ACIT, CENTRAL CIRCLE-2, PATNA vs. SHRI NAGENDRA PRASAD, PATNA

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ITA 109/PAT/2020Status: DisposedITAT Patna05 February 2026AY 2010-11Bench: SHRI GEORGE MATHAN (Judicial Member), SHRI LAXMI PRASAD SAHU (Accountant Member)1 pages

AI SummaryAllowed

Facts

A search and survey operation was conducted on the assessee, leading to the discovery of cash deposits of Rs. 3,28,00,000/- in the bank account during the assessment year 2010-2011. Statements were recorded from the assessee, his son, and the bank manager, all indicating the money belonged to the assessee and constituted undisclosed income.

Held

The Tribunal held that the reasons for reopening the assessment were clear, unambiguous, and supported by evidence, fulfilling all the requirements for valid reassessment proceedings. The CIT(A)'s decision to quash the reassessment was found to be incorrect.

Income Tax Appellate Tribunal, “PATNA BENCH”, PATNA

Hearing: 05/02/2026Pronounced: 05/02/2026

O R D E R

Per George Mathan, JM :

This is an appeal filed by the assessee against the order of the Id. CIT(A), Patna-3, dated 11.09.2020 for the assessment year 2010-2011.

It was submitted by the Ld.CIT DR that a search and survey was conducted on the assessee on Sona Sati Organics Group on 22/09/2016. On the basis of the evidences found it was noticed that the assessee and his family member s had deposited in account of the bank in cash for the impugned assessment year to the extent of Rs.3,28,00,000/-. Statements had been recorded from the assessee, assessee’s son and the Bank Manager. It was admitted by the assessee’s son that the explanation for the money as deposited were to be given by the father as the money belonged to the father. The Bank Manager also admitted that the money had been deposited on behalf of the father. The father admitted that the money is belonged to him. Consequently, reasons were recorded and the assessment had been reopened. The reasons for reopening had been provided to the assessee. The assessee had responded to the reasons recorded. The response was also disposed off by the Ld.AO. The AO gave opportunity to the assessee to explain the deposits. No explanation was given, other than a claim that the amounts represents the business income from the assessee’s liquor business over the years and that it was not part of the regular books of account. Consequently, the AO brought to tax the said amount in the hands of the assessee on substantive basis.

In appeal the Ld.CIT(A) had quashed the reassessment by holding that the reasons recorded were vague and self contrary and that the reasons were insufficient for reopening of the assessment. It was the submissions that the revenue is in appeal against such findings the Ld.CIT(A). It was submission that the reasons were clear and they were not vague and all the requisites for recording reasons were also validity complied with. It was the prayer that the order of the Ld.CIT(A) be reversed.

In reply, the Ld.AR on behalf of the assessee submitted that the appeal filed by the revenue is impermissible, insofar as it has not been authorised by the PCIT. It was further submission that the perversity in the order of the Ld.CIT(A) has not been pointed out. It was the submission that appeal cannot be normally filed before the Tribunal by the revenue without finding of specific perversity in the order of the CIT(A) and requisite permission being obtained. The Ld.AR further read the order of the Ld.CIT(A) in extensive. It was further submission that the reasons as recorded by the AO which has been Ld.CIT(A) in verbatim in page 17 of its order were not reasons to believe but for reasons to suspect. It was also the submission that the Ld.CIT-DR has not dislodged with any of the case laws which has been applied by the Ld.CIT(A) for giving relief to the assessee. It was also the submission that amounts deposited in the bank doesn’t automatically become undisclosed income. It was submission that these amounts were relating to the earlier years and the same were liable to be taxed only in the years to which the amounts related. It was also submission that the assessment u/s.143(3) of the Act in the case of the assessee had already been done earlier for the impugned assessment year and consequently there was a violation of the proviso to Section 147 of the Act. It was the submission that the appeal of the revenue is liable to be dismissed.

We have considered the rival submissions. Here we would like to open our findings with the simple maxim that, “when substantial justice is pitted against technicality, technicality must step down”. In any case, a perusal of the letter dated 02/07/2025 from the PCIT (Central), Patna to the Joint Commissioner of Income-tax, Central Circle-2, Patna, shows that the grounds were specifically authorised by the PCIT. The various Hon’ble High Courts have been repeatedly held that the procedures are the hand made of justice and technicality must not come in way of justice. The alleged defects in the appeal filed by the revenue, admittedly, does not survive, insofar as necessary approvals have been taken by the revenue for filing the appeal before the Tribunal. In any case, such defects, if any, in respect of filing of the appeal, is in regard to the admission of the appeal and it is for the Tribunal or the Registry of the Tribunal to verify the same. It is not a defense for the assessee to bar the revenue from challenging an order which is not to the satisfaction of the revenue passed by the Ld.CIT(A). With these findings, the claim of the Ld.AR that the appeal of the revenue should be dismissed for technicality, stands rejected.

