AMANDEEP SINGH,NEW DELHI V. DCIT CIRCLE 10(1), NEW DELHI

ITA 1546/DEL/2024

AI Insights

The case involves Amandeep Singh, the appellant, who contested the reassessment of his income for the Assessment Year 2010-11 by the Deputy Commissioner of Income-tax (DCIT), Circle 10(1), New Delhi. The reassessment was based on information suggesting involvement in money laundering activities through transactions with sister concerns. The Tribunal examined the validity of the reassessment proceedings, focusing on the jurisdictional issues raised by the assessee, particularly the lack of tangible material and the reliance on suspicion for reopening the assessment under section 148 of the Income-tax Act, 1961.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669331 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Other Referred Cases: Saraswati Petrochem (P) Ltd. vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: SALIL AGGARWAL
• Keywords: Reassessment proceedings; Onus to prove; Source of fund; Reason to believe; Tangible material
• Section: 147; 148; 142(1); 68; 139

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER and SHRIS.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.1546/DEL/2024 (Assessment Year: 2010-11) Amandeep Singh, vs. DCIT, Circle 10 (1), 10/46, West Punjabi Bagh, New Delhi. New Delhi – 110 026. (PAN :ALOPS5758C) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Salil Aggarwal, Sr. Advocate Shri Shailesh Gupta, CA Shri Madhur Agarwal, Advocate REVENUE BY : Shri Ashish Tripathi, Sr. DR Date of Hearing : 22.04.2025 Date of Order : 27.06.2025 O R D E R PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER : 1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax Appeals/National Faceless appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 22.02.2024 for Assessment Year 2010-11. 2. Brief facts of the case are, assessee filed its return of income on 14.10.2010 declaring total income of Rs.10,97,140/-. Subsequently, proceedings were initiated under section 148 of the Income-tax Act, 1961 (for short ‘the Act’) 2 ITA No.1546/DEL/2024 on the basis of specific information received from office of Deputy Director of Income-tax (Inv.), Unit-1(2), New Delhi. Accordingly, notice u/s 148 was issued and served on the assessee on 31.03.2017 after obtaining approval from Pr.CIT-4, New Delhi. Based on the information received from DDIT (Inv.), AO observed that large scale transactions are carried out between sister concerns through a number of accounts. The transactions were found to be without any economic rationale and it is suspected that money laundering activities were being carried out through these accounts. Further he observed that it is suspected Mr. Tarun Goyal, CA operating from Karol Bagh, New Delhi is involved in purchase of existing companies and formation of new ones. It was found that he was controlling 35 companies. Accordingly, he reproduced the details of transactions with Guru Kirpa Enterprises and Amandeep Singh in the reasons recorded for reopening the same. Several notices were issued to the assessee u/s 142 of the Act and subsequently assessee filed his return of income. Subsequently, notices u/s 142(1) were issued and served on the assessee dated 06.12.2017. In response, ld. AR of the assessee attended and submitted relevant information and the assessment was completed vide order dated 29.12.2017. 3. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and ld. CIT (A) dismissed the appeal preferred by the assessee. 3 ITA No.1546/DEL/2024 4. Aggrieved with the above order, assessee is in appeal before us raising following grounds of appeal :- “1. That the learned CIT(Appeals) has erred in upholding the arbitrary assumption of jurisdiction u/s 147/148 of the Act in the instant case by the A.O. even though no income could be said to have escaped assessment in the hands of the assessee on the basis of information said to have been received by the AO. That the AO has wrongly assumed jurisdiction u/s 147 of the Act only on the basis of suspicion and the learned CIT(Appeals) ought to have quashed the assessment order being null and void ab initio. 2. That the learned CIT(Appeals) has erred in rejecting the grounds of appeal raised before him against the issuance or the notice u/s 148 or the Act beyond the statutory time allowed u/s 149 of the Act as also against the wholly wrong and arbitrary sanction u/s 151 of the Act which was granted without application of mind in the instant case. 3. That the Learned CIT (Appeals) has failed to appreciate that there was no relevant tangible material on the record of tile A.O. that could have enabled him to validly record any reason to believe that any income has escaped assessment in the instant case. That the notice u/s 148 off the Act was issued in the instant case only on the basis of suspicion and the CIT(A) ought to have quashed the impugned assessment order. 