SOCIETY FOR EDUCATION AND RESEARCH,JAGADHRI, YAMUNANGAR vs. DCIT(E) (CIRCLE-2), CHANDIGARH

Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/NFAC, Delhi dt. 19/01/2024 pertaining to Assessment Year 2012-13. 2. In the present appeal, the assessee has raised the following grounds of appeal:

1. That the learned CIT(A) NFAC has erred in law and on facts in confirming the additions u/s 68 amounting Rs. 34,50,350/- made by AO on account of cash deposits in bank.

2. That the learned AO has erred in law and on facts in reopening the assessment proceedings u/s 148 of the Act. 3. That the authorities below have erred in law and on facts in dismissing the appeal without providing adequate opportunity of being heard. 4. That the appellant craves leave to add, alter, amend or to substitute the above ground(s) of appeal either before or at the time of hearing of case. 3. Briefly the facts of the case are that the assessee filed its return of income on 29/09/2012 declaring total income as NIL which was assessed under section 143(3) by JCIT, Range – 2 (Exemption), Chandigarh vide its order dt. 30/03/2015. Subsequently, the case of the assessee was reopened and notice under Section 148 was issued by ITO, Ward-4, Yamuna Nagar on 11/03/2019. In response, the assessee submitted that the return of income filed earlier under section 139 may be treated as return filed in response to notice under section 148 of the Act. Thereafter, notice under section 142(1) was issued on 26/11/2019 followed by show cause on 04/12/2019 to explain the source of cash deposited in the bank account. In response, the assessee submitted that it has been running an Engineering College during the year and had received total fees amounting to more than Rs. 5 crore during the year and fees was mostly received in cash and was deposited in the bank account from time to time. It was accordingly submitted that the cash so found deposited which has been pointed out in the notice was part of the fees so received by the assessee and no adverse view should be taken in this regard. 4. The submission so filed by the assessee were considered but not found acceptable to the AO. As per the AO, the assessee has only stated that the cash deposit was made out of funds received from the students but it has not produced / filed any documentary evidence in support of its claim, therefore the amount of the cash deposit amounting to Rs. 34,50,350/- with Punjab National Bank, VPO-Jagadholi, Yamuna Nagar remained unexplained and the same was brought to tax invoking provision of Section 68 of the Act and as against the returned income of NIL, the reassessed income was determined at Rs. 34,50,350/-. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) who has since sustained the said findings and the appeal of the assessee has been dismissed. Against the said order, the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR submitted that the AO has erred in law and facts in reopening the assessment proceedings under section 147 of the Act. In this regard, our reference was drawn to the reasons so recorded by the AO which are contained at page 21-22 of assessee’s paperbook and it was submitted that in para 2 of the said reasons, the AO has stated that no return of income has been filed by the assessee for A.Y. 2012-13. Thereafter, in para 6 again, the AO has stated that since no return of income has been filed, the source of cash deposit in the bank account remained unexplained. It was submitted that such reasons were factually incorrect as not only Income Tax return was filed but the same was also subject to the regular assessment proceedings u/s 143(3) as find mention in the order so passed by the AO itself and our reference was drawn to the copy of the assessment order passed under section 143(3) dt. 30/03/2015 placed as part of the assessee’s paper book. It was further submitted that notice under section 148 was issued on 11/03/2019 and before that, an enquiry letter was issued by the ITO Ward-5, Yamuna Nagar on 15/02/2019 and in response to which, the assessee had filed response on 19/02/2019 informing the ITO Ward-5, Yamunanagar that the assessment has already been completed earlier under section 143(3) and copy of the assessment order was also submitted as part of its written submission. It was accordingly submitted that the AO has recorded incorrect factual findings while reopening the assessment proceedings that no return of income has been filed by the assessee and no response has been filed in response to enquiry conducted prior to issuance of notice. It was submitted that the same shows lack of application of mind on the part of the AO while recording the reasons and it is a settled position that where reopening has been done on incorrect or non-existent facts, the reassessment proceedings cannot be sustained and deserves to be set aside and in support, reliance was placed on the decision of Hon’ble Punjab & Haryana High Court in case of CIT vs. Atlas Cycle Industries(1989) 180 ITR 319, Coordinate Chandigarh Benches decision in case of Baba Kartar Sing Dukki Educational Trust (ITA No. 444 to 446/Chd/2014 dt. 29/05/2015) and in case of Gunjan Arora Vs. ITO (ITA No. 450/Chd/2023 dt. 15/05/2024).

7. It was further submitted that assessment for the impugned assessment year 2012-13 has been reopened by issuing notice under section 148 on 11/03/2019 i.e beyond 4 years from end of the relevant assessment year and as per the proviso to Section 147 where the assessment has already been completed under section 143(3), the AO was required to record satisfaction that income has escaped assessment due to failure of the assessee to disclose truly and fully material facts. It was submitted that in the instant case, there is no satisfaction which has been recorded by the AO as far as nature of failure on the part of the assessee to disclose which all facts are not true and correct. It was submitted that the same is again a jurisdictional defect and on this ground as well, the initiation of reassessment proceedings deserves to be set aside and in support reliance was placed on the decision of Hon’ble Punjab & Haryana High Court in case of Duli Chand Singhania Vs. Asst. CIT (2004) 269 ITR 192.

8. Per contra, the Ld. DR submitted that the AO was in receipt of non- PAN AIR information that the assessee had deposited cash amounting to Rs. 34,50,350/- in his bank account maintained with Punjab National Bank, Jagdholi, Yamuna Nagar. Further, the AO also referred to the information available in the AST Portal and wherein it was found that no return of income has been filed by the assessee for the impugned A.Y 2012-13. Thereafter, the AO sought information under section 133(6) from the PNB which confirms that the cash of Rs. 34,50,350/- has been deposited in the bank account maintained by the assessee with Punjab National Bank. Thereafter, the AO issued letter dt. 17/07/2018 seeking information under section 133(6) to the assessee to explain the source of cash deposit in its bank account. However, there were no response to the said letter, thereafter the AO based on tangible information in his possession that there were cash deposit in the bank account maintained by the assessee and the source of which has not been explained by the assessee by furnishing any documentary evidence and the fact that no return of income has been filed and which is apparent from the AST Portal, the AO recorded his