JITENDRABHAI BHAGVANBHAI DALVADI,SURENDRANAGAR vs. ITO WARD 2, MORBI

Shri Kalpesh Doshi, Learned Counsel for the assessee, pleads that above additional ground may be admitted in the interest of natural justice and equity and fair play, as its omission in the main ground of appeal

Brief facts qua the above legal ground are that case of assessee was reopened u/s 147 of the Act in respect of ITS/NMS details that the assessee has made cash deposit Rs.15,01,000/- in Bank of Baroda, Halvad. Accordingly, notice u/s 148 was issued to the assessee, on 27.03.2018, after recording the reasons for reopening of the case for assessment year (AY) 2011-12, which was duly served upon the assessee. As such, with a view to bring the escapement of income, if any, to the tax net, the case of the assessee was re-opened resorting the provisions of section 147 of the Act. Thereafter, in compliance to Section 129 of the Act, a fresh notice u/s 142(1) r.w.s. 129 of the Act, dated 04.06.2018, was issued to the assessee, as there was change of incumbent. In response to the (AY-11-12) Jitendrabhai B Dalvadi 4 notice issued u/s 148 of the Act, the assessee was obliged to file his return of income. Since, the matter is barred by limitation, the notices u/s 142(1)/Questionnaire notice u/s 143(2) of the Act were issued to the assessee. vide e-filing, Ask No.947320620280718, dated 28.07.2028, the assessee has filed before assessing officer, return of income declaring Nil income and agriculture income of Rs.5,76,280/-.In compliance to questionnaire and notice dated 24.08.2018, the assessee has submitted before the assessing officer, that assessee is carried agricultural activities and have agriculture income and submitted the details of copy of cash receipt on sale of agriculture produce and land holding evidences etc. The assessee has also furnished copy of Form No.7/12, 8A and copy of sale bills in respect of sale of agriculture product as per details below:

However, the assessing officer rejected the above documents of the assessee and observed that as per the details available with the Department, the assessee has deposited cash of Rs.15,01,000/-, on 26.11.2010, into his bank account maintained with Bank of Baroda. On analyzing, the details of sale bills of agriculture product, it was observed that prior to 26.11.2010, the assessee had available cash-in-aggregate of Rs.1,24,671/- only. Therefore, the rest of cash deposits amounting to Rs.13,76,329/- (15,01,000 – 1,24,671) remains unexplained and accordingly cash deposit to the tune of Rs.13,76,329/- was (AY-11-12) Jitendrabhai B Dalvadi 5 treated, by the assessing officer, as income from undisclosed source and added to the taxable income of the assessee.

Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A) who has confirmed the action of Assessing Officer. The ld.CIT(A) in respect of re-opening of case u/s 147/148 of the Act, noted that the assessing officer had specific information that the assessee had made cash deposit of Rs.15,00,000/- and based on that the assessee's case was re-opened after recording reasons and the reasons were in accordance with law, therefore, learned CIT(A) dismissed the technical ground of the assessee. On merit, the learned CIT(A) observed that addition of Rs.13,76,329/-, u/s 68 of the Act was rightly made by the assessing officer, as the assessee submitted only Sales bill of agricultural produce and Form No.7/12, 8A of land holding proof, which are not sufficient documents to explain the source of the cash deposit, hence, learned CIT(A), confirmed the addition made by the assessing officer.

Aggrieved by the order of Ld.CIT(A), assessee is in further appeal before us.

Shri Kalpesh Doshi, Ld.Counsel for the assessee, at the outset submitted that during assessment proceedings, the reopening of assessment was carried out without obtaining prior approval from higher authority. That is reassessment proceedings were initiated under section 148/147 of the Act, without taking permission from the prescribed authority, hence reopening of assessment should be quashed on this score only.

On the other hand, learned DR for the revenue, submitted that proper procedure was adopted by the assessing officer, so far reopening of the assessment is concerned.

Therefore, we note that the reopening of assessment is carried out without obtaining approval of higher authority. We note that as per the provisions of section 151 of the Act, at the time of reopening of the case, the assessing officer is required to obtain approval of Higher Authority. The assessing officer (AY-11-12) Jitendrabhai B Dalvadi 9 should obtain such approval from Principal Commissioner of Income-tax, however, the assessing officer failed to obtain the approval. In this regard, we would like to refer the provision of section 151 of the Act, which is reproduced as under: “Sanction for issue of notice. 151.(1) No notice shall be issued under section 148 by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons record by the Assessing Officer that it is a fit case for the issue of such notice. (2). In a case other than case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.”

It is also stated before us that assessee has not been provided the copy of approval along with the reasons recorded for reopening. The assessing officer is required to obtain prior approval of Ld. PCIT for issuing notice u/s 148 of the Act. However, there is no reference of approval obtained from Ld. PCIT, when the reasons are issued to the assessee. Hence, assessing officer has failed to obtain the approval from Ld. PCIT. The provisions of section 151(1) with the proviso stated that “no such notice shall be issued unless the Commissioner is satisfied on the reason recorded by the Assessing Officer that it is a fit case for the issue of notice” which means that the satisfaction of the Commissioner is paramount for which the least that is expected from the Commissioner is application of mind and due diligence before according sanction to the reasons recorded by the Assessing Officer. Since the pre-requisite condition for issuance of notice u/s 148 of the Act is not fulfilled in the assessee`s case under consideration, and therefore, the notice may be treated as invalid and cannot be cured by resorting to provisions of section 292BB of the Act, therefore, we quash the reassessment proceedings and allow the appeal of the assessee.