SMT. MANISHA RAJENDRA BHOSALE,,JALNA vs. INCOME TAX OFFICER,, JALNA

This bunch of appeals relating to same assessee for different assessment years on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience.

The assessee in ITA No.348/PUN/2017, relating to assessment year 2009-10 has raised the following grounds of appeal:- 1) On the facts and circumstances of the case and in law the reopening of the assessment invoking the provisions of S. 147 of the Act is vitiated in law since the notice issued dt. 17-05-2013 was served by RPAD on the same date is an impossibility. The Notice u/s 148 was issued without recording the reasons prior to issue of notice u/s. 148. Though this ground was not raised before Ld. CIT(A) but being pure question of law going to the root of the matter is raised for the first time before Hon'ble Tribunal. It be admitted for adjudication, accordingly. 2) On the facts and circumstances of the case and in law the exparte assessment made under S. 144 of the Act so made for want of non-filing of the Return in response to notice u/s 148 of the Act is vitiated in law since the A.O. has framed the assessment u/s 144 r.w.s. 147 as per the original return filed. The A.O. virtually admits that the original return was treated to have been filed in response to notice u/s 148 of the Act. The exparte assessment u/s 144 is not justified. It be quashed. 3) On the facts and circumstances of the case and in law and considering the assertive statement of the assessee that no books of account have been maintained for her profession the provisions of S. 69A become inapplicable for bringing to tax the deposits into the bank account. The deposits in the bank account are simply from out of professional receipts. In such circumstances the assessment can be only percentage of profit basis. The Ld. CIT(A) was not justified in confirming the addition of Rs.7,74,706/- made by the A.O. The addition confirmed be deleted. 4) On the facts and circumstances of the case and in law the Ld. C]T(A) was not justified in confirming the addition of Rs.7,74,706/- made by the A.O. u/s 69A of the Act. The addition made being illegal be deleted.

The issue raised in this bunch of appeals is against reopening of assessment under section 147/148 of the Act. The assessee during the course of hearing has also filed additional ground of appeal, which reads as under:- 1) On the facts and circumstances of the case and in law the statutory notice issued under S. 148 is without any sanction as required by S. 151 of the Act. The notice itself is illegal and without jurisdiction. The consequent assessment is also illegal and without jurisdiction. The assessment be quashed.

The learned Authorized Representative for the assessee pointed out that the additional ground of appeal does not require any investigation of facts, hence the same be admitted.

The issue raised in the present appeal is against reopening of assessment under section 147/148 of the Act. The assessee has raised various aspects of the said issue in the grounds of appeal and has also mentioned that notice issued under section 148 of the Act is without sanction required by section 151 of the Act. The second issue has been raised by way of additional ground of appeal which goes to the root of the case and hence, the same is admitted for adjudication.

Briefly, in the facts of the case, the Assessing Officer notes that as per information available on record, the assessee had deposited substantial cash in the bank account to the extent of ₹ 13,46,100/-, ₹ 20,73,250/- and ₹ 10,48,700/- for assessment years 2009-10 to 2011-12, respectively. The Assessing Officer thus, recorded reasons for reopening the assessment that income chargeable to tax within meaning of Explanation 2(b) of section 147 of the Act had escaped the assessment for these assessment years. Notice under section 148 of the Act was issued to the assessee and served upon the assessee. The assessee in response to notice was required to furnish return of income within 30 days but the assessee failed to furnish any return of income. Thereafter, notice under section 142(1) of the Act along with questionnaire was issued. In response to the said notice, the assessee did not furnish any details except letters stating that the assessee was forwarding copy of computation sheet and Balance Sheet and Profit and Loss Account for assessment years 2009-10 to 2011-12. The assessee also filed written reply. The Assessing Officer noted that during the

Before the CIT(A), the assessee raised the issue on merits and the same was decided against the assessee.

The assessee before the Tribunal has raised the issue against ex-parte assessment made under section 144 of the Act for want of non-filing the return of income in response to notice issued under section 148 of the Act. However, the Assessing Officer had framed the assessment as per original return of income filed and hence has challenged the assessment framed under section 144 of the Act. Other grounds of appeal have been raised against merits of addition. Further, vide additional ground of appeal, the assessee has challenged the jurisdiction exercised under section 148 of the Act being without sanction required under section 151 of the Act. The learned Authorized Representative for the assessee pointed out that the issue raised goes to the root of jurisdiction and can be raised for the first time. Attention was drawn to the reasons recorded for reopening the assessment, which are enclosed at page 3 for assessment year 2009-10, at page 8 for assessment year 2010-11 and at page 17 for assessment year 2011-12 of Paper Book. The learned Authorized Representative for the assessee stressed that the Assessing Officer had invoked Explanation 2(b) to section 147 of the Act in assessment year 2009-10 and in assessment years 2010-11 and 2011-12 had invoked Explanation 2(a) to section 147 of the Act, on the ground that no return of income was filed by the assessee. However, while completing assessment, the Assessing Officer has relied on the return of income filed for assessment years 2010-11 and 2011-12. In respect of said years, the learned Authorized Representative for the assessee pointed out that where the return of income had already been filed, there is no merit in invoking Explanation 2(a) of section 147 of the Act. With regard to assessment

The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below.

On perusal of record and after hearing both the learned Authorized Representatives, appeals in assessment years 2010-11 and 2011-12 are taken up first. The assessee is aggrieved by the action of Assessing Officer in recording reasons for reopening the assessment on the ground that the assessee had not filed return of income and hence, the Assessing Officer had reason to believe that there was escapement of income within meaning of Explanation 2(a) of section 147 of the Act. With regard to assessment year 2009-10, reference was made to Explanation 2(b) of section 147 of the Act. The case of assessee is that she had already filed return of income for assessment years 2010-11 and 2011-12 before Assessing Officer recorded reasons for reopening the assessment under section 147 and before issue of notice under section 148 of the Act. Hence, provisions of Explanation 2(a) of section 147 of the Act are not attracted. It may be pointed out that in the reasons recorded for reopening the assessment which are placed at pages 8 and 17 of Paper Book, the Assessing Officer has referred to Explanation 2(a) of section 147 of the Act. However, in the assessment order, the Assessing Officer refers to Explanation 2(b) of section 147 of the Act, but that is an error and in fact, the Assessing Officer had recorded reasons for reopening the assessment on the ground that the assessee had failed to file the return of income.

Explanation 2 to section 147 of the Act provides that for invoking provisions of section 147 of the Act, following instances shall also be deemed to be cases where income chargeable to tax had escaped assessment. Clause (a) lays down that where no return of income has been furnished by the assessee though the total income of assessee or any other person in respect of which he was assessable to tax during the previous year, exceeded the maximum amount, which is not chargeable to income tax. Clause (b) provides that where the return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has under- stated the income or has claimed excessive losses, deduction, allowance or relief in the return. There are other instances i.e. in clause (b), (c) to (d), but we are not concerned with the same, hence not being referred to. The first clause which has been applied by the Assessing Officer in assessment years 2010-11 and 2011-12 is clause (a) to Explanation 2 of section 147 of the Act. The said clause clearly talks of an instance where no return of income has been furnished by the assessee. However, the perusal of assessment order passed by the Assessing Officer under section 144 r.w.s. 147 of the Act, though talks of no return of income being filed by the assessee originally and no return of income being filed by the assessee in response to notice under section 148 of the Act, but while computing income in the hands of assessee, the Assessing Officer refers to income as per return filed on 18.10.2012 at ₹ 1,97,850/- and for assessment year 2011-12, income as per return filed on 18.10.2012 of ₹ 2,17,130/-. It may be clarified herein itself that reasons for reopening the assessment were recorded on 17.05.2013 i.e. much later than the assessee having filed the return of income originally. In such circumstances, invoking of Explanation 2(a) of section 147 of the Act by the Assessing Officer for assessment years 2010-11 and 2011-12 is not justified. Consequently, the order

Now, coming to assessment year 2009-10, wherein the reasons were recorded by invoking Explanation 2(b) of section 147 of the Act i.e. accepting the fact that the assessee had furnished the return of income and no assessment was made and it was noted by the Assessing Officer that the assessee had under-stated the income or had claimed excessive losses. Accordingly, reopening of assessment by invoking provisions of Explanation 2(b) of section 147 of the Act for assessment year 2009-10 is upheld.

Now, coming to the merits of addition made in the hands of assessee, wherein the Assessing Officer in the assessment order itself has taken note of the fact that as against total cash deposits of ₹ 14,90,193/-, the assessee had shown gross receipts on account of tuition fees to the tune of ₹ 3,32,172/- and her husband who is joint holder of account shown at ₹ 3,83,315/-, totaled to ₹ 7,15,487/-, then the balance receipts works out to ₹ 7,74,706/-. Once the bank account has been held to be joint bank account of assessee and her husband, then receipts of said bank account cannot be assessed in the hands of assessee in totality. The Assessing Officer has accepted the plea of assessee of receipts totaling ₹ 3,32,172/- in the hands of assessee and ₹ 3,83,315/- in the hands of husband of assessee, which are majorly similar. So, the balance receipts in the bank account which is joint bank account between the assessee and her husband cannot be added in totality in the hands of assessee.

Another aspect of the issue is that the said deposits are being treated as income from undisclosed source in the hands of assessee. Once the receipts

In the result, all the appeals of assessee are allowed.