TMI Blog2021 (2) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded wrong, incorrect and non-existing reasons in the reasons recorded for reopening of the assessment. It would also show that A.O. did not apply his mind to the information received from REIC through ITO, Ward-43(4), New Delhi. The A.O. without any basis has recorded wrong, incorrect and non-existing reasons for reopening of the assessment. The A.O. also did not mention in the reasons that as to how much amount, the income chargeable to tax has escaped assessment in the case for assessee for assessment year under appeal. All these facts clearly support the explanation of assessee that A.O. without any cause or justification recorded wrong, incorrect and non-existing reasons for reopening of the assessment. As relying on SHRI NATRAJAN MONIE VERSUS THE INCOME TAX OFFICER, WARD 2 (5) , GURGAON. [ 2020 (12) TMI 345 - ITAT DELHI] it is clear that A.O. has recorded incorrect, wrong and non-existing reasons in the reasons recorded for reopening of the assessment reproduced above and have also did not apply his mind to the information received from REIC through ITO, Ward-43(4), New Delhi. Therefore, we are of the view that reopening of the assessment is illegal and bad in Law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11264 maintained with Axis Bank in the name of assessee. The A.O. from the bank statements of both the accounts noted that assessee has deposited huge cash in his bank accounts, details of which are noted in the assessment order. The A.O. called for explanation of assessee regarding deposits in these bank accounts to which assessee explained that certain deposits in cash are initial withdrawals from the bank accounts and also explained the source of the same. The A.O, however, did not accept the explanation of assessee, in the absence of documentary evidences, therefore, part addition of ₹ 52,00,500/- was made under section 68 of the I.T. Act, 1961 in respect of unexplained cash deposits in the bank accounts. The A.O. similarly called for explanation of assessee with regard to amount deposited in Punjab and Sind Bank, Delhi in A/c. No.xxxxx43750. The assessee explained that amounts are received out of the sale proceeds etc., which were deposited in the bank account. The A.O, however, made addition of ₹ 10,38,259/- on account of two entries not explained by assessee. The A.O. also called for explanation of assessee with regard to deposits in the Axis Bank and after co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not form part of the reasons recorded. On the facts and under the circumstances of the case the jurisdiction assumed by the AO u/s 147 is bad in law as the material on the basis of which jurisdiction has been assumed was totally vague and has no bearing on the income finally assessed by the AO. 4.2. Learned Counsel for the Assessee submitted that A.O. has recorded wrong, incorrect and non-existing reasons for reopening of the assessment and it being legal issue would go to the root of the matter, therefore, the same may be admitted for adjudication of the appeal. In support of his contention, he has relied upon the Judgment of the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd., 229 ITR 383 (SC). 5. On the other hand, Ld. D.R. strongly opposed the admission of the additional grounds and submitted that the issue of reopening of the assessment was not raised before the authorities below and in case it is admitted the same may be remanded back to the file of Ld. CIT(A) for fresh adjudication. 6. After considering the rival submissions and material on record, we are of the view that it is a legal issue and copy of the reasons recorded for reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export of various products. The A.O. has accepted the business income declared by assessee from export business and no addition have been made on account of assessee being engaged in any smuggling activity. Whatever the amounts have been mentioned of ₹ 72 lakhs in cash and ₹ 1.82 crores received from foreign source, A.O. has not made any addition against the assessee. Assessee has declared all the bank accounts maintained to the Income Tax Department and only few entries have been considered as unexplained and out of the same also substantial addition have been deleted by the Ld. CIT(A). The A.O, thus, without verifying the information, has recorded wrong, incorrect and non-existing reasons for initiation of the re-assessment proceedings and as such reopening of the assessment is invalid, bad in Law and liable to be quashed. He has submitted that A.O. in the reasons above did not record as to for how much amounts the income has escaped assessment. In support of the contention he has relied upon several decisions. 8. On the other hand, the Ld. D.R. relied upon the Orders of the authorities below and submitted that whatever information was received by the A.O, was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d other High Courts has held that in case incorrect, wrong and non-existing reasons are recorded by the A.O. for reopening of the assessment and A.O. failed to verify the information received due to non application of mind to information, reopening of the assessment would be unjustified and is liable to be quashed. The Order of the Tribunal is reproduced as under : IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.No.1817/Del./2017 Assessment Year 2011-2012 Shri Natrajan Monie, S-19/001, The Close South, Nirwana Country, Sector-50, Gurgaon. PAN AAFPN2890N vs. The Income Tax Officer, Ward 2 (5), Gurgaon. (Appellant) (Respondent) For Assessee : Shri Kapil Goel, Advocate For Revenue : Ms. Rinku Singh, Sr.DR Date of Hearing : 03.12.2020 Date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,59,237/- 3. Income from MCX business as discussed in para 3.3. ₹ 7,72,461/- 4. Income from unexplained cash deposits as discussed in para 3.4 ₹ 59,50,000/- 5. Income from unexplained cash credits as discussed in para 3.5(i). ₹ 9,85,000/- 6. Income from profit on redemption of MF/FD as discussed in para 3.5(ii) ₹ 1,32,174/- TOTAL ₹ 84,37,210/- 3.1. The assessee challenged the reopening of the assessment as well as additions on merit before the Ld. CIT(A). However, the appeal of assessee has been partly allowed. 