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2017 (6) TMI 491 - ITAT DELHI

2017 (6) TMI 491 - ITAT DELHI - TMI - Assumption of jurisdiction u/s 147 to 151 - unexplained bank deposits - Held that:- AO did not apply in his independent mind to the information received from AIR. Since no proceedings were pending before AO when he issued the letter of enquiry to the assessee, therefore such enquiry letter was not valid in eyes of law. The assessee was not required to respond to this invalid and non est letter of inquiry issued by the AO. The AO in the absence of reply from .....

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for reopening of the assessment. - Decided in favour of assessee. - ITA Nos. 970,971/Del/2017 - Dated:- 7-6-2017 - Shri Bhavnesh Saini, Judicial Member Assessee by : Dr. Rakesh Gupta Shri Somil Aggarwal, Advocate Department by: Ms. Bedobani, Sr. DR ORDER Per Bhavnesh Saini, Judicial Member Both the appeals by the same assessee are directed against different orders of Ld. CIT(A) dated 3rd November, 2016 for asstt. year 2011-12 and dated 16th November, 2016 for asstt. year 2012-13. Ld. Representa .....

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f ₹ 13,91,657/-. 4. Briefly the facts of the case are that assessee filed return of income declaring income at ₹ 2,37,940/- on 29th March, 2013. The AO noticed that there were total cash deposits of ₹ 63,27,996/- in assessee s saving bank account with Punjab National Bank, Corporation Bank and Axis Bank, Rudrapur. The assessee was asked to explain the cash deposits within the time. However no reply is filed. The AO thereafter recorded the reasons for the opening of the assessme .....

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(A). However the Ld. CIT(A) dismissed both the grounds of appeals of the assessee in principle, however, AO was directed to compute the income of assessee after giving credit to the turn over already disclosed u/s 44AD of the I.T. Act. The appeal of assessee was thus partly allowed. 6. Ld. Counsel for assessee referred to the reasons recorded for reopening of assessment as are reproduced in para 3.3 of the appellate order the same reads as under:- In this case on AIR information was received tha .....

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ent other than mentioned above effected during the year with full details. (ii) Produce your statement of all Bank Account in your name or in name of your dependent family members. Also give detailed narration of each credit and debit entry reflecting in Bank Statement explaining the source/purposes thereof. (iii) If you are farmer, furnish copy of khasra-khatuni evidencing ownership proof and also the proof of selling of agriculture produce relating to the period under consideration. (iv) If yo .....

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ons for initiating the proceedings to tax these transaction in the hand of the assessee by presuming that these are not disclosed to Income Tax Department. The assessee even after receiving the letter himself, did not tendered any reply till date and till now. This is sufficient fact to establish that these transaction/deposits are not disclosed in the regular return of income of assessee. Therefore, it is clear that amount of ₹ 63,27,996/- has not been brought to tax by the assessee. Acco .....

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bsence of reply of the assessee formed the opinion for reopening of the assessment. The deposit in the bank account by itself would not give reasons to the AO to believe income has escaped assessment. Mere deposit in the bank account would not prima facie makes out a case of reopening of the assessment. He has further submitted that the AO in the reasons recorded incorrect fact of deposits of ₹ 63,27,996/- despite the total deposits were only to the tune of ₹ 41.15 lacs. This fact is .....

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deposits constituted undisclosed income, over-looking the fact that the source of the deposits need not necessarily be the income of the assessee, the proceedings is neither countenanced, nor sustainable in law. 2. Order of ITAT Delhi Bench in the case of Smt. Rajni vs ITO and others in ITA No. 854/Del/2016 dated 6.11.2017 in which in para 12 it was held as under :- 12. With the assistance of the Ld. Representatives, I have gone through the record carefully. Section 147 of the Act contemplates t .....

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xtracted above would indicate that the Ld. AO has basically not made reference to any material possessed by him except the AIR communicated to him. It is pertinent to observe that he has not analysed the information in right perspective and he sought to reopen by conceiving a fact that the assessee failed to respond to the query raised about this investment. As noticed in the submissions of Ld. Counsel for the assessee, I am of the view that there was no proceedings pending before the AO when he .....

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. Apart from the above, it is to be seen that in the reasons the AO has nowhere alleged escapement of income. The thrust of the reasoning would show that he want to make an enquiry about the investment. No doubt, for reopening of an assessment, he has to just form a prima facie opinion and not to arrive at a firm conclusion, but, the formation of a prima facie opinion should also depict escapement of income. It is also pertinent to observe that when all these pleas were raised before the first a .....

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s no nexus between reasons vis-à-vis formation of belief exhibiting the escapement of income. Taking into consideration all these aspects, I am of the view that the AO is not justified in reopening of the assessment afresh. I allow this ground of appeal and quash the assessment. As far as other issues are concerned, since reopening of assessment has been held as bad and not in accordance with the law, therefore, I deem it not necessary to deal with the other grounds of appeal as they have .....

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ncome has escaped assessment and reopening for making fishing inquiry was not valid. 8. On the other hand Ld. DR submitted that prima facie case was made out for reopening of the assessment. Therefore AO correctly reopened the assessment and relied upon decision of the Hon ble Supreme Court in the case of Raymond Woollen Mills Ltd. 236 ITR 34. 9. I have considered rival submissions. It is not in dispute that assessee filed return of income prior to issue of notice u/s 148 of the I.T. Act. The no .....

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The contention of the assessee was found correct by the Ld. CIT(A). It is therefore clear that the AO while recording the reasons for reopening of the assessment recorded incorrect facts in the reasons for reopening of assessment. Therefore reopening of the assessment u/s 147 is clearly invalid and bad in law. I rely decision of Hon ble Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries 180 ITR 319. Further the AO after obtaining the AIR information wanted to verify t .....

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