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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
Per Dr. M. L. Meena, A.M.:
Both the appeals have been filed by the assessee against the
common order even dated 24.01.2018 passed by the Ld. Commissioner of
Income Tax (Appeals), Bathinda in respect of the Assessment Year 2009-
10, challenging therein impugned additions on account of the cash deposit
in the appellants bank a/c, being claimed out of the sale proceeds of the
agricultural land.
Grounds of appeal in ITA No. 147/Asr/2018
“1. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the re-opening the assessment on the basis of vague information.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the re-opening assessment as the reasons recorded to re-open the case are no reasons in the eye of law.
That the learned Pr. CIT, Bathinda erred in giving sanction to re-open the case mechanically and without application of mind on the facts of the case. So, the reopening is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the notice issued u/s 148 was not served upon the assessee. So, the re- assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, as the learned AO has not considered the relevant documents supplied during
3 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO the course of assessment proceedings. So, the re-opening as well as re- assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not following the decisions of the jurisdictional Bench of ITAT on account of judicial discipline which were directly on the point in dispute. Accordingly, the re-assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) should have deleted the whole addition in the hands of the assessee as is clear that he has deposited the money in his bank account out of the sale proceeds of his ancestral agricultural land sold in financial year 2008-09 (December 2008) and on money received from the purchasers.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) should have deleted the whole addition in the hands of the assessee as is clear that her husband has deposited the money in the bank account of the assessee out of the sale proceeds of his agricultural land sold in financial year 2008-09 (December 2008) and on money received from the purchasers.
That as the agricultural land sold belongs to the HUF of the assessee, so the assessment should have been made in the hands of the HUF of the assessee not in individual status. So, the assessment is liable to be quashed.
That in any case, the sale proceeds of agricultural land sold in financial year 2008-09 (December 2008) in question is agricultural income. So, it is tax free income. Accordingly, the addition made as income from other sources u/s 69A is liable to be deleted.
That any other relief may kindly be granted to the assessee to whom she is found entitled at the time of hearing of appeal.”
Grounds of appeal in ITA No. 148/Asr/2018
4 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO “1. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the re-opening the assessment on the basis of vague information.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the re-opening assessment as the reasons recorded to re-open the case are no reasons in the eye of law.
That the learned Pr. CIT, Bathinda erred in giving sanction to re-open the case mechanically and without application of mind on the facts of the case. So, the reopening is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the notice issued u/s 148 was not served upon the assessee. So, the re- assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, as the learned AO has not considered the relevant documents supplied during the course of assessment proceedings. So, the re-opening as well as re- assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not following the decisions of the jurisdictional Bench of ITAT on account of judicial discipline which were directly on the point in dispute. Accordingly, the re-assessment is liable to be quashed.
That on the facts and in the circumstances of the case and in law, the learned CIT(A) should have deleted the whole addition in the hands of the assessee as is clear that he has deposited the money in his bank account out of the sale proceeds of his ancestral agricultural land sold in financial year 2008-09 (December 2008) and on money received from the purchasers.
That as the agricultural land sold belongs to the HUF of the assessee, so the assessment should have been made in the hands of the HUF of the assessee not in individual status. So, the assessment is liable to be quashed.
That in any case, the sale proceeds of agricultural land sold in financial year 2008-09 (December 2008) in question is agricultural income. So, it is
5 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO tax free income. Accordingly, the addition made as income from other sources u/s 69A is liable to be deleted.
That any other relief may kindly be granted to the assessee to whom she is found entitled at the time of hearing of appeal.”
There are common grounds of appeal on identical facts in both these
appeals, and even arising out of the common order of the ld. CIT(A).
Therefore, these appeals are heard together and disposed by a common
order for the sake of brevity. The I.T.A. No. 147/Asr/2018, in respect of the
Assessment Year: 2009-10 is taken as a lead case for discussion.
Briefly the facts as per record are that both these appeals were being
decided together by the Ld. CIT(A) for the reason that there are identical
issues being involved. It comes out of the records that the husband of Smt.
Manjit Kaur (one of the appellants), namely Sh. Lakhwinder Singh who happen to be brother of Sh. Baljinder Singh (the 2nd appellant). The
Assessing Officer noticed that Smt. Manjit Kaur has deposited a sum of Rs.
