SUSHILA CHOUDHARY,JAIPUR vs. INCOME TAX OFFICER, NFAC, NFAC, DELHI

fu/kZkj.k o"kZ@Assessment Year : 2013-14 cuke Sushila Choudhary, Income Tax Officer, NFAC, Heraitage Vill Babli Farm, Sirsi Vs. NFAC, Delhi. Road, Khatipura, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFSPC4511M vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Nikhilesh Katariya, C.A. jktLo dh vksj ls@ Revenue by : Shri Dinesh Badgujar, Addl.CIT (Thr. V.C.) lquokbZ dh rkjh[k@ Date of Hearing : 04/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 12/02/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [for short “CIT(A)/NFAC”] dated 16.04.2024 for the assessment year 2013- 14, which in turn arise from the order dated 26.03.2022 passed under section 147 read with section 144B of the Income Tax Act,1961 [ for short “Act” ] by the National Faceless Assessment Centre [ for short ld. AO.] 2. The assessee has marched this appeal on the following grounds:-

“1. The Id. AO erred in law as well as on the facts of the present case in initiating reassessment proceedings u/s 148 of the Income Tax Act, 1961 and Id. CIT(A) erred in sustaining the same and hence the consequent assessment may be quashed.

3. The Id. AO erred in law as well as on the facts of the present case in not disposing off the specific objection of the assessee raised on the validity of the reassessment proceedings and the complete proceedings was in violation of settled judicial precedents and therefore bad in law and Id. CIT(A) erred in sustaining the same and hence the proceedings is prayed to be quashed.

4. The Id. CIT(A) erred in law as well as on the facts of the 0 present case in mentioning wrong facts in its order and as such the order of Id. CIT(A) suffers with serious infirmities and hence, the consequent findings deserves to be ignored and order of Id. AO be quashed.

6. The Id. CIT(A) erred in law as well as on the facts of the 0 present case in applying the provisions of section 292BB of the Act for sustaining of reassessment proceedings though the same is not applicable on the facts of the present case and hence the findings of Id. CIT(A) is prayed to be quashed while deleting the addition made by the Id. AO.

7. The Id. AO erred in law as well as on the facts of the present 0 case in making an addition u/s 69A of the act though the provision itself is not applicable on the facts of present case and hence the consequent addition was bad in law and Id. CIT(A) erred in sustaining the same and hence, the addition may please be deleted.

8. Rs.6846997/- The Id. AO erred in law as well as on the facts of the present case in treating the cash deposit in bank account as unexplained and Id. CIT(A) erred in confirming the same and therefore, the consequent addition is prayed to be deleted.

9. The assessee prays your honors indulgence in add, amend, modify or delete any or all grounds of appeal on or before the date of hearing.”

Account No. and bank name Cash deposits Deposits other than cash Andhra Bank, Enginners colony Sirsi Rs. 51,57,500/- - Road, jaipur Andhra bank, Vandana Arcade, Rs. 16,89,497/- H. No. 2-22, Beside Padmavathi Plaza, Hyderabad Total Rs. 68,46,997/ 3.1 Because of the reasons lead to the reason to believe that the income chargeable to tax has escaped assessment and thereby a notice u/s. 148 of the Act dated 31.03.2021 was issued. The assessee filed a return in response to the said notice on was issued to the assessee on 16.11.2021. Thereafter, the case was transferred to faceless assessment unit. The assessee was issued notice u/s. 142(1) along with questionnaire on 22.02.2022.

In response the assessee submitted its reply on 28.02.2022.

3.2 In response to the notice the assessee submitted letter dated 28.02.2022, and submitted copy of bank statement of Andhra Bank Sirsi Road branch Jaipur. Wherein found that cash has been deposited from 10.04.2012 to 29.10.2012 and the amount of deposit is in the range of between Rs. 2500 to Rs. 500000.

Therefore, the assessee has deposited a total cash of Rs. 51,57,500.00 in her account. However, while issuing the notice from the department, same amount had been mentioned thrice.

The assessee further submitted that cash deposited was out of savings and gift received from her husband. The assessee has submitted gift deed dated 19.01.2012. The assessee was issued a notice u/s. 142(1) on 10.03.2022 requesting her to submit further details including balance sheet as on 31.03.2013, copy of ITR for AY 2010-11 & 2011-12 and copy of ITR and wealth tax return of her husband to verify the details of cash in hand if any for the period of gift. However, the assessee did not respond to the said notice. Assessee has contended that she has received cash gifts from her husband. On perusal of bank statement it was seen by the ld. AO that the cash have been deposited in piece meal in the FY 2012-13 and not the entire amount of gift which she received as claimed. The reason for the same were not been explained by assessee. On perusal of the bank statement also seen that out of cash deposit the assessee has made payments to one Heritage Village in a regular manner for a sums of Rs. 34,00,000/-. The assessee has also not given any detail for the same in the absence of details and satisfactory explanation, the cash deposits of Rs. 68,46,997/- were treated as unexplained money u/s 69A of the Act and was added back to the total income of the assessee.

“DECISION OF THE APPELLATE AUTHORITY W.R.T GROUND NO.- 1 ΤΟ 8: The contentions of both the Appellant assessee and the AO resp. have been carefully considered and this Appellate authority has noted the following points: i. The assessee has not filed its original Return of Income for A.Y. 2013- 14 as per the provisions of section 139(1) of the IT Act, 1961 (the Act.). ii. The Assessing officer on the basis of information available via ITS details that the assessee has made huge cash deposits in her savings bank account during the FY 2012-13 relevant to AY 2013-14, led to the reason to believe that the income chargeable to tax has escaped assessment and a notice u/s. 148 of the Income-tax Act, 1961, dated 31.03.2021 was issued. iii. The assessee filed a return in response to the said notice u/s. 148 of the Act on 29.09.2021 declaring income of Rs. 1,96,850/-. iv. Thereafter, the case was transferred to faceless assessment unit. The assessee was issued notice u/s. 142(1) along with questionnaire on 22.02.2022. In response the assessee submitted its reply on 28.02.2022. v. Further a Show-cause notice (BCN) containing draft assessment order was also issued to the assessee to offer its explanation. However, the assessee failed to respond to the said SCN. vi. The Submissions of the assessee were considered by the Assessing officer and the assessing officer concerned made additions amounting to Rs 68,46,997 u/s 694 of the Income Tax Act, 1901. vii. The appellant assessee in its submissions has stated that, “At the outset it is submitter that the Id AO reopened the proceedings on the ground that the assessee has deposited a cash of Rs 17161997/ in its bank account which is clear from the copy of reasons recorded, a copy of which is enclosed herewith (Encl.2) On the page 2 of the reasons, the following detail of information has been noted by the id. AO: 2. Brief details of information collected/received by the AO:- as per information available on records the assessee maintains bank account with Andhra Bank, Engineers Colony, Sirsi Road, Jaipur. During financial year 2012-13 relevant to assessment year 2013-14 the bank account of the assessee were collected by amount as details below:- Deposits other Account No. and Bank name Cash deposits than cash Andhra Bank, Engineers Rs. 51,57,500/- - Colony, Sirsi Road, Jaipur. Andhra Bank, Engineers Rs. 51,57,500/- - Colony, Sirsi Road, Jaipur.

