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TMI Blog2019 (4) TMI 2080X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation that the assessee has three bank account - one with Prime Cooperative Bank and remaining two bank account with Surat Co-operative Bank, Nanpura, Surat in which huge cash deposits were made. Therefore, the case was reopened u/s.147 of the Act after issue of notice under section 148 of the Act on 21.03.2014 and after recording the reason for belief and taking prior approval of higher authorities. 4. Being dissatisfied, the assessee preferred an appeal before the CIT (A). Before whom, it was submitted that the assessee has filed return of income declaring total income of Rs. 1,10,940 for the assessment year 2007-08. The assessment was reopened under section 147 of the Act by issue of notice under section 148 of the Act on 21.03.2014 on the ground of AIR information. The assessee vide letter dated 05.03.2015 stated that original return of income may be treated as filed in response to notice under section 148 of the Act. The assessee has requested the AO to provide copy of bank account on the basis of which notice under section 148 of the Act was issued. However, the same was not provided. The AO has mentioned in show cause notice that total deposits in bank account to the tun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, 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 Rs. 37,10,700/- has escaped assessment within the meaning of sec. 147 of the Act. I have, therefore, reason to believe that income of Rs.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." 6. The learned counsel for the assessee drawing our attention to the reason for reopening of assessment submitted that the AO has mentioned in the reason for reopening of assessment that there was failure on the part of the assessee to file a return of income under section 139 of the Act. Whereas the assessee has already filed return of income on 21.11.2007 declaring total income of Rs. 1,10,940 vide acknowledgement and computation of income placed at Paper Book Page No. 29 to 32. Therefore, it was contended that the reopening of assessment was made on incorrect facts and without verification of return of income filed by the assessee. Hence, assumption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the financial year 2009-10 are unexplained/undisclosed. In view of the above facts, the AO had reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the IT for A.Y. 2010-11 by an amount of Rs. 3 9, 65, 000/-and it is a fit case for reopening the assessment for A.Y. 2010- 11." The Honourable Court observed that "11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged that the AO in his reason record for reopening of assessment stated that the assessee has not filed any return of income for the assessment year under consideration whereas the assessee has duly filed return of income for the assessment year under 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 Rs. 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 Rs. 37,10,700/- has escaped assessment within the meaning of sec. 147 of the Act. I have, therefore, reason to believe that income of Rs.37,10,700/- has escaped assessment within the meaning of section 147 of I. T. Act. It is therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment for A.Y. 2010-11." The Honourable Court observed that "11. In this context, we have noted that the reasons proceeded on two fundamental grounds. One, that the property in question was sold for a sum of Rs. 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 Rs. 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 Rs. 50 lakhs." The Hon`ble High Court, in view of the fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded by the AO for initiation of reassessment proceeding and issuance of notice under section 148 of the Act was on the wrong and incorrect facts that the assessee has never filed the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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