6. Coming to the main issues in the appeal, a perusal of the order of the Ld.CIT(A) shows that the Ld.CIT(A) has categorically recorded and reproduced in verbatim the reasons recorded for reopening, this admittedly is not disputed by either side. A perusal of the assessment order gives a picture of why the reasons were recorded. A Search & Seizure and survey operation had been done on Sona Sati Organics Group on 22/09/2016. A survey had been conducted on Bank of Baroda Bank, Buxar Branch. In Page 3 of the assessment order the AO has brought out the statements of the Manager of Bank Of Baroda, Buxar Branch has also been recorded. When such substantial evidence is available, insofar as the assessee admits that it is an undisclosed income of the assessee, the assessee’s son admits that the money is belonged to his father and it is for the father to explain. The Bank Manager admits that the money is belonged to the assessee. What is the Assessing Officer to believe is the source of the deposits in the bank account. All point out to one person, being the assessee. The assessee is well aware what he has said and admitted. When recording reasons, it is the opinion of the AO that it is required to be recorded that he has reasons to believe that particular amount belongs to a particular person and that the amounts has not been offered to tax or escaped assessment and an approximate quantification of the amounts is also required. Here one should keep in mind that the assessee himself admits that the money belongs to him. The assessee admits that the money is undisclosed income and this is exactly what the AO has recorded in his reasons. The reasons recorded does not show any vagueness or inconsistency. The claim that reasons have been recorded identically in the case of the assessee’s son does not mean that the reasons recorded in the case of the assessee are vague or that is opinion is not fixed. Reasons are required to be recorded in the case of the son also so that the protective assessment to protect the interest of revenue would have been passed. If the claim of the assessee is to be accepted then it would be futile for a search to be conducted and evidences to be gathered, insofar as the assessee will say one thing at one point and on another point will turn around and say something else and all reasons would become vague.

The recording of reasons is not an assessment proceeding. It is a prelude to the reassessment proceeding. There should be suspicion, a valid suspicion. There should be reasonable evidence that the money is belonged to the particular person, whose reopening is being done. In the impugned case, it becomes clear that the assessee himself has admitted that the money is belonged to him. The assessee admits that this is undisclosed income. The assessee’s son has admitted that the money belongs to the assessee. The bank manager admits that the amounts belonged to the assessee and the amounts have been deposited during the impugned assessment year. Obviously, only the assessee would know to which year the money is belonged which have been deposited during the impugned year. It is for the assessee to explain the assessee had been given ample opportunities in the course of the assessment, in the course of survey in the course of search. The assessee did not give any cogent explanation. The assessee, other than raising technical arguments, made no substantive submissions in regard to the addition proposed per se.

A perusal of the order of the Ld.CIT(A) shows that in page 20 & 21 the Ld.CIT(A) has circulantly brought out following 12 points summarizing in the principles in regard to the reopening :- 1. The reasons are required to be read as they were recorded by the Assessing Officer, 2. No substitution or deletion is permissible; 3. No additions can be made to those reasons; 4. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him, 5. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year.

The reasons recorded should be clear and unambiguous and should not suffer from any vagueness; 7. The reasons recorded should be self explanatory and should not keep the assessee guessing for the reasons; 8. Reasons provide the link between conclusion and evidence; 9. The reasons must be based on evidence; 10. The Assessing Officer, in the event of challenge to the reasons must be able to justify the same based on material available on record; He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence; 12. That vital link is the safeguard against arbitrary reopening of the concluded assessment.

With regard to point No.1, when this text is applied to the reasons recorded, it is seen that there is no defect in the reasons recorded. With regard to Point No.2, the AO has not done any substitution on addition. With regard to point No.3, no addition has been made. With regard to point No.4, the reasons amply clear. It shows that the amount has been deposited in cash the dates on which the cash has been deposited and whose name the amounts had been deposited. With regard to point No.5, this is the condition for the applicability of the proviso to section 147 of the Act. With regard to point No.6, the reasons recorded are absolutely clear, the persons names are available, the dates of deposits are available, the bank details are available. With regard to point No.7, the assessee has been given all the information required to respond. With regard to the point no.8, here it was mentioned that the AO has talked about the search and survey, how this amount was found and where this amount was found and whose name the amounts were found and the quantum of the amounts. With regard to point No.9, the evidence is very clear as it was found during the course of search and the statement recorded. With regard to point No.10, the assessment order itself speaks of the material available on record. With regard to point No.11, the AO has brought out the details of the amounts persons whose name the amounts were deposited the statement recorded. With regard to point No.12, it must be mentioned here that the assessee has not filed any cross objection. No evidence of an earlier assessment under Section 143(3) of the Act is available. There is only allegation only of an assessment having been done u/s.143(3) of the Act. The cross objection, admittedly, is not there. Even Rule 27 of the ITAT Rules, 1963 have not have been invoked. This being so, we have no information that an earlier assessment has been done in the case of the assessee. It has also not been brought to attention that such assessment has been done. Even otherwise the reasons recorded clearly shows that the AO has clearly mentions that Rs.3,28,00,000/- the income chargeable tax has escaped assessment. This being so, we are of the view that the reopening of the assessment in the case of the assessee is validly done.

10.

A perusal of the orders of the Ld.CIT(A) shows that the Ld.CIT(A) has taken the stand that the reassessment proceeding have been initiated merely for the reasons of cash deposited in the bank. This is not correct. This finding of the Ld.CIT(A) is wrong. The reasons recorded clearly shows the amounts deposited, in whose name they were deposited, the dates of deposits and the reasons recorded should be read with the conjoining circumstances which has led to the reasons being recorded. In this case, the search and the survey brought out of the facts of substantial tax evasion. This being so, the order of the Ld.CIT(A) stands reversed and that of the AO stands restored.