53,00,000/- in her bank account and similarly Sh. Baljinder Singh has
deposited a sum of Rs. 32,05,000/- in his bank account during the year
under consideration. This information culminated in to issue of notice u/s
148 of Income Tax Act on 21/03/2016 in both the cases after recording
reasons that income has escaped assessment. In both the cases
assessments were completed by issue of order on 16/12/2016 u/s 143(3) of
6 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO the Act with an addition of Rs. 34,82,750/- and Rs. 22,97250/- in the case
of Smt. Manjit Kaur and Sh. Baljinder Singh respectively by the AO. The
AO discussed that in the case of Smt. Manjit Kaur an addition of Rs.
34,82,750/- was made on account of unexplained deposits in the bank
account providing benefit of Rs. 907,750/- being the receipts on account of
sale of agricultural land in December 2008 against peak deposit of Rs.
43,90, 500/-. and similarly, in the case of Sh. Baljinder Singh, the
Assessing Officer made addition of Rs. 22,97,250/- after providing benefit
of Rs. 907,750/- being the receipts on account of sale of agricultural land in
December 2008 and also taking the peak credit into consideration.
Ground No. 1 to 6 are interlinked to each other pertaining to the issues of validity of reasons for reopening of the assessment u/s 148 of the Act; sanction by PCIT under section 151 and non service of notice and thus, validity of reassessment proceeding.
6.1 In appeal, the Ld. CIT(A) has confirmed the finding of the AO on the issue of validity of reasons and PCIT’s section u/s 151 of the Act, by observing as under:
“5.0 Non service of 148 notice: it has been contended that no notice under section 148 of the Income Tax Act was served upon the appellant, however in the remand report the Assessing Officer clearly mentioned that the notice was issued but it remained non-complied. There is difference between not sending the notice/non-issue of the notice by the Assessing Officer and non-compliance on behalf of the assessee. The mandate under the provisions of Income Tax Act
7 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO is that the reassessment notice must be issued. Moreover, the appellant participated in the assessment proceedings actively and did not raise any objection which gets covered under section 292 BB of Income Tax Act. The appellant not only participated in the assessment proceedings but also adduced evidence in support of the contentions on merit. No objection was taken to the reassessment proceedings. The contention of the appellant that the objections can be filed at the state of appeal also for the first time lacks merit because the safeguard of GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 179 CTR (SC) 11 is available at the assessment stage which being the first stage of mounting of reassessment proceedings. The appellant has failed to convince that the due procedure has not been followed. 5.1.2. At the outset, it would be relevant to examine the decision in the above- mentioned case from a different viewpoint also. The following needs immediate consideration: a) the case of Hindustan Lever Ltd. (supra) quoted above also mention is another aspect and legal principle which can be reproduced as, “Undoubtedly, at the stage of recording the reasons for reopening the assessment, all that is necessary is the formation of prima facie belief that an income has escaped the assessment and it is not necessary that the fact of income having escaped assessment is proved to the hilt”. The assessing officer when finds deposit of cash into bank account then at that stage he is not required to prove that the said cash would necessarily come to assessment. There can be surrounding circumstances which may result in prima facie belief that income has escaped assessment. The surrounding circumstances must found mention in the reasons recorded by the assessing officer. The courts cannot sit over the sufficiency of reasons but the only examination at that stage which can possibly be done has been laid down by the Hon’ble Court as “cause and effect relationship”. If the material in possession of the assessing officer can sufficiently show that there is a cause and effect of income having escaped, no fault can be found. b) The decision of Lakhmani Mewal Das (supra) was rendered while interpreting the provisions of section 147 of Income Tax Act in the pre- amended period. This section has undergone considerable change w.e.f 01.04.1989. In the earlier set up, besides reasons to believe with the assessing officer he was also required to prove that income has escaped assessment due to failure on the part of the assessee. In this case, the question of Hundi was in consideration which prompted
8 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO Hon'ble court to give a finding that there must be a rational connection showing that the income has escaped assessment due to failure on the part of the assessee. In the post amendment period there is no such requirement.
c) The observation that all cash deposits in the bank account may not be the income of the assessee and therefore any assumption that it has escaped assessment would be fallacious has to also at the same time need to be considered from the viewpoint that if a large cash has been deposited by a person who has not been subjected to tax, the onus would be up on such person to establish that the deposited cash is from explained sources. A prima facie assumption exist as has been laid down by Hon'ble court in the case of ACIT Vs Rajesh Jhaveri Stock Brokers P. Limited.291 ITR 500 SC which has been discussed here under. 5.1.3. In order to ascertain whether the decision of Hon’ble ITAT above and decisions in similar cases lays down on challenged and unfettered Legal postulate that cash deposit in bank accounts by itself is insufficient for mounting of reassessment, it would be useful to refer to a series of decided cases as under:
a) ACIT Vs Rajesh Jhaveri Stock Brokers P. Limited.291 ITR 500 SC: At the time of initiation of re-assessment proceedings only reason to believe that income chargeable to tax has escaped assessment is sufficient to invoke jurisdiction of AO to initiate reassessment proceedings.
“Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in
9 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. P. Ltd. [1996] 217 ITR 597 (SC) ; Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC).
The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied: firstly the Assessing Officer must have reason to believe that income, profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is, however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso.
So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued.”
10 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO b) A.L.A. Firm v. CIT [1991] 189 ITR 285 (SC)
The jurisdiction of the Income-tax Officer to reassess income arises if he has, in consequence of specific and relevant information coming into his possession subsequent to the previous concluded assessment, reason to believe that income chargeable to tax had escaped assessment. It was held that even if the information be such that it could have been obtained by the Income-tax Officer during the previous assessment proceedings by conducting an investigation or an enquiry but was not in fact so obtained, it would not affect the jurisdiction of the Income-tax Officer to initiate reassessment proceedings, if the twin conditions prescribed under section 147 of the Act are satisfied.
c) Raymond Woollen Mills Limited. Vs ITO 236 ITR 34 SC In this case, we do not have to give a final decision as to whether there is suppression of material facts by the assessee or not. We have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage. We are of the view that the court cannot strike down the reopening of the case in the facts of this case. It will be open to the assessee to prove that the assumption of facts made in the notice was erroneous. The assessee may also prove that no new facts came to the knowledge of the Income-tax Officer after completion of the assessment proceeding. We are not expressing any opinion on the merits of the case. The questions of fact and law are left open to be investigated and decided by the assessing authority. The appellant will be entitled to take all the points before the assessing authority. The appeals are dismissed.
d) Gurera Gas Cylinders Pvt. Ltd. vs CIT 258 ITR 170 P&H A perusal of the reasons recorded by respondent No. 2 shows that he had applied his mind to the relevant material and formed a belief that the petitioner had not disclosed complete facts which could enable it to claim deduction under section 80-1 and, therefore, its income had not been properly assessed. At this stage, the court can neither go into the sufficiency or adequacy of the reasons recorded by respondent No. 2 nor can it interfere with the notice simply because on an overall reappraisal of material, a different opinion may be formed.
e) Jawand Sons Vs. CIT 326 ITR 39 P&H
11 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO Under section 147 of the Act, after its amendment with effect from April 1, 1989, wide power has been given to the Assessing Officer even to cover cases where the assessee had fully disclosed the material facts. The only condition for action is that the Assessing Officer should have reason to believe that income chargeable to tax had escaped assessment. Such belief can be reached in any manner, and is not qualified by a pre-condition of full and true disclosure of material facts by the assessee as contemplated in the pre-amended section 147(a) of the Act.
f) Sewak Ram Vs ITO 236 CTR 462 (P&H) After amendment of s. 147 w.e.f. 1st April, 1989, reassessment can be initiated even if there is disclosure in the return if without considering the particulars of the return, processing is done under s. 143(1) or assessment is made under s. 143(3). No doubt, mere change of opinion by itself is not a ground for reassessment as held in the judgments relied upon on behalf of the assessee but if there are reasons to believe that tax has escaped, reassessment is permissible. Reasons can be even on the basis of particulars of the return without any new material.
