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Facts
The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Income-tax Act, 1961, alleging that the assessee had deposited a substantial sum in his savings bank account and had not filed a return of income. The AO, after obtaining approval from the Principal Commissioner of Income Tax (PCIT), made an addition on account of unexplained cash deposit.
Held
The Tribunal held that the reasons recorded by the AO for reopening the assessment were based on incorrect assumptions of facts. The bank statements did not support the figures mentioned by the AO, and crucial details like the assessee's address and PAN were missing in the reasons recorded. Furthermore, the PCIT's approval was granted mechanically without proper application of mind.
Key Issues
The primary issue was the validity of the assumption of jurisdiction by the AO under Section 147 of the Act due to flawed reasons and improper approval for reassessment proceedings.
Sections Cited
144, 147, 148, 151
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AGRA BENCH “SMC”: AGRA
Before: SHRI M. BALAGANESH
O R D E R
The appeal in AY 2011-12, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] dated 10.12.2024 against the order of assessment passed u/s 144 r.w.s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 23.12.2018 by the Assessing Officer, ITO, Ward-3(4), Hathras (hereinafter referred to as ‘ld. AO’).
At the outset, I find that there is a delay in filing of appeal before this tribunal by the assessee by 22 days. Considering the reason adduced in the condonation petition, I am inclined to condone the delay and admit the appeal of the assessee for adjudication in the interest of substantial justice.
The preliminary legal issue raised by the assessee is challenging the validity of assumption of jurisdiction under section 147 of the Act in the facts and circumstances of the instant case.
I have heard the rival submissions and perused the materials available on record. There was an information in possession of the Income Tax Department that the assessee has deposited cash in his savings bank account in the sum of Rs. 38,56,470/-. The learned AO sought clarification from the assessee which the assessee did not comply with. The assessee had not filed any return of income for the year under consideration. Accordingly, the Learned AO formed a belief that income of the assessee had escaped assessment and issued notice under Section 148 of the Act on 26-03-2018 after obtaining approval from the Ld PCIT, Aligarh. The reasons recorded for reopening the assessment are as under:-
The Learned AO forwarded these reasons along with the proforma to the Learned PCIT, Aligarh through proper channel for seeking approval in terms of Section 151 of the Act. For the sake of convenience, the said proforma seeking approval under Section 151 of the Act is reproduced below:-
I find that the assessee has furnished the entire bank statements for the period 1-1-2008-31-3-2012 before the Learned AO, which are enclosed in pages 4 and 5 of the paper book. On perusal of the said bank statement, I find that the total credits in the said bank account is only Rs. 77,538/- for the whole period of 1-1-2008-31-3-2012 and no cash deposits except Rs. 2,000/- was found thereon. Whereas in the reasons recorded, the Learned AO had stated that assessee had deposited Rs. 28,26,470/- in the bank account. In the assessment order, the Learned AO had stated that assessee had deposited a different sum of Rs. 38,56,470/- and out of that had made an addition of Rs. 15,00,000/- as unexplained cash deposit and framed the assessment under Section 144 r.w.s. 147 of the Act on 23-12-2018.
On perusal of the reasons, bank statements for three and a half years and the approval granted by Learned PCIT, Aligarh under Section 151 of the Act, it could be safely concluded that the reasons were recorded by the Learned AO for reopening the assessment based on incorrect assumption of facts without making even preliminary enquiry with the banks by obtaining the relevant bank statements. There was absolutely no figure either in the sum of Rs. 28,26,470/- or in the sum of Rs. 38,56,470/- stated by the Learned AO in the reasons and in the assessment order respectively. Further, in the reasons recorded, the Learned AO had not even mentioned the correct address of the assessee and had not even mentioned the PAN of the assessee. Further, some other assessee’s name has been mentioned in the said reasons recorded. All these facts collectively go to prove that the recording of reasons by the Learned AO was based on purely incorrect facts which are not at all pertaining to the assessee herein and accordingly the formation of belief on the part of the Learned AO that income of the assessee had escaped assessment is totally flawed. The Learned PCIT, Aligarh being the competent authority to grant approval under Section 151 of the Act ought to have verified this fact while sanctioning approval for reopening the assessment. The Ld PCIT not verifying even the preliminary facts thereon had grossly erred in granting approval under Section 151 of the Act in a mechanical manner without any application of mind, vitiates the entire reassessment proceedings. All these facts collectively become fatal to the entire reassessment proceedings warranting quashing of the entire reassessment. I direct accordingly.
Even on merits, it is not known how the learned AO had arrived at the figure of Rs 15,00,000/- for making addition on account of unexplained cash deposit in the instant case. On perusal of the bank statement, the total credits in the bank account of the assessee for the period 1-1-2008 to 31-3- 2012 is only Rs 77,538/-. Accordingly, the assessee is not even obligated to file return of income. Hence there is no case made out by the revenue for justifying the addition in the sum of Rs 15,00,000/- on an ad hoc basis.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 19/11/2025.