MAHAVIR PRASAD JAT,JAIPUR vs. ITO WD, BEHROR, BEHROR

ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 30-10-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2011-12 wherein the assessee has raised the following ground of appeal. ‘’1. On the facts and in the circumstances of the case, the AO as well ld. CIT(A) erred in invoking the provisions of Section 148 of the Act without any reason which is unjustified and liable to be quashed.

2 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 2. On the facts and in the circumstances of the case, the AO as well ld. CIT(A) erred in adding Rs.26,28,500/- of IT Act on account of cash deposit of Rs.26,28,500/- into bank account without appreciable income and cash withdrawal from bank which is unjustified and liable to be quashed.’’ 2.1 Apropos Ground No. 1 and 2, the facts as emerges from the order of the ld. CIT(A) are as under:- For Ground No. 1 5.1 I have gone through the facts of the case and have the following observations The case was re-opened u/s 147 of the Act aftor recording reasons that appellant had deposited cash amounting to Rs. 26.28.500/- in his bank account maintained with UCO Bank during the year and no ITR has been filed The assessment proceedings were concluded by passing order uis 147 of the Act on 13.12.2018. The total income of the appellant was determined at Rs. 27,78,500/- The appellant has filed this appeal against the order passed u/s 147 of the Act dated 13.12.2018. 5.2 On perusal, it is observed that the instant case was reopened on the basis of information of cash deposit amounting to Rs. 26,28,500/- in his bank account maintained with UCO Bank during the year. The appellant had not filed his ITR for the year under consideration. As per information, cash of Rs 26,28,500/- was deposited in bank account of UCO Bank and source of cash deposits remain unexplained in the hands of the appellant and thus there was sufficient reason as well as data with AO which led to invoke the provisions of section 147 of the Act. Accordingly, I am of the view that AO has rightly invoked the provision of section 147 of the Act in this case. Hence the grounds of appeal are dismissed. The ground no. 1 of appeal is dismissed.

3 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 5.3 The ground No. 2 pertains to addition of Rs. 26,28,500/- on account of cash deposit in bank account. During appellate proceedings, the appellant has submitted that he works as a commission agent to sale and purchase of trucks. The appellant has submitted copy of bank statement of SBI and cash book and argued that the cash deposits were made out of cash withdrawals from the same bank or from another bank The submission of the appellant is considered. It is necessary to mention here that bank statement of SBI bank only is furnished. The bank statement of the UCO bank wherein cash was deposited has not been furnished by the appellant. However multiple opportunities have been provided to the appellant On perusal of bank statement of SBI, it is found that cash withdrawals have been made on various date in small quantity ranging from 1000/- to 25000/- during the year. However, the appellant has nowhere mentioned the purpose and utilization of these cash withdrawals: On further verification of bank statement and cash book, no instance has been noticed wherein some big amount had been received and paid by the appellant as claimed. On verification of reply submitted before AO, it was noticed that following facts were submitted before AO that ‘’2. total income for the AY 2011-12 was Rs. 1.50,000/- and the same was derived from working as mediatory in transaction of sale and purchase of old vehicles. 3. cash deposited in the bank account represented receipts from transaction of sale of old vehicles, Assessee withheld his commission amount and transferred the balance amount to owner In appellant proceedings, appellant has submitted that: ‘’The cash deposits in banking account had immediate sources of cash withdrawals from same bank or from another Bank. No amount was received in cash from any other person by way of borrowing or by way of income.’’ Considering both the replies of the appellant, submitted in assessment proceedings and in appellate proceedings, the same are found contradictory, it is further noticed that appellant has claimed that regular books of accounts is maintained, however, no evidence has been provided to substantiate the source of cash receipts as well as claim of cash expenses. Even, no evidence has been furnished to prove the activities carried out during the year. Thus, appellant has failed to submit any cogent evidence in support of grounds. In absences of corroborative evidences, the grounds are not found supported and property backed. The explanation offered by the appellant does not justify the nature and source of cash deposits made in bank account. It proves that the appellant is misleading and has nothing to submit which could substantiate and justify the nature and source of cash 4.4 In view of the above discussion and considering the facts of the case. I am of view that the cash deposit represents the income of the appellant during the year from undisclosed sources. Therefore, the addition of Rs. 26,28,500/- on account of cash deposit in bank account is upheld and ground of appeal is dismissed. The Ground No. 2 is dismissed.

2.2 During the course of hearing the ld.AR of the assesee prayed before the Bench to allow the appeal by submitting the following written submission .

