TMI Blog2019 (8) TMI 1484X X X X Extracts X X X X X X X X Extracts X X X X ..... . Appeal of assessee is allowed. - ITA No. 7403/Del/2018, ITA No. 7404/Del/2018 - - - Dated:- 1-8-2019 - Sh. Bhavnesh Saini, Judicial Member Assessee by : Sh. Anup Sharma, Adv. And Sh. Sanjay Prashar, Adv. Revenue by : Sh. S. L. Anuragi, Sr. DR ORDER Both the appeals by different assessees are directed against the orders of ld. CIT(A), Ghaziabad dated 28.09.2018 for assessment year 2010-11. 2. I have heard ld. Representatives of both the parties and perused the materials available on record. Both the parties mainly argued in the case of assessee Abdul Samad and have stated that issue is same in both the appeals, therefore, order in this case could not followed in the case of assessee Smt. Hameeda Begum. 3. In the case of assessee Abdul Samad, the assessee challenged the reopening of assessment u/s 147 of the Income Tax Act, 1961 and addition of ₹ 26,40,000/- being money deposited in the bank account. 4. The ld. Counsel for assessee referred to PB-1 which is reasons for reopening of assessment and submitted that cash deposit per se cannot be treated as income of the assessee. Therefore, reopening of assessment is illegal and bad in law. He ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Representatives of both the parties and perused the material on record. 3. In this appeal assessee challenged the assumption of jurisdiction u/s 147 to 151 of the I.T. Act and additions of ₹ 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 assessment and issued a notice u/s 148 of the I.T. Act on 16th March, 2014. No compliance was made. The assessee did not explain the source of the cash deposit in the bank accounts. The AO as per information obtained u/s 133(6) from the aforesaid banks calculated peak of the said accounts and made the addition of ₹ 13,91,657/- treated the same as income from business for year under consideration. 5. The assessee challenged the reopening of the assessment as well as addition on merit before Ld. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income of assessee. Therefore, it is clear that amount of ₹ 63,27,996/- has not been brought to tax by the assessee. Accordingly, I have reason to believe that income to that tune of ₹ 63,27,996/- has been escaped assessment. Accordingly notice u/s148 is being issued for initiating the proceeding of the I.T. Act, 1961. 7. Ld. Counsel for assessee submitted that no proceedings were pending before AO when AO issued the letter of enquiry. The inquiry letter is not valid in eyes of law. The assessee is not under obligation to respond to this invalid and non est so-called letter of enquiry. The AO merely in the absence 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 considered favourably by Ld. CIT(A) and his findings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO except the information transmitted by AIR Wing. 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 appellate authority, then, the Ld. First appellate authority has not dealt with a single proposition and rather dealt with the issue in an altogether different manner whether notice u/s 148 was served or not, copy of reasoning was provided or not, the procedure contemplated through the decision of the Hpn ble Supreme Court in the case of GKN Driveshaft was followed or not. The Ld. CIT(A) has not addressed the contention of the assessee that reopening of assessment in itself is bad because there is no nexus between reasons vis- -vis formation of belief exhibiting the escapement of income. Taking into consideration all these aspects, I am of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. The AO thus 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 the assessee presumed that income to the extent of deposits had escaped assessment. The deposit in the bank accounts per se cannot be the income of assessee. It was mere suspicion of the AO based on incorrect facts that income chargeable to tax has escaped assessment. According to section 147 of the I.T. Act the AO shall have reason to believe that any income chargeable to tax has escaped assessment. Therefore the belief of the AO should be based upon some specific and tangible material for the purpose of reopening of the assessment. The course adopted by the AO was wholly unjustified in recording the incorrect facts in the reasons for reopening of the assessment. The decision cited by the Ld. Counsel for assessee would clearly support the contention of the assessee that reopening of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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