SUNITA TULI,PATHANKOT vs. ITO WARD-1, PATHANKOT, PATHANKOT

The Ld. CIT(A) erred in failing to adjudicate the specific legal ground that the reassessment was barred by limitation as per sec 149(1)(b), the total cash deposits in two banks actually being Rs.49,76,500/- i.e. below Rs.50 lacs, against Rs.55,89,500/- incorrectly assumed by AO, by wrongly taking the deposits in one account at Rs.15,13,000/- whereas actual deposits in that account were only Rs.9,00,000/-. Thus, the reopening beyond three years was time- barred, and the assessment deserves to be annulled.

That the reasons recorded by AO and approval granted by PCIT u/s.151 on incorrect facts, by assuming cash deposits at Rs.55,89,500/- against actual deposits of Rs.49,76,500/- is patently mechanical and illegal, as recently held by Hon’ble Bombay High Court in the case of Tele Performance Global Services (P.) Ltd. v. ACIT [2024] 298 Taxman 769 (Bom) (HC)”

Brief facts of the case are that no return of income has been filed by the assessee for the year under appeal. On the basis of information that the assessee has deposited HDFC Bank and Central Bank of India, proceedings were initiated vide notice u/s 148 dated 31.03.2022 (as per procedure).

During the course of assessment proceedings, the assessee has explained the cash deposits in bank to have been sourced out of some business transaction, relating to purchase and sales. It was further submitted that the total deposit in HDFC Bank A/c No. xxxxxx0152 was Rs. 40.76 lacs and the deposits with Central Bank of India A/c No. xxxxx0203 was only 9 lacs (which is wrongly stated by the AO at Rs. 15,13,000/-).

The matter carried in appeal before the ld. first appellate authority has been dismissed by the ld. CIT(A) by setting aside the assessment u/s 147 r.w.s. 144 by observing as follows:

Now, the assessee is before the Tribunal on the grounds contained in the memorandum of appeal and the main grievance of the assessee is that the Ld. CIT(A)

In course of hearing before the Tribunal, the ld. AR of the assessee submitted that the total cash deposits in both the bank accounts together totals to Rs. 49.76 lacs which is below the stipulated amount of Rs. 50 lacs and as such the reopening of the assessment beyond the three-year period is barred by limitation and the assessment deserves to be quashed.

He further submitted that the AO has wrongly considered the deposits in Central Bank of India as 15,13,000/- (based on incorrect information received) when actually the total of cash deposits in the said bank is only nine lacs, and in support of his contention he has furnished the copy of the bank statement. To sum up the matter the ld. AR pointed out that the total deposits in both the banks taken together being 49.76, is less than the minimum requirement of 50 (fifty lakhs) and as such, the assumption of jurisdiction u/s 147 beyond a three-year period is barred by limitation, being hit by the provisions of section 149(2)(b) of the Act 61.

He further submitted that the approval itself granted by the PCIT u/s 151 on the basis of incorrect fact by assuming the cash deposit to be 55.89 lacs is factually incorrect and in support of his contention he relied on the Hon’ble Bombay High Court 769 (Bom)(HC).

Before concluding, he further raised the legal issue pertaining to validity of the notices issued by the jurisdictional Assessing Officer (JAO) u/s 148 dated 31.03.2022 which is not legally valid in terms of the CBDT Notification No. 18/2022 dated 29.03.2022 issued in terms of section 151 of the Act which mandates that such notice is to be issued only in a faceless manner and in support of his contention he relied on the Hon’ble Punjab & Haryana High Court in the case of Jatinder Singh Bhangu v.

As such, the ld. AR submitted that the ld. first appellate authority was not legally justified in refusing to adjudicate the legal grounds contained in Form No. 35, by simply setting aside the matter before the AO for fresh assessment, in consequence to which the AO has issued notice u/s 142(1) for proceeding with the set-aside assessment, ignoring the legal issues raised before appellate authorities.

As such he prays for adequate relief.

The Ld. DR relied on the order of the CIT (A) and submitted that since the case is set aside to the AO for fresh assessment, all legal issues may be taken up at the assessment stage, as such he prayed for upholding the order of Ld. CIT(A). are of the view that the appellate authority needs to adjudicate on all the grounds contained in the memorandum of appeal specially the legal issues which strikes at the very root of jurisdiction.

As such we deem it fit and proper to remand the matter to the files of the Ld. CIT(A) for adjudication on the legal grounds taken by the assessee in form 35, after allowing proper and reasonable opportunity of being heard to the assessee and the assessee is also directed to file all his submission and fully cooperate in appeal proceedings.

In the result, the appeal of the assessee is allowed for statistical purpose.