DESH RAJ JAKHAR,GORDHANPURA V. INCOME TAX OFFICER, WARD NEEM KA THANA

ITA 1261/JPR/2024

AI Insights

The case involves Shri Desh Raj Jakhar, who appealed against the order of the CIT(A) for the assessment year 2014-15. The primary issues in the appeal were the initiation of proceedings under section 148 of the Income Tax Act, the addition of Rs. 49,09,500 as unexplained investment under section 69, and the initiation of penalty under section 271(1)(c). The AO had initially treated the cash deposits in the assessee's bank accounts as unexplained investments, leading to the appeal. The Tribunal noted procedural lapses and the need for further verification of the sources of the deposits before concluding the matter.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472791 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Other Referred Cases: Arvind Sahdeo Gupta V/s ITO and anr Writ Petition No. 4793 of 2021 (Bombay High Court, Nagpur Bench), Mumtaz Haji Mohmad Memon V/s ITO in Special Civil Application No. 21030 of 2017 (Gujrat High Court), Keshav Saran V/s ACIT in ITA No. 382/Del/2019 (Delhi ITAT)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H
• Assessee Lawyers: SHAFFI MOHD
• Keywords: Condonation of delay; Reassessment proceedings; Onus to prove; Gift; Period of limitation; Source of fund; Reason to believe; Time period of passing order
• Section: 147; 148; 143(3); 292BB; 143(2); 143(1); 69

Judgement Text

" vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oaJh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 1261/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2014-15 Shri Desh Raj Jakhar Village: Goverdhanpura Post: Nayabass, Tehsil: Neem Ka Thana Distt: Sikar 332 713 (Raj_ cuke Vs. The ITO Neem Ka Thana Distt. Sikar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHVPJ 8029 L vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Shaffi Mohd. Advocate jktLo dh vksj ls@Revenue by: Mrs. Anita Rinesh, JCIT -DR lquokbZ dh rkjh[k@Date of Hearing : 23/12/2024 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 25 /02/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee isdirected against the order of the ld. CIT(A) dated 20-03-2024, National Faceless Appeal Centre, Delhi [ for short NFAC/CIT(A)] for the assessment year 2014-15 raising therein following grounds appeal: ‘’1. That the AO erred in initiating the proceedings u/s 148 of the Act. 2. That the AO erred in making the addition of Rs.49,09,500/- u/s 69 as the assessee has proved the prima facie burden about the source of amount. 2 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR 3. That the AO erred in initiating the penalty u/s 271(1)© of the Act. 2.1 During the course of hearing, the Bench noticed that there is delay of 148 days in filing the appeal by the assessee for which the assessee has filed an application dated 15-10-2024 for condonation of delay giving therein following reasons: ‘’1. That the Ld. Commissioner of Income Tax (Appeals) National Faceless appeals Centre passed the order in appeal of the assessee on 20.03.2024. 2. That the order was uploaded on the portal not communicated by any other mode of service, to me. 3. That when more than sufficient time has been passed then, I have enquired by status of my appeal on 10.10.2024, then my consultant informed me that order in appeal has been passed on 20.03.2024 and the same is available on the portal. But this fact was not communicated to me earlier. 4. That thereafter I have contacted him for further proceedings on 11.10.2024. He advised me file second before the Hon'ble Income Tax Appellate Tribunal within 60 days from the date of service of order of CIT(A). That period is already over. 5. That thereafter I have contacted another advocate, who is doing the work of appeals etc. on 12.10.2024 and handed over the paper to him for preparation of appeal. 6. That because of the above reasons the appeal could not be filed within the time limitation as prescribed in the Income Tax Act which resulted in 118day's delay from the date of service of assessment order i.c. 21.03.2024. 7. That the delay in filing the present appeal is bona-fide, there is no mala-fide intention in filing the appeal after limitation period. This occurs only because of the reasons mentioned in above paras, hence requested that the delaymay kindly be condoned. It is therefore, humbly prayed that the present application under Section 5 of Limitation Act may kindly be allowed and the Appeal filed by the Appellant assessee may be treated to been filed in limitation and the delay in filing of the appeal may kindly be condoned. 3 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR To this effect, the assessee has filed an affidavit deposing therein the above facts of the case as to delay of 148 days made in filing the above appeal. 2.2 On the other hand, the ld. DR objected to such inordinate delay of 148 in filing the appeal and submitted that the Court may decide the issue as deemed fit and proper in the case. 2.3 We have heard both the parties and perused the materials available on record. The Bench from the submissions of the assessee noticed that order was uploaded by the Department on its portal and this fact was not communicated to the assessee by serving the order through postal service and thus the assessee was not able to get proper communication. The Bench feels that the assessee is prevented by sufficient cause not filing the appeal timely. Hence, in view of the matter, the delay is condoned. 3.1 Apropos ground of appeal of the assessee, it is noticed that the ld. CIT(A) has dismissed the appeal of the assessee by observing at para 6 to 7 of his order as under:- ‘’Decision 6. It is not disputed that the appellant deposited cash totaling Rs.59,09,500 in his bank accounts with State Bank of Bikaner and Jaipur (a/c No. 51053440598) and Axis Bank(Ac No.912010057402287) in FY 2013-14. The appellant did not file return of income for the year. During proceedings u/s 147 the appellant failed to explain the source for the cash deposits and instead \"surrendered\" Rs. 10,00,000 4 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR as taxable income out of the cash deposits made. The AO completed the assessment, treating the balance cash deposited (Rs.49,09,500) as unexplained investment u/s 69 and deeming the same to be income. 6.1 During appellate proceedings the appellant explained the source for the deposits as under: Source Rs. 1 Gifts from relatives 33,55,000 2 Amount advances by friends for investment 14,30,000 3 Savings of earlier years 3,20,000 4 Out of withdrawal of current year 1,89,500 5 Sale of property 6,15,000 59,09,500 6.2 The claims of the appellant were examined thoroughly during remand proceedings. 6.3 According to the appellant he received money (Rs.47,85,000) from 18 individuals who were his friends or close relatives. Out of these 16 were produced before the AO. It was stated that one of them had died and one was not produced. The individuals who attended the remand proceedings accepted that they had given the appellant the amounts in question. However, these individuals turned out to be people of modest means. They could not establish their sources of income with any kind of documentary proof. No documents such as bank statements or returns of income were produced by the so-called creditors in support of their income. It is trite law that in order to establish the genuineness of a credit, identity and credit-worthiness of the creditor and genuineness of the transaction have to be established. In this case the creditworthiness of the supposed creditors is not established. Also, transactions between the appellant and so-called creditors have all allegedly taken place through cash. Therefore, there is no money trail between the so-called creditors and the appellant. In the case of friends who claim to have given business advances, there is no agreement. Under the circumstances, the conclusion is inescapable that the persons introduced as creditors are mere name lenders only. I am unable to accept the claim of the appellant regarding amounts received from friends and relatives. 6.4 The appellant claimed that he had sold 2 pieces of property in the previous year and that his father had sold one piece of property. It was claimed that cash deposits amounting to Rs.6,15,000 was on account of advances received from these transactions. However, no proof for the sale of immovable property, such as sale deed or sale agreement were produced. Therefore, this claim is rejected. 5 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR 6.5 Since withdrawals from bank are made for small amounts and for specific purposes, it is difficult accept the claim of the appellant that out of cash deposited, Rs.1,89,500 was on account of cash withdrawn from bank. Therefore, this claim is rejected. 6.6 Out of the cash deposited in banks, the appellant has attributed Rs.3,20,000 to savings of earlier years. The appellant has not furnished any proof for this claim such returns of income filed in earlier years or closing of some investment. In the absence of proof of a proximate source, the claim regarding saving of earlier years as source for the deposits in bank is rejected. 6.7 In the light of the foregoing discussion, I find no reason to interfere in the findings of the AO. When cash is deposited in bank, it counts as an Investment. When the assessee is unable to explain the nature and source of this investment, the AO can treat the same as the income of the assessee u/s 69. The addition u/s 69 is therefore rightly made. 7. In the result, the appeal is dismissed. 3.2 During the course of hearing, the ld AR of the assessee filed the following written submission praying therein to allow the appeal of the assessee by quashing the order of the lower authorities. Ground-wise submission of the assessee:- ‘’The assessee filed this appeal against the order of the Ld. CIT(A) dated 20.03.2024 and taken the following grounds of appeal :- 1. That the Ld. Assessing officer is erred in initiating the proceedings u/s 148 2. That the Ld. Assessing officer if erred in making the addition of Rs. 49,09,500/- u/s 69 as the assessee has proved the prime facie burden about the source of amount. 3. That the Ld. Assessing officer is erred in initiation the penalty u/s 271(1)(c). 4. The Appellant craves the liberty to add, amend / alter any of the grounