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Facts
The assessee is in appeal against the order of the CIT(A) upholding the re-opening of assessment for AY 2011-12. The AO reopened the assessment based on information about a cash deposit of Rs. 50,00,500/- in the assessee's bank account.
Held
The Tribunal held that the re-opening of assessment was valid, as proper approval was obtained from the Competent Authority. Furthermore, the Tribunal found that the assessee had adequately explained the source of the cash deposits through various documents and confirmations.
Key Issues
Whether the re-opening of assessment was valid and whether the assessee had provided satisfactory explanation for the cash deposits.
Sections Cited
148, 147, 151, 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH
Before: SHRI RAJPAL YADAV & SHRI KRINWANT SAHAY
The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 20.08.2019 passed for assessment year 2011-12.
ITA No.1332/CHD/2019 A.Y.2011-12 2
Originally assessee has raised four grounds of appeal, out of those grounds, Ground No. 1 and 4 are general grounds, which do not call for recording of any specific finding. In rest of the two grounds, the grievance of the assessee is that ld. CIT(A) has erred in upholding the re-opening of assessment by issuance of a notice u/s 148 of the Income Tax Act and confirming the addition of Rs.50,00,500/- added by the AO on account of unexplained cash deposits in the bank.
The assessee has filed an application under Rule 11 of the ITAT Rules, 1963 for permission to raise additional ground of appeal. In this additional ground of appeal, assessee has pleaded that re-opening has been made without proper approval from the competent authority as contemplated in Section 151 of the Income Tax Act.
4. Since it is a connected plea for Ground No. 2 whereby assessee has challenged the re-opening of assessment, we admit this ground and proceed to decide this issue whether assessment has been reopened validly or not.
The brief facts of the case are that assessee did not file his return of income. The AO received information from A.Y.2011-12 3 Annual Report Wing that assessee has made deposit in cash of Rs.50,00,500/- in the Punjab National Bank, Saving Bank Account No. 3517000604108179. The AO has recorded the reasons and reopened the assessment. Since assessee did not respond to the AO, hence he passed the ex-parte assessment according to his best judgement u/s 144 read with Section 147 on 01.11.2018. The ld. counsel for the assessee drew our attention towards page No. 70 to 81 and submitted that approval of ld. JCIT for re-opening of the assessment is available on page 79 but he has approved the reasons which are different with the one reproduced in the assessment order. The copy of the reasons approved by the JCIT is available on page No. 80 and 81. Thus, according to the ld. counsel for the assessee, the AO has not taken any approval qua the reasons reproduced on page No. 2 of the assessment order. The AO has not analyzed the information received from the AIR/CIB and has not applied his independent mind.
On the other hand, ld. DR relied upon the orders of Revenue authorities.
We have duly considered the rival contentions and gone through the record carefully. The reasons were recorded on A.Y.2011-12 4 20.03.2018 and they were approved by the Competent Authority on 23.03.2018 and notice u/s 148 was issued on 27.03.2018. No doubt, the reasons referred in the assessment order are at little bit variance from the reasons approved by the JCIT, but it is pertinent to note that the reasons which are approved, they are valid reasons to harbour a belief that income of the assessee has escaped assessment. The AO might have reproduced incomplete reasons in the assessment order but that does not mean there were no valid reasons available on the record. The valid reasons are those reasons which are approved by the Competent Authority u/s 151 of the Income Tax Act. No weightage could be given to the alleged reference of reasons in the assessment order. As far as argument of the ld. counsel for the assessee that no independent mind was applied by the AO, we find that it is not ascertainable on the record whether assessee was having any Permanent Account Number at the relevant time, but it is sure he has not filed the return for this assessment year. In such situation, it was not practically possible for the AO to make analysis of the information collected from AIR with the ITA No.1332/CHD/2019 A.Y.2011-12 5 assessment record of the assessee. He has to believe in the information and he has rightly harboured his belief that income of the assessee has escaped assessment. The AO cannot ascertain the source of deposits in the bank account from the assessment record of the assessee in the absence of link for verifying that fact. Therefore, we do not find merit in the contentions raised by the ld. counsel for the assessee qua re-opening of assessment vis-à-vis grant of approval by the competent authority. There is no merit in it. Hence, first fold of grievance is rejected. Re-opening is valid and it is upheld.
With regard to the source of cash deposits, assessee has given following explanation :
SOURCE OF CASH DEPOSITS AMOUNT (INR) Sale Proceeds from the Sale of Agricultural Land measuring 1.697 30,00,000 Hectares to Mrs. Kulwinder Kaur and Mrs. Gurvinder Kaur on 30.03.2011 received in Cash Gift received by the Wife of the Appellant from her Father amounting to 11,00,000 Rs. 11,00,000/ - Outstanding Two Years' Lease Rent and Advance Lease Rent for two 6,40,000 years, received in Cash by the Mother of the Appellant from leasing out 4 Acres of Agricultural Land located at Village Mathada Khurd Tehsil Phillaur District Jalandhar (Lease Rent @ Rs. 40,000/- per Acre per annum) 5,000/- Great Britain Pounds each were brought by the Appellant, his 10,50,000 Wife and his Mother from United Kingdom to India on their travel and approximately were converted in Indian Rupees Lease Rent received in Cash by the Appellant and his Father-in-law from leasing out Agricultural Land
ITA No.1332/CHD/2019 A.Y.2011-12 6
The ld. counsel for the assessee drew our attention towards page 56 of the Paper Book wherein copy of the Sale Deed is available. In this Sale Deed, name of the assessee is also available. Ld. First Appellate Authority has erred in observing that it was sold by the brother of the assessee. We find that Sale Deed is by both the brothers. Both brothers have filed their affidavit before the CIT(A) that sale proceeds have been deposited in the bank account. Hence, to the extent of Rs.30 lacs, no doubt should have been raised by the Revenue Authorities. The assessee has explained the source. As far as the balance amount is concerned, the CIT(A) has erred in making observation that assessee has not submitted the bank statement of his father-in-law, from whom a gift was received by his wife. It is pertinent to note that it is a joint account between assessee and his wife. His father-in-law withdrew a sum of Rs.11 lacs and copy of the bank statement is available on page 73. He has confirmed the gift to his daughter of Rs.11 lacs and the confirmation is available on page 45 of the Paper Book. Therefore, assessee has explained the source of Rs.11 lacs also. Similarly, assessee has demonstrated that he has 4 acres of land which was given on lease by his mother and A.Y.2011-12 7 lease money of 3-4 years was given to him on his visit from U.K. to India which was deposited in the bank account. Rest of Rs.10.50 lacs is the small savings out of Britain Pounds, which has been deposited by his wife in the bank account. Thus, according to us, assessee has fully explained the source of Rs.50,00,500/- deposited in the Saving Bank during this year. The relevant evidence has been filed on Paper Book. The ld. First Appellate Authority have erred in not believing the version put forth by the assessee. Accordingly, we allow second fold of grievance and delete the addition.
Appeal of the assessee is partly allowed.
Order pronounced on 16.05.2025.