Andhra Bank, Engineers Rs. 51,57,500/- - Colony, Sirsi Road, Jaipur. Andhra Bank, Vandana Arcade Rs. 16,89,497/- H. No. 2-22 BesidePadmavathi Plaza, Hyderabad. Total Rs. 1,71,61,997/-

Thus, it is evident that during the year under consideration the aforesaid bank account of the assessee were credited by Rs. 1,71,61,997/-. From the record of this office. It was noticed that the assessee has not filed her return of income for the A.Y. 2013-14. Therefore, the above credits in the aforesaid bank accounts were not opened for verification. viii. The ground for reopening was that the assessee has deposited cash of Rs 1,71,61,997 which is totally incorrect and even the id AO himself ended up with making addition of Rs 68,46,997/-only (which is also incorrect)

The appellant assessee states that, the Ld AO has reopened the case stating assesses has deposited cash of Rs 1,71,01,007/-, but had made the addition of Rs 68,46,997/- This appellate authority is in the view that the reasons recorded are stating that the assessee has made cash deposits and the addition has also been made on cash deposits. The amounts mentioned for Rs. 51,57,500 and Rs 16,89,407 are correct. However, the amount of Rs. 51,57,500/- has been mentioned three times and the same has been duly taken care by the assessing officer in the assessment proceedings and also in the assessment order. Thus, this contention of the appellant assessee that, the reason for opening the reassessment was totally wrong is not correct, as the reason given was cash deposited in bank which is correct and the same information regarding the deposits in Andhra bank Jaipur was repeated three times and as already mentioned above the AO has taken care of that during the assessment proceedings. Thus, the assessment proceedings cannot be said to be bad in law. ix. In view of the above facts the Appellant ought to have been careful enough to not ignore the show-cause notices issued by the AO during the assessment proceedings. Further, the appellant ought to have been careful enough not to keep arguing the same point before this Appellate authority and could have brought on record such concrete proof to discharge its onus and which it has miserably failed to do so. It is also seen that the Hon'ble Supreme Court of India in its decision in the case of ACIT vs Rajesh Jhaveri Stock Brokers Pvt. Ltd 291 ITR 500 held that, if the AO for whatever reason has reason to believe that, income has escaped assessment it confers jurisdiction to reopen the assessment. The relevant portion of the above decision is reproduced as under: "16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of faimess to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe, but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. [1996 217 ITR 597 (SC)]: Raymond Woollen Mills Ltd. v. ITO 1999 236 ITR 34 (SC).

17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (1) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a) But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso.

18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. In the case of Peass Industrial Engineers(P) Ltd (73 Taxmann.com 185) vide decision dated 05/08/2016, the Hon'ble Gujarat High Court held as under: When the Assessing Officer is armed with the tangible material in the form of specific information received by the Investigation Wing, Ahmedabad, it is thoroughly justified in issuing a notice for reassessment. It is revealed from the said additional material available on hand and a reasonable belief is formed by the Assessing Officer that income of the assessee has escaped assessment and, therefore, once the reasonable belief is formulated by the DCIT on the basis of cogent tangible material, the DCIT is not expected to conclude at this stage the issue finally or to ascertain the fact by evidence or conclusion. Function of the Assessing Officer at this stage is to administer the statute. What is required at this stage is a reason to believe and not establish fact of escapement of income and therefore, looking to the scope of section 147 as also sections 148 to 152, even if scrutiny assessment has been undertaken, if substantial new material is found in the form of information on the basis of which the Assessing Officer can form a belief that the income of the assessee has escaped assessment, it is always open for the DCIT to reopen assessment. From the reasons which are recorded, it clearly emerges that the assessee is the beneficiary of those entries by Kayan brothers, who are well known entry operators across the country and this fact has been unearthed on account of the information received by Director General of income-tax, Investigation Branch and therefore, it cannot be said in any way that even if four years have been passed, it is not open for the Assessing Officer to reopen the assessment. In the present case, there is independent application of mind on behalf of the Assessing Officer in arriving at the conclusion that income had escaped assessment and therefore, the contentions raised by the assessee are devoid of merits. Dealing with the contentions of the assessee that the information received from Director General of Income-tax, Investigation Branch, Ahmedabad, can never be said to be additional information. The information which has been received is on 26-3-2015 from the Director General of Income-tax, Investigation Branch, Ahmedabad, whereby it has been revealed that present assessee is also the beneficiary of those Kayan brothers, who are in the activity of entry operation throughout the country and therefore, it cannot be said that this is not justifiable material to form a reason to believe by the Assessing Officer and therefore, this being a case, the Assessing Officer is justified in issuing notice under section 148 to reopen the assessment and therefore, the challenge contained in the petition being devoid of merits, same deserves to be dismissed [Para 12]. In the case of Raymond Woolen Mills 236 ITR 34 (SC), Hon'ble Supreme Court of India held that it is only to be seen whether there was a prima facie case for re-opening or not, sufficiency of reasons not to be seen." Thus, it can be observed that, the AO concerned had reasons enough on record to go ahead with the re-opening of the case and hence the re-opening proceedings were not bad in law. x. It is noted that, evidently the Appellant assessee had not raised this issue of notice at the time of assessment proceedings or on completion of the assessment order. When it would have been most appropriate for the appellant assessee to raise the issue before the AO in this case, it chose to remain silent. The language of Section 2928 and 292BB is produced hereunder for reference: "...292B No return of income, assessment, notice, summons or other proceeding. furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such retum of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. 292BB: Where an assessee has appeared in any proceeding or co- operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was- (a) not served upon him, or (b) not served upon him in time, or (c) served upon him in an improper manner Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment...". Hence, the above section is pretty curt and clear. The Appellant's ground means that, the assessee had not raised this issue as mentioned in the ground of appeal

no.- 1 to 4 within the given time ie when such notice was issued to it or on/after finalization of its assessment order. Therefore, it is purely a post-thought and in this eyes of this Appellate authority this contention of appellant assessee, raised in its ground is not tenable. Hence, in light of the above discussions and facts of the case and in law, this ground no.-1 to 4 of the Appellant assessee is found un-tenable. xi. The AO has mentioned in its assessment order that, “……… a Show cause notice containing draft assessment order was also issued to the assessee to offer its explanation. However the assessee failed to respond." Thus, the contention of the appellant in its ground no. -5 that, the “….. AO erred in law as well as on the facts of the present case in not disposing off the objection raised against the reasons recorded and hence following the settled judicial pronouncements......” Is not acceptable. The appellant was provided with the opportunity to be heard and to defend its stand, but it chose not to respond to the AO's aforesaid SCN with the draft assessment order. xii. Even the ground no.-6 of the appellant that The Id. AO erred in law as well as on the facts of the present case in not considering the reply brought on record and passing ex-parte assessment and hence the assessment being in violation of principles of natural justice,......" is found to be un-tenable. As the AO has mentioned in its assessment order that, a Show cause notice containing draft assessment order was also issued to the assessee to offer its explanation. However the assessee failed to respond." xiii. The appellant assessee has submitted following sources for cash deposits of Rs 68,46,997/-. The same are discussed as follows:- a. Cash availability in the hands of appellant assessee as per the ITR filed for AY 2008-09 was Rs 59,34,133/-“ According to appellant assessee claim cash availability as on 31.03.2008 was Rs 59,34,133/- which was shown by her in her ITR of FY 2007-08 relevant to AY 2008-09, this cash was deposited by the appellant assessee during FY 2012-13 relevant to AY 2013-14. The appellant assessee has not provided any information in her submissions regarding cash balances declared by her in ITR for AY 2009-10, 2010-11, 2011-12, 2012-13. The Assessing officer has specifically asked to submit the copies of ITR for AY 2010-11 and 2011- 12 vide notice u/s 142(1) dated 10.03.2022, but the appellant assessee has not submitted the ITR before the Assessing officer at the time of assessment proceedings and/or to this Appellate authority also. If appellant assessee was holding this cash balance continuously for 04 years than it would have been declared by her as cash balance in every ITR from AY 2009-10 to AY 2012-13. Thus, in the eyes of this Appellate authority the appellant assessee has failed to prove that, the cash deposited during FY 2012

