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TMI Blog2024 (4) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... information indicating that in the year under consideration, the assessee had deposited cash amounting to Rs. 46,34,231/- in his savings bank account, the Assessing Officer reopened the assessment under section 147 of the Act. Alleging that the assessee did not comply with notices issued under sections 148 and 142(1) of the Act, the Assessing Officer proceeded to complete the assessment ex-parte, to the best of his judgment, invoking the provisions of section 144 of the Act. While doing so, he added back an amount of Rs. 95,24,077/- representing both cash and cheque deposits made in the bank account during the year under consideration. Against the assessment order so passed, the assessee went in appeal before learned first appellate authority, inter alia, challenging the reopening of the assessment under section 147 of the Act. However, learned first appellate authority upheld the validity of the proceedings under section 147 of the Act. On merits, learned first appellate authority granted partial relief to the assessee by deleting the addition made of cheque deposits. 3. Before us, learned counsel appearing for the assessee drew our attention to the reasons recorded for reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer has reopened the assessment on wrongful assumption of facts. This, in our view, vitiates the initiation of proceedings under section 147 of the Act, which ultimately culminated in passing of the assessment order under section 147/144 of the Act. 7. Our aforesaid view gets support from the decision of the Coordinate Bench in case of Shri Anuj Chaudhary Vs. ITO (supra), wherein the Bench has observed as under: "8. Based on the aforesaid two factual incorrect assumptions made by the ld AO while recording the reasons, the AO had come to conclusion that cash deposit of Rs. 13,47,000/- made in the saving bank account would constitute income escaping assessment in the hands of the assessee, warranting reopening u/s 147 of the Act. Once, it is clearly established that the very basis of assumption of jurisdiction by the ld AO for reopening the assessment was based on incorrect facts, the entire foundation of reason to believe of the ld AO goes. Once, the foundation goes, the entire reopening deserves to be quashed. This view of ours is further fortified by the decision of the coordinate bench of Mumbai Tribunal in the case of ITO Vs. M/s. Champaklal Mathurbai Mehta in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old that the entire reopening had been triggered by the Id. AO based on complete incorrect assumption of fact that no return of income was filed by the assessee for the A.Y. 2011-12, wherein a financial transaction of purchase of property was made. The letter to assessee by the Id. AO calling for income tax return based on report received in the non-filers list was never issued by the Id. AO for A.Y. 2011-12 i.e. the year under consideration before us. Factually it was issued only for A.Y. 2010-11 as stated supra. Hence, we hold that the reasons recorded for reopening has been made without application of mind by the Id. AO. Now the moot question that arises for our consideration is as to whether the reopening which is made based on incorrect assumption of fact and non-application of mind by the Id. AO could be held to be valid. This issue has been addressed by the Hon'ble Jurisdictional High Court in the case of Dhiren Anantrai Modi vs. Income Tax Officer in Writ Petition No.3224 of 2019 dated 15/12/2021. For the sake of convenience, the entire order is reproduced hereunder:- "1. Petitioner is impugning notice dated 26th March, 2019 issued under Section 148 of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are issued in pursuance of the objective of completing reassessment in accordance with the procedures laid down. On this ground alone, the notice dated 26th March, 2019 has to be set aside. 6. Moreover, Mr. Gandhi submitted that despite repeated requests for copy of the sanction under Section 151 of the Act, the same has not been provided. The averment to that effect in the petition has not even been denied in the affidavit in reply and respondent, in the affidavit in reply has not even bothered to annex the sanction obtained which gives us a feeling that the said Mr. Ramesh C. Meena who issued notice under Section 148 of the Act containing errors of facts and who has filed affidavit in reply does not wish to produce the same. We have to, therefore draw adverse inference against respondent that if it is disclosed it may be prejudicial to the interest of Revenue. 7. One wonders whether the sanctioning authority under Section 151 of the Act also would have even applied his mind because the reasons recorded as noted above itself displays non application of mind by the Assessing Officer. Therefore, either no sanction as contemplated under Purti Parab 4/4 420-WP-3224- 2019.doc Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration to tax as capital gains. The Assessing Officer may have dispute with respect to computation of such capital gains, he cannot simply dispute the fact that the assessee did 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 Rs. 50 lakhs. The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is Rs. 50 lakhs but the registering authority has valued the property on the date of sale at Rs. 1,18,95,000 for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment. The reasons cited assessee filed no return and that 1/3rd share of the assessee from the actual sale consideration of Rs. 1,18,95,000 therefore, was not brought to tax. These reasons are interconnected and interwoven. In fact, even if these reasons are seen as separa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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