4. That the learned CIT(Appeals) has erred in sustaining the addition of Rs.5,1925,158/- made to the income of the assessee by the A.O. u/s 68 of the Act. b) That the Learned CIT(Appeals) has failed to appreciate that the onus to prove the source or deposit of Rs.5,19,25,158/- in tile fully disclosed bank accounts of the assessee stood discharged by the assessee and that the same stood rejected by the A.O. only on the basis of suspicion. surmises and conjectures. c) That the learned CIT(Appeals) has erred in sustaining the addition of Rs.5,19,25,158/- without allowing adequate opportunity of hearing to the assessee to make detailed submissions on the quantum addition of Rs.5,19,25,158/-. That the learned CIT (Appeals) ought to have allowed opportunity to the assessee as prayed for before him and ought not to have passed the impugned order without allowing such opportunity to make further submissions.” 5. At the time of hearing, ld. AR of the assessee submitted that Ground Nos.1 to 3 are jurisdictional issues raised by the assessee. He submitted that assessee has filed its return of income u/s 139 (1) on 14.10.2010 declaring his income at Rs.10,97,140/-. He submitted the sequence of events and brought 4 ITA No.1546/DEL/2024 to our notice page 1 of the paper book which is a notice issued u/s 148 of the Act and he brought to our notice reasons recorded u/s 148 of the Act which was supplied to the assessee is placed at page 7 of the paper book. He read out the reasons recorded by the AO and brought to our notice point no.1 of the notice in which AO has observed that it is suspected that money laundering activity is being carried out by these accounts and stressed the point that it is only an issue purely on the basis of suspicion. However, he brought to our notice point no.2 of the notice wherein again AO recorded that it is suspected that Tarun Goyal, CA operating from Karol Bagh, New Delhi is involved in purchase of existing companies and formation of new one. Again he pointed out point no.3 wherein it is mentioned that suspected money laundering activities were carried out mainly through HDFC Bank Ltd., Karol Bagh, New Delhi and Axis Bank through Delhi based branches and technically he further referred that it is suspected that all the four banks were not generating STR/CTR as per the AML/CFT Guidelines. Further he submitted that Investigation Wing has issued summons to various banks and collected information relating to the accounts operated on behalf Tarun Goyal, CA. 6. Further he submitted that with regard to the details mentioned relating to Guru Kripa with Axis Bank, it is randomly mentioned as Janakpuri branch whereas actual branch details are Tilak Nagar branch and the above account 5 ITA No.1546/DEL/2024 is current account. Further he brought to our notice the details of Amandeep wherein again the name of the branch was mentioned as Janakpuri and the correct details are Tilak Nagar and it is related to saving bank account. He further brought to our notice that in the last para of the reasons recorded, it was mentioned that as per the return downloaded from the ITD Portal and verified the records and it is clear that the assessee company has not disclosed fully and truly all material facts necessary for its assessment. In this regard, he submitted that assessee is an individual not a company. With regard to page 9 of the paper book which is the last page of the reasons recorded, he submitted that the AO has not established any relationship with Tarun Goyal, who is the suspected money launderer with the assessee; and further reasons recorded are related to the company whereas the assessee concerns is only proprietary concerns. 7. Further he brought to our notice page 10 of the paper book wherein assessee has raised several objections. One of them is the reasons recorded by the AO are undated. Further he brought to our notice pages 11 to 13 of the paper book wherein assessee has raised several objections and brought to our notice page 15 of the paper book wherein AO has disposed off the objections raised by the assessee. He submitted that the AO has not disposed off various issues raised by the assessee including the undated recording of reasons. In this regard, he submitted that the reasons recorded by the AO are not cogent 6 ITA No.1546/DEL/2024 enough to reopen the assessment and the AO has not recorded the quantum of escapement of income and further he submitted that all bank transactions are duly recorded in the books of the assessee and the relevant bank branches recorded in the case of Tarun Goyal are not the branches wherein the assessee has any transactions and insisted that the reassessment proceedings were initiated in the case of the assessee wholly on the basis of suspicion and there is no cogent material on record and wrong assumption of facts to assume the jurisdiction in this case. He vehemently argued that it is a wrong assumption of jurisdiction in the case of the assessee for reopening of the assessment. 8. On the other hand, ld. DR of the Revenue brought to our notice page 7 of the paper book and submitted that TIP was received from CBI, New Delhi and based on the above investigation carried on in the case of Tarun Goyal. Further he brought to our notice page 14 of the paper book and submitted that the AO has followed the due process of law to dispose off the various objections raised by the assessee and insisted that the case involving information from CBI and also the AO has duly addressed the various objections raised by the assessee. Finally, he relied on the findings of the lower authorities. 