TMI Blog2020 (9) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... U/s 148. Mechanical approval granted by the ld. Pr.CIT - In the case in hand, the assessee has not filed any return of income U/s 139 of the Act and the A.O. received information from the DIT(Inv.), Jaipur regarding the deposit of cash of ₹ 9.19 lacs in the bank account of the assessee that too after an enquiry conducted by the Investigation Wing regarding the source of the said deposit and only when the reply of the assessee was not found to be satisfactory the said information was sent to the A.O. for appropriate steps - when the reasons recorded by the A.O. prima facie lead to the formation of belief that the income assessable to tax has escaped assessment then the ld. Pr.CIT is not required to record separate satisfaction as the reasons itself reveal the satisfaction of the A.O. - Decided against assessee. Unexplained cash deposit u/s 68 - assessee has explained the source of cash deposit in the bank account as the sale proceeds of the land sold by the father of the assessee for consideration - wife of the assessee filed an affidavit claiming that the amount of ₹ 2,72,500/- deposited in the ICICI bank account belongs to her as it is a joint bank account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee are directed against the orders of the ld. CIT(A)-1, Jaipur both dated 26/03/2019 arising from the assessment order passed U/s 147 r.w.s 143(3) of the Income Tax Act, 1961 (in short, the Act) as well as the penalty levied U/s 271F of the Act respectively for the A.Y. 2009-10. 2. The hearing of the appeal was concluded through video conference in view of the prevailing situation of Covid-19 Pandemic. 3. In the quantum appeal, the assessee has raised following grounds of appeal. 1.1 The impugned assessment order u/s 143(3)/148 dated 26/11/2016 is bad in law and on facts of the case, for want of jurisdiction and carious other reasons and hence the same may kindly be quashed. 1.2 The action taken u/s 147 by the ld. AO is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same may kindly be quashed. 2. ₹ 9,19,000/-: the ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of ₹ 9,19,000/- made by the ld. AO on account of alleged unexplained cash deposits in the bank accounts u/s 68. Hence, the addition so made by the ld. AO and confirmed by the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al and without application of mind. In support of his contention, he has relied upon the following decisions: (i) Pr.CIT Vs N.C. Cables Ltd. (2017) 98 CCH 0010 (Del HC). (ii) CIT Vs S. Goyanka Lime Chemicals Ltd. (2015) 231 Taxman 0073 (MP). (iii) Gorika Investment Export P Ltd. Vs ITO (2018) 53 CCH 0168 (Del)(Trib) (iv) Tara Alloys Ltd. Vs ITO (2018) 63 ITR (Trib) 0484 (Del). 6. On the other hand, the ld DR has submitted that it is case of non-filing of return of income by the assessee and subsequently the A.O. has received information and material to reflect the cash deposit of ₹ 9.19 lacs in the bank account of the assessee and this deposit made in the bank account itself is more than the threshold limit of income assessable to tax, therefore, the A.O. was having tangible material to form a belief that the income assessable to tax has escaped assessment. The ld DR has further submitted that it is not a simple case of information regarding deposit of cash in the bank account but the Investigation Wing has conducted a proper enquiry on the source of deposit and only after response/reply of the assessee was considered. The said information was sent to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t limitation of six years from the end of the relevant assessment year provided U/s 149 of the Act expires only after 31st March of the corresponding 6th year from the end of the assessment year. The said judgment was also followed by the Hon ble Gujarat High Court in the case of Vinayak Builders Vs B.D. Garsar. Thus, the issuance of notice within the period of limitation is not in dispute and the service of the same is also not in dispute, therefore, the question of limitation does not arise. 7. We have considered the rival submissions as well as relevant material on record. There is no dispute that the A.O. has issued notice U/s 148 of the Act on 31/03/2016 by Speed Post which was also served upon the assessee on 01/04/2016. The notice issued on 31/03/2016 is well within the period of limitation provided in the provisions of Section 149 of the Act which contemplates that no notice U/s 148 shall be issued inter alia not more than six years have elapsed from the end of the relevant assessment year. For ready reference, we reproduce Section 149 of the Act as under: Time limit for notice. 28 149. 