g) Aditya and Co. Vs CIT 279 ITR 47 P&H In the case of an intimation under section 143(l)(a) of the Act the question of examination of the material by the Assessing Officer did not arise at that stage. Therefore, in case of intimation u/s 143(1), re-opening cannot be challenged on the ground of change of opinion.
h) Tilak Raj Bedi Vs. JCIT 319 ITR 385 P&H The power of reassessment can be validly exercised if satisfaction is arrived at after following due procedure that income had escaped assessment. Such satisfaction may involve change of opinion but was not at par with "mere change of opinion".
i) Pb. State Cooperative Agriculture Dev Bank Vs. CIT 207 CTR 352 P&H The notice for reassessment is not based merely on change of opinion but also on subsequent judgment of the Hon'ble Supreme Court in U.P. Co-operative’s case (1999) 237 ITR 574 (SC). There was material justifying invoking of jurisdiction under s. 147 of the Act.
j) Grover Nursing Home 248 ITR 493 P&H An analysis of the aforementioned decisions of the Supreme Court makes it clear that the court can invalidate a notice issued under section 148 of the Act only if it
12 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO is satisfied that no material was available before the Income-tax Officer on the basis of which he could form a belief that the income chargeable to tax had escaped assessment or that the said belief was not at all bona fide or was based on vague, arbitrary and nonspecific information. However, the court cannot go into the sufficiency of the reasons for forming the belief and sit in appeal over the opinion formed by the competent authority.
k) Consolidated Photo & Finvest Ltd. Vs. ACIT 281 ITR 394 Del Action u/s 147 permissible even if AO gathered reasons to believe that income has escaped assessment from the very same record which has been subject matter of completed asstt. 5.1.4 On the basis of discussion above, it can be safely concluded that the facts of each case are different and it cannot be universally concluded that simple information cash deposited in bank account is insufficient to come to a conclusion that income has escaped assessment. There can be occasions where the assessing officer does not require any other information and still come to believe that income has escaped assessment. It is also settled principle of law that at the state of notice the assessing officer does not required to possess material to conclude that income has escaped assessment without any doubt. At the state of notice a prima facie belief is sufficient for issue of notice. The explanation of the appellant is considered after the issue of notice and at this stage the assessing officer may file the reassessment proceedings as has been elaborated the explained by Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) where it has categorically been held that in the light of objections filed by the assessee, the Assessing Officer would pass a detailed order.
6.0 In consideration of discussion in paragraph 4 and 5 above, the grounds of appeal no. 2, 3, 4 and 5 are dismissed.
7.0 Ground of Appeal no. 6: This ground of appeal is related to legality of directions issued by the joint Commissioner invoking section 144A of the Income Tax Act. However, neither in the assessment order nor in any of the written submissions filed by the appellant this issue has been pressed upon, therefore the same is dismissed.
8.0 Ground of Appeal no. 7: HUF capacity: In this ground of appeal, the appellant’s contention was that the Assessing Officer has committed an error in reopening the case of individuals/appellant whereas the property was sold which belong to HUF and hence the reassessment is liable to be quashed.
13 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO 9.1 In the appellate proceedings, the appellant vociferously pleaded his case by showing on record the entries in revenue records and also submitted the family tree of the appellant. In support of contention in number of judgments in respect of Hindu succession act as applicable on the appellant were submitted.
I have given careful consideration to the contention above and find that 9.2 the entire set of argument is misplaced because the appellant has lost sight that his case has been reopened based upon the fact that there was cash deposit in his bank account which has not been explained. The contention of the appellant would have been considered if the Assessing Officer was bringing to tax sale consideration/capital gains of sale of agricultural land belonging to HUF in the hands of individual appellant. On the contrary, in the present case it is appellant who wants the Assessing Officer to believe that source of cash is emerging from sale consideration of agricultural land (it is immaterial whether the said land belonged to appellant himself or to his HUF). The Assessing Officer did not believe any of the contention in respect of sale of agricultural land and more so that the issue was not in front of the Assessing Officer at all. The contention of the appellant is misplaced because Assessing Officer neither assessed the transaction of sale of the said agricultural land not decided it’s status in his impugned order. The ground of appeal is dismissed.
