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2024 (3) TMI 734 - HC - Income TaxReopening of assessment - Notice issued after more than four years of the expiry of relevant assessment year - as alleged Cello Stationery Product (Firm) has deposited cash in its bank account - partnership firm was converted into a private limited company - HELD THAT:- Reason to believe recorded that the firm M/s. Cello Stationery Products used to exist with effect from 1st April 2008 and in the year 2009, the partnership firm was converted into a private limited company. The entities were allotted different PANs due to which while filing AIR Report, bank has erroneously quoted PAN for the firm instead of the company. In the reasons, it is also recorded that in response to a notice under Section 133(6) of the Act, HDFC Bank, Malad (East) Branch has stated that the Account has cash deposits for AY 2013-2014 and the account was opened for CSPPL on 29th May 2008 and assessee has made total cash deposits of Rs. 1,87,39,187/- for FY 2012-2013. The HDFC Bank has also confirmed by its letter that there were nil cash deposits for firm Cello Stationery Products. Therefore, the AO should have recorded in the reasons to believe as to how he has come to the conclusion that apart from the amount of Rs. 1,87,39,187/- certified to have been deposited in cash by HDFC Bank, there is another deposit of Rs. 1,86,33,520/-, because admittedly there is only one bank account. Moreover, in the certificate which is annexed to the petition issued by the HDFC Bank giving details of cash deposited during the said financial year, the cash deposited is in two parts, i.e., more than Rs. 2,00,000/- and less than Rs. 2,00,000/-. The total deposit of more than Rs. 2,00,000/- comes to Rs. 1,86,33,520/- and cash deposit of less than Rs. 2,00,000/- is Rs. 1,05,667/- and the total of these two figures is Rs. 1,87,39,187/-. Therefore, the AO without examining these details has recorded the reasons to believe, which indicates non-application of mind. When these details have been brought to his notice admittedly in the objections filed by Petitioner, the AO instead of dealing with this duplicity has simply stated that those details will be considered during the reassessment proceedings. He has also not dealt with Petitioner’s assertion in the objections that those amounts deposited in cash have been offered to tax. Strangely even in the affidavit-in-reply, Respondents after admitting that the bank has certified that only Rs. 1,87,39,187/- were deposited in cash during FY 2012-2013, has not explained as to how they proposed to reopen the assessment on the allegation that a sum of Rs. 3,73,72,707/- chargeable to tax has escaped assessment. It clearly shows that neither there was any independent application of mind by the AO while recording reasons nor application of mind by the sanctioning authority while giving approval. The reassessment proceeding was made on wrong and incorrect facts and therefore, makes the reopening null and void. The assessee has pointed out that there was only one bank account where only Rs. 1,87,39,187/- has been deposited in cash. HDFC bank also has issued such a certificate in response to notice that it received u/s 133(6) of the Act. The AO in his order disposing the objections does not deal with the factual position asserted by Petitioner. Therefore, there could be no reason for the AO to believe that income chargeable to tax has escaped assessment. Decided in favour of assessee.
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