ASIF KHAN,KOLKATA vs. ITO,WARD-32(3),KOL, KOLKATA

Per Anikesh Banerjee, Judicial Member: The instant appeal of the assessee was filed against the order of Ld.

Commissioner of Income-tax (appeals)-NFAC, Delhi [in brevity ld. ‘CIT(A)’]

dated 11.08.2023 passed u/s 250 of the Income Tax Act, 1961 (in brevity the

‘Act’) for assessment year 2012-13. The impugned order was emanated from

2 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan the order of the ld. Income-tax Officer, Ward-32(3), Kolkata (in brevity the

‘AO’) passed u/s 143(3)/147 of the Act dated 17.12.2019.

i) 08.06.2011 Rs. 9,00,000/- ii) 08.06.2011 Rs. 7,00,000/- iii) 08.06.2011 Rs. 30,000/- iv) 09.06.2011 Rs. 9,00,000/- v) 09.06.2011 Rs. 9,00,000/- vi) 09.06.2011 Rs. 9,00,000/- vii) 09.06.2011 Rs. 9,00,000/- viii) 09.06.2011 Rs. 9,00,000/- ix) 09.06.2011 Rs. 5,00,000/- x) 15.06.2011 Rs. 49,90,000/- xi) 16.06.2011 Rs. 50,00,000/- Total Rs. 1,66,20,000/-

The AO without verifying the facts and reasons of the above deposits in the bank A/c, capriciously and forcibly added Rs. 1,65,90,000/- out of the above amounts with the total income of the assessee and the Ld. CIT(A) without appreciating the matter confirmed the addition.

3 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan

for the AY 2012-13 originally on 30.08.2012 declaring total income of Rs. 9,90,

375/-. The case was reopened on the receipt of information from the

ADIT(Inv)/Unit-2(1) about deposits with United Bank of India bearing A/c no.

008721030212 of Rs. 1,65,90,000/- in cash. During the course of assessment

proceedings, the appellant stated that these were gifts received from his father.

But the ld. AO was not satisfied with the submissions of the assessee and the

documents submitted and he proceeded by treating the cash deposited in the

bank account as unexplained money. The ld. AO passed the order u/s 143(3)

r.w.s 147 of the Act dated 17.12.2019 by adding the amount of Rs.

1,65,90,000/- to the income of the assessee u/s 69A of the Act and assessing the

total income at Rs. 1,75,80,375/-. The aggrieved assessee filed the appeal before

the ld. CIT(A) but remains unsuccessful. Being dissatisfied with the appeal

order filed appeal before us.

the jurisdiction of the ld. AO for reopening the case U/s 148 of the Act. The

ld.AR invited our attention to ‘reason recorded’for initiatingnotice U/s 147 of

the Act. The relevant observation is culled as follows: -

“Reason for initiating proceedings u/s 147 of the I.T.Act, 1961:- In the instant case the assessee filed his/her Return of Income for the A.Y 2012-13 on 30/08/2012 declaring total income of Rs 9,90,380/-. The return of income was

4 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan processed u/s 143(1) on 08.12.2013 on the same income. No notice u/s 143(2) was found to have been issued in this case and no assessment u/s 143(3) or 147 has been made. Subsequently, information has been received from ADIT(lnv.), Unit-2(1), Kolkata vide F No. ADIT(lnv)/Unit-2(l)/Kolkata/Asif Khan/2017-18/11612 dated 09.03.2018 that the assessee Shri Asif Khan deposited un-usual value cash of Rs.1,65,90,000/- during the period of 08/08/2011 to 15/06/2011. As per records it is observed that the assessee- maintained A/c number 008721030212 of United Bank. Notice u/s 131 of the I.T. Act of 1961 was issued to the assessee and he explained the source of alleged funds deposited in his. bank account in cash. On perusal of ITD it is seen that assessee filed his ITR for A.Y 2011-12 of Rs 9,89,578/- and A.Y 2012-13 of Rs.9,90,375/- only. In view of the above, I have reason to believe that the assessee's income to the tune of Rs.1,65,90,000/- has escaped assessment within the meaning of section clause (b) of Explanation 2 to section 147 of the I.T. Act, 1961. Since, 4 years have already passed from the end of the relevant Assessment Year, necessary approval is required from the Ld. Pr. Commissioner of Income Tax-11, Kolkata, before issuing notice u/s 148 as per section 151(1) of the Income Tax Act, 1961. Accordingly, the matter is being put up before Ld. Pr. CIT-11 (Through Addl. CIT, Range-3 Kolkata) for his kind perusal and necessary approval, if deemed fit.”

wrongly mentioned 08/08/2011 to 15/06/2011 by the ld. AO. The ld. AR further

arguedand placed that the satisfaction of the ld. AO is borrowed, no separate

enquiry was conducted by the ld. AO after receiving the reply ofnotice U/s 131

and there are no tangible materials in record for reopening U/s 147 of the Act.

