TMI Blog2022 (5) TMI 950X X X X Extracts X X X X X X X X Extracts X X X X ..... ance made by both the banks till date. Therefore, the AO never had with him any copy of bank statement before recording of reasons for reopening of assessment and issue of notice u/s 148. Therefore, without going to the contents of the entries in the bank accounts merely deposits cannot be treated as income escaping assessment. There is no nexus between the prima facie inferences arrived in the reasons recorded and the information . The information was restricted to cash deposit in bank account but there was no material much less tangible, cogent, credible and relevant material to form a reason to believe that cash deposits represented income of the assessee. The reasons recorded in the present case at best can be treated to be reasons to suspect which is not sufficient for reopening the assessment u/s 148 of the Act. The requirement of application of mind is missing in the present case on the face of it in the reasons recorded. PCIT also mechanically issued permission to reopen the assessment without going into the facts available on record. Even in the Form for seeking approval, in Column 8, the AO records that no return has been filed by the assessee even though factually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of section 144. 6. That having regard to the facts and circumstances of the case, the Ld. CIT(A) has erred in upholding the addition of Rs. 15,24,650/- out of total addition of Rs. 28,83,000/- made by the AO on account of cash deposit in the bank accounts. 7. That the above grounds are independent of one another and the appellant craves the leave to add, modify, amend or delete any of the grounds of the appeal at the time of hearing. 2. The assessment of the assessee was reopened by issue of notice u/s 148 based on AIR/CIB Information that the assessee had deposited cash of Rs.28,83,000/- in his Bank account during FY 2010-11 relevant to AY 2011-12. The reassessment was completed u/s 144/147 on 10.12.2018 treating the amount of Rs.28,83,000/- as an unexplained money of the assessee u/s 69 A of the Act. 3. Before the Ld. CIT(A) the assessee challenged the reopening of assessment as well as the addition on merits and the Ld. CIT(A) sustained the reopening of assessment and also the addition made u/s 69A of the Act. 4. The Ld. Counsel for the assessee submits that based on an AIR Information that the assessee had deposited Rs.28,83,000/- in his bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under consideration and the assessee vide his reply dated 03.09.2012 informed the Income Tax Officer, Ward 30(2), New Delhi that he has already filed return of income on 30.07.2011 vide acknowledgement no. 3001000609. Ld. Counsel submits that copy of notice and the reply of the assessee are placed at pages 6 and 7 of the Paper Book. Therefore, the Ld. Counsel for the assessee submits that as the matter of record that the fact of filing the return of income by the assessee for the year under consideration was very much within the knowledge of the AO at the time of recording of reasons as the individual transaction statement for the FY 2010-11 dated 10.03.2018 containing the details of AIR Information as well as details of filing return of income for the year under consideration is very much available on record. Therefore, the Ld. Counsel for the assessee submits that the reasons recorded for reopening by the AO suffer from a material factual discrepancy and goes to the root of the matter and renders the reasons to nullity and void. Therefore, it is submitted that any proceedings emanating from void reasons are nothing but illegal and void and, as such, is liable to be quashed. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing his own mind to the information, if any, collected before recording the reasons. It is also submitted that Ld. PCIT also accorded approval which is also undated without any application of mind. For the proposition that an approval granted without an application of mind is bad in law reliance is placed on the Delhi High Court decision in the case of PCIT vs. N.C. Cables Ltd. [391 ITR 11]. 10. On the other hand, the Ld. DR strongly supported the orders of the authorities below. 11. Heard rival submissions perused the orders of the authorities below and the case laws relied on. The first contention of the assessee is that the assessment was reopened without application of mind and on wrong assumption of facts. The reasons recorded for reopening of assessment by AO are as under: REASONS TO BELIEVE IN THE CASE OF SH. NADEEM HASAN, PAN:ACCPH8788G FOR AY 2011-12 1. The department is having information that the assessee has deposited cash of Rs.28,83,000/- with ICICI Bank Ltd. during the FY 2010-11 relevant to AY 2011-12. 2. It appears that entire investment of Rs.28,83,000/- is unaccounted and it is likely that there is an escapement of income of more than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi held that: As regards, the other contentions of the assessee that the reopening was done in a mechanical manner without application of mind, we find there is nothing on record to support such a contention. There is a live link between the information which was available with the Assessing Officer and his formation of belief that income has escaped assessment, sufficiency of such information cannot be gone into while deciding the issue of validity of reopening. The Assessing officer can also not make enquiries as no proceedings were pending before him for the relevant assessment year. In the above view of the matter, we are in agreement with finding of the Ld. CIT(A) that the reopening of assessment u/s 147 of the Act, was valid . 7. The live link between the material available on ITD system and the reasons for belief that income has escaped assessment has been sufficiently demonstrated. Since, no assessment has been completed u/s 143(3) of the Act, and period of 4 years has elapsed, hence, the proposal is forwarded to the Pr. Commissioner of Income Tax-16, New Delhi for consideration and necessary approval in accordance with the proviso appended with section 151(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at income had escaped assessment. However, the facts as recorded above suggest that there is no live link between the material available and the reasons for belief that income had escaped assessment. From perusal of the reasons recorded for reopening of assessment it is noticed that the reasons recorded only based on AIR Information and nothing else. The AO has not verified the facts, not examined the bank statements and formed belief that income had escaped assessment prior to issue of notice u/s 148 of the Act. There is complete non-application of mind by the AO. 13. As per the provisions of section 147 in order to form belief that income has escaped assessment the AO ought to have formed an opinion on the basis of the material possessed by him exhibiting the facts that income has escaped assessment. A perusal of the reasons recorded for reopening of assessment in this case would indicate that the basis of reasons recorded is AIR Information stating cash deposits of Rs.28,83,000/- as an unexplained investment and also that the assessee did not file any return of income for the year under consideration. It is pertinent to mention that the AO has not analyzed the information in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the Hon ble Gujarat High Court in the case of Sagar Enterprises vs. ACIT (supra). 17. In the case of PCIT vs. G.G. Pharma India Ltd. [384 ITR 147] the Hon ble High Court held that reopening only on the basis of information received that the assessee has introduced unaccounted money in the form of accommodation entries without showing in what manner the AO applied independent mind to the information renders the reopening void. In the case on hand also the AO simply relied on the AIR Information and not made any verification of facts and independent application of mind to the materials available on record to come to conclusion that there is an escapement of income in assessee s case. 18. Further it is observed that the Ld. PCIT also mechanically issued permission to reopen the assessment without going into the facts available on record. Even in the Form for seeking approval, in Column 8, the AO records that no return has been filed by the assessee even though factually incorrect and the PCIT did not apply his mind while granting approval as he has simply gone by what is recorded by the AO which is factually wrong. The satisfaction recorded by the PCIT is in mechanical m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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