9. Considered the rival submissions and material placed on record. We observed that the AO has initiated the proceedings u/s 148 of the Act by 7 ITA No.1546/DEL/2024 relying on the information received from DDIT (Inv.). As per the reasons recorded by the AO, it indicates that Tarun Goyal, a Chartered Accountant is involved in money laundering cases and it is fact on record that it is only a suspicion on the basis of which the proceedings were initiated in the case of Tarun Goyal and we observed that the Investigation Wing has investigated the issue and directed the Axis Bank and HDFC Bank to submit the transactions relating to Tarun Goyal. The AO has not brought on record any cogent material linking the assessee and Tarun Goyal while recording the reasons. He initiated the proceedings only on the basis of suspicion and no cogent material brought on record linking the assessee any way in these transactions. We observed that the assessee has already recorded various transactions in his books of account. Further we observed that the reasons recorded by the AO are on the basis of initiating proceedings in the case of the companies. However, the assessee is an individual having proprietorship concern. The allegation in the case of Tarun Goyal is involving accusation of existing companies and formation of new ones in order to indulge in money laundering whereas the assessees is a proprietorship concern. How the abovesaid transactions having impact on the proprietorship concern is not clearly brought on record by the AO while recording the reasons. After carefully going through the reasons recorded or initiating of proceedings u/s 148, we observed that the AO initiated the proceedings for roving enquiry 8 ITA No.1546/DEL/2024 without having any cogent material in his hands. Therefore, without recording the proper reasons for reopening the assessment backed by cogent material to support, the initiation of proceedings is bad in law and further we observed that AO has not disposed off the main objections separately before initiating the reassessment proceedings. In this regard, we heavily rely on the decision of Hon’ble Delhi High Court in the case of Saraswati Petrochem (P) Ltd. vs. ITO reported in 156 taxmann.com 471 (Del.) wherein Hon’ble High Court has held as under :- “17.5 It is evident that the AO had, perhaps, no tangible material available with him to form a belief that income, otherwise chargeable to tax, had escaped assessment. The phraseology used by the AO reveals that he 'suspected' that income chargeable to tax had escaped assessment. Therefore, according to us, this approach of the AO breached the other well-established principle of law that suspicion and conjecture cannot form the basis for triggering reassessment proceedings qua an assessee. 18. In our view, the AO did not employ diligence while triggering the reassessment proceedings against the petitioner/assessee. It appears that because AO realized that the information received by him from ITO (Nahan) via letter dated 12-3-2018 concerned the preceding period, he attempted to commence reassessment proceedings under section 147/148 of the Act by simply comparing the 'source of funds' reflected under various heads in the balance sheets for the preceding AY and the AY in issue. Furthermore, that there was a gap in the enquiry is evident from the following. First, the respondent/revenue emphasized the fact that information was sought from the petitioner/assessee via notice dated 20-3-2018 before it issued the impugned notice on 31-3-2018. The notice dated 20- 3-2018 could not have reached the petitioner/assessee and nothing to the contrary has been placed on record by the respondent/revenue] as concededly, it did not bear the complete address of the petitioner/assessee. Second, the AO did not even have the list of shareholders of the petitioner/assessee, as indicated in the 'reason to believe'. 19. We are of the opinion that the AO did not have the tangible material on record that could have persuaded him to form a belief that income, otherwise chargeable to tax, had escaped assessment. The AO did not carry forward the enquiry process once he had received communication from ITO (Nahan). As noticed above, the AO did not furnish either the letter dated 12-3-2018 received from ITO (Nahan) or the relevant intimation received from the ADIT(Inv)lUnit- 4(2) New Delhi, along with the document containing 'reason to believe' Had the 9 ITA No.1546/DEL/2024 AO furnished the documents, he would have been able to reach a firmer conclusion that crossed the threshold of suspicion and conjecture.” 10. With the above defects and without recording the proper reasons backed by cogent materials, while initiating the reassessment proceedings which are bad in law ab initio, accordingly we are inclined to quash the reassessment proceedings made by the AO. Ground Nos.1 to 3 raised by the assessee are allowed. 11. Since the grounds on jurisdictional issues are allowed, the issues on merit become academic, therefore, not deliberated upon. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 27th day of June, 2025. Sd/- sd/- (VIKAS AWASTHY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27.06.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "