ATIKSHABEN MANISHBHAI PATEL,VALSAD V. .INCOME TAX OFFICER, VALSAD

ITA 695/SRT/2024

AI Insights

The case involves Atikshaben Manishbhai Patel, who did not file a return of income for the assessment year 2011-12. The AO reopened the case under section 147 after noticing share transactions worth Rs.8,79,774. Following the reopening, the AO made several additions to the assessee's income, which were partly confirmed by the CIT(A). The assessee appealed to the Tribunal, challenging both the validity of the re-assessment and the merits of the additions. The Tribunal found that the AO had not made any additions regarding the reason for re-opening and thus quashed the re-opening of the assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26785 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 22-06-2024
• Other Referred Cases: CIT vs. Mohmed Juned Dadani, CIT vs. Jet Airways (I) Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVISH BHATT
• Assessee Lawyers: CHAITALI SHAH
• Keywords: Unexplained cash credit; Reason to believe; Validity of assessment
• Section: 147; 148; 143(3); 142(1); 143(2); 250; 64

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.695/SRT/2024 Assessment Year: (2011-12) (Physical Hearing) Atikshaben Manishbhai Patel, 3-7-11 Golwad, Rana Street Malaviyaji Road Vapi, Valsad – 396001. Vs. The ITO, Ward – 1, Valsad èथायीलेखासं./जीआइआरसं./PAN/GIR No: BDBPP1226L (Appellant) (Respondent) Appellant by Ms. Chaitali Shah, CA Respondent by Shri Ravish Bhatt, Sr. DR Date of Hearing 12/11/2024 Date of Pronouncement 16/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 15.05.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2011-12. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in reopening the case of the assessee u/s. 147 of the Act by issuing notice u/s. 148 of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the Id. CIT(A) has erred in partly confirming the action of assessing officer by sustaining the addition of Rs. 3,97,500/- on account of alleged unexplained cash deposits. 2 ITA No.695/SRT/2024/AY.2011-12 Atikshaben Manishbhai Patel 3. On the facts and circumstances of the case as well as law on the subject, the Id. CIT(A) has erred in partly confirming the action of assessing officer by sustaining the addition of Rs. 2,42,000/- on account of alleged unexplained credit. 4. It is therefore prayed that the assessment framed u/s. 143(3) r.w.s. 147 may please be quashed and/or above additions made by the assessing officer and partly confirmed by the CIT(A) may please be deleted. 5. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.” 3. Brief facts of the case are that assessee had not filed return of income for AY.2011-12 after verifying the data uploaded by DIT (I&CI), Mumbai the Assessing Officer (in short, ‘AO’) noticed that assessee made transactions in shares of Rs.8,79,774/-. Hence, the case was reopened u/s 147 after obtaining necessary approval of the PCIT, Valsad. Notice u/s 148 was issued on 26.03.2018. The assessee filed return on 16.11.2018, declaring income of Rs.1,40,370/-. Thereafter, AO issued notices u/s 143(2) and 142(1) and passed the order u/s 143(3) r.w.s. 147 on 20.12.2018 by making following additions: (i) Rs.5,39,500/- towards unexplained cash deposit, (ii) unexplained other credits of Rs.14,39,148/- (iii) unexplained receipt of Rs.5,30,786/- in the P&L account and (iv) unsecured loan of Rs.3,82,000/- u/s 68 of the Act. 4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The appellant had challenged validity of assessment u/s 147 and merits of additions of various amounts mentioned in the preceding para. The CIT(A) has dismissed the ground regarding validity of re-assessment. The reasons for reopening was that “assessee had made share transactions worth Rs.8,79,774/- and in absence of return of income or any response from the assessee source of 3 ITA No.695/SRT/2024/AY.2011-12 Atikshaben Manishbhai Patel investments in shares is unexplained.” The CIT(A) observed that additions in assessment orders are result of verifications of unexplained credits by AO. Unexplained credit added by AO under various heads are related to source of investment in shares. Hence, objection of assessee was not found tenable and the ground was dismissed. The CIT(A) has partly allowed appeal by sustaining addition of Rs.3,97,500/- on account of cash deposits and Rs.2,42,000/- on account of other credits. He has deleted addition of Rs.5,30,786/- and Rs.3,82,000/- being the sale receipts and unsecured loans. The appeal was partly allowed. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee filed two paper books containing the details submitted before the AO and various case laws. It was submitted that the reasons for re-opening was not given by the AO and the AO has passed the assessment order making various additions but he made no additions on the issue on which the case was reopened. She has relied on the decisions in the cases of CIT vs. Mohmed Juned Dadani, 84 CCH 64 (Gujarat HC) and CIT vs. Jet Airways (I) Ltd., 239 CTR 183 (Bombay HC). She has also submitted that there was loss of Rs.1,02,450/- [Rs.8,77,149 (-) Rs.9,79,599] on account of share transactions and the AO has not added anything in this issue. The sale of shares of Rs.8,77,149/- is duly reflected in the return of income filed by the assessee. The ld. AR relied on the submission made before the CIT(A). 4 ITA No.695/SRT/2024/AY.2011-12 Atikshaben Manishbhai Patel 6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of CIT(A). He submitted that the CIT(A) has allowed substantial relief to the assessee and only addition of Rs.3,97,000/- and Rs.2,42,000/- has been sustained. 7. We have heard both the parties and perused the materials available on record. We have also deliberated on the decision relied upon by ld. AR. Since jurisdictional issue on validity of re-opening u/s 147 of the Act has been raised, we shall first deal with the same. The reasons for re-opening are given at page 24 and 25 of the paper book which is as under: “Reason for the belief that income has Escaped assessment: 1. As per information available in ITD data the assessee has not filed return of income for AY.2011-12. 2. As per the information available with this office under NMS information, it is seen that the assessee has made Share transaction of Rs.8,79,774/- during the year under consideration. 3. In view of analyzing the NMS information, ITD data from 360-degree profile of this assessee in assessment module of ITBA systems has been downloaded and it is seen that the assessee has undertaken the above financial transaction. 4. In this regard a query letter weas issued to the assessee on 15.02.2018. Thereafter, reminder letter was also issued on 16.03.2018. The letter was served upon the assessee by speed post/personally. However, the assessee did not respond to the letter and filed no reply whatsoever, in the matter. 5. Since, the assessee has not submitted any explanation for source of investment in shares, therefore, I have reason to believe that income amounting to Rs.8,79,774/- invested in shares is not assessed to tax.” 7.1 It is thus clear that the source of investment in shares of Rs.8,79,774/- was the reason for re-opening the assessment u/s 147 of the Act. However, in the assessment order, we find that the AO has made additions of Rs.5,39,500/- towards cash deposits, Rs.14,39,148/- towards other credits in the bank 5 ITA No.695/SRT/2024/AY.2011-12 Atikshaben Manishbhai Patel accounts, Rs.5,30,786/- on account of sales in the P&L account and Rs.3,82,000/- on account of unsecured loan. It is, therefore, clear that no addition was made on account of the investment in shares of Rs.8,79,774/-, which was the reason for re-opening the assessment. The ld. AR has relied on the decisions of Mohmed Juned Dadani (supra) and Jet Airways (I) Ltd. (supra). The Hon’ble jurisdictional High Court in case of Mohmed Juned Dadani (supra) has held that when on ground on which re-opening assessment was based, no addition was made by the AO, he could not make addition on some other grounds which did not form part of reasons recorded by him. We also find that the Hon’ble Bombay High Court in case of Jet Airways (I) Ltd. (supra) has also held that where after issuing a notice u/s 148, the AO accepts contention of assessee and holds that income, for which he has initially formed a reason to believe that it had escaped assessment, has, as a matter of fact, not escaped assessment, it is not opened him to independently assess some other income. If he intends to do so, a fresh notice u/s 148 would be necessary. We find that the AO has not made any addition on the issue of re-opening i.e., unexplained investment of Rs.8,79,774/- in share transactions. Therefore, he could not have made the other additions in the order u/s 143(3) r.w.s. 147 of the Act. Therefore, the ground is allowed. 8. Since we have quashed the re-opening of the assessment u/s 147 of the Act by issuing notice u/s 148 of the Act, the other grounds are academic in nature and do not require adjudication. 6 ITA No.695/SRT/2024/AY.2011-12 Atikshaben Manishbhai Patel 9. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 16/12/2024 Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 16/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "