DNYNOBA SHIVRAM BARURE,,LATUR vs. INCOME TAX OFFICER,, LATUR

The assessee is aggrieved by certain additions made by the Assessing Officer (AO) as confirmed in the first appeal.

Briefly stated, the facts of the case, as recorded in the assessment order, are that an enquiry was conducted by the Income-tax Department regarding bulk cash withdrawal of Rs.35.00 lakh from the bank account of the assessee in February, 2007. The matter was then transferred to the jurisdictional Assessing Officer. The AO, after prior approval of the JCIT, issued notice u/s.148 on 11-03-2014. During the course of the assessment proceedings, the assessee submitted that the cash of Rs.35.00 lakh deposited in the bank account was because of the nature of business carried on by him. It was explained that he was acting as a commission agent under the name and style ‘Prajakta Traders’. Farmers bring their agricultural produce at his shop. He makes sales through auction to the merchants. The merchants who purchase the commodity issue cheque in assessee’s name, which is deposited in his bank account.

Subsequently, after deducting the commission @2%, the assessee pays the entire purchase cost to the respective farmers against the purchase of their commodities. That is how, the assessee explained that the amount deposited by cheques from the merchants in the bank account was withdrawn for paying to the farmers. The AO considered the assessee’s contention and accepted the same. He however, made certain other additions as found noted in the computation of total income made by the AO.

I have heard the rival submissions and gone through the relevant material on record. From the assessment order, it can be seen that the AO initiated re-assessment proceedings on the basis of information received about the assessee having deposited cash of Rs.35.00 lakh in his bank account. The AO made certain additions. He, however, did not make the addition of Rs.35.00 lakh in the assessment completed u/s. 147 of the Act.

It is worthwhile to note that the Hon’ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom) has held that the AO cannot proceed with re-assessment if the grounds mentioned in re-assessment are non-existent i.e., if no addition is made on that score. When I examine the factual scenario obtaining in the instant case on the touchstone of the ratio laid down by the Hon’ble jurisdictional High Court in the above decision, the inescapable conclusion which can be drawn is that the additions made in the re-assessment order, different from the one for which notice u/s 148 of the Act was issued and that itself was not made, lack legality. The same are, therefore, directed to be deleted.

In the result, the appeal is allowed in the above terms. Order pronounced in the Open Court on 21st March, 2022.