SHRI NEERAJ BHARDWAJ,BAREILLY vs. INCOME TAX OFFICER, WARD-2(1), BAREILLY

The ld. AR, at the outset invited my attention to a petition for condonation of delay and it was submitted that there is a delay of 152 days in filing the appeal which had happened due to complete lockdown in the month of March, 2020. It was submitted that the order of ld. CIT(A) was received on 18.03.2020 and therefore, the assessee was to file appeal before 18.05.2020 and which has been filed on 05.11.2020. It was submitted that due to lockdown during this period, the appeal could not be filed therefore it was prayed that the delay in filing the appeal may be condoned and appeal be heard on merits.

The ld. DR, did not raise any objection for condonation of delay in filing the appeal.

Finding the reasons for delay in filing the appeal plausible. I condoned the delay and ld. AR was asked to proceed with his arguments.

The ld. AR, at the outset submitted that assessee had filed concise grounds of appeal on 3.8.2022 and the first ground relates to the grievance of assessee that the reopening u/s. 148 is bad in law in view of the fact that the case of the assessee was reopened by recording reasons that assessee had deposited cash in bank account and further by holding that assessee had not filed return of income u/s. 139 of the Act. In this respect the ld. AR submitted a copy of acknowledgment of income tax return for the relevant assessment year filed on 10.06.2010. My attention was further invited to PB pgs. 3 to 6, where a copy of reasons for reopening of the case was placed. My specific attention was invited to column 6 where the Assessing Officer had noted that no return has been furnished by the assessee. The ld. AR submitted that since the reopening has been initiated on the basis of wrong finding of facts, therefore initiation of proceeding u/s. 147 is bad in itself and reliance in this respect was placed on an order of Hon'ble Allahabad High Court in the case of Shri Sunil Kumar Rastogi HUF vs. ITO, Writ Tax No. 658 of 2017 where vide order dated 02.12.2019 the Hon'ble Court has held in favour of the assessee under similar facts and circumstances.

The ld. DR, on the other hand, submitted that on the basis of AIR information, the case of the assessee was reopened and in the bank account there was no mention of PAN of the assessee and during a search in the PAN database, the name of the assessee did not appear therefore the Assessing Officer was left with no option but to issue notice u/s. 148 of the Act and in view of the above, it was submitted that the ground taken by the assessee be dismissed.

I have heard the rival parties and have gone through the material placed on record. From the reasons recorded placed at PB pgs.4 to 6, I find that as per AIR information available on record, the Assessing Officer observed that a cash of Rs.11,62,000/- has been deposited in the saving bank account of the assessee. The Assessing Officer wrote a letter to assessee to explain the source of such deposits. The assessee did not reply to the said notice. The Assessing Officer further notes that PAN database was searched in the system but could not find the particulars about assessee therefore he held that no question of assessment u/s. 143(3) arises as no return was visible on the system and therefore he held that there has been a failure on the part of assessee to make a return u/s. 139 of the Act and he initiated the reassessment proceedings. Paper book Pg.5 is a list of questions which needs to be filed by AO while initiating reopening of a case. Sl.No. 6 of the questions requires Assessing Officer to answer to a question as to whether provisions of Section 147(a) or 147(b) are applicable. Against reply to this question Section 147(a) has been mentioned and it has also been mentioned that no return has been furnished by the assessee. On the contrary, the fact remains that assessee did file return of income u/s. 139 of the Act on 10.06.2010, a copy of the acknowledgement is placed in the file. The date of filing of the return is much before than the date of recording of reasons. The Assessing Officer has noted that PAN was searched in the system and DCR of respective year has also been consulted and he had not found the copy of return filed by assessee. In view of the fact of having filed the return of income by the assessee the finding of the Assessing Officer that no return has been furnished by the assessee is wrong and therefore I hold that Assessing Officer has reopened the case by recording a wrong fact. The copy of acknowledgment of return for the relevant year has been made part of this order. Had the Assessing Officer noted the correct facts of filing the return, he would have verified the fact of escapement of income from the return of income which he has not done therefore the notice issued u/s. 147 is not legally tenable.

The Hon'ble Allahabad High Court in the case of Shri Sunil Kumar Rastogi HUF (Supra) vide order dated 02.12.2019 has cancelled the notice issued u/s. 148 under similar facts and circumstances. The findings of Hon'ble Court are reproduced below:

In view of above and following the judicial precedents as relied on by the assessee I also quash the notice u/s. 147 and therefore hold the assessment order void ab initio and the consequent order of ld. CIT(A) is also held to be a void ab initio. In view of above, Ground No.1 of the appeal is allowed.

Nothing was argued other than Ground No.1 therefore rests of the grounds are dismissed as not pressed.

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