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TMI Blog2023 (4) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... lead case. 2. Assessee has filed an application for condonation of delay of 02 days wherein, assessee has stated that delay has occurred due to postal delay which was not control of the assessee. The delay for 02 days for filing the appeal before the ITAT is prayed for condone. The Ld. Sr. DR has not made any strong objection against the condonation of delay. Therefore, the delay of 02 days is condoned. ITA No. 182/Asr/2019 3. The assessee has taken the following grounds: "1. In the facts and circumstances of the case the Ld. AO has erred in opening of the assessment by recording false reasons under section 148(1) of the Income Tax Act. 2. The Ld. AO has erred in recording reasons on the basis of surmises and conjectures, ignoring the fact on record. 3. The Ld. AO, while recording reasons, has erred in treating cash deposits in bank a/c and payment against credit card as income of the assessee, which is wholly outside the purview of meaning of Income defined u/s. 2(24) of the Act. 4. The AO has erred in opening of the assessment by recording arbitrary and irrational reasons, not based on relevant material facts, without appreciating the settled law that any and every mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for hearing; none was present on behalf of the assessee. ITA No. 182/Asr/2019 and 183/Asr/2019 were requested to take on basis of the written submission by the Ld. counsel for the assessee. Only ITA No. 184/Asr/2019 was prayed for adjournment. But there is no such a reasonable ground for the adjournment of hearing. The adjournment petition was rejected and ITA No. 184/Asr/2019 is taken for adjudication with the consent of the Ld. Sr. DR. 6. The Ld. counsel for the assessee has filed a written submission which is taken on the record. The grievance of the assessee is related to legal grounds and the factual grounds. The assessee challenged the jurisdiction of the Ld. AO for reopening of the case u/s. 148 of the Act and claimed that the entire recorded reasons is false, and the assessment order is liable to be quashed. Ground No. 1 to 8 & 10 are purely related to the legal grounds which were already agitated before the Ld. CIT(A). Only the ground No. 9 is factual ground and ground No. 11 is general in nature. 7. The Ld. Sr. DR vehemently argued and fully relied on the order of Ld. CIT(A). 8. We heard the rival submission and relied on the documents available in the record and ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relying on provisions of para (a) of Explanation 2 to Sec 147 of the Income Tax Act reproduced as under: Explanation 2.--For the purposes of the section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:--(a) where no return of income has been furnished by the assessee although her total income or the total income of any other person in respect of which he is assessable under the Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; ii. While recording reasons u/s. 148(2) of the Act, the AO has stated that: "it has been verified and found that the assessee has failed to file her return of income for the financial year 2009-10 relevant to assessment year 2010-11, therefore I have reason to believe that an income of Rs. 48,35,500/- has escaped assessment in terms of provisions of section 147 of the Income Tax Act 1961. Accordingly I am satisfied that such income and any other income chargeable to tax, which has escaped assessment and which may come to my notice subsequently during the course of assessment proceedings under the section is to be charged to tax. In view of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in treating cash deposits in bank a/c as income of the assessee, which is wholly outside the purview of meaning of Income defined u/s. 2(24) of the Act. i. The Assessing Officer has reopened the assessment wrongly presuming that cash deposited in Bank a/c amounting to Rs. 48,35,500.00/- has escaped assessment. AO proceeded on fallacious assumption that bank deposits constituted undisclosed income. The reassessment proceedings could not be resorted to unless there was reason to believe, rather than suspect, that income had escaped assessment. ii. The AO has overlooked the fact that the sources of deposit or payment need not necessarily be income of the assessee. Though, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escapement assessment. The material before the AO must indicate income escaping assessment rather than desirability of further probe in the matter which may or may not lead to income escaping the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law ii. It is submitted that the AO cannot reopen the assessment for making a roving and fishing inquiry. To reopen the assessment, it is necessary that there must be something which indicates, even if it does not establish, the escapement of income from assessment. That it is only on that basis that the AO can form a prima-facie belief that an income has escaped assessment. Merely because some investigations if made, could have led to detection of an income escaping assessment, cannot be reason enough to hold the view that the income has escaped assessment. There has to be some kind of cause and effect of relationship between the reasons recorded and the income escaping assessment. iii. It is apparent that on the basis of AIR Information, the AO has reason to suspect and not reason to believe that income chargeable to tax has escaped assessment, which is not a valid ground for invoking the provisions of section 147 of the Act. The reason to believe that income chargeable to tax has escaped assessment must be based upon material on record, which is not there. In the circumstances, the basic requirements of section 147 of the Act not being satisfied, the assumption of jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 In the facts and circumstances of the case, the Ld. AO has erred in proceeding to assess income of the assessee by rejecting the objection without application of mind. i. The assessee has filed "objections to reasons recorded" as per Apex Court ruling in the case of Gkn Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. But the assessing officer did not dispose of the same on merit as per law. On the other hand the Ld. AO proceeded to assess income of the assessee by rejecting the objection without application of mind and holding the "false reasons" recorded as "correct reasons" ii. It is well settled that the reasons recorded for reopening the assessment have to speak for themselves. They have to spell out that (i) there was a failure of the Assessee to disclose fully and truly all the material facts necessary for the assessment and (ii) the reasons must provide a live link to the formation of the belief that income had escaped assessment. iii. The assessing officer, while disposing the assessee' "objections to reasons recorded" has relied on NMS letter No NMS/AAIPT2526L/1307825 issued vide No. 211 dated 10.08.2016 to the assessee. The reasons recorded cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akhmani Mewal Das [1976] 103 ITR 437 has held that "it is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening the assessment. At the same time, it is to be borne in mind that it is not any and every material, howsoever vague and indefinite or distant, remote or far-fetched, which would warrant the formation of the belief relating to escapement of the income from the assessment". v. It is submitted that there is no direct nexus or live link between reasons recorded and the AO's formation of her belief that there has been escapement of the income on a/c of cash deposits in assessee saving bank accounts. The reasons to believe was wholly based on her fallacious presumption that the assessee has not filed return of income. vi. According to the reasons recorded, there was AIR information, according to which the assessee has deposited cash in her bank a/c. The Annexure A' to the reasons recorded bears the following headings: "Reasons recorded under section 148 Read with para (a) of Explanation 2 to sec 147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid due tax. The assessee was also the partner of M/s. Kash Ind Roller Flour Mills and was fully associated with the firm. The entire addition of cash deposit amount of Rs. 13,82,500/- in HDFC Saving Bank a/c, cash deposited amount of Rs. 30,12,654/- in ICICI Saving Bank a/c and Rs. 13,44,000/- is also deposit cash in ICICI Saving Bank a/c was added back with total income. The assessee claimed that mere deposit of cash cannot be taken as income of the assessee. In ITA No. 184/Asr/2019, the assessment order was passed u/s. 144 of the Act. The assessee has raised two legal points related to jurisdiction of the Ld. AO for issuance of notice u/s. 148. First, the mistake was done in the recorded reason as the assessee was treated as non filler of ITR, whereas the assessee had filed the income tax return during his assessment year. Further, the assessee had filed objection against the recorded reason before the Ld. AO which was not disposed off during the assessment proceeding. Both objections are duly clarified by the Ld. CIT(A) in the appeal order. But the assessee was wrongly treated as non-filer of return for impugned assessment year which is not correct observation. Further, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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