Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ NEW DELHI
Before: SHRI B.P. JAIN
ORDER PER B.P. JAIN, A.M. This appeal of the assessee arises from the order of learned CIT(A), Muzaffarnagar, vide order dated 28.02.2017 for the Assessment Year 2009-10. The assessee has raised the following grounds of appeal:- That the order is against law & facts on the record. 1) Ld. CIT(A) was wrong confirming starting of proceedings u/s 147 without 2) any reasons to believe by Ld. AO. Ld. CIT(A) was wrong in confirming issuing notice u/s 147 after expiry of 3) four years from the end of assessment year without sanction u/s 151 of the I.T. Act, 1961.
Ld. CIT(A) was wrong in confirming the addition of Rs. 7,60,000.00 and 4) Rs. 8,00,000.00 2. The assessee presses the legal grounds with regard to initiation of reassessment proceedings under Section 147 of the Act which he claims to be bad in law.
3. The facts that the AO noted that notice under Section 148 of the Act was issued on 28.3.2014 and duly served upon the assessee to verify the source and nature of such cash transaction but no compliance was made on the date of compliance.
4. The learned CIT(A) after receiving the submission of the assessee and the remand report of the AO confirmed the action of the Assessing Officer that notice was issued and served on 29.3.2014 and the assessee did not submit the source and nature of the cash transaction.
I have heard the rival contentions and perused the facts of the case. It was submitted that the assessee is of 62 years of age and has agriculture land of 35k-bigha from since long time & saving are Rs. 13,00,000.00 on 01.04.2008 in cash at home. Detail of deposits in bank is clear from cash flow statement. Deposits are from withdrawals previously from this bank & sale of agriculture land for Rs. 18,00,000.00 on 02.06.2008 and consideration of sale was received as under:- Dt. Dt. Rs. 08.04.2008 Agreement 1,00,000.00 02.06.2008 Bainama 17,00,000.00 Total 18,00,000.00 The above land was situated at v. Nojal Nojali, P-Thanabhavan D- Shamli and hence sales are exempt, being urban area agricultural land. Notice u/s 148 was dispatched by Regd. Post on 01.04.2014 i.e. after 4 years from the end of A.Y. 2009-10 and the same is time barred without any sanction u/s 151 of the I.T. Act, 1961 from Principal CIT, Muzaffarnagar. The assessee relies upon the following rulings:- (I) ITO vs. Ghulam Hussain (Bakshi) (1980)-10 TTJ-291 (Chd) “Reassessment – Notice under s. 148 – Limitation- “Issued” & “Served”, whether has same meaning – Service of notice within prescribed period essential. Assessment annulled by AAC was justified”. (II) ITO vs. On Exim Pvt. Ltd – (2013)-157-TTJ-0633 (Del) “For the purpose of Section 149, the date of issue of notice u/s 148 would be the date on which the same was handed over for service to the proper officer, i.e. postal authorities.” (III) Kanubhai M. Patel (HUF) vs. Hiren Bhatt or His successors to Office & Ors.-(2011) 237- CTR-544 (Guj)” “Impugned reassessment notice under s. 148 for asst. yr. 2003-04 have been signed on 31st March, 2010, whereas the same were sent to the speed post centre for booking only on 7th April, 2010-Impugned notices thus have been issued after the expiry of six years from the end of the assessment year under consideration, hence, the same are clearly barred by limitation.” Thus the notice u/s 148 is invalid and consequently assessment order is also in valid. Reasons to believe Ld. AO noted the reasons to believe which are not valid due to the following facts:-
1. 1. There is no date on which the same are noted and reasons to believe should be issued before the issuance of notice u/s 148. Reasons to believe without date cannot be said to have been noted before the issuance of notice u/s 148.
2. Ld. AO mentioned in the assessment order as under:- “A notice u/s 148 of the Act was issued on 28.3.2014 and duly served upon the assessee to verify the source & nature of such cash transaction but no compliance was made on the date of compliance.” From the above finding that notice u/s 148 was issued to verify the source and nature of such cash transactions and not for finding that certain income has escaped assessment and hence notice u/s 148 was not valid and for the same, reliance is placed upon the appeal order passed by Your-Honour in the case of Mohd. Rashid AY 2009-10 in which it was mentioned. “From the above it is noted that the AO has re-opened the case u/s 147 of the Act for further investigation require to find out the actual source of cash deposit made in the bank account during the relevant previous year. Reasons to believe are vital for any proceedings to be validly initiated u/s 147 of the Act. Merely making of further investigation to find the actural source of cash deposits in bank accout is not sufficient reason to re-open the case u/s 147 of the Act. The reasons recorded by the AO for making further enquiries, are not valid as per the provision of section 147 of the Act. In view of these facts, it is inferred that the AO has not validly initiated the proceedings u/s 147 of the Act.”
3. AO did not mention about the service of notices under Section 133(6) of the I.T. Act, 1961. Thus in reasons to believe, mentioning about the several notices u/s 133(6) is not a reason to believe to issue notice u/s 148.
4. AO noted reasons to believe on AIR information that the assessee has deposited cash of Rs. 47,51,000.00 in his saving bank account. The assessee submits that the deposits of Rs. 47,51,000.00 in SB a/c is not a reason to believe as the deposits does not constitute the income which has escaped assessment. For this reliance is placed upon:- 1. Bir Bahadn Singh Sigwali vs. ITO (68-SOT-197 (Delhi) (URO).
2. Saraf Gramodyog Sansthan vs. ITO (2007) 108-ITD-0115- (Agra) “AO was not justified in drawing the interference that certain deposit in the assessee’s bank account was income chargeable to tax and that the same had escaped assessment merely because the assessee had not filed return for the relevant assessment year, without verifying the deposit from the regular books of account and, therefore reopening of assessment was invalid, s. 292 cannot take care of any mistake in recording of reasons for reopening of assessment.”
Banarsilal Molhotra vs. DCIT-(2004) 83 TTJ-0163 (Jodh.) “All material facts having been disclosed, reopening of assessment on the ground of non-disclosure of source of investment was in valid.”
CIT vs. Indo Arab Air Services-(2016) 283 CTR (Del) 92 “Conclusion : While the AO has referred to the fact that the ED gave information regarding cash deposits being found in the books of the assessee, the AO did not state that he examined the returns filed by the assessee for the said assessment year and detected that the said cash deposits were not reflected in the returns, further, information concerning payments made to third parties, which were unable to be verified by the ED, also required to be assessed by the AO by examining the returns filed to discern whether the said transaction was duly disclosed by the assessee, reopening was not therefore sustainable.”
5. General Electoral Trust vs. ITO-(2016) 289- CTR (Bom) 284 “The condition precedent for issuance of notice under s. 147/148 is no different in cases where no return of income has been filed. If cl. (a) of Expln 2 to s. 147 is to be applied then it must be established that the income of the person to whom the notice is issued is in excess of the maximum amount not chargeable to tax. This could have been done by collecting information under s. 133B. The reasons in support do not indicate any reasons belief that income chargeable to tax has escaped assessment nor does not it hold that income of the assessee is in excess of the maximum amount chargeable to tax. It proceeds on the basis that all receipts are income. The reopening notice has to be tested by the terms recorded for issuing the notice and the order disposing of the objection cannot be the basis for sustaining the impugned notice.
In the circumstances and facts of the case having issued the notice after the expiry of four years and that too without any sanction under Section 151 of the Act which fact had been verified from the assessment record available with the learned DR that as per postal receipt the notice under Section 148 was dispatched on 1.4.2014 and was acceded by the learned DR.
In the circumstances and facts of the case and the cases relied upon and the facts hereinabove, the AO does not acquire the jurisdiction for reassessment/assessment under Section 147/148 of the Act and assessment so made and is directed to be quashed.
In the result, the legal grounds of the assessee are allowed.
Since the assessee succeeds on legal grounds, I do not decide the case on merit. 10. In the result, the appeal of the assessee in is allowed.
Order pronounced in the open court on 05.10.2017