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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC + D’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 27/01/2016 passed by CIT (Appeals)- Rohtak for Assessment Year 2007-08.
The grounds of appeal are as under:-
“1. That notice issued u/s 148, subsequent order passed u/s 147, impugned
order passed by CIT(Appeals) all are bad in law, because of non - fulfillment
of mandatory jurisdictional conditions specified under the Act.
1.1 That orders passed by AO and CIT(Appeals) are bad in law, being based
on invalid reasons which in turn are based on mere cash deposit without
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anything more.
1.2. That orders passed by AO and CIT(Appeals) are bad in law,
because after return filing no valid notice u/s 143(2) is issued, as evident
from Para - 3 of the impugned order.
1.3. That orders passed by AO and CIT(Appeals) are bad in law,
because there is no valid exercise of jurisdiction by Assessing Officer who has
passed the final order (ITO, Ward-2, Narnaul), as reasons are recorded by
ITO, Ward-2, Rewari and notice u/s 148 is also issued by ITO, Ward-2,
Rewari.
That on the facts and in the circumstances of the case and in law, Ld.
CIT(Appeals) erred in sustaining the additions made by the AO amounting to
Rs. 19,00,000/- u/s 69A of the Income Tax Act, being alleged unexplained
deposit.
That on the facts and in the circumstances of the case and in law, Ld. AO
and Ld. CITA made egregious error in making and confirming of the addition
of Rs. 18,17,621/- as per para-5 of the assessment order, which neither
forms part of reasons recorded u/s 148, for which no separate notice u/s 148
is issued and same is even not sustainable on merits.”
Notice u/s 148 for A.Y. 2007-08 was issued to the assessee on
16.03.2012 by the Income Tax Officer, Ward-2, Rewari having territorial
jurisdiction to the assess the income of the assessee after recording the
following reasons: “As per AIR information for the F.Y. 2006-07 received in this office the assessee has made cash deposits of Rs. 19,00,000/- in his bank account
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with PUNJAB NATIONAL Bank REWARI. A query notice was issued to the assessee on 24.01.2012. But no response has been received from the assessee. I, therefore, have reason to believe that the assessee has deposited cash in his bank account out of his income from unexplained sources. Accordingly income to the extent of Rs. 19,00,000/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s 148 of I. T. Act, 1961 for the assessment year 2007-08.” Sd/- (O. P. Punia) Income-tax Officer, Ward-2, Rewari.”
In response to notice u/s 148, no return of income was filed by the assessee. Again notice u/s 142(1) was issued on 17.08.2012 asking the assessee to file his return of income but no return was filed in compliance to this notice also and only power of attorney of the advocate was filed. Later on the jurisdiction of the case was assigned to the Income Tax Officer, Ward-2, Narnaul by the Joint Commissioner of Income Tax, Rewari Range, Rewari vide office order dated 04.02.2013. Notice u/s 142(1) calling the return of income along with query letter was issued for 15.02.2013 and in response to this assessment proceedings were attended by the counsel of the assessee but no return of income was filed. But afterwards return of income declaring Nil income was filed as well as written replies were filed by the assessee’s counsel. The Assessing Officer observed that as per information available on record, the assessee made cash deposit of Rs. 12,50,000/- on 08.05.2006 and Rs. 6,50,000/- on 11.05.2006 in his bank account maintained with branch office Ateli. The assessee was asked a query dated 06.02.2013 as to explain the source of these cash deposits with documentary evidence. The assessee vide reply dated 11.03.2013 submitted that the deposit in the bank account was out of the cash received from the agreement to sale. The Assessing Officer rejected the plea of the assessee on the ground that no sale deeds of the land
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was executed till date for which alleged agreements were made. The Assessing Officer observed that as per material available on record during the F.Y. 2006-7 relevant to A.Y. 2007-08, the assessee sold his share of agricultural land situated in the revenue estate of VII-Padiyawas for Rs. 19,06,250/-. The Assessing Officer held that the land sold by the assessee is covered in the definition of capital assets in view of the Notification issued by CBDT on 06.01.1994 F.No. 164/03/87ITAI, hence land in question is liable to capital gain. Thus, the Assessing Officer made an addition of Rs. 18,17,621 as capital gain of the assessee.
Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that on identical i.e. exact wordings the reasons recorded in the present case has been dealt by the Tribunal in case of Krishan Kumar vs. ITO (ITA No. 3985/Del/2017 A.Y. 2007-08 dated 15.12.2017) wherein the appeal of the assessee is allowed as reassessment proceedings initiated by the AO are held to be void. Therefore, the Ld. AR submitted that on the legal ground itself the appeal be allowed.
The Ld. DR relied upon the Assessment Order as well as the order of the CIT(A), but could not distinguish the facts of the case decided by the Tribunal in case of Krishan Kumar (supra).
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note here that the facts of the case in case of Krishan Kumar (Supra) and in the present case are identical in nature. In fact, the figures of amount, Bank name and the notice issuing date are exactly the same as well as the Assessment Year is also the same. The Ld. DR also could not point out any distinguishing factor with the order of the Tribunal in case of Krishan Kumar and in present assessee’s case. The Tribunal held as under:
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“9. I have considered the rival arguments made by both the sides, perused the orders of the AO and Ld. CIT(A) and the paperbook filed on behalf of the assessee. I have also considered the various decisions cited before me. A perusal of the reasons recorded by the AO as reproduced by him in the assessment order shows that the reopening was made on account of cash deposit of Rs. 19 lakh in the bank account of the assessee. However, the AO in the assessment order has made addition of Rs. 36,26,500/- on account of capital gain and interest income. Thus, there is no addition on account of which the assessment was reopened by issue of notice u/s 148 of the I.T. Act. Hon’ble Delhi High Court in the case of 6 ITA no. 3985/Del/2017 Ranbaxy Laboratory Ltd., vs CIT(supra) has held that the assessing officer has the jurisdiction to reassess the issues other than issues in respect of which proceedings were initiated. But he was not justified when the reasons for the initiation of those proceedings seized to survive. Since, in the instant case, there was no addition made in the assessment order on account of which the assessment was reopened but some other additions have been made by the AO, therefore, the AO does not have jurisdiction to make such other additions in absence of any addition made for which the assessment was re-opened in the light of the decision of Hon’ble Delhi High Court in the case of Ranbaxy Laboratory Ltd. (supra). Therefore, the re-assessment proceedings have to be quashed. 10. Even otherwise, also the reopening was made on the basis of AIR information received that the assessee has made cash deposit of Rs. 19 lakhs. I find identical issue had come up before this bench of the Tribunal in the case of Mahavir Prasad (supra). The Tribunal vide ITA no. 924/Del/2015 order dated 09.10.2017 for assessment year 2007-08 had quashed such re-assessment proceedings by observing as under: “9. After going through the reasons recorded by the ITO, Ward-2, Rewari, am of the view that there is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, 7 ITA
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no. 3985/Del/2017 the same are without jurisdiction; that the reasons recorded are highly vague, far-fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and these are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. Keeping in view the facts and circumstances of the present case and the case law applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves tobe quashed.
In view of the above discussion, the reassessment proceedings initiated by the AO are held to be void. Since assessee succeeds on this legal ground i.e. validity of reassessment proceeding, therefore, grounds on merit become academic in nature and therefore are not being adjudicated. 12. In the result, the appeal filed by the assessee is allowed.”
Thus, the issue contested herein is identical in the present appeal. Thus, the assessee succeeds in the legal ground regarding validity of reassessment proceeding, therefore, we are not adjudicating the grounds on merit as the same becomes academic in nature. The appeal of the assessee is allowed.
In result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 20th September, 2018. Sd/- Sd/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 20/09/2018 R.N*