13. (AY 2013- 14) was held by the Assessing since FY 2007-08 relevant to AY 2008-

9. Thus, this baseless contention of the appellant assessee does not give enough support to assessee's stand and is found to be non- genuine and a post thought. b. The Appellant assessee has submitted one more source for the cash deposited during the FY 2012-13 that is a Cash gift of Rs.51,00,000/- received from the husband of the assessee: Appellant assessee on page no 10 of the submissions dated 15.03.2024 has submitted that, "Source in the hands of husband also proved it is further submitted that the husband of the assessee Shri B.S. Choudhary received the funds on account of sale of property to Neelam Marble Private Limited through a registered sale deed. The sale of property was made for a consideration of Rs.5100000/- and a copy of registered sale deed dt. 11-2-2008 is enclosed herewith (Encl. 10).” The Assessee has claimed that her husband who got a cash of Rs 51,00,000/-during FY 2007-08 from sale of a property, gifted her this cash of Rs 51,00,000/-on 19.01.2012. The Assessing officer vide its notice u/s 142(1) dated 10.03.2022 has specifically asked the appellant assessee to provide copy of ITR and wealth tax return of her Husband, but the appellant assessee did not provided any of the documents to the assessing officer during the course of Assessment proceedings. If the appellant assessee husband was holding this cash balance continuously for 4 years then it would have been declared by her husband in its ITR which have not been provided by the appellant assessee to the Assessing officer and / or to this Appellate authority. The appellant assessee has also not provided cash book of her husband for the previous year and for this year under consideration in support of her contention, to this Appellate authority. Thus, this contention of the appellant assessee is not tenable and is a post thought. Thus, it does not provide any support to appellant assessee's stand. Thus, in view of the above discussions at point no. xiii (a) & (b), the ground of appeal

no.-7 & 8 of the appellant is found to be un-tenable. xiv. The onus is on the appellant assessee to prove the creditworthiness and genuineness of the transactions, this Appellate authority places reliance on the Hon'ble Supreme Court judgment in the case of Chuharmal s/o Takarmal Mohnani vs Commissioner Of Income- Tax on 2. May1988 wherein the Hon. Supreme Court had held that: "In that view of the matter and in view of the principles behind the purpose of Explanation, the assessee in the instant case, has failed to discharge his onus of proof. The aforesaid Explanation was amended by Finance Act, 1964 with effect from 1st April, 1964. The amendment was prospective in effect and in the year under reference the amendment was in force. Though the penalty proceedings are penal in nature but in the facts of this case the onus on revenue has been duly discharged. In the aforesaid view of the matter, there is no merit in this application for leave to appeal and it is accordingly dismissed.” According to the Supreme Court Judgment the onus is on the Appellant assessee to prove the genuineness and creditworthiness of the transaction. Thus, in view of the above facts and discussions at point no.-(i) to (xiv), the addition made by the Assessing officer amounting to Rs 68,46,997/- u/s 69A of the Income-tax Act, 1961, is UPHELD. The grounds of the appellant are thus rejected. In the result, the appeal is NOT ALLOWED.”

5. Feeling dissatisfied with the above finding of the ld. CIT(A) the assessee filed the present appeal before this tribunal on the grounds as reiterated herein above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:-

“GOA 1 to 7: The ld. AO erred in law and on facts in making addition Brief Fact: The assessee is an individual earning income from agriculture and related activities. The ld. AO, on the basis of information available on ITS, noted that during the year under consideration the assessee made cash deposits of Rs.17161997/- in two saving bank accounts: a. Rs.15472500/- Andhra Bank, Jaipur b. Rs.1689497/- Andhra Bank, Hyderabad Total Rs.17161997/- The ld. AO further noted that the assessee did not file any return of income as the income remained below taxable limit. On presumption that certain income escaped from assessment, reassessment proceedings were initiated against the assessee by issuing notice u/s 148 of the Act on dt.31-3-2021. In response to the notice, the assessee filed its return of income on dt.29-9-2021 at a total income of Rs.196850/-, a copy of which is placed at PB 21 During the course of assessment proceedings the assessee explained that the information given by the department is completely incorrect and the assessee has deposited cash of Rs.5157500/- only and that too in only one bank account. Further the source of cash deposit was opening balance as also cash gift received from her husband Shri B.S. Choudharyand in support of same necessary documents were submitted. However while rejecting various submissions of the assessee, the ld. AO made an addition of Rs.6846997/-. In first appeal, the ld. CIT(A) rejected the contention of the assessee for the reasons mentioned in the appellate order. Therefore, this second appeal of the assessee before the Hon’ble Bench. Our Submission: 1.1.1Assessment reopened with appreciation of incorrect & incomplete facts: At the outset it is submitter that the ld. AO reopened the proceedings on the ground that the assessee has deposited a cash of Rs.17161997/- in two bank account as would be seen from the copy of reasons recorded, a copy of which is enclosed herewith (PB 18-20). On the page 2 of the reasons(PB 19), the following detail of information has been noted by the ld. AO:

Thus the ground for reopening was that the assessee has deposited cash of Rs.17161997/- in two of its bank accounts. However it issubmitted that this fact is totally incorrect and even the ld. AO himself ended up with making addition of Rs.6846997/- only (which is also incorrect). Apparently there were following discrepancies in the information: a. Source of information is not given b. One bank branch has been written three times Sushila Choudhary vs.ITO c. Same amount is repeated three times which may not be possible for three different account d. Account no. is not mentioned anywhere in the information so received e. Only one bank account maintained by the assessee: It may be noted that the assessee has maintained only one bank account with Andhra Bank at its branch at Sirsi Road, Jaipur. No bank account was maintained by the assessee at Hyderabad. 1.1.2 The ld. AO made addition of Rs.6846997/- only: As would be seen from the assessment order the ld. AO finally made addition of Rs.5157500/- in respect of one bank account and Rs.1689497/- in respect of other bank account thus making addition of Rs.6846997/- as against the basis of reassessment of Rs.17161997/-. This itself proves that the very initiation of proceedings was based on incorrect facts. 1.1.3 No bank account at Hyderabad Branch-Even the information of the department speaks of assessee not being owner of bank account at Hyderabad: We may refer to the submission made by the department on dt.19-12-2024 along with which AIR transactions details have been enclosed. In the first line of ‘Annexure B’ which have been made basis of making addition of Rs.1689497/- name of transacting party is written as YSAIKRISHNA and there is no name of assessee. If theinformation was considered due to PAN no. it was incumbent on the ld. AO to make further enquiry before holding the assessee as the owner of the bank account when even the bank account is not in its name. 1.2.1 The ld. AO did not have even bank statement on record before initiation of reassessment proceedings: Above discussion clearly shows that forget about any enquiry or investigation, the ld. AO did not have even bank statement of the assessee on record before issuing of notice of reassessment. This approach of the ld. AO is not only strange but contrary to the settled judicial principles and even against the principle of natural justice. Therefore, the proceedings deserves to be quashed. 1.2.2 No application of mind - entire proceedings bad in law: From the above discussion it is very much clear that the assessee had only one bank account and further the amount taken into consideration by the ld. AO in respect of the bank account was also incorrect and without any basis. Even the ld. AO taken incorrect figures from the information which was on its own record. Thus there was no application of mind on the part of the ld. AO before initiating reassessment proceedings.