So, the assessment U/s 148 is non est.

5 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan

ITO, wd-1, Navsari ITA No, 3522/AHD/2016, Date of pronouncement

19/04/2021. Relevant paragraphs are reproduced as follows: -

“15. It is abundantly clear from the above noted precedents that Assessing Officer in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute that the assessee did file the return of income for the assessment year under consideration, which was duly acknowledged by the department, (That is, the assessee has filed the return of income which is placed on paper book page no.7), then, it has to be held that the entire reasoning thus proceeded on the wrong premises that the assessee had never filed the return. This, itself would be sufficient to annual the notice of reopening the assessment. Besides, mere cash deposit in the bank account would not disclose escapement of income. The assessee might have deposited the cash out of his sale of capital asset, sale of property and sale of investment, agricultural income etc. Therefore, we are inclined to hold the reassessment proceedings under section 147 of the Act as bad in law and hence, we quash the reassessment proceedings.” 7. The ld. DR vehemently argued and relied on the orders of revenue

authorities. The relevant paragraphs of appeal order are reproduced as below: -

6.4 lit is seen from the above facts that the appellant has given evasive replies and not submitted the necessary supporting documents to Substantiate his claim that the aforesaid cash deposits were explained and duly recorded in his books. Even if it is assumed that the aforesaid amount was in the nature of capital .receipt,the appellant oughtto have recorded the sum in his capital account .and.as cash-in-hand in his balance sheet. However, he has not submitted copy of his capital account or balance sheet to support his claim made in the present appeal. Further, he has failed to explain the long gap between the dates of receiving the cash as gift,from father and the dates of depositing the cash in the bank Account. There is no clarification regarding why the substantial cash-in-hand was not utilised during the intervening period and why the unutilised cash was not deposited earlier in the bank account. Futhermore, no documents evidencing the creditworthiness the donor of the gift have been submitted. 6.5 Finally, the appellant’s contention that the year of. taxability of the capital receipts would be AY 2010-11 and not AY 2012-13 is hot tenable. This is because the issue at hand is the taxability of the cash deposits amounting to Rs 1,65,90,000/- made by the appellant in bank account during FY 2011-12 . The A.O had held the cash deposits to be the appellant’s deemed income on account of non-explanation with respect to their nature and source and non- recording of the same in the books of the appellant. The issue involved in the present appeal is not whether the gift, receive^ during FY 2009-10, is taxable, as revenue or.capital receipt. Therefore, the appellant’s contention is unfounded.”

6 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan 8. We heard the rival submission and considered the documents available in

the record. The assessee is the regular filer of income tax return and during the

impugned assessment year the assessee filed return under section 139 of the act.

The cash deposited in the bank account was duly declared during the filing of

the return. The reopening was initiated after 4 years of impugned assessment

year. The deposited cash was duly received as gift by the assessee in earlier

assessment year from his father. The cash in hand was deposited in the bank

account in impugned assessment year. The assessee submitted the source of

cash deposit which was received from his father as gift during the verification

before issuance of notice u/s 147. Also the source of the cash gifted by the

father which was originated from the agricultural income was also submitted

before the revenue authority during the compliance of notice u/s 131 of the Act

before issuance of the notice u/s 147 of the Act. In recorded reason the ld.AO

was silent about that verification under section 131 of the Act after receiving the

reply. The assessee complied with the notice issued u/s 131. But there is no

further investigation from the end of the ld. AO. The ld. AO was fully satisfied

on the report of the ADIT (Inv), Unit 2(1), Kolkata and no other investigation

was initiated. The recorded reason is quite silent about the relevant tangible

documents during proceeding for reopening. Only the report of the investigating

authority is the documents for reopening. We relied on the order of Ashis

Natvarlal Vashi(supra). The reopening was initiated on borrowed satisfaction,

7 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan not on belief of the ld. AO. The ld. AO recorded the reason which warranted him to hold the belief that the income chargeable to tax has escaped assessment thereafter the ld. AO usurped the jurisdiction to reopen the assessment. The source of the cash deposit was explained by the assessee in all stages of investigation. When the income is foundation on which he based his belief of escapement of income is absent, so AO’s usurpation of jurisdiction to reopen of assessment is legally untenable & so, null in the eyes of law. So, we quash the reassessment made by the ld. AO without jurisdiction. The addition to amount of Rs. 1,65,90,000/- be deleted accordingly.

Order is pronounced in the open court on 30th January, 2024

Sd/- Sd/- (Manish Borad/मनीष बोरड) (Anikesh Banerjee /अ�नकेश बनज�) Accountant Member/लेखा सद�य Judicial Member/�या�यक सद�य Dated: 30th January, 2024 SM, Sr. PS

8 I.T.A. No. 1048/Kol/2023 Assessment Years: 2012-13 Asif Khan

Copy of the order forwarded to: