TMI Blog2021 (4) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... essment do not make out a case that the assessee was engaged in some business and has not been filed return of income. Therefore, the cash deposit in the bank account could not be basis for holding the view that income has escaped assessment. The assessee may have deposited the cash out of his sale of capital asset, sale of property and sale of investment etc. Therefore, reasons recorded by the Assessing Officer are not valid and hence the reassessment proceedings initiated based on the reasons recorded is bad in law. Assessing Officer in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute that the assessee did file the return of income for the assessment year under consideration, which was duly acknowledged by the department, then, it has to be held that the entire reasoning thus proceeded on the wrong premises that the assessee had never filed the return. This, itself would be sufficient to annual the notice of reopening the assessment. Besides, mere cash deposit in the bank account would not disclose escapement of income. The assessee might have deposited the cash out of his sale of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see cannot raise the additional ground. She pleaded that during the appellate proceedings, the assessee has not challenged the reopening of assessment under section 147 of the Act, therefore, now before this Tribunal, the assessee cannot make a fresh ground to argue on reopening proceedings. 5. We have heard both the parties on this preliminary issue and note that during the assessment proceedings, Assessing Officer has issued notice under section 148 of the Act. The assessing officer, vide para 2 of his assessment order, has stated that in response to notice under section 148 of the Act, the assessee has not furnished his return of income in the prescribed time. However, we note that assessee has furnished the return of income in response to notice under section 148 of the Act stating that the original return was filed by assessee on 01.01.2008 and the said return of income may be treated, as if, the return filed in response to notice under section 148 of the Act, vide paper book page no.3, letter submitted by the assessee before the assessing officer. We note that the issue relating to the re-assessment proceedings was there before the assessing officer and we note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 142(1) of the Income Tax Act. Therefore, assessing officer proceeded to make the assessment under section 144 of the Income Tax Act. 7. As per AIR/CIB information and bank statement received from the bank in response to notice issued under section 133(6) of the Act it was noticed by the assessing officer that the assessee has deposited cash of ₹ 22,77,550/- in his saving account of ICICI Bank. The assessee has failed to furnish the source of cash deposit in saving bank account of ICICI Bank along with supporting evidences. Therefore, assessing officer made addition of ₹ 22,77,550/- as unexplained cash deposits, under section 69 of the Income Tax Act. 8. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the addition made by the Assessing Officer. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 9. Shri Rasesh Shah, Learned Counsel for the assessee contends that reasons recoded by the assessing officer are itself bad in law. Learned Counsel pleads that reasons so recorded by the Assessing Officer under section 147 of the Act does not show applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. for 2009-10, 2010-11 2011-12 has been finalized and unexplained cash has been added in his total income. Considering the above facts, the assessee has no comments for reply. It is seen that assessee s cash-deposit is genuine or not since no evidence on records. Therefore, I have reason to believe that income of the assessee exceeding ₹ 1 lacs for the accounting period 2006-07 relevant to A.Y. 2007-08, has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Place: Navsari (J.C. Dhorawala) Income tax Officer, Ward-1 Navsari Date: 24.03.2014 13. Now, we shall analyze the above reasons recorded by the Assessing Officer. We note that in the reasons recorded by the Assessing Officer it is mentioned that assessee has deposited cash to the tune of ₹ 22,77,550/- in ICICI Bank. The assessee did not file necessary evidence of cash deposit, therefore assessing officer presumed that income has escaped assessment to the extent of cash deposit of ₹ 22,77,550/-. We note that Assessing Officer has opined that an income of ₹ 22,77,55 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration. Therefore, the AO has assumed wrong facts, hence, reassessment proceeding are liable to be quashed. In order to appreciate the facts in proper perspective, it would be relevant to reproduce the reason recorded by the AO which are appearing at Paper Book Page No. 72-73 as under:- In this case AIR data has been generated from ITD application and it is noticed that during F.Y. 2006-07 relevant to A.Y. 2007-08, the assessee has deposited ₹ 37,10,70/- in bank account. On verification of the record, it is found that the assessee has not filed his Return of Income. The failure on the part of the assessee to make a return u/s. 139 of I.T. Act, the income chargeable to tax to the extent of ₹ 37,10,700/- has escaped assessment within the meaning of sec. 147 of the Act. I have, therefore, reason to believe that income of ₹ 37,10,700/- has escaped assessment within the meaning of section 147 of I. T. Act. It is therefore, necessary to initiate action u/s.147 of I.T. Act, 1961 in the case of the assessee for A.Y. 2007-08. 