TMI Blog2024 (2) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... epted. Ld. CIT(A) has, thus, rightly decided the issue against the assessee, which, therefore, does not require any interference. In the result ground no. 1 of the assessee stands dismissed. Source of cash deposit into bank - Assessee has requested the Ld. AO for verification of the veracity of documents i.e., agreements duly signed by assessee, seller party and the witnesses. Since the agreements were not registered the same were treated as fabricated, invalid and afterthought. Ld. AO have not considered it appropriate to summon the seller or to call them for personal hearing to check the genuineness of transaction, so as to arrive at the correct position pertaining to the explanations of the assessee w.r.t. cash deposits, by taking the excuse of time barring assessment. AO has placed his reliance on the assumption that the contentions and explanations offered by the assessee are beyond human probabilities, however, in order to establish that such contentions are wrong the requisite Suo moto inquiries which should have been done by the Ld. AO are not considered necessary, even after the request of the assessee. Such action of the Ld. AO was found to be against the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of the case and in law, the Id CIT(A) has erred in sustaining the application of sec.15BBE on the alleged addition of Rs. 53,41,000/-. 3. Brief facts of the case culled out from the record are that the assessee is engaged in the business of cable and HB wire binding manufacturing and filed his return of income for A.Y. 2014-15 on 29.11.2014 declaring total income of Rs. 6,92,760/-. On the basis of reason recorded that, the assessee has deposited cash of Rs. 53,41,000/- in various bank accounts, proceedings u/s 147 were initiated and notice u/s 148 was issued to the assessee on 31.03.2021. In response to the notice, assessee filed his return of income on 07.08.2021 declaring total income of Rs. 6,92,760/-. During the course of assessment proceedings, the assessee vide his response stated that he entered into an agreement for purchase of land at Rs. 49,00,000/- from Shri Shyam Lal, later the agreement for purchase of land was cancelled and cash was returned by the seller to the assessee which was deposited in his bank accounts, however, the explanation of the assessee was not considered convincing by the Ld. AO, and accordingly, he added back the amount of Rs. 53,41,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, has inter alia, made following cash deposits during the account period 1-4-05 to 31-3-06: dated 28-4-05; amount Rs. 2,60,000/- To verify the source of above cash deposit enquiry letter was issued to the assessee on 13-3-08 which was received by Smt. Tejpal Kaur on behalf of the assessee. The assessee has failed to turn up on the date of hearing i.e., 26-3-08. As per database available with this office, neither the assessee is assessed to IT nor the return for the AY u/c has been filed by him. Therefore, under the circumstances, the above deposit remains unexplained and has to be treated as having been made out of undisclosed sources. In view of the above facts, I have reasons to believe that income of Rs. 2,60,000 has escaped assessment for the AY 2006-07. Issue notice u/s148. Sd, ITO, 30-4-08 . 41. Thus, as evident from the reasons, the material available for the AO to form a belief of escapement of income consists of two items: (i) Information with the Deptt of cash deposit of Rs. 2,60,000 by the assessee in his savings bank account; and (ii) The non-response of the assessee to the letter of enquiry dt.13-03-08. 42. As found in the preceding p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that basis that the AO can form a prima facie belief that an income has escaped assessment; that merely because some further investigations have not been carried out, which, if made, could have led to detection of an income escaping assessment, this cannot be reason enough to hold the view that the income has escaped assessment; and that there has to be some kind of cause and effect of relationship between the reasons recorded and the income escaping assessment. The observations of Lakhmani Mewal Das (1976) (SC), were reproduced, as under: the reasons for the formation of the belief must have rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the ITO and the formation of this belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into sufficiency or adequacy of the material and substitute its own opinion for that of the ITO on the point as to whether action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Ld DR has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen is existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. There cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather than desirability of further probe in the matter which may or may not lead to income escaping the assessment, in our humble understanding, cannot be drawn. 49. Now, in keeping with Bir Bahadur Singh Sijwali (Del-Trib), this information cannot form a valid basis for initiating assessment proceedings u/s. 147. As observed in Bir Bahadur Singh Sijwali (2015) (Del-Trib), the mere fact that the deposits had been made in the bank account does not indicate that these deposits constitute income which has escaped assessment. 50. Thus, it was a mere suspicion of the AO that prompted him to initiate assessment proceedings u/s147, which is neither countenanced, nor sustainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the AO, as set out earlier, were not sufficient reasons for reopening the assessment proceedings. We, therefore, quash the reassessment proceedings. [as extracted from Bir Bahadur Singh Sijwali (2015) 53 taxmann.com 366 (Del-Trib)] 1.6. It is submitted that 0m Prakash Shukla (2018) (Lkw-Trib) dt. 30-11-18, held as under: 4. The AO recorded the following reasons to form belief of escapement of income of the assessee: As per information available in the office it is noticed that during the year relevant to the AY09-10 the assessee had made cash deposits to the tune of Rs. 28,18,210/- in his SB account No.377010100030223 maintained with Axis Bank Ltd- Faizabad which are not verifiable at this stage. The source of deposit to the tune of Rs. 28,18,210, extent of business, nature and source(s) of deposits are to be considered in the case of assessee. No return for the year u/c has been filed by the above-named person. I have reason to believe that income to the tune of Rs. 28,18,210 has escaped assessment for the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment order dt.18-3-14 and the impugned order dt.28-9-16, are thus, annulled and cancelled. No other issue survives for adjudication, nor was anything else argued. [as extracted from 0m Prakash Shukla (2018) ITA No.763/Lkw/2016 (Lkw-Trib)] 1.7. It is submitted that in Braham Prakash Lakra (2019) (Del-Trib) dt.19-11-19, held as under: 4 that assessment proceedings u/s.147 were initiated on the basis of information received from the ITO (I CI)-II, New Delhi. The satisfaction note was recorded by the AO which reads as under: As per information received from/ ITO (I CI)-II, New Delhi vide letter ITO(I CI)-I/UCB/Dep/9/14-15/2095 dt.24-3-16, regarding cash deposit by Shri Bhram Prakash Lakra was taken-up for verification under. As per the information it is seen that the above-mentioned assessee has made cash deposit amounting to Rs. 38,00,000/- during the 12-13. However, no ROI has been filed for 12-13. In view of the above information, I have reasons to believe an amount of Rs. 38,00,000 chargeable to tax has escaped assessment within the meaning sec147. It is a fit case to issue notice u/s148. 11. On identical set of facts, Ashwani K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal with the question as to whether the assessee could be said to be engaged in any business; all that is to be examined is whether the fact of the deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in our humble understanding, is in negative. The AO has opined that an income of Rs. 10,24,100 has escaped assessment of income because the assessee has Rs. 10,24,100 in his bank account on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, 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 desirab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r obtaining necessary approval from the Appropriate Authority, statutory notice u/s148 dt.23-3-16 was issue to the assessee... 6. On perusal of the above order, it is evident that the AO reopened the case of the assessee merely on the basis of suspicion that the income of the assessee has escaped assessment. It is a settled that notice u/s148 cannot be issued merely on the basis of the insufficient compliance to the letters issued by the Deptt. There must be a something which indicates, even if it does not establish, the escapement of income from assessment. Merely because some further investigations have not been carried out, which, 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. Thus, in the present case also, the AO issued notice u/s148 merely on the basis of suspicion that the cash deposited in the bank account of the assessee has escaped assessment. To support this view, I draw support from Bir Bahadur Singh Sijwali (2015) (Del-Trib) wherein it was held as under: 8. . . .AII that the reasons recorded for reopening indicate is that cash deposits aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the AO for formation of belief of escapement of income has been filed. These reasons read as follows: dt.5-3-15, As per AIR information available in the office it is noticed that during the year relevant to the AY. 2000-11, the assessee had made cash deposits to the tune of Rs. 13,19,000/- in her SB account maintained with PNB. The source of money deposited in SB account, which are not verifiable at this stage. ROI for the year u/c has been filed by the above named assessee but from the perusal of return, cash deposits in the bank account cannot be verified at this time. The source of deposit to the tune of Rs. 13,19,000 extent of business, nature and source(s) of deposits are required to be examined in the case of assessee. I have reason to believe that deposits to the tune of Rs. 13, 19,000 has escaped assessment for the relevant AY. Hence, proceedings u/s147 are being initiated. Issue notice u/s147. Sd, (Gulab Singh) ITO. 5. In Bir Bahadur Singh Sijwali (2015) (Del-Trib), it has been held, inter alia, as under: 8. . . . All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs. 10,24,100 have been made in the bank accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posits are required to be examined in the case of the assessee.. 7. The AO further states in the reasons that: ...I have reason to believe that deposits to the tune of Rs. 13,19,000 has escaped assessment for the relevant AY. and that hence, proceedings u/s147 are being initiated. 