‘’Before ITAT Jaipur Written submission in case of Mahaveer Prasad Jat, Shahpura A.Y. 2011-12. May I please your honour In this case, a notice u/s 148 was received for the year under consideration, which was complied with by the assessee through the filing of a return declaring income of Rs. 150000/- declaring commission income derived from assisting with sales and purchases of trucks and saving account interest. The assessment was made by making the addition of the sentire amount of cash deposits in the banking account amounting to Rs, 2628500/- treating it unexplained. Ld. CIT (A), also sustained the addition. Aggrieved with the order assessee preferred this appeal as many as taking three grounds of appeal. Your honour, the grounds of appeal as under:

1. On the facts and in the circumstance of the case LD AO erred in invoking provisions of section 148 and CIT (National Faceless Appeal Centre) erred in sustaining action without any reason which is liable to be quashed.

2. On the facts and in the circumstance of the case LD AO erred In making an addition of Rs. 2650000/- u/s 69 of IT Act being cash deposit in the bank account without appreciation nature of income and CIT (National Faceless Appeal Centre) erred in sustaining addition which is unjustified and liable to be quashed.

3. Residuary clause Ground no 1 Your honour, the initiation of proceedings u/s 148 was bad in law being the very essential burden lay upon AO before assuming jurisdiction was not discharged properly. The action against assessee was taken only to verify the cash deposits into the banking account. Please see the assessment order in which AO stated that “On the basis of information in my possession revealed that the assessee has deposited a sum of Rs. 2628500.00 during the F.Y. 2010-11 in his saving account held with UCO Bank. The assessee has not filed his return of income for the year under consideration. In the absence of a return of income, 6 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR the above transaction has not verifiable. Accordingly, the reason for escapement has been recorded and notice u/s 148 is issued.” Your honour, the section empowers AO to re-open the completed assessment where any income has escaped assessment for which AO must have a belief of escapement. He must have reasonable belief and such belief must have been recorded before taking action. Further, explanation 2, provides the deemed escapement where ITR was not filed and the income of the assessee exceeded the maximum amount not chargeable to tax. Your honour the above statement of AO categorically establishes the facts that the very powers given u/s 148 were used by him for verification of transaction. He himself, did not have any clue, any reason, any belief of escapement of income. If this type of case is selected for reopening then each and every person`s assessment could be reopened if the return of income is not filed. Your honour, filing of return is compulsory only where the gross income is in excess than maximum amount which is not chargeable to tax. And that`s why only a few people among all national file their returns. As per AO, where 95% of persons who choose to not file their return in view of provision of section 139(1) their cases could be re-opened for verification of certain financial transactions by resorting powers u/s 148. For verification of transactions, the statute provides some other section i.e., 142, 133(6), 131A, 133A 132 etc. But the powers of section 148 can only be taken where AO has reason to believe that any income has escaped assessment. And for such belief, he has compulsorily recorded the reason for belief of escapement. Hon’ble Gujarat High Court in Hotel Oasis (Surat) (P) LTD. v. DCIT (2011) 57 DTR (Guj) 378, has held that that assessment cannot be reopened merely to make inquiries. Hon’ble High Court of Gujarat in case of Bakulbhai Ramanlal Patel Vs. ITO (2011) 56 DTR 0212, Special Civil Appln. No. 12853 of 2010, Mar 4, 2011 has held that where the reasons recorded reflect that the matter requires detailed investigation and further verification, the AO has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment and therefore, the assumption of jurisdiction by the AO is invalid and as such, the impugned notice under s. 148 is not sustainable and is quashed.

7 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR Hon’ble Supreme Court in ITO, & Ors v. Lakhmani Mewal DAS (1976) 103 ITR 437(SC), held that wherein it was observed that for reopening of assessment, there must be a rational connection or relevant bearing on the formation of the belief that income chargeable to tax has escaped assessment. In an identical case Hon'ble ITAT Agra in appeal no 393/Agra/2018 dated 23.09.2019 held in the case of Premwati Suman vs ITO pronounced detail order for which the ratio of judgment is as under:-

1. 1. In this case property was purchased but ITR was not filed u/s 139 of the Income Tax Act, 1961.

2. AO issued a re-assessment notice after recording the reason for escapement stating that investment in house property is not explainable for want filing of return.

3. Ld. DR argued that Explanation-2 to section 147 does provide the presumption of deemed escapement where ITR is not filed. Hon’ble ITAT held that to presume the deemed escapement under Explanation 2, there has to be satisfied two conditions.

10 MAHAVIR PRASAD JAVT VS ITO, WARD- BEHROR 3. Cash deposited in the bank account represented receipts from transaction of sale of old vehicles. Assessee withheld his commission amount and transferred the balance amount of owner.