On Merits: The appellants have failed to submit even iota of evidence in support of explanation of cash deposit in the bank account. The only oral submissions have been made that the land in question has been sold at much higher price than the registered price. Both the appellant’s did not make any effort to get the statement of purchasers recorded that the price paid by them was higher. This by itself is sufficient to conclude that the entire story is concocted and without any basis. The grounds of appeal on merits are also dismissed.”
At the time of hearing, the Ld. AR submitted that the learned CIT(A) had erred on the facts and in law, in upholding the re-opening of the assessment on the basis of vague information; that the reasons recorded to re-open the case are no reasons in the eye of law; that the learned Pr. CIT, Bathinda erred in giving sanction to re-open the case mechanically and without application of mind on the facts of the case; that the notice issued
14 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO u/s 148 was not served upon the assessee; that on the facts and in the circumstances of the case and in law, as the learned AO has not considered the relevant documents supplied during the course of assessment proceedings and that the learned CIT(A) erred in not following the decisions of the jurisdictional Bench of ITAT on account of judicial discipline which were directly on the point in dispute. Accordingly, the re- opening as well as re-assessment is liable to be quashed.
Per Contra, the Ld. DR Supported the impugned order. He contended that the LD. CIT (A) has passed a speaking and reasoned order following the judgement of higher judicial forums as applicable to the facts of the Case. He further placed reliance on the judgement in the case of “Rakesh Gupta vs. Commissioner of Income-tax, Panchkula”, [2018] 93 taxmann.com 271, in support of sanction granted by the PCIT u/s 151 of the Act.
We have heard rival contentions, perused the material on record and considered the written submission of the assessee and the citations relied upon by both the sides. Admittedly, the Assessing Officer has recorded reasons u/s 147 of Income Tax Act stating that there were cash deposits in the bank account of Smt. Manjit Kaur and Shri Baljinder Singh, the appellants, amounting to Rs. 53,00,000/- and Rs. 34,82,750/- respectively and they have not filed the return of income. Therefore, Ld. CIT(A) held that the AO has valid reasons to believe that income has escaped assessment. Accordingly, the learned CIT appeal has upheld the validity of the reopening of the assessment following the judgements of the Hon’ble apex court and Jurisdictional High Court, higher judicial forum and the
15 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO jurisdictional bench, as above. The Ld. AR has failed to furnish any judgement of jurisdictional High Court on parity of facts, in rebuttal. In view of the matter, we find no infirmity in the finding of the CIT appeal on the issue of validity of the reopening of assessment under section 147 of the act and accordingly, the CIT appeal order is upheld on the issue of validity of reasons for reopening of the assessment.
9.1 In various decisions ITAT and decisions of higher Judicial forums as above on similar facts lays down, unfettered Legal postulate that cash deposit in bank accounts by itself is sufficient for mounting of reassessment.
9.2 In the case of ‘ACIT Vs Rajesh Jhaveri Stock Brokers P. Ltd.’, 291 ITR 500 the Apex Court observed that at the time of initiation of re- assessment proceedings only reason to believe that income chargeable to tax has escaped assessment is sufficient to invoke jurisdiction of AO to initiate reassessment proceedings as under:
“Section 147 authorizes and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese
16 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. P. Ltd. [1996] 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC).
9.3 Accordingly, the grounds number1 and 2 of appellant assessee are dismissed.
The next issue is that the PCIT Bhatinda, has granted approval under section 151 of the act, without application of mind and that non service of Notice.
The Ld. Counsel submitted that the appellants cases have been reopened beyond 4 years and therefore, the PCIT’s sanction were taken in these cases. The Ld. Counsel argued that while granting sanction, the PCIT, Bathinda had mentioned simply “yes” which reflect that the PCIT has granted sanction in mechanical manner without application of mind on the facts of the case by giving sanction in 62 cases at a time in one go to the AO, Ward -2(1), Bathinda. The AR further argued that although notice u/s 148 was issued on 21.03.2016 to the assessee through the registered post
17 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO and it was not served upon the assessee and the service of notice is preconditioned for validity of the reassessment proceedings. It is noted that the Assessing Officer issued notice under section 148 of Income Tax Act send through registered post which was never received back and hence the CIT (A) held that it was deemed to be served.