8. Here, again, Bir Bahadur Singh Sijwali (2015) (Del-Trib) is specific that what has to be examined is whether the fact of deposits, per se, in the bank account of the assessee could be the basis of holding the view that the income has escaped assessment. It is only belief of escapement of income, which would enable the AO to reopen a completed assessment. Herein, however, the AO himself is of the belief that what has escaped assessment is the bank deposits of Rs.13,19,000. Now, these deposits, as also held in Bir Bahadur Singh Sijwali (2015) (DelTrib), by themselves, do not lead to income being taxed in the assessee's hands. 9. No decision contrary to Bir Bahadur Singh Sijwali has been cited. 10. For the above discussion, it is hereby held that in the present case, the reasons recorded by the AO were not reasons sufficient enough to enable reopening of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground no. 2 of the present appeal, it is the submission of Ld. AR that the contention raised before the LD. CIT(A) have not been dealt with properly. The assessee has duly explained the source of cash deposit into bank; however, Ld. CIT(A) has dismissed the ground of appeal. For the sake of clarity, the submission of the assessee and finding of the Ld. CIT(A) on this issue are extracted as under: Submission of the Assessee before Ld. CIT(A) 2. Revised Gr. No.2: 2. On the facts and circumstances of the case and in law, the Id AO has erred in making addition u/s69A of Rs. 53,41,000 on the count of cash deposits into bank account treating it as explained, which is arbitrary and is liable to be deleted. 1. The assessee has filed his ROI on 29-11-14 by declaring total income at Rs. 6,92,760; the assessee earns income from his proprietary concern M/s. Vijay Enterprises, director remuneration from M/s. Jaikapeesh Buildinfra Pvt Ltd and interest from saving bank account and it is submitted that, during the FY 2013-14, the assessee has made cash deposits of Rs. 3,41,000/- in his savings bank (i.e., Rs. 52,50,000/- in ICICI bank A/c No.028201516791, Rs. 5,000 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m bank at Rs. 4,41,000 has deposited total cash into bank account of Rs. 53,41,000; for this purpose cash book for FY. 2013-14 and bank ledger alongwith bank statement is enclosed at Pg. 166 to 169 for your honors kind consideration; 1.10. From the above, it is clear that during the year u/c the assessee has received cash of Rs. 49 lakhs and cash deposit of Rs. 53,41,000 and it is also clear that out of the total cash deposit of Rs. 53,41,000, substantial amount represents cash received back on cancellation of agreement and balance out of the cash withdrawals made and balance available with the assessee. More so, the Id AO has totally ignored the explanation of the assessee stating it is an afterthought. 1.11. Therefore, there is no escapement of income on the count of unexplained cash deposit in bank account of the assessee, being cash deposited into bank as alleged by the Id AO and hence, the addition ofRs.53,41,000 may kindly be deleted. Findings of Ld. CIT(A) 5.2 The appellant has raised 3 grounds on the addition made worth Rs. 53,41 ,000/ They are adjudicated as under:- During the course of assessment proceedings, the Assessing Officer came to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned purchase agreement and cancellation agreement / verification of the document so submitted. However, Ld. CIT(A) who is having powers coterminous with that of the Ld. AO have not taken cognizance of such request of the assessee which was ignored by the Ld. AO but have summarily accepted the verdict of the Ld. AO without further enquiry into the issue for the sake of principle of nature justice. It is further submitted by the Ld. AR, that on this aspect, Ld. AO has rejected the contention of the assessee supported with purchase agreement and cancellation agreement to substantiate that the cash of Rs. 49,00,000/- have been given to the seller which was subsequently received back when the agreement was cancelled, without confronting the concerned seller. The agreements were treated as invalid and non est by the Ld. AO without assigning any specific reason, moreover, when the assessee had requested vide his reply dated 14.03.2022, which is apparent from the assessment order, Ld. AO has rejected the request stating that the assessment proceedings are going on since January 2022 under FAS, whereas, the assessee has deliberately made such requests for verification at the fag end of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of documents i.e., agreements duly signed by assessee, seller party and the witnesses. Since the agreements were not registered the same were treated as fabricated, invalid and afterthought. Ld. AO have not considered it appropriate to summon the seller or to call them for personal hearing to check the genuineness of transaction, so as to arrive at the correct position pertaining to the explanations of the assessee w.r.t. cash deposits, by taking the excuse of time barring assessment. Ld. AO has placed his reliance on the assumption that the contentions and explanations offered by the assessee are beyond human probabilities, however, in order to establish that such contentions are wrong the requisite Suo moto inquiries which should have been done by the Ld. AO are not considered necessary, even after the request of the assessee. Such action of the Ld. AO was found to be against the principle of natural justice, thus, in order to check the veracity of documents and genuineness of the transactions, which are the root transactions from where the cash was generated as explained by the assessee but in the opinion of revenue authorities those documents are afterthought and fabricated. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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