The Hon’ble Bombay High Court in the case of BIC CELLO (INDIA) (P) LTD. vs. ASSISTANT COMMISSIONEROF INCOME TAX & ANR.(2024) 8 NYPCTR 314 (Bom)(copy enclosed) held as under: “15. Strangely even in the affidavit-in-reply, respondents after admitting that the bank has certified that only Rs. 1,87,39,187 were deposited in cash during financial year 2012-13, has not explained as to how they proposed to reopen the assessment on the allegation that a sum of Rs. 3,73,72,707 chargeable to tax has escaped assessment. It clearly shows that neither there was any independent application of mind by the AO while recording reasons nor application of mind by the sanctioning authority while giving approval. The reassessment proceeding was made on wrong and incorrect facts and therefore, makes the reopening null and void.

7. In our view, if the reasons for reopening the assessment is based on incorrect facts or conclusions, certainly the notice issued for reopening cannot be sustained. Moreover, if according to respondent No. 1 only the sale of shares of TCS Ltd. Was ‘business income’ and not ‘profits arising of sale of investment’ to say that the amount of Rs. 22,71,25,79,374 has escaped assessment, also indicates nonapplication of mind. We would also go a step ahead and observe that if only the approving authority under s. 151 of the Act had considered the reasons properly, either he would have directed respondent No. 1 to re- work on the reasons or would not have granted the approval. Moreover, we may keep in mind this is a case where the scrutiny assessment was completed and order under s. 143(3) of the Act has been passed followed by a rectification order under s. 154 of the Act. Therefore, petitioner’s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under s. 143(3) of the Act and (ii) When an order under s. 154 of the Act was passed. (emphasis, italicized in print, supplied)"

17. It is also useful to reproduce para Nos. 6 & 7 of the judgment of this Court in Ankita A. Choksey vs. ITO &Ors. (2019) 411 ITR 207 (Bom), which read as under : "6. It is a settled position in law that the AO acquires jurisdiction to issue a reopening notice only when he has reason to believe that income chargeable to tax has escaped assessment. This basic condition precedent is applicable whether the return of income was processed under s. 143(1) of the Act by intimation or assessed by scrutiny under s. 143(3) of the Act. Further, the reasons to believe that income chargeable to tax has escaped assessment must be on correct facts. If the facts, as recorded in the reasons are not correct and the assessee points out the same in its objections, then the order on objection must deal with it and primafacie, establish that the facts stated by it in its reasons as recorded are correct. In the absence of the order of objections dealing with the assertion of the assessee that the correct facts are not as recorded in the reason, it would be safe to draw an adverse inference against the Revenue.

7. Thus, we are of the view that even in cases where the return of income has been accepted by processing under s. 143(1) of the Act, reopening of an assessment can only be done when the AO has reason to believe that income chargeable to tax has escaped assessment. The mere fact that the return has been processed under s. 143(1) of the Act, does not give the AO a carte blanche to issue a reopening notice. The condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts, must be satisfied by the AO so as to have jurisdiction to issue the reopening notice. In the present case, the AO has proceeded on fundamentally wrong facts to come to the reasonable belief/conclusion that income chargeable to tax has escaped assessment. Further, even when the same is pointed out by the petitioner, the AO in his order disposing of the objection does not deal with factual position asserted by the petitioner. Thus, it would be safe to conclude that the Revenue does not dispute the facts stated by the petitioner. On the facts as found, there could be no reason for the AO to believe that income chargeable to tax has escaped assessment. (emphasis, italicized in print, supplied)"

18. The facts in the case at hand, it can be safe to observe, are almost identical.The assessee has pointed out that there was only one bank account where only Rs.1,87,39,187 has been deposited in cash. HDFC bank also has issued such acertificate in response to notice that it received under s. 133(6) of the Act. The AOin his order disposing the objections does not deal with the factual positionasserted by petitioner. Therefore, there could be no reason for the AO to believethat income chargeable to tax has escaped assessment.

19. In the circumstances, rule is made absolute in terms of prayer cl. (a), which reads as under : "a. Issue a Writ of Certiorari or any other writ order or direction under Art. 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned notices and passing of the impugned order and after going through the same and examining the question of legality thereof, quash, cancel and set aside the impugned notices (Exh. A) dt. 30th March, 2021 & 21st June, 2021 and impugned order (Exh. B) dt. 3rd Feb., 2022."

“3. The AO made addition of Rs.10,90,380/- on the alleged cash deposits based on AIR in formation even without obtaining the bank statement and keeping in it on record . The revenue authorities are expected at least to obtain the bank statement before issue o f notice u/s 148 o f the Income Tax Act, 1961 and completion of the assessment proceedings u/s 144 of the Act. Since , the revenue could not bring anything on record with regard to the alleged deposits (bank statement) the tenets of “Best judge assessment” are grossly flouted. The addition made by the AO is hereby deleted.” In the present case also, the ld. AO even did not take any pain to call for the bank statement from the bank which would made it clear that the assessee did not make any such cash deposit. Therefore, the proceedings initiated against the assessee is bad in law and is to be quashed. 1.2.3 No independent enquiry by the ld. AO: It is clear from the annexure to the copy of reasons recorded that despite there being ample powers, the ld. AO did not even issued a single notice to the bank to check for the apparent discrepancy nor made any other enquiry. The information clearly shown that one bank account is not in the name of the assessee and that one amount is repeated thrice. This obviously raises a suspicion and it was incumbent on the part of the ld. AO to make enquiry to ascertain whether the information received from ITD is correct information or not ? Instead of making such enquiry the ld. AO simply proceeded to issue notice of reassessment.

WELL TRANS LOGISTICS INDIA (P) LTD. vs. ADDITIONAL COMMISSIONER OF INCOME TAX & ORS. (2024) 8 NYPCTR 1115 (Del) (CPB 70-77) 25. In the present case, as may be seen, there is no "close nexus" or "live link" between tangible material and the reason to believe that income has escaped assessment. The information received from the Investigating Unit of the Revenue cannot be the sole basis for forming a belief that income of the assessee has escaped assessment. Having received information from the Investigating Wing, it was incumbent upon the AO to take further steps, make further enquiries and garner further material and if such material indicate that the income of the assessee has escaped assessment and then form a belief that the income of the assessee has escaped assessment

As already discussed above that the facts which have been considered by the ld. AO for initiating of reassessment proceedings are incorrect and incomplete. The ld. PCIT have granted approval to reopen the case based on such facts. Therefore, it is clear that there is no application of mind from the approving authority and the approval has been given in a very mechanical manner as even the ld. PCIT did not bother to ascertain that whether the information being relied upon is complete and correct because apparently one amount is written thrice which may not be correct information and even the bank account was not in the name of the assessee. There is consistent view of courts that mechanical approval given by the authority without any application of mind is not a valid approval and accordingly, the notice of reassessment is beyond jurisdiction and consequent proceedings are bad in law. INCOME TAX OFFICER vs. R. SUNDARAVELU(2023) 37 NYPTTJ 1329 (Chennai) (CPB 37-40)

The reply was submitted on dt.25-3-2022 and the screenshot is as below:

However both the lower authorities concurrently held that no reply was submitted by the assessee on the show cause notice issued which observation is grossly incorrect and contrary to the facts on record. Thus both the lower authorities proceeded on the basis of wrong presumption of facts and hence the consequent proceedings and assessment becomes bad in law and deserve to be quashed. 1.5 Objection of the assessee not disposed of with a speaking order:It is notable that the assessee has raised objection against the reassessment proceedings through its letter dt.25-3-2022 as mentioned above, which was submitted on the same date, a copy of which is enclosed herewith (PB 14-17). In the letter so submitted the assessee has duly challenged the reassessment proceedings as can be seen from the contents of the letter which has been enclosed herewith as above.