11.1 The CIT(A) discussed that in the remand report the Assessing Officer clearly mentioned that the notice was issued but it remained non- complied. There is difference between not sending the notice/non-issue of the notice by the Assessing Officer and non-compliance on behalf of the assessee. The mandate under the provisions of Income Tax Act is that the reassessment notice must be issued. Moreover, the appellant participated in the assessment proceedings actively and did not raise any objection which gets covered under section 292 BB of Income Tax Act. The appellant not only participated in the assessment proceedings but also adduced evidence in support of the contentions on merit. No objection was taken to the reassessment proceedings. The contention of the appellant that the objections can be filed at the stage of appeal also for the first time lacks merit because the safeguard of GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 179 CTR (SC) 11 is available at the assessment stage which being the first stage of mounting of reassessment proceedings. The appellant has failed to convince that the due procedure has not been followed.
11.2 It is seen from the assessment record that there are number of notices which were sent to the appellant but there was no compliance. The order for a-fixture was done by the AO on 23/11/2017 which was executed. The notice for reassessment was issued through speed post which has not
18 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO returned back making a presumption that the same has been served. Hon'ble Supreme Court in the case of Income Tax officer, Etawah v. Dharam Narain [2018] 253 Taxman 479 (SC) held that the service of notice on representative of assessee on ground of non-availability of assessee is deemed service of notice on assessee and sufficient compliance of requirement of section.
11.3 Having considered, the assessee’s written submissions on legal grounds along with Paper Book and hearing the Ld. additional CIT DR on perusal of the records, we find that the legal issue in the case of the assessee is not covered with any decision of the ITAT Amritsar bench on the parity of facts. In our view, the Pr. CIT has given approval for re- opening the case as per the mandate and proper application of mind. So, the re-opening is valid in law and accordingly upheld. Admittedly, the Assessing Officer issued notice under section 148 of Income Tax Act on the same date through registered post which was never received and hence, it is deemed to have been served. The notice for reassessment was issued through speed post which has not returned back making a presumption that the same has been served. The CIT appeal has rightly placed reliance on the Hon'ble Supreme Court in the case of Income Tax officer, Etawah v. Dharam Narain [2018] 253 Taxman 479 (SC) wherein it is held that the service of notice on representative of assessee on ground of non-availability of assessee is deemed service of notice on assessee and sufficient compliance of requirement of section. Accordingly, the issue of validity of service of notice under section 148 is upheld. Thus, ground No. 4 of the appeal is rejected
19 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO 11.4 The appellant assessee has referred in its written submissions that the sanction letter is placed at Page 2 of Paper Book, where the Pr. CIT, Bathinda has mentioned simply “Yes” while giving sanction. So, it is contended that the Pr. CIT, Bathinda gave sanction to re-open the case mechanically and without application of mind on the facts of the case. He placed reliance on the Amritsar Bench. However, the judgment of the Hon’ble Jurisdictional High Court of Punjab & Haryana in the case of “Rakesh Gupta vs. Commissioner of Income-tax, Panchkula”, [2018] 93 taxmann.com 271, was not brought before the Bench wherein it was held that-
“………………………the case before us is entirely different. We have found that the reasons recorded by the AO justify the initiation of proceedings under Sections 147 and 148. As the Principal Commissioner agreed with these reasons, it was not necessary for him in his order according sanction to reiterate the reasons furnished by the AO. There is nothing that indicates that he did not apply his mind to the reasons furnished by the AO.
Reasons to believe are there. The reasons are based on tangible material. The return and account books of assessee had not undergone scrutiny at the time of assessment. The information is specific and not vague. A reasonable person can form an opinion on the basis of the material. The information received could form the basis of reason to believe that income has escaped assessment and the re-opening is not on mere suspicion. Hence, the assumption of jurisdiction is in accordance with law.
11.5 Respectfully, following the Hon’ble Jurisdictional High Court in case of “Rakesh Gupta vs. Commissioner of Income-tax”,(Supra) we uphold the validity of reopening of assessment on both the counts that valid reasons recorded by the assessing officer and valid sanction accorded by the
20 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO landed PCIT under section 151 of the act by way of writing “Yes” in the approval form, as we understand that the PCIT was not required to reiterate the reasons recorded by the assessing officer under section 147 of the act. Thus, ground numbers 3, 5 and 6 of the appellant assessee are rejected.