4. Learned Counsel for the Assessee referred to the reasons recorded for reopening of the assessment which have been provided to the assessee under RTI Act, copy of which is placed on record. He has submitted that A.O. in the reasons mentioned that assessee has made investment of ₹ 2 lakhs for purchase of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N AAFPN2890N 3. Status INDL 4. Ward/Circle/Range Ward-2(5), Gurgaon 5. Assessment Year 2011-12 6. Date 11.02.2015 Reasons for initiating proceedings u/s. 147/148 of the Income Tax Act, 1961. Information has been received through NMS (P-1 category that during the period under consideration, the assessee had made investment of ₹ 200000/- for purchase of mutual fund and transaction in commodity exchange contract of ₹ 10,00,000/- during the assessment year 2011-12. As per record assessee do not have file return of income for the Assessment year 2011-12. The income chargeable to tax amounting to ₹ 1200000/- which is chargeable to tax has escaped assessment and any other income found during the course of assessment proceedings which is chargeable to tax has escaped assessment. I have reasons to believe that the above said income/transaction of ₹ 1200000/- and any other income fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing at page-3 of the assessment order, but, after examination this figure was also found incorrect and A.O. has ultimately restricted the addition to ₹ 7,72,469/- i.e., for income only but no addition is made of transaction of MCX Investment. Therefore, A.O. has recorded wrong, incorrect and non-existing facts in the reasons recorded for reopening of the assessment that assessee has made transaction in commodity exchange contract of ₹ 10 lakhs. It may also be noted here that A.O. in the assessment order in para-2 has mentioned that assessee has made investment of ₹ 10 lakhs in purchase of mutual funds which fact is also incorrect and is contradictorily recorded in the reasons for reopening of the assessment for ₹ 2 lakhs only. The A.O. in the assessment order has also recorded same statement that assessee has made contract in commodity exchange exceeding ₹ 10 lakhs which fact was ultimately found incorrect by the A.O. himself and he has made part addition as against the income mentioned in the show cause notice. These facts clearly show that A.O. did not apply his mind to the information received through NMS and also recorded wrong, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd incorrect facts have been mentioned in the reasons recorded for reopening of the assessment. Further, the reopening of the assessment would be invalid if the A.O. wanted to make investigation out of information. Such exercise should have been prior to recording of the reasons. In support of our findings, we rely upon the following decisions. 6.2. The Hon ble Punjab Haryana High Court in the case of CIT vs., Atlas Cycle Industries [1989] 180 ITR 319 (P H) held as under : Held, (i) that the Tribunal was right in cancelling the reassessment as both the grounds on which the reassessment notice was issued were not found to exist, and, therefore, the Income-tax Officer did not get jurisdiction to make the reassessment. 6.3. The Hon ble Delhi High Court in the case of Pr. CIT vs., SNG Developers Ltd., [2018] 404 ITR 312 (Del.) in which it was held as under : Held, dismissing the appeal, that the reasons recorded by the Assessing Officer for reopening the assessment under section 147, issuing a notice under section 148 did not meet the statutory conditions. As already held by the Appellate Tribunal, there was a repetition of at least five accommodation entries a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was unsustainable in law and the notice issued under section 147 of the Act was to be quashed. 6.5. The Hon ble Bombay High Court in the case of Siemens Information Systems Ltd., vs., ACIT Others [2007] 293 ITR 548 (Bom.) held as under : The petitioner had several EOU/STP units engaged in the business of export of software. In response to the notice for reopening the assessment for the assessment year 1999-2000, the petitioner, objecting to the issuance of the notice, stated that the reasons furnished by the authority had quoted the provisions of section 10A as amended by the Finance Act, 2000, with effect from the assessment year 2001-02 and as such could not have been made applicable to the assessment year 1999-2000 and the notice had been issued under the mistaken belief about the correct position of law. However, opportunity to show cause was given to the petitioner as to why the loss claimed should not be disallowed to be carried forward. On a writ petition : Held, allowing the petition, (i) that it would be clear from the reasons given that the authority proceeded on the presumption that the law applicable was the law after the amendment and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and circumstances of the case and in the light of material on record, we are of the view that reopening of the assessment is illegal and bad in Law and is liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment. Resultantly, all additions stand deleted. In view of the above, there is no need to decide other issues raised in the present appeal which are left with academic discussion only. Accordingly, appeal of the Assessee is allowed. 7. In the result, appeal of the Assessee allowed. 9.1. Considering the above discussion in the light of decision of ITAT, Delhi E-Bench, Delhi in the case of Shri Natrajan Monie, Gurgaon vs., ITO, Ward-2(5), Gurgaon (supra), it is clear that A.O. has recorded incorrect, wrong and non-existing reasons in the reasons recorded for reopening of the assessment reproduced above and have also did not apply his mind to the information received from REIC through ITO, Ward-43(4), New Delhi. Therefore, we are of the view that reopening of the assessment is illegal and bad in Law and liable to be quashed. We, accordingly, set aside the Orders of the authorities below and quash the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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