However the ld. AO framed the assessment without disposing of the objection so raised by the assessee. The Hon’ble Supreme Court in the decision of GKN Driveshafts (India) Ltd. vs. ITO 259 ITR 19 (SC) has laid down the procedure to be followed by the assessing authority in the reassessment proceedings which specifically require the assessing officer to dispose of the objection raised by the assessee. If the assessing officer fails to follow the procedure then entire proceedings become bad in law. LUCAS TVS LTD. vs. ASSISTANT COMMISSIONER OF INCOMETAX(2024) 8 NYPCTR 40 (Mad) (CPB 27-32) 27. It is precisely for this reason, the Hon'ble Supreme Court had held that a speaking order should be passed after the assessee is furnished with reasons for reopening of the assessment. In this case, the safeguards enunciated by the Hon'ble Supreme Court in GKN Drive Shafts (India) Ltd. vs. ITO &Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) has been ignored by directly passing the impugned assessment order. Therefore, impugned assessment order is therefore not sustainable. Hon’ble Delhi Bench in the matter of Kamlesh Kumar Agarwal vs. ITO in dt.18-5-2022 (CPB 13-26) has held that where the ld. AO has not followed the procedure laid down by the Hon’ble Supreme Court, the reassessment is bad in law “13. In the case on hand also the AO did not comply with the procedure as laid down by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Pvt. Ltd. making the assessment as bad in law. Therefore, in view of the above discussion, I hold that the reassessment made by the AO is bad in law and accordingly the reassessment order is quashed. As the reassessment was held to be bad in law on the preliminary grounds and the very jurisdiction of initiation of proceedings u/s 148 of the Act the other grounds raised by the assessee are not gone into as they become academic at this stage.

14. In the result, the appeal of the assessee is allowed as indicated above” 1.6 Mere deposit of cash cannot be a ground for initiation of reassessment proceedings: We may further submit that the mere fact that some cash has been deposited by the assessee cannot be a ground for initiating of reassessment proceedings and on this aspect Hon’ble Surat ITAT quashed the reassessment proceedings in the matter of Ashish Natwarlal Vashi vs. ITO dt.19-4-2021 (CPB 1-12) and a copy of the decision is enclosed herewith for your kind perusal. The Hon’ble Bench on page 6 para 13 of the order observed as under: “We note that Assessing Officer has opined that an income of Rs. 22,77,550/- has escaped assessment of income because the assessee has Rs 22,77,550/- 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. The amount deposited in the bank account may be out of sale proceeds of investments, property or agricultural income of the assessee which may be exempted under the Income Tax Act. 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. Thus, just to reopen the assessment, based on the cash deposits would not make the Revenue’s case strong, because mere fact that these cash deposits have been made in a bank account, which according to us do not indicate that these deposits constitute an income which has escaped assessment. Such cash deposit may be out of past savings. The above reasons recorded for reopening the assessment do not make out a case that the assessee was engaged in some business and has not been filed return of income. Therefore, the cash deposit in the bank account could not be basis for holding the view that income has escaped assessment. The assessee may have deposited the cash out of his sale of capital asset, sale of property and sale of investment etc. Therefore, reasons recorded by the Assessing Officer are not valid and hence the reassessment proceedings initiated based on the reasons recorded is bad in law. We note that on the similar facts the Co-ordinate Bench of Surat in the case of Rinakumar A. Shah (in for AY.2007-08, order dated 30.04.2019, held the reassessment proceedings an invalid……”

In the present case the entire reopening is based on the ground of cash deposit and as such following the above order, the proceedings may please be quashed. 1.7.1 Incorrect consideration of facts by the ld. CIT(A): It is submitted that the ld. CIT(A) also considered incorrect facts as narrated above while deciding of the appeal of the assessee. On page 9 of the order the ld. CIT(A) held as under: “Hence, the above section is pretty curt and clear. The Appellant’s ground means that, theassessee had not raised this issue as mentioned in the ground of appeal no.- 1 to 4within the given time ie: when such notice was issued to it or on/after finalization of itsassessment order. Therefore, it is purely a post-thought and in this eyes of thisAppellate authority this contention of appellant assesee, raised in its ground is nottenable. Hence, in light of the above discussions and facts of the case and in law,this ground no.- 1 to 4 of the Appellant assessee is found un-tenable. xi. The AO has mentioned in its assessment order that, “….a Show cause notice containingdraft assessment order was also issued to the assessee to offer its explanation. Howeverthe assessee failed to respond.” Thus, the contention of the appellant in its ground no.- 5that, the “….AO erred in law as well as on the facts of the present case in not disposing offthe objection raised against the reasons recorded and hence following the settled judicialpronouncements,…….” Is not acceptable. The appellant was provided with the opportunityto be heard and to defend its stand, but it chose not to respond to the AO’s aforesaid SCNwith the draft assessment order. xii. Even the ground no.-6 of the appellant that, “….The ld. AO erred in law as well as on thefacts of the present case in not considering the reply brought on record and passing exparteassessment and hence the assessment being in violation of principles of naturaljustice, …..” is found to be un-tenable. As the AO has mentioned in its assessment orderthat, “….a Show cause notice containing draft assessment order was also issued to theassessee to offer its explanation. However the assessee failed to respond.” Thus the ld. CIT(A) decided all the legal grounds against the assessee solely on the ground that the assessee did not challenge the reassessment proceedings before the ld. AO. However as already submitted that this fact is grossly incorrect and the assessee has duly submitted reply and challenge to reassessment proceedings on dt.25-3-2022 (PB 14-17) as discussed above. 1.7.2 Fact of reply to show cause notice brought to the notice of ld. CIT(A):It is also important to mention here that the assessee duly brought the fact of the reply to the show cause issued by the ld. AO to the notice of the ld. CIT(A) and further also enclosed the copy of reply given by the assessee. This would appear from the copy of submission made before the ld. CIT(A) (PB 1-13). At page

8. (PB 8) of the submission in para 1.4.1 it is clearly contended by the assessee that the ld. AO passed the order without taking in to consideration the objection of the assessee. Thus the order of the ld. CIT(A) was completely prejudiced to the assessee and against the principle of natural justice and accordingly deserves to be reversed. 1.8 Reason to believe is a must even as per the decision rendered in case of RAJESH JHAVERI STOCK BROKERS (P) LTD. – Clearly not applicable as interpreted by the department: The department has referred to the decision in case of ASSISTANT COMMISSIONER OF INCOME TAX vs. RAJESH JHAVERI STOCK BROKERS (P) LTD.(2007) 291 ITR 500 (SC) to contend that sufficiency of material is not relevant. In this regard it is submitted that the decision in case of Rajesh Jhaveri (supra) is not applicable on the facts of the present case in so far as that case was relating to the legal aspect of some issue where the court have held that established escapement of income is not required. By no stretch of imagination the finding of that case be extended to a situation where the ld. AO has considered incorrect facts like in the present matter. Further even as per the decision there has to be reason to believe and an incorrect information cannot be a foundation of proper reason to believe. Therefore, reliance placed by the department on the above decision is of no avail. GOA 8: Rs.6846997/- The ld. AO erred in making addition u/s 69A Without prejudice to above, on merits 2.1 Clarification on incorrect information duly submitted by the assessee: Please note that the clarification regarding operating only one account by the assessee and categorically deny with the allegation of Ld.AO on assessee being holder of other bank accounts in the very first submission made on dt.28.02.2022. An extract of the same response dt.28.02.2022 are is below:

2.2 Source of deposit fully explained: It is submitted that the assessee has given the complete evidences to prove the source of deposit. The source of cash deposit was the opening balance of cash with the assessee as well as the cash gift received from the husband of the assessee and both the points have been discussed in detail in the subsequent paragraphs. 2.3.1 Return filed for AY 2008-09 disclosed substantial cash availability:It is important to note that in the return filed for the AY 2008-09, the assessee has duly disclosed the cash balance at Rs.5934133/- and a copy of return with ack. no.2311031067 dt.31-3-2009 is enclosed herewith for your kind perusal (PB 21-41). At page 3 of the return, in the column of ‘cash in hand’ this cash balance is duly appearing(PB 24). The screen shot of the extract of the return so filed is appearing as below:

Thus it can be seen that a substantial cash of Rs.5934133/- was available with the assessee on 31-3-2008 which was available for deposit in the bank account. Even the capital account of the assessee was submitted before the ld. AO which is placed at PB 41. 2.3.2 Return filed for AY 2008-09 not questioned by the ld. AO: We may also submit that the income tax return filed for AY 2008-09 was duly placed before the ld. AO however no adverse comments were made by the ld. AO. Therefore, this source of cash availability remains unquestioned. In these circumstances the availability of cash of Rs.5934133/- is fully proved.

2.4.1 Cash gift of Rs.5100000/- received from the husband of the assessee:Thereafter, a cash gift was also received from her husband Shri B.S. Choudary 2.4.2 Source in the hands of husband also proved: It is further submitted that the husband of the assessee Shri B.S. Choudhary received the funds on account of sale of property to Neelam Marble Private Limited through a registered sale deed. The sale of property was made for a consideration of Rs.5100000/- and a copy of registered sale deed dt.11-2-2008 is enclosed herewith(PB 42-51). 2.4.3 Copy of bank statement of Shri B. S. Choudhary enclosed herewith: We are also enclosing herewith the copy of bank statement of the account kept with Bank of Baroda(PB 52) with account no.01140100008892 in which the cheque of Rs.5100000/- was deposited. This amount was withdrawn through two different cheques on dt.19-2-2008 and 20-2-2008 and out of the same cash gift was given to the assessee. 2.4.4 Details of entries in bank statement enclosed separately: It may be noted that the cash withdrawal is not clear from the bank statement as only instrument no. is mentioned. Therefore, we are separately enclosing herewith the detailed report of the entries (PB 53-56) as appearing from the software of the bank itself. Transaction type in both the entries is appearing as cash payment and abstract of both the entries are as follows:

It is relevant to mention that the above is taken from the system/ software of the bank itself and can be relied upon. Still if required enquiries may be made from the bank. 2.5 Gift deed from the husband of assessee enclosed herewith: As already submitted that the assessee has received cash gift from her husband Shri B.S. Choudhary. This gift was made under a proper instrument dt.19-1-2012, which is a duly sworn in gift deed, a copy of which is enclosed herewith (PB 57-58). It may be noted that the gift deed is properly witnessed by two persons, the complete names and addresses of these persons are duly appearing in the gift deed. If required, even enquiries may be made from these witnesses to ascertain the genuineness of the transaction. 2.6 Identity, capacity and creditworthiness clearly proved: It is submitted that in the present case the identity of the donor is clearly established as he is husband of the assessee. Further, the capacity of the donor is also proved in as much as he sold the property out of which an amount of Rs.5100000/- was received. The amount was received through banking channels only and the withdrawal was made from the bank account only. Therefore, there was enough cash availability with the assessee to deposit cash in the bank account, first out of cash balance available with her out of cash availability in year 2008 to the tune of Rs.5934133/- and further from receipt of cash gift of Rs.5100000/- from her husband on 19-1-2012.Though availability A cash flow statement may be submitted if so desired.

Both of these sources of cash were duly placed before the ld. AO and the ld. AO could not point draw any adverse inference out of the same. The ld. AO even did not bother to make any further enquiry on the evidences furnished by the assessee which makes it clear that the evidences submitted were bonafide and plausible. 2.7 No evidence of cash being utilized elsewhere: It is an admitted fact that there remained cash with the assessee and her husband for a long duration. However it is submitted that there is nothing on record to suggest that this cash which is duly disclosed in the return filed by the assessee was utilized elsewhere. Therefore, this source of cash has to be accepted by the department. 2.8 Delay in deposit cannot be basis for rejection: It has been alleged by the department that there is delay in deposit of cash by the assessee. In this regard we may submit that there may be several reasons for delay in deposit of cash in bank account and unless there is evidence with the department that the money has been used elsewhere there cannot be any justification in rejecting the source of cash. Jaya Agarwal vs. ITO 302 CTR 241 (Del)(PB 78-80) 8. We find it difficult to accept the approach and findings recorded for several reasons. The brief order does not examine and consider the entire explanation and material on record as withdrawal of Rs. 2,00,000 in cash was undisputed. Naturally, the huge withdrawal was for a purpose and objective. From the beginning the explanation given was that withdrawal was to pay earnest money for purchase of immovable property, which deal did not fructify. Explanation given was not fanciful and sham story. It was perfectly plausible and should be accepted, unless there was justification and ground to hold to the contrary. Delay of some months in redeposit of part amount is the sole and only reason to disbelieve the appellant. Persons can behave differently even when placed in similar situations. Due regard and latitude to human conduct and behaviour has to be given and accepted when we consider validity and truthfulness of an explanation. One should not consider and reject an explanation as concocted and contrived by applying prudent man’s behaviour test. Principle of preponderance of probability as a test is to be applied and is sufficient to discharge onus. Probability means likelihood of anything to be true. Probability refers to appearance of truth or likelihood of being realised which any statement or event bears in light of the present evidence (Murray’s English Dictionary). Evidence can be oral and cannot be discarded on this ground. Assessment order and the appellate orders fall foul and have disregarded the preponderance of probability test. 2.9 No enquiry made by the ld. AO to disprove the evidences brought on record by the assessee: It may be noted that despite of source of deposit brought on record, the ld. AO simply brushed aside the submissions of the assessee instead of making any enquiry. Once some credible information and gift deed brought on record, it was incumbent upon the ld. AO to make enquiry and also record the statement of the assessee and her husband. Simply ignoring the evidences submitted by the assessee will not make the evidences not reliable automatically. In the above facts and circumstances, even on merits of the caseno addition could have been made as the assessee has enough cash as has been explained above. Therefore, it is humbly prayed that the order of the ld. AO be quashed and delete the entire addition which is based on the proceedings being bad in law and out of jurisdiction of the ld. AO.”

6.1 To support the contention raised in the written submission ld. AR of the assessee filed a detailed paper book and the index of the document submitted reads as under:-

Sr. Particulars Pages 1. Copy of Written submission before Ld. CIT(A) 1-13 2. Copy of responses submitted before the ld. AO. 14-17 3. Copy of reasons recorded and approval 18-20 4. Copy of return of income for the AY 21 5. Copies of return from and capital account for the AY 2008- 22-41 09 6. Copy of sale deed dt. 11.02.2008 42-51 7. Copies of details of the bank transactions as per bank 52-56 record.

