to him, notice could not be served through Registered Post, therefore, it was served through Affixture. The AO has ultimately passed assessment order ex-parte u/s 144 read with Section 147 of the Income Tax Act on 29.12.2019. In this assessment, ld. AO has given credit of withdrawals made by the assessee in the past and ultimately made addition of Rs.18,90,600/- on account of unexplained investment made in the bank account. Thus, this addition is being made u/s 69A of the Income Tax Act.
Appeal to the ld.CIT (Appeals) did not bring any relief to the assessee.
ITA 131/CHD/2025 A.Y. 2012-13 3
Before us, ld. counsel for the assessee has raised two- fold of contentions. In his first fold of contentions, he impugned the manner in which approval u/s 151 was given to the AO for re-opening of the assessment. He also submitted that only information possessed by the AO was from the AIR Wing. He was not possessing the complete details i.e. Bank Statement which was obtained by him during the course of assessment proceedings. Therefore, formation of belief that income has escaped assessment is on the basis of some suspicion without possessing concrete material by the AO. Thus, this re-opening is bad in the eyes of law. He made reference to 12 judgements in this regard whose copies are placed in the Paper Book from page No. 22 to 83. He has also pointed out the manner in which notice was alleged to be served upon the assessee through Affixture. According to him, no independent witnesses were joined by the alleged Process Server while affixing the service of notice. Hence, it is not in accordance with the procedure contemplated in Section 282 of the Income Tax Act.
ITA 131/CHD/2025 A.Y. 2012-13 4
In his second fold of submission, he pleaded that a perusal of bank statement would indicate that one transaction of 27.05.2011 has been considered as unexplained by the AO. On this day, assessee has deposited Rs.19 lacs but this amount was received by her on sale of agriculture land whose Sale Deed is being annexed in the Paper Book at page No. 7 and translated copy at page No.8. He submitted that in this Sale Deed, sale consideration is being shown as Rs.9,35,000/- but this is the amount on which Stamp Duty was paid. The actual sale consideration was Rs.19 lacs which was deposited by the assessee in her bank account.
The ld. DR on the other hand, relied upon the orders of Revenue Authorities. He submitted that assessee failed to explain the source of deposits and since assessee was a non- filer of return, therefore, AO could not cross-examine the alleged deposits in the bank statement with her details with the Income Tax Department. Therefore, there is no defect in recording reasons and re-opening the assessment.
7.1 As far as re-opening of assessment is concerned, the contention of the ld. counsel for the assessee was that since
ITA 131/CHD/2025 A.Y. 2012-13 5 bank statement was not collected by the AO before recording of reasons, therefore, he was not possessing complete information for formulating a belief that income has escaped assessment. The reasons are based on mere suspicion of escapement of income. For buttressing this contention, he relied upon the following decisions :
Sr.No. Nature of Document 1. Sh. Mahavir Parsad Vs. The I.T.O. (ITAT Delhi) 2. Sh. Rajesh Chunara Vs. The I.T.O. (ITAT Jaipur) 3. Udesh Sharma Vs. I.T.O. (ITAT Delhi) 4. Gurdish Kaur Khullar Vs. ACIT (ITAT Chandigarh) 5. Sukhvir Singh Vs. Income Tax Officer (Amritsar-Tri B) 6. Amrik Singh Vs. Income Tax Officer 7. Raaj Rattna Stock Holdings ( P ) Ltd. Vs. ACIT (Guj) 8. Sh. Tek Chand Vs. ITO (ITAR Chd) 9. ClT Vs. S. Goyanka Lime and Chemical Ltd. (SC) 10. CIT Vs. Naveen Chander (P&H) 11 CIT Vs. Chetan Gupta (Del.) 12. Farah Naaz & others Vs. ITO (ITAT Delhi)
We do not deem it necessary to recite and recapitulate the proposition laid down in all these decisions. We concur with the submission of the assessee that if no specific information is available to the AO, which has a live nexus with the formation of belief exhibiting escapement of income, then
ITA 131/CHD/2025 A.Y. 2012-13 6 assessment cannot be reopened, but here is a case where assessee is a non-filer of Income Tax Return. There is no detail on the Portal of the Income Tax Department against whom credentials of the assessee could be verified. The amounts available in the bank account transmitted by the bank in its Annual Report System could not be cross-verified. Thus, it becomes a prima-facie reason to the AO that since the assessee is not filing the return, therefore, the source of this amount deserves to be examined. We agree that a deposit in the bank account cannot be per-se escaped income but then it has to be cross-verified from the past history of the assessee which is not available in the present case. Therefore, we do not find any error in re-opening of the assessment. This ground of appeal is rejected.
9. As far as on merits, we are of the view that assessee does not have any other source of income which can be termed as undisclosed income, out of which deposits could be made. A perusal of the bank statement would not indicate that any substantial transaction had ever been made by the assessee in her bank account. The AO failed to collect any other details
ITA 131/CHD/2025 A.Y. 2012-13 7 regarding possessing of unexplained assets by the assessee or incurrence of unexplained expenses. Though in the Sale Deed, amount mentioned is on the lower side, but that amount was meant for payment of Stamp Duty. It cannot be construed as the only sole consideration alleged to be received by the assessee. It is an agriculture land sold by the assessee. The AO has not examined whether any Long Term Capital Gain would be assessable in the hands of the assessee, but looking to the background and social status of the assessee, it can easily be inferred that assessee does not have any other source of income except sale proceeds of this agriculture land. Therefore, the ld. CIT (Appeals) is not justified in confirming the addition inspite of perusal of the sale Deed by him. Accordingly, we allow this fold of contention and delete the addition made to the income of the assessee.
In the result, appeal of the assessee is partly allowed.