11. The perusal of above reasons would show that the AO has proceeded to reopen the assessment on the ground that the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 1,18, 95, 000/- and two; the assessee has not filed the return that therefore his one 3rd share out of the sale proceeds was not offered to tax. Both these factual grounds are totally incorrect as is now virtually admitted by the Revenue. It is undisputed that the assessee had actually filed the return of income for the said assessment year and income also offered his share of declared sale consideration to tax as capital gain. The Assessing Officer may have dispute with respect to the computation of such capital gain, he cannot simply dispute the fact that the assessee did not file the return. Importantly, even the second factual assertion of the Assessing Officer in the reasons recorded is totally incorrect. He has referred to said sum of ₹ 1,18,95,000/-as a sale price of the property. The Assessee had produced before the Assessing Officer, the sale deed in which, the sale consideration disclosed was at ₹ 50 lakhs. The Hon`ble High Court, in view of the foregoing, observed that reasons recorded, in fact, ignored that fact that the sale consideration as per the sale deed was ₹ 50 lakhs and that the assessee had by filing of the return offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income, and in fact, it was filed. This view is further supported by decision of Co-ordinate Bench of Surat Tribunal in the case of Vishal Dilip Rai v. ITO Valsad [I.T.A.No. 1863/Ahd/2016/SRT dated 26.09.2018] in which following the decision of Hon`ble High Court of Gujarat in the case of Sunrise Education Trust v. Income Tax Officer [2018] 92 Taxman 74 (Gujarat) quashed the reopening of assessment as the reasons mentioned that the assessee has not filed return whereas the assessee did file the return of income. Therefore, are we are inclined to hold that the initiation of reassessment proceeding u/s.147 of the Act and notice under section 148 of the Act of the Act and all subsequent proceedings and orders have been issued, conducted, passed without having valid jurisdiction, and therefore, the same are bad-in-law and hence, we quash the same. Accordingly, legal ground no. 1 above of the assessee is allowed and notice under section 148 of the Act with impugned reassessment proceeding of the AO /CIT (A) are quashed. 14. On the similar facts, the reassessment proceedings was quashed by the Co-ordinate Bench in the case of Shri Hashmukhbhai B. Patel (in ITA No. 193/SRT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, query letter dated 03.02.2017 could not have been issued to the assessee. It was, therefore, illegal and there is no application of mind by the A.O. Similar issue have been considered by the ITAT, Delhi SMC-Bench in the case of Mahavir Prasad vs. ITO in ITA.No.924/Del./2015 for the A.Y. 2007-2008 in which reopening of the assessment have been quashed vide Order dated 09.10.2017. The relevant finding in para-9 of the Order is reproduced as under: 9. After going through the reasons recorded by the ITO, Ward-2, Rewari, I am of the view that there is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, the same are wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erely presumed that there is escapement of income. There is, thus, no application of mind on the part of the A.O. to record reasons as per Law. The initiation of re-assessment proceedings are beyond the jurisdiction of the A.O. into the matter. We, therefore, do not subscribe to the view of the Ld. D.R. that reopening of the assessment is valid into the matter. We, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment under section 147/148 of the I.T. Act. Resultantly, the entire additions stand deleted. Appeal of assessee allowed. 15. It is abundantly clear from the above noted precedents that Assessing Officer in the reasons recorded proceeded on the erroneous footing that the assessee has not filed return of income at all and when it is not in dispute that the assessee did file the return of income for the assessment year under consideration, which was duly acknowledged by the department, (That is, the assessee has filed the return of income which is placed on paper book page no.7), then, it has to be held that the entire reasoning thus proceeded on the wrong premises that the assessee had never filed the return. This, itself w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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