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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SMT.ANNAPURNA GUPTA
(Applicant) (Responent) : Shri Vivek N. Chavda, Advocate Assessee by Revenue by : Shri R.R. Makwana, Sr.DR सुनवाई क� तार�ख/Date of Hearing : 22/11/2022 घोषणा क� तार�ख /Date of Pronouncement: 2911/2022 आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), Gandhinagar in short referred to as ld.CIT(A)) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short), dated 25.4.2019 pertaining to Asst.Year 2015-16.
The assessee has raised the following grounds in the appeal: 1.1 The order passed u/s.250 on 25.04.2019 for A.Y.2015-16 by CIT(A)- GNR, A'bad upholding the addition of Rs.20,15,200/- made u/s 69A as unexplained money made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned additions.
1.3 The Ld.CIT(A) has grievously erred in law and on facts in not granting specific and sufficient opportunity to present the case on merits and thereby violated the principle of natural justice. 2.1 That the Ld. CIT(A) erred in upholding the reopening u/s 147 which is wholly illegal and out of the purview. 2.2 The Ld. CIT(A) has upheld the addition which not the part of the reasons recorded which is wholly illegal and out of the purview. 2.3 The Ld. CIT(A) has failed to appreciate that the case of the appellant was reopened for the specific reason for verifying the cash deposited in demonetization period which is falling in FY:2016-17 and the AO has made additions in FY: 2014-15. 2.4 The Ld. CIT(A) has failed to appreciate that the reasons itself shows that the reopening of AY:2015-16 is nothing but a roving and fishing inquiry. 2.5 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the addition of Rs. 20,15,200 made u/s 69A. 2.6 That the Ld. CIT(A) ought not to have upheld addition of Rs.20,15,200 made u/s 69A.
The ld.counsel for the assessee first made arguments vis-à-vis legal ground as raised before us in ground no2.1 - 2.4 challenging validity of the assessment framed in the present case under section 147 of the Act. Contention of the ld.counsel for the assessee was that the reasons recorded by the AO were not sufficient for formation of believe for the escapement of income so as to confer jurisdiction on the AO to initiate proceedings under section 147 of the Act. He contended that on the basis of information pertaining to one year, A.Y 2017-18 ,the AO had assumed jurisdiction to reopen the case of another year,A.Y 2015-16 In this regard, he drew our attention to the reasons recorded in the present case by the AO, placed before us in PB Page No.18 as under:
The ld.cousnel for the assessee pointed out that only information in the possession of the AO was regarding cash deposit by the assessee post declaration of demonetization which had taken place on 8.11.2016 and was upto 30.12.2016; that information of cash deposits with the AO related to financial year 2016-17 pertaining to the Asst.Year 2017-18. He pointed out that on the basis of this information of cash deposit by the assessee in Asst.Year 2017-18, the AO had sought to reopen case of the assessee for Asst.Year 2015-16 in the present case. He pointed out that reasons do not reveal any information in the possession of the AO vis-à-vis cash deposits in the bank account of the assessee in A.Y 2015-16 which he sought to reopen. That in any case, the information
4 available with the AO of cash deposited by the assessee during demonetization period could have only lead to suspicion that the assessee had undisclosed income in the preceding year also i.e A.Y 2015-16,the year , but certainly not could have lead to formation of believe of escapement of income which is an essential ingredient for assuming jurisdiction to initiate proceedings under section 147 of the Act.
The ld.DR on the other hand relied on the order of the ld.CIT(AT) at para 4.4 and 4.5 of the order as under:
Contention raised in this regard vide para 1 of the submissions dated 25.07.2018 is rejected.”
I have heard rival contentions and have gone through the order of the authorities below. I find merit in the contention of the ld.counsel for the assessee that reasons recorded has no nexus
5 between information in the possession of the AO and formation of believe of escapement of income in the impugned year. As is evident from bare perusal of the reasons recorded as reproduced above, the information in the possession of the AO was vis-à-vis cash deposit in the bank account of the assessee post-demonetization, meaning thereby, after 6.11.2016 to 30.12.2016. The information therefore related to financial year 2016-17 and therefore pertained to Asst.Year 2017-18. The only other information in the possession of the AO was that in the past three years upto demonetization the assessee had not filed any return of income. On the basis of this information, the AO presumed that the assessee had undisclosed income pertaining to the impugned year before me i.e. Asst.Year 2015-16 and reopened the case of the assessee. Clearly it is a simple case of reopening being resorted to merely on suspicion and presumption. The reasons do not record any fact vis-à-vis cash deposits in the impugned year by the assessee. On the basis of the information pertaining to Asst.Year 2017-18 alone the AO surely could not have formed a belief of escapement of income for the impugned year and this information in the possession could have at best have lead to suspicion that even in the impugned year i.e. 2015-16, the assessee must have earned income, which was not returned to tax. I therefore hold that in the absence of any information leading to belief of escapement of income in the present case, jurisdiction assumed by the AO to reopen the assessment of the assessee under section 147 of the Act is bad in law. The assessment order passed therefore is set aside as being invalid.
7. Since the assessment order passed has been held invalid, adjudication on merits of the addition made is a mere academic
6 exercise and the grounds raised by the assessee on merits in Ground No.3.1 -3.2 are therefore not being dealt with by us
In the result, the appeal of the assessee is allowed in above terms.
Order pronounced in the Court on 29th November, 2022 at Ahmedabad.