29 [(1) No notice under section 148 shall be issued 30 for the relevant ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. Notice was issued within the period of limitation and was also duly served upon the assessee on the very next day, therefore, the question of limitation does not arise. Further the assessee has complied with the notice by filing the return of income which is only return of income filed by the assessee. Hence, the return of income filed by the assessee in response to notice U/s 148 of the Act is otherwise to be scrutinized by the A.O. Hence, we do not find any substance in the objection raised by the assessee against the limitation of the notice issued U/s 148 of the Act. 7.1 As regard the mechanical approval granted by the ld. Pr.CIT, we note that the A.O. sent the proposal in the performa for approval/sanction of the ld. Pr.CIT which contains the details including the reasons recorded by the A.O. Once the reasons recorded by the A.O. are found to be having a direct nexus with the information and formation of belief that the income assessable to tax has escaped assessment then the Pr.CIT need not to given separate reasons for his satisfaction. In the case in hand, the assessee has not filed any return of income U/s 139 of the Act and the A.O. received information from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the period of 6 years on 31/3/2016 as-provided under the provisions of Section 149(1). A copy of reasons recorded u/s 147 has simultaneously been supplied to the assessee while complying with the terms of the notice us/ 148 of the Act in view of the guiding principles as laid down by the Hon'ble Supreme Court in the case of M/s GKV Drive Shafts (India) Ltd vs. ITO Ors reported at (2003) 259 ITR 19 wherein it has been held that We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receiving of reasons, the notice is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order, in the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking Order before proceeding with the assessment in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond the period of six years from the end of the relevant assessment year, were clearly barred by limitation end could not be sustained. This judgment was also followed by Gujrat High Court in the case of VINAYAK BUILDERS VS. B.D. GARSAR. On carefully considering the above objection application and analysis of the facts of the case in view of the provisions of the Ac! and in complying with the guiding principles and judgments, it is pointed out that (i) 'The notice must be issued by the 4.0. who has the jurisdiction of the case of the assessee. Issue of notice us 148 by the A.O. having no jurisdiction over the assessee is invalid and all the proceedings carried on in pursuance of that notice are invalid and can be quashed. Further A.O. recording reasons and issuing notice has to be same person. Reference may be made to 93 TTJ Chennai 537, 147 TTJ(Ahd)730. (ii) Section 151 provides for the sanctions to be obtained before issuing of the notice u/s 148. If original assessment has been framed u/s 143(3) or section 147 has been made for any relevant assessment year no notice can be issued by an A. 0. below the rank of ACIT or DC/T unless the JC/T has given a sanction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Now after filing of the return it is the right of the assessee to obtain the copy of the reasons recorded by the AO. Once this request is made the AO is bound to provide the copy of the reasons recorded within a reasonable time but before starting the reassessment proceedings. In this regard the attention is invited to the judgment of Punjab Haryana High Court reported in 305 ITR 124 besides the judgments a/ready considered for mandatory recording of the reasons and supply the same to the assessee. After receiving the copy of the reasons recorded the assessee shall within a reasonable time file his objections to the reasons recorded with the A.O. It is important to note here that objections must be filed within a reasonable time before the initiation of the reassessment proceedings. In case the assessee files his objections the objections must be disposed off by the AO by way of a speaking order. This procedure was will settled by the Hon'ble Apex Court in the famous case of GKN Drive Shaft reported in 259 ITR (SC )19. In view of the above, it is construed that the .AO has issued u/s 148 after following the provisions of Section 147 read with Section 151(2) Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO without application of mind and without reason to believe that the income has escaped assessment. From the facts of the case, it is noted that the appellant has not filed regular return of income. It is also seen that the AO has recorded detailed reasons before issuing the notice u/s 148 of the Act. The reasons are specific and clearly indicates the escapement of the income. The AO has also provided the copy of the reasons to the appellant and dispose them off by passing speaking order. Thus, it is seen that the reopening of the case has been done following cue procedure as provided in the law. It is also seen that the AO has complied the guidelines laid down by the Hon'ble Apex Court in the case of M/s GKN Driveshafts vs. ITO (2003) 259 ITR 19 (SC). The appellant is challenging the sufficiency of the reasons recorded. It may be mentioned that the Courts cannot look into the sufficiency of the reasons recorded by the AO for reopening the assessment u/s 147 of the Act. Reliance is placed on the decision of Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs ITO [1999] 236 ITR 34 (SC), wherein it was held by their lordship that: In this case, we do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence. In reply to the show cause, the AR of the assessee has submitted above reply dated 8/11/2016 which is not found satisfactory, justifiable and reasonable. The assessee has failed to substantiate the source of cash deposits of ₹ 9,19,000/- in the bank accounts. it is also verifiable that the assessee has allegedly manipulated the facts of the case and he has not succeeded in linking with the source of funds from sale of agricultural land by his father. It is evident from the sale deed dated 4/6/2007 that Shri Tarachand Ajmera F/o of the assessee sold out agricultural land for ₹ 53,00,000/- in the