TMI Blog2020 (5) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2010-11 has been taken as a lead case wherein the assessee has taken the following grounds as appeal:- 1. Assumption of jurisdiction on Presumption That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming upholding the assumption of jurisdiction for re-assessment. The re-assessment proceedings in this case were only based on presumption/ suspicion and were thus not validly initiated. 2. Action u/s 148 on the basis of cash deposit in Saving Bank Account :- That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming recording reasons and issuing notice u/s 148 on the basis of cash deposit ₹ 2,97,000/- in bank account for which source is found unverifiable. 3. Re-assessment is based on borrowed satisfaction :- That on the facts and in the circumstances of the case Ld. CIT(A) II has grossly erred in law and facts by confirming issuing notice u/s 148 on the basis of AIR information in respect of cash deposit in bank accounts and without verifying the correctness of the information and therefore re- assessment proceeding is abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich, on appeal, has been sustained by the ld. CIT(A). Against the said findings, the assessee is in appeal before us. 4. In grounds no. 1 to 5, the assessee has basically challenged the assumption of jurisdiction by the Assessing Officer by issuance of notice U/s 148 of the IT Act. 5. During the course of hearing, the ld. AR submitted that the assessee in his business of purchase and sale of fish aquariums and allied products and has originally filed his return of income on 30.07.2011 wherein the assessee has disclosed his gross income from business amounting to ₹ 1,74,510/-. It was submitted that for the assumption of jurisdiction U/s 147 of the Act, the AO should have reasons to believe and not made suspicion that the income has escaped assessment. In this regard, our reference was drawn to the reasons recorded by the Assessing Officer which reads as under:- The assessee has filed his return of income for year under consideration on 30.07.2011 declaring total income of ₹ 1,06,440/-. The ITO Investigation, Jaipur conducted enquiry in this case. It is gathered that the assessee has deposited cash in his bank account amounting to ₹ 2,97,000/- source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reasons has issued notice to the assessee. It was submitted that as long as there is nexus between material and formation of belief that income has escaped assessment, the sufficiency of material may not be relevant for assumption of jurisdiction U/s 147 of the Act. In support, reliance was placed on the decision of Hon ble Rajasthan High Court in case of Uttam Chand Jain. It was further submitted that information received from the Investigation Wing constitute a tangible material and after considering the same where the AO formed a belief that the income has escaped assessment, the reopening cannot be quashed. Regarding the contention so advance by the ld. AR regarding borrowed satisfaction, it was submitted that the AO has duly recorded his satisfaction in the instant case and therefore, the contention so advance by the assessee cannot be accepted. Regarding non disposal of objections raised by the assessee against the reasons recorded by the AO, it was submitted that it is a mere technicality which cannot be fatal in terms of making the whole proceeding as bad in law. In support, reliance was placed on the decision of Hon ble Madras High Court in case of Home Finders Housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that, income of ₹ 2,97,000/- has escaped assessment within the meaning of sect ion 147 of the IT Act 1961 . In the present case, the petitioner questions the assumption of jurisdiction to reopen the assessment principally on the ground that there has been no failure on the part of the petitioner to fully and truly disclose all material facts necessary for its assessment. The petitioner has not failed to disclose fully and truly all material facts necessary for its assessment and that the reopening of assessment has been occasioned by change in opinion, which is impermissible. The assessee has deposited cash in bank account amounting to ₹ 2,97,000/. Source of which was sale proceeds of 22 Kt plain gold jewellery amounting of ₹ 3,49,000/-. The source of bank deposited is verifiable and fully explained. In view above facts your honour is requested to drop reassessment proceeding and decide objection by speaking order. 9. We therefore find that the undisputed facts which are emerging from the records are that in response to notice u/s 148, the assessee filed his return of income, the reasons were requested to be supplied to him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings and consequential assessment order passed thereto as nullity? And the relevant facts and findings are contained in Para 4, 4.1 and 8 which reads as under:- 4. Counsel for the appellant has contended that the present appeal is arising out of the judgment and order of the tribunal whereby tribunal has upheld the contention of the appellant and remitted back the matter for reassessment which will give a second inning to the Assessing Officer who has to do reassessment within a period of 9 months and he will get extended time of limitation which is not the object of the Income Tax Act. When the Court has already fixed the period, it is to be construed in a very strict sense and has to be applied. 4.1 In support of his contention, he has relied upon the following decisions: 1. KSS Petron Private ltd. vs. ACIT, ITA No. 227/2014, 03.10.2016 holding as under:- 7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f KS Petron Private Ltd. (supra) which is followed in Hotel Blue Moon (supra), the law declared by the Supreme Court is taken in true spirit whether it will open a second inning in how own. Section 153(3) is to be read very cautiously as 153 powers are given to the Department, the Court has to look into whether the law declared by the Supreme Court is given away or protected. In the present case, as the Assessing Officer has clearly ignored the law declared by the Supreme Court, in that view of the matter, the issues which are raised in the matter, the Tribunal ought not to have remitted back for reassessment since period of limitation has already expired as the authority will get extended time of limitation beyond 9 months which is not the object of Income Tax Act. 9. In that view of the matter, on issue No. 1 and 2, the order of reassessment passed by the Tribunal is declared null and void. The questions are answered in favour of assessee and against the Department. 10. The appeal of the assessee is allowed. 10. We find that in the aforesaid decision, the Hon ble High Court has considered the decision of Hon ble Madras High Court in case of Home Finders Housin ..... 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