TMI Blog2016 (7) TMI 1599X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment proceedings, that the source can be questioned, and deemed to be income u/s.68/69, in case no satisfactory explanation is offered by assessee. In the absence of verification/explanation of the assessee in the course of assessment proceedings, it is premature to assume the same as 'income', much less for the purposes of section 148. Therefore, the AIR information is no tangible material to empower the AO to reach the requisite satisfaction as envisaged u/s 147/148. - Decided in favour of assessee. - ITA No.649(Asr)/2015 - - - Dated:- 11-7-2016 - Sh. A.D. Jain, Judicial Member And Sh. T.S. Kapoor, Accountant Member Appellant by: Sh.J.S. Bhasin, Advocate Respondent by: Sh. Bhawani Shanker, DR ORDER A.D. Jain, JM: This is the assessee s appeal for the assessment year 2005-06, against the order dated 23.11.2015, passed by the ld. CIT(A)-2, Jalahdhar. The assessee has raised the following grounds of appeal: 1. That the dl. CIT(A) has grossly erred in law as also on facts, in upholding the validity of proceedings initiated by the ITO u/s 147/148. 2. That the ld. CIT(A) also erred in upholding the proceedings u/s 147/148, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In response to the notice u/s 148, the assessee submitted that the return originally filed on 31.03.2006 may be treated as her return. 2.1 During the course of assessment proceedings, the assessee was asked by the Assessing Officer to explain the source of investment in the Mutual Funds/ Securities to the extent of ₹ 1,09,49,156/- made by her during the year under consideration. As the investment in Mutual Funds/ Securities were routed through bank account(s) of the assessee maintained by her with various banks, the assessee, during the course of assessment proceedings, was also asked by the Assessing Officer to explain the sources of various credit entries in various bank accounts maintained by the assessee. In response thereto, the assessee, vide her letter dated 17.08.2012, submitted that as already explained, the assessee had made investments in different Mutual Funds/Relief Bonds and securities, etc., through M/s HSBC Securities, who acted as Portfolio manager for the assessee. It was further submitted that all the purchase transactions were routed through the savings bank account maintained by her with M/s Hongkong and Shanghai Banking Corporation Limited, which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gulu Lalwani Dt.03.01.2005 ₹ 1,00,000/- 6. Gift from Mr. Gulu Lalwani Dt. 02.04.2004 ₹ 25,000/- It was further informed that for the remaining credits, efforts were afoot to locate the necessary confirmation/evidence, and would be filed in due course. It was further submitted that a huge time gap of about eight years, besides the ill health and old age of the assessee were the major factors at play which were causing delay in filing the necessary evidence. The assessee further explained the deposits of ₹ 26,00,000/- on 08.09.2004, ₹ 22,00,000/- on 09.12.2004, ₹ 20,00,000/- on 10.02.2005 and ₹ 18,95,000/- on 31.03.2005 in her bank account No. 15186 with Punjab Sind Bank, Kapurthala, vide her reply dated 28.01.2013. Vide reply dated 15.03.2013, the assessee explained some deposits of ₹ 51,00,000/- on 05.06.2004 in saving bank account No. 18148 with P SB, ₹ 53,865/- on 10.08.2004 in saving bank account with P SB, ₹ 50,000/-each in HSBC account on 15.04.2004, 09.06.2004, 30.06.2004, 02.08.2004, 19.08.2004, 03.09.2004, 07.10.2004, 05.11.2004, 09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d more time to explain these deposits, which was denied, the Assessing Officer treated these deposits from unexplained sources and made an addition of ₹ 28,36,295/- to the returned income of the assessee. Apart from this, undisclosed interest income of ₹ 3,679/- on FDR of ₹ 10,00,000/- was also added to the returned income of the assessee. The assessment in the case of the assessee was ultimately completed by the Assessing Officer vide order passed under section 143(3) of the Act, dated 28.03.2013, at an assessed income of ₹ 35,37,829/-, which included additions of ₹ 28,36,295/- on account of unexplained credits in the bank accounts of the assessee and ₹ 3,679/- on account of undisclosed interest income on FDRs. 3. On appeal, the ld. CIT(A) dismissed the appeal of the assessee. 4. Now, aggrieved, the assessee is in appeal before this Bench. 5. Apropos Grounds no. 1 2, the assessee has contended that the invocation of the jurisdiction u/s 148 on the basis of AIR information was vehemently contested before the Id. CIT(A); that a bare perusal of the reasons recorded bears out beyond doubt that the very basis of initiation of the reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(2), after the return is filed.; that it is only during such assessment proceedings, that the source can be questioned, and deemed to be income u/s.68/69, if no satisfactory explanation is offered by assessee; that in the absence of verification/explanation of the assessee in the course of assessment proceedings, it is premature to assume the same as 'income', much less for section 148; that needless to mention, such investment could be from tax free income like agriculture income, gifts, loans, capital receipts, etc., As such, it may not constitute income at all; and that therefore, the AIR information is no tangible material to empower the AO to reach the requisite satisfaction as envisaged u/s 147/148. 6. The ld. DR, on the other hand, relied on the impugned order. 7. We have heard the rival contentions in the light of the material available on record. The AO has recorded the following reasons while reopening the case: Reasons for the Belief AIR information has disclosed various entries amounting to ₹ 1,09,49,156/- in the case of Ms. Surinder Mohini R/o 1- Guru Kirpa, Jalandhar Road, Kapurthala. The assessee filed her Income Tax return for the F.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said income of ₹ 1,09,49,156/- had escaped assessment. 8. The above reasons are no reasons in the eyes of law, inasmuch as the source of investment is yet to be verified and explained, and it cannot be held as income escaping assessment for the purposes of section 148. For such a verification, the AO is to assume normal jurisdiction under section 143(2), after the return is filed. It is only during such regular assessment proceedings, that the source can be questioned, and deemed to be income u/s.68/69, in case no satisfactory explanation is offered by assessee. In the absence of verification/explanation of the assessee in the course of assessment proceedings, it is premature to assume the same as 'income', much less for the purposes of section 148. Therefore, the AIR information is no tangible material to empower the AO to reach the requisite satisfaction as envisaged u/s 147/148. 9. In this regard, in Sh. Ashwani Kumar vs. ITO , the Amritsar Bench of the Tribunal, vide order dated 23.02.2016 (SMC) (copy placed on record), passed in ITA No.129/Asr/2015, has held the reasons recorded u/s 148, based on the vague information, backed by the AIR, to be invalid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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