year 2007. The claim of the assessee is not found reasonable acceptable under the manipulation of facts and giving self-serving statement in affidavit in contrary to any documentary evidence that the source of cash deposit in the bank accounts in the year 2008-09 is from the sale proceeds. The assessee has failed to establish the receipt' of sale proceeds through cheque or draft etc and thereafter, to make deposit in the bank accounts. The assessee has not furnished any evidence of source of wife's income which has been claimed to have deposited in the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts circumstances of the case, it is derived that the assessee has failed to offer any reasonable and justifiable reply to prove the source of cash credit found in his bank account. The burden of proof lies upon the assessee to explain genuineness and sources of cash credit. This view is further supported by the following judgments: - i. RICE MILLS v. COMMISSIONER OF INCOME-TAX; [2008] 307 FR 343 (P H) where assessment held justified on income from undisclosed sources on estimate basis and transactions not disclosed. ii. Maru Ram Makhan Lal vs. CIT [2008] 300 ITR 12 (P H) Reference held the question of law for cash credit and burden of proof on the assessee to prove genuineness of credits; assessee not able to prove credits were genuine then addition made to income held just filed. iii. SHIV RICE AND GENERAL MILLS v. COMMISSIONER OF INCOME TAX , [2008]300 ITR 19(P H) Burden of proof on assessee to prove identity of creditor, his creditworthiness and genuineness of transaction - cash credits not proved by assessee, addition held justified u/s 68 of Income Tax Act 1961. iv. INDUS VALLEY PROMOTERS LTD. v. COMMISSIONER OF INCOME-TAX [2008]305 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have made deposits in the names of relatives Held the onus was upon the persons in whose names the deposits were found to disclose the source of the funds and failure would result in the amount being treated as their unexplained money. 6. Under the facts circumstances of the case and relying upon the above judgments, it is deduced that the assessee has failed to explain the source of cash deposit/credit to his above bank accounts and he has offered no proper, reasonable and acceptable explanation to the source of above cash credit in the bank accounts. Therefore, in view of the above, it is fairly construed that the assessee has absolutely failed to explain the source of cash credit which remains unexplained u/s 68 of the Income Tax Act, 1961. Accordingly, the credit of ₹ 9,19,000/- is treated as unexplained income of the assessee made out of undisclosed sources of income and the same is added to the total income of the assessee. (vi) Thus, in the assessment order, the AO elaborately dealt the submissions of the appellant and also discussed the relevant judicial pronouncements. During the appellate proceedings, the appellant again relied on its claim that the cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the wife to own the said amount of deposit in ICICI bank account then the said addition is not justified. The ld AR has further submitted that the A.O. has made addition of entire amount of deposit without giving even the credit of the sale proceeds of the assessee s business as well as other income of the assessee. He has given much stress to the affidavit filed by the wife of the assessee and submitted that the affidavit filed by the assessee as well as wife of the assessee are having evidentiary value and in absence of any contrary record, the same should have been accepted. The ld AR has submitted that once the assessee has explained the source of amount much more that the deposit made in the bank account then the addition made by the A.O. and confirmed by the ld. CIT(A) is not justified and the same may be deleted. In support of his contention, he has relied upon the following decisions: i) Mehta Pareek Co. 30 ITR 181 (SC) ii) ITO Vs Dr. Tejgopal Bhatnagar 20 TW 368 (JP) iii) paras cotton Company Vs CIT (2003) 30 TW 168 (JD) iv) CIT Vs Lunard Dimond Ltd. 281 ITR 1 (Del). v) CIT Vs Bhawani Oil Mills (P) Ltd. 239 CTR 445. vi) Sh. Chhitar Singh Gurjar Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of her boutique business receipts. The A.O. has not accepted the said affidavit of the wife of the assessee in absence of any other evidence regarding the activities of the alleged boutique carried out by the wife and earning of the income as she has never filed any return of income. The assessee also explained the source of his own business income. 10.1 Having considered the facts and circumstances of the case when the father of the assessee has sold the property in the year 2007 for a consideration of ₹ 53.00 lacs and the assessee is the only legal heir then the possibility of the source of deposit in the bank account of the assessee from the sale proceeds of the property of the father is not ruled out. However, the assessee has not produced the details of the bank account of father to support the fact that there was a withdrawal of cash from the bank account of the father. Therefore, in these facts and circumstances, we find that this issue requires a detailed and proper verification regarding source of deposit. Further to the extent of income declared by the assessee as well as the claim of wife of the assessee regarding the deposit of ₹ 2,72,500/- cannot be rej ..... X X X X Extracts X X X X X X X X Extracts X X X X
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