BRAHAM PRAKASH LAKRA ,DELHI vs. ITO, WARD- 67(1), NEW DELHI

order of the Commissioner of Income Tax [Appeals] - 21, New Delhi dated 17.09.2018 pertaining to assessment year 2012-13.

“ A s p e r i nformation received from /TO (I&C1)- II, New Delhi vide letter TTO (I&Cl)- I/UCB/Dep./9/20l4-15/2095 dated 24.03.2016 regarding cash deposit by Shri Bhram Prakash Lakra was taken-up for verification under As per the information. it is seen that the above mentioned asses see. PAN AASPL9105I1 has made cash deposit amounting to Rs. 38 during the 12. However, no return of income has been filed for 2012-13.

In view of the above information, I have reasons to believe an amount of Rs. 38 lac chargeable to tax has es/ assessment within the meaning section 147 of the I.T. Act. 1961. It is a fit case to issue notice under section 148 of the Income Tax Act. 1961.”

9. In my considered opinion, reasons given by the Assessing Officer are devoid of any application of mind since not only the Assessing Officer assumed incorrect figure of cash deposits but also completely ignored the fact that return for the year under consideration was already filed on 24.12.2013. These facts can be gathered from the body of the assessment order itself.

10. The Hon'ble High Court of Gujarat in the case of Sunrise Education Trust, 92 taxmann.com 74 has observed as under:

"5. Having heard Ld. Counsel for the parties and having perused the documents on record, it could be straightway seen that the Assessing Officer in the reasons recorded, proceeded on the erroneous footing that the assessee had not filed return at all. The first premise for issuing the notice was thus factually incorrect. It is now not disputed by the Revenue that the assessee did file return of income for the year under consideration which was duly acknowledged by the Department. The entire reasoning thus proceeded on the wrong premise that the assessee had never field the return. This itself would be sufficient to annul the notice of reopening the assessment."

"7. The facts are not disputed. A bare perusal of the reasons recorded for issuance of notice u/s 148 of the Act, shows that the only material available before the AO was the AIR Information of the assessee having deposited an amount of Rs. 11.60 lakhs in his savings bank account. Remarkably, the reasons recorded did not even mention the bank in which such savings bank account was maintained. The assessee, as available from the first page of the assessment order, was issued a notice u/s 148 of the Act, in pursuance to the aforesaid reasons. The assessment order u/s 143(3) of the Act is dated 25.03.2013. The assessee had filed the return of income on 05.10.2005 and it had been stated in response to the notice u/s 148 of the Act that this return be treated as having been filed in response to this notice. In 'Bir & 4144/Del/2018 Bahadur Singh Sijwali' (supra), like in the present case, the reasons recorded indicated that cash deposits had been made in the bank account of the assessee. The Tribunal held that the mere fact that the deposits having been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. It was observed that the reasons recorded did not make out a case that the assessee was engaged in some business and the income from such a business had not been returned by the assessee. In the case at hand also, the reasons recorded do not contain any such recital. The Tribunal held that the factum per se, of deposits in the bank account of the assessee could not be made the basis for holding the view that income had escaped assessment, over-looking that the sources of the deposits need not necessarily be the income of the assessee; and that as such, the reasons recorded were not sufficient to believe escapement of income; that rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s 148 of the Act."

"8. Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs. 10,24,100/- have been made in the bank account of the assessee, but the mere fact that these deposits have been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. The reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal & 4144/Del/2018 with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The Assessing Officer has opined that an income of Rs. 10,24,100/- has escaped assessment of income because the assessee has Rs. 10,24,100/- in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped assessment.

judgment in the case of Phool Chand Bajrang Lal vs. ITO [1993] 203 ITR 456/69 Taxman 627, that was case in which their Lordships concluded that the AO "rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original & 4144/Del/2018 assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assessment" and we are unable to see anything on the facts of the present case which are materially similar to the facts of the said case. As regards her reliance on the decision of a coordinate bench in the case of Mithila Credit Services Ltd. vs. ITO [IT Appeal No. 1078/Delhi of 2013, dated 23.05.2014], it is important to bear in mind the fact that it was a case in which the Assessing Officer had reopened the assessment on the basis of receipt of information from Directorate of Investigation, and, as noted by the Assessing Officer in the reasons recorded for reopening the assessment, "the name of the assessee figures as one of the beneficiaries of these alleged bogus transactions" in the information given by the directorate. If the assessee was a beneficiary of such a scam, the income was indeed to have been taxed in its hands but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does not lead to income being taxed in the hands of the assessee. Ld. Departmental Representative has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, there cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather then desirability of further probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn.

13. Since the assessment order has been quashed, I do not find it necessary to dwell into the merits of the case.

The order is pronounced in the open court on 19.11.2019.