In ground No. 7 to 10 the appellant challenged that the amount deposited was out of sale proceeds of Agricultural land of HUF and the AO has committed an error in reopening the case of individuals/appellant and hence the reassessment is liable to be quashed.
12.1 At the time of hearing, the Ld. AR argued that on the facts of the case the learned CIT(A) was required to have deleted the whole addition in the hands of the assessee as he has deposited the money in his bank account out of the sale proceeds of his ancestral agricultural land sold in financial year 2008-09 (December 2008) and on money received from the purchasers; that the appellant assessee’s husband has deposited the money in the bank account of the assessee out of the sale proceeds of his agricultural land sold in financial year 2008-09 (December 2008) and on money received from the purchasers and hence the agricultural land sold belongs to the HUF of the assessee, so the assessment should have been made in the hands of the HUF of the assessee not in individual status and He prayed that the assessment is liable to be quashed. The Ld. AR also argued that in any case, the sale proceeds of agricultural land sold in financial year 2008-09 (December 2008) in question is agricultural income and it is tax free income. Accordingly, the addition made as income from other sources u/s 69A is liable to be deleted.
21 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO 12.2 The Ld. AR vehemently reiterated before us, what the submissions made by the assessee before the Ld. CIT(A) along with some documents of revenue records and the family tree of the appellant and judgments in respect of Hindu succession act as applicable according to him. The Ld. CIT(A) has discussed that the entire set of argument is misplaced because the appellants have lost sight that their cases have been reopened based upon the fact that there were unexplained cash deposit in their bank account which have not been explained. The CIT(A) has discussed that the contention of the appellants would have been considered if the Assessing Officer was bringing to tax sale consideration/capital gains of sale of agricultural land belonging to HUF in the hands of individual appellant. In the present case, it is appellants who wanted the Assessing Officer to believe that source of cash was emerging from sale consideration of agricultural land. In our view, it is immaterial and irrelevant whether the said land belonged to appellant himself or to his HUF. We understand that the issue is neither capital gains nor cash deposit in the bank A/c of HUF nor arising out of the impugned order and hence, the Ld. CIT (A) has rightly held that contention of the appellant was misplaced because Assessing Officer neither assessed the transaction of sale of the said agricultural land nor it has questioned the status of the person to be decided in the impugned order.
12.3 Accordingly, the contention of the LD. AR that as the agricultural land sold belongs to the HUF of the assessee, so the assessment should have been made in the hands of the HUF of the assessee is rejected. Similarly, the appellant claim that the sale proceeds of agricultural land sold in financial year 2008-09 (December 2008) in question are agricultural
22 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO income is tax free income challenging the addition made under the head income from other sources u/s 69A is also rejected. Thus, the ground no. 7 to 10 of appeal are dismissed.
However, the Ld. AR for the assessee requested to remand the matter to the AO for verification of source of cash deposit in bank, by way of reiterating the claim of source out of sale proceeds of land by the husband. Since, this ground is neither raised by the appellants in quantum addition on merits nor any additional evidence filed, even an iota of evidence have not been submitted before us or before the authorities below to explain and substantiate the source of the disputed cash deposits in the appellants bank account at the time of hearing. Thus, the ground and the prayer being general in nature, hence, dismissed as not maintainable.
The facts of the matter in I.T.A. No. 148/Asr/2018, in respect of the Assessment Year: 2009-10 are similar to the facts in I.T.A. No. 148/Asr/2018, in respect of the Assessment Year: 2009-10 except variation of amount of cash deposit in bank. Therefore, our observation and finding given in I.T.A. No. 147/Asr/2018, in respect of the Assessment Year: 2009- 10 shall be applicable in mutatis mutandis to the matter in I.T.A. No. 148/Asr/2018, in respect of the Assessment Year: 2009-10.
In the result, both the appeals are disposed off in the terms indicated as above.
Order pronounced in the open court on 24.08.2022.
Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member
23 ITA Nos. 147 & 148/Asr/2018 Manjit Kaur & Baljinder Singh v. ITO *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order