Sr. Particulars Pages 1. 1-12 Ashish Natwarlal Vashi vs. ITO Dt.19-4-2021 2. 13-26 Kamlesh Kumar Agarwal Vs. ITO In Dt.18-5-2022 3. 27-32 Lucas Tvs Ltd. Vs. Assistant Commissioner Of Income Tax (2024) 8 Nypetr 40 (Mad) 4. 33-36 Manveer Singh Vs. ITO ITA No.2976/Del/2022 Dt.20-6- 2023 5. 37-40 INCOME TAX OFFICER Vs. R. SUNDARAVELU (2023) 37 ΝΥΡΤTJ 1329 (Chennai) 6. 41-52 Sahu Exports Vs. ACIT In W.P. No.13883/2018 Dt.21-12- 2023 7. 53-60 Sukhvir Singh Vs. Income Tax Officer 2024) 38 Nypttj 1177 (Asr): (2024) 208 Itd 97 (Asr) 8. 61-69 Shri Tek Chand Vs. The ITO In ITA No.255/Chd/2020 Dt.15-3-2021 9. 70-77 Well Trans Logistics India (P) Ltd. Vs. Additional Commissioner Of Income Tax & Ors. (2024) 8 Nypctr 1115 (Del) 10. 78-80 Jaya Agarwal Vs. ITO 302 CTR 241 (Del) 11. 81-92 Assistant Commissioner Of Income Tax Vs. Rajesh Jhaveri

Stock Brokers (P) Ltd. Dt.23-5-2007

7. Ld. AR of the assessee in addition to the written submission vehemently argued that the reasons so recorded were not correct and thereby the assumption of jurisdiction is not legally correct.

The ld. AR of the assessee also submitted the same amount has been written thrice and the first deposit of cash was not related to the assessee. Even the approving authority while according the sanction has not applied mind on the issue and therefore, the appeal assessment is illegal and bad. On the merit the assessee has already disclosed the cash on hand in the previous year ITR and therefore, the merit is also explained and therefore, the merits also in favour of the assessee.

8. Per contra, ld. DR supported the order of the ld. CIT(A) and submitted the following written submission as received from the ld. AO countering the submission of the assessee, which reads as under:-

“Apropos to the above, in this connection, it is submitted that the following comments /documents is called for. The requisite report submitted as under: - 1. Comments on ground of appeal submitted as under: -

In this case assessee has not file her original return of income for A.Y. 2013-14 as per the provision of section 139(1) of the IT Act 1961. The information was available the department on ITS details it was seen that the assessee has huge cash deposit in her saving bank account during the F.Y. 2012-13. Accordingly notice u/s 148 of the Income Tax Act 1961 dated 31.03.2021 was issued after prior approval competent higher authority. The assessment order u/s 147 read with section 1448 of the I.T. Act 1961 was passed on 26.03.2022 and addition of Rs. 6846997/- was made on account of unexplained money u/s 69A of the I.T. Act 1961.

Aggrieved by the order passed by the AO, the assessee preferred an appeal before Ld. CIT(A). In appeal no. NFAC/2012-13/10117499, Ld. CIT(A) NFAC has passed an order by not allowed the appeal of the assessee vide order dated 16.04.2024.

Thereafter, the assessee again filed an appeal before Hon'ble ITAT, Bench-Jaipur. The assessee mainly taken following ground of appeal:-

1. The Id. A.O. erred in law as well as As per information available (AIR transaction on the facts of the present case in detail) with the department, the assessee initiating reassessment proceedings maintained Bank Account with Andhra Bank u/s 148 of the IT Act 1961 and Id. Eng. Colony, Sirsi Road, Jaipur. During the F.Y. CIT(A) erred in sustaining the same 2012-13 relevant to A.Y. 2013-14 the following and hence the consequent cash deposit were made by the assessee- assessment may be quashed. Bank Name Cash deposit 2. The very reason recorded suffers from serious factual mistakes and Andhra Bank Eng. 51,57,500/- Colony, Sirsi Road, consequently the reason to Jaipur. believe is on wrong foundation and accordingly the whole Andhra Bank Eng. 51,57,500/- proceedings become bad in law Colony, Sirsi Road, and on the facts of the present Jaipur. case and the Id. CIT(A) erred in sustaining the same and hence, Andhra Bank Eng. 51,57,500/- the same may please be Colony, Sirsi Road, quashed. Jaipur.

Andhra Bank Eng. 51,57,500/- 3. The Id. AO erred in law as well as Colony, Sirsi Road, on the fact of the present case in Jaipur. not disposing off the specific objections of the assessee raised Andhra bank 16,89,497/- Vandana Arcade, H. on the validity of the No. 2-22, beside reassessment proceedings and Padmavathi Plaza, the complete proceedings was in Hyderabad. violation of settled judicial precedents and therefore bad in law and Id. CIT(A) erred in Total Rs. 1,71,61,997/- sustaining the same and hence The information regarding cash deposit has the proceedings is prayed to be been received from NMS (Annexure-A) On quashed. perusal of the list Multi Year NMS A.Y. 2013-14 priority-1 in respect of ITO Ward 1(1), Jaipur which is enclosed as per Annexure-A, the 4. The Id. CIT(A) erred in law as well assessee has made cash deposited of Rs. as on the facts of the present 1,54,72,500/- in her bank account. On enquired case in mentioning wrong facts in on ITBA System (AIR Transaction details) its order and as such the order of which is enclosed as per Annexure-B, on Id. CIT(A) suffers with serious perusal of AIR detail the assessee has made infirmities and hence, the cash deposits of Rs. 1,71,61,997/-. consequent findings deserve to be ignored and order of Id. AO be quashed. Since the assessee has not filed her original ITR for A.Y. 2013-14, therefore, the case of the assessee was re-opened u/s 147 of the IT Act 5. The Id. CIT(A) erred in law as well 1961 with prior approval competent authority. as on the facts of the present Accordingly notice u/s 148 of the IT Act 1961 case in rejecting the submission was issued on 31.03.2021. Therefore, of the assessee summarily contention of the assessee not acceptable. without giving any valid reasons and as such the order of Id. CIT(A) is against the principle of natural justice and hence no adverse inference be drawn from the same and the additions made by the Id. AO be deleted.

7. The Id. AO erred in law as well as Notice u/s 148 of the IT Act, 1961 was on the facts of the present case in issued on 31.03.2021. In compliance to the making and addition u/s 69A of notice, assessee file return on 29.09.2021 the act thought the provision itself declaring income of Rs. t 1,96,850/-. Notice is not applicable on the facts of u/s 143(2) was issued 1 to the assessee on present case and hence the 16.11.2021. Thereafter, the case was consequent addition was bad in transferred to Faceless Assessment Unit. law and Id. CIT(A) erred in sustaining the same and hence, During the assessment proceeding it was the addition may please be noticed that the assessee has deposited deleted. total cash of Rs. 51,57,500/-in her bank account however, while Issuing the notice from department the same amount had 8. Rs. 6846997/-The Id. AO erred in been mentioned thrice. The assessee was law as well as on the facts of the issued a notice u/s 142(1) on 10.03.2022 present case in treating the case requesting her to submit details including deposit in bank account as balance sheet as on 31.03.2013, copy of unexplained and Id. CIT(A) erred ITR for Α.Υ. 2010 11, 2011-12 & copy of in confirming the same and ITR Wealth Tax Return of her husband to therefore, the consequent verify the details of cash in hand if any for addition is prayed to be deleted. the period of gift. However, assessee did not respond to the said notice. Assessee has contended that she has received cash gift from her husband. On perusal of bank statement, it was seen that the cash have been deposited in piece meal in the F.Y. 2012-13 and note the entire amount of gift which she received as claimed. The reason for the same has not been explained by the assessee during the assessment proceedings. In the absence of details and satisfactory explanation, the cash deposits of Rs. 68,46,997/- were treated as unexplained money u/s 69A of the IT Act, and same was added to the income of the assessee. The contention of the assessee is not acceptable on the following ground-

1. First the assessee has submitted that he had closing balance of cash Rs. 59,34,133/- at the end of the F.Y. 2007-08. In support of his claim, he has submitted ITR for A.Y. 2008-09 & copy of his capital account as on 2007-08 in which cash balance of Rs. 59,34,133/- shown. Due to long time difference between the assessee had cash balance at the end of F.Y. 2007- 08 & assessee had made cash deposit during FY 2012-13. Secondly, assessee has not filed her return of income for AY 2009-10 to 2012-13, therefore, the claim of the assessee that the amount of Rs. 59,34,133/- was having in cash in hand was carry forwarded from FY 2007-08 to 2011-12. In view of the above, the contention/claim of the assessee is not acceptable.

2. SH. Bagwan Singh Choudhary had received sale consideration against the agriculture land of Rs. 51,00,000/- through banking channel in his bank account and he had withdrawn the same in two instalments on 19.02.2008 of Rs. 26,00,000/- & on 20.02.2008 of Rs. 25,00,000/-whereas he gifted his cash amount to his wife. 19.01.2012 on through unregistered instrument. Due to time difference between cash withdrawn & gift given by Sh. B.S. Choudhary and absence of registration of gift deed, authenticity of gift deed may be doubtful. The assessee has made colourful story to avoid the taxation transaction. on above 3. The third reason that as per assessment order the assessee has made cash deposited in piece meal in the F.Y. 2012- 13 instead of entire amount of gift which she received is claimed.

With the above remarks report is submitted for your kind perusal and necessary action.”

9.1 So far as regards to the legal ground raised by the assessee the bench noted that from the reasons recorded in this case was for the escapement of the income of Rs. 1,71,61,997/-. If the ld. AO has applied his mind while recording the reasons the same income is reported three times of an amount of Rs. 51,57,500/- originating the same bank and branch even though the same was considered as escaped income and Rs. 16,89,497/- [ page 22 of the paper book ] did not even belong to the assessee. Thus, this shows the fundamental basis for re-opening has no application of mind. Even when the approval to that has been granted the same is given as “Yes”. When things are apparent there should be an application of mind which is missing at both the stage while recording the reasons and thereafter while granting approval for the same. Thus, the assumption of jurisdiction for escapement of income has no basis. To support this view of the matter we get strength from the decision of the Hon’ble Bombay High Court’s decision in the case of BIC CELLO (INDIA) (P) LTD. vs. ASSISTANT COMMISSIONEROF INCOME TAX & ANR.(2024)

8. NYPCTR 314 (Bom) wherein the court held that :

“15. Strangely even in the affidavit-in-reply, respondents after admitting that the bank has certified that only Rs. 1,87,39,187 were deposited in cash during financial year 2012-13, has not explained as to how they proposed to reopen the assessment on the allegation that a sum of Rs. 3,73,72,707 chargeable to tax has escaped assessment. It clearly shows that neither there was any independent application of mind by the AO while recording reasons nor application of mind by the sanctioning authority while giving approval. The reassessment proceeding was made on wrong and incorrect facts and therefore, makes the reopening null and void.

16. As held in Tata & Sons Ltd. vs. Dy. CIT (2022) 137 taxmann.com 414 (Bom), or conclusions, certainly the notice issued for reopening cannot be sustained. Paragraph Nos. 6 & 7 of the said judgment read as under :

"6. If we consider the table reproduced, the sale of shares of TCS Ltd. Which according to respondent No. 1 should be treated as ‘business income’ and not ‘profits arising out of sale of investment’, is only Rs. 19,32,34,27,592 (Rs.12,26,61,28,794 + Rs. 7,05,72,98,798, i.e., "long- term capital gains Tata Consultancy Services Ltd.". Mr. Pinto though made valiant attempt to defend the notice issued for reopening, in fairness, as an officer of the Court, considering the reasons as recorded agreed that the only item which could have been stated to have escaped assessment would be the long-term capital gains in the sale of TCS Ltd. shares amount to Rs. 19,32,34,27,592 and respondent No. 1 was incorrect in stating that he had reason to believe that the sum of Rs. 22,71,25,79,374 has escaped assessment.

7. In our view, if the reasons for reopening the assessment is based on incorrect facts or conclusions, certainly the notice issued for reopening cannot be sustained. Moreover, if according to respondent No. 1 only the sale of shares of TCS Ltd. Was ‘business income’ and not ‘profits arising of sale of investment’ to say that the amount of Rs. 22,71,25,79,374 has escaped assessment, also indicates nonapplication of mind. We would also go a step ahead and observe that if only the approving authority under s. 151 of the Act had considered the reasons properly, either he would have directed respondent No. 1 to re-work on the reasons or would not have granted the approval. Moreover, we may keep in mind this is a case where the scrutiny assessment was completed and order under s. 143(3) of the Act has been passed followed by a rectification order under s. 154 of the Act. Therefore, petitioner’s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under s. 143(3) of the Act and (ii) When an order under s. 154 of the Act was passed. (emphasis, italicized in print, supplied)"

7. Thus, we are of the view that even in cases where the return of income has been accepted by processing under s. 143(1) of the Act, reopening of an assessment can only be done when the AO has reason to believe that income chargeable to tax has escaped assessment. The mere fact that the return has been processed under s. 143(1) of the Act, does not give the AO a carte blanche to issue a reopening notice. The condition precedent of reason to believe that income chargeable to tax has escaped assessment on correct facts, must be satisfied by the AO so as to have jurisdiction to issue the reopening notice. In the present case, the AO has proceeded on fundamentally wrong facts to come to the reasonable belief/conclusion that income chargeable to tax has escaped assessment. Further, even when the same is pointed out by the petitioner, the AO in his order disposing of the objection does not deal with factual position asserted by the petitioner. Thus, it would be safe to conclude that the Revenue does not dispute the facts stated by the petitioner. On the facts as found, there could be no reason for the AO to believe that income chargeable to tax has escaped assessment. (emphasis, italicized in print, supplied)"

20. Petition disposed. There will no order as to costs.”

The decision cited by the revenue has different facts whereas the decision cited herein above has identical issue and facts and as referred herein above Ground no. 1 to 7 raised by the assessee are allowed.

9.2 Ground no. 8 raised by the assessee deals with the merits of the issue on hand. The ld. AO and that of the ld. CIT(A) has confirmed that the addition because cash was deposited from 10.04.2012 to 29.10.2012 and the amount of deposit is in the range of between Rs. 2500 to Rs. 500000. Therefore, the assessee has deposited a total cash of Rs. 51,57,500/- in her account. The contention of the assessee that cash deposited was out of savings and gift received from her husband. The assessee has submitted a gift deed dated 19.01.2012 [ paper book page 57- 58 ]. Even the return of income so filed by the assessee for earlier year wherein she reported cash on hand for Rs. 59,34,133/-.

Those documents was very well available but were not considered to explain the cash so deposited by the assessee. Considering this apparent evidence we do not considered that the cash was unexplained in the hands of the assessee and therefore, the ground no. 8 raised by the assessee stands allowed.

In the result, the appeal filed by the assessee is allowed.