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Facts
The assessee, a non-filer, had a Rs. 16 Lacs time deposit in PNB. Reassessment proceedings were initiated u/s 148, and the AO assessed Rs. 16 Lacs u/s 69A. The CIT(A) partly allowed the appeal, confirming Rs. 8 Lacs, leading the assessee to appeal further, alleging non-service of notice, mechanical approval, and factual discrepancies regarding the FDRs.
Held
The Tribunal noted the assessee's claims regarding non-service of notice u/s 148 and mechanical approval by tax authorities for reassessment. Taking a lenient view, despite the assessee's failure to definitively prove non-receipt of notices, the Tribunal remanded the matter back to the AO for fresh consideration of the remaining Rs. 8 Lacs addition, directing the assessee to provide evidence for the source of funds (mother's bank account).
Key Issues
The key issues were the validity of reassessment proceedings due to alleged non-service of notice under Section 148 and mechanical approval for sanction, along with the verification of the source of the time deposit and application of mind by the tax authorities.
Sections Cited
139, 148, 142(1), 133(6), 69A, 250, 282
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Income Tax Appellate Tribunal, JAIPUR BENCH “SMC”, JAIPUR
Before: Dr. S. SEETHALAKSHMI & SHRI GAGAN GOYAL
This appeal by assessee is directed against the order of NFAC, Delhi dated 02.07.2024 passed u/s. 250 of the Income Tax Act, 1961 (in short ‘the Act’). The assessee has raised the following grounds of appeal: -
1. That the Commissioner of Income-Tax (Appeals), Income Tax Department at para no. 5 of the order u/s. 250 dated 02/07/2024 held that the reassessment was completed by the A.O. without service of notice u/s. 148 as mandated by the provisions of law and also the same principle was laid down by the Honourable Supreme Court in the case of R.K. Upadhyay V/s Shanabhai P. Patel referred by the appellant in its submission during hearing u/s. 250 of the Act.
In spite of agreeing and allowing our ground, the Commissioner of Income-Tax (Appeals), Income Tax Department did not quashed the order dated 05/12/2018 passed by the A.O. as the service of notice is a condition precedent before making an assessment u/s. 148 of the Act.
So, the addition sustained by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 and the order dated 05/12/2018 of the A.O. are liable to be set aside.
2. That in the case of Mrs. Shubhashri Panicker vs. Commissioner of Income tax cited at (2018) 403 ITR 434. Honourable Rajasthan High Court held that "Assessing officer cannot complete reassessment without service of notice and reassessment proceedings finalised without effecting proper service of notice are liable to be quashed."
The fact of non-service of notice u/s. 148 of the Act has been admitted by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 027/07/2024.
So, the addition sustained by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 and the order dated 05/12/2018 of the A.O. are liable to be set aside
That the form for recording the reasons and for obtaining the approval of the Principal Commissioner of Income Tax states the reasons for belief of the income as escaped income recorded by the A.O. at point 11 as "As per information available with the department, it is gathered that the appellant has deposited Rs. 16, 00,000/- in his bank account held with PNB.
While the information was of 2 FDR's of Rs. 8, 00,000/- with same account no, and date. This clearly shows that no application of mind was made by the then Α.Ο.
The fact that there was only one FDR of Rs. 8,00,000/- has been accepted by the present A.O. in its remand report dated 26/06/2024, which has been quoted at para 4.3 at page 6 of order dated 02/07/2024 of Commissioner of Income-Tax (Appeals), Income Tax Department.
Also, Principal CIT stated at point 11 of the form for recording the reasons and for obtaining the approval of the Principal Commissioner of Income Tax "I have perused details of cash deposit and I am satisfied that this is a fit case for reopening”
Now, this fact clearly shows that PCIT has not gone through the facts of the case. If he had done so, then he would get to know that there was no cash deposit, but there was information of FDR, that too of FDR of Rs. 8,00,000/- only, but sanction was given for cash deposit of Rs. 16,00,000/-.
So, the PCIT has not applied mind.
Also, JCIT has just stated 'Yes' in response to point 12 of the form for recording the reasons and for obtaining the approval of the Principal Commissioner of Income Tax without stating anything. So, the JCIT has also not applied his mid, before forwarding the case for approval of PCIT and acted mechanically.
In case of CIT Vs. S. Goyanka Lime & Chemical Ltd. reported at (2015) 64 taxmann.com 313, Honourable Supreme Court of India held that "where Joint Commissioner recorded satisfaction in mechanical manner and without application of mind to accord sanction for issuing notice under section 148. Reopening of assessment was invalid"
So, the reopening of assessment with mechanical approval of PCIT, without application of mind is invalid and order passed was liable to be set aside.
Even after raising this ground, the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024, did not even discussed this issue and just ignored this ground.
So, the addition sustained by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 without discussing the main grounds and the order dated 05/12/2018 of the A.O. are liable to be set aside.
4. That if we go through the form for recording the reasons and for obtaining the approval of the Principal Commissioner of Income Tax, there is no date available along with signatures by A.O., JCIT and PCIT, that on which date they have signed the form and given approval.
This clearly shows that the approval given by PCIT is not proper.
So, the addition sustained by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 which has the effect of illegal approval and the order dated 05/12/2018 of the A.O. are liable to be set aside.
5. That the Commissioner of Income-Tax (Appeals), Income Tax Department has agreed in his order dated 02/07/2024, that there was only 1 FDR of Rs. 8,00,000/-and the present A.O. has also accepted this fact.
This implies that the proceedings initiated by the A.O. were void ab initio.
So, the addition sustained by the Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 on the basis of proceedings initiated on the wrong ground and the order dated 05/12/2018 of the A.O. are liable to be set aside.
That Commissioner of Income-Tax (Appeals), Income Tax Department in its order dated 02/07/2024 stated that he did not have any detail which confirms that the FDR of Rs. 8,00,000/- having account no. 036800DA00000622 was made through saving account no. 0368000100262529 of Smt. Padma Devi who was his mother.
In this regard, it is submitted that if the Commissioner of Income-Tax (Appeals), Income Tax Department had any doubt that whether the FDR was made through saving account no. 0368000100262529 of Smt. Padma Devi who was his mother, then he could have required it, but Commissioner of Income-Tax (Appeals), Income Tax Department did not require it at any point of time.
So, we are now submitting the copy of bank passbook of PNB account no. 0368000100262529 in the name of Smt. Padma Devi showing that on 02/03/2011 FDR of Rs. 8,00,000/- having account no. 036800DA00000622 in the name of Pukhraj was made through her saving account. We are also enclosing copy of PNB FDR having a/c no. 036800DA00000622 of Pukhraj.
Since, the FDR was made through bank account of mother i.e. Smt Padma Devi, the amount of Rs. 8, 00,000/- could not be considered as unexplained income u/s. 69A. So, the addition sustained by the Commissioner of Income-Tax (Appeals). Income Tax Department in its order dated 02/07/2024 and the order dated 05/12/2018 of the A.O. are liable to be set aside.
The appellant please be permitted to add, amend, alter or delete and ground of appeal.
That the appeal please be accepted in toto.
The brief facts of the case are that the assessee was amongst the non-filers of return u/s. 139 of the Act. Information was there with the department that the assessee had made time deposit of Rs. 16 Lacs during the year under consideration in PNB, Bharatpur. In view of this information a notice u/s. 148 of the Act was issued vide dated: 26.032.18. However, no compliance was made by the assessee despite of issuing further notices u/s. 142(1) of the Act. To further confirm a notice u/s. 133(6) of the Act was issued by the AO to the bank. A final show cause was issued to the assessee to be complied with by 26.11.2018, but there was no compliance by the assessee in terms of filing the return/ reply and appearance etc. Ultimately, the case of the assessee was assessed at Rs. 16 Lacs u/s. 69A of the Act. The assessee being aggrieved with the same preferred an appeal before the Ld. CIT (A), who in turn partly allowed the appeal to the extent of Rs. 8 Lacs and balance amount of Rs. 8 Lacs confirmed. The assessee being further aggrieved preferred the present appeal before us.
3. We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee before us alongwith grounds taken before us. It is observed that the address as mentioned in the assessment order was “Pukhraj Gurjar, S/o. Shri Ghanshyam, Behind Dhav Pyasa, Atal Bandh, Bharatpur”. Identical address was there on the order of the Ld. CIT (A) and on Form No. 36 filed before us. Secondly, it was not explained by the assessee throughout the submissions before the Ld. CIT (A) and even before us also that, when he was not in receipt of the notices issued by the AO u/s. 142(1) and 148 of the Act, how he came to know about the adverse ex-parte assessment order passed against him.
Further, how he received the assessment order required to file the appeal before the Ld. CIT (A). On this issue except allegations against the AO, no explanatory submissions are there on record ever filed by the assessee. Moreover, the grounds taken by the assessee, he tried to shift his burden on the Ld. CIT (A) and AO, whereas he himself had miserably failed to establish that no notice was actually received by him and consequent to that he has not participated before the AO and further by saying that the Ld. CIT (A) is duty bound to ask for the copy of pass book in the name of his mother to correlate his investment in time deposit is baseless and against the law. It is observed that based on documents available on record, the decision taken by the Ld. CIT (A) is well founded and without any fault.
Now before us, the assessee has filed copy of ration card and death certificate of his mother but still copy of bank pass book not filed, which can confirm the source of the assessee’s time deposit of balance 8 Lacs. In view of this, taking a lenient view, we deem it fit to restore the matter back to the JAO for fresh consideration of the assessee’s claim for balance 8 Lacs after giving a fresh opportunity of being heard following the procedure laid down in section 282 of the Act for service of notice and the assessee is directed to appear before the AO without fail and seeking any adjournment. The assessee is further directed to produce the relevant evidence like the pass book of bank account of his mother to establish the link between the time deposit made by him vis-a-vis transfer from her mother’s account. With these observations the grounds raised by the assessee are partly allowed for statistical purposes.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
The Order is pronounced in the open court on the 17th day of April 2025. Sd/- Sd/- (Dr. S. SEETHALAKSHMI) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 17/04/2025 Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. आयकर आयु� CIT 3. 4. िवभागीय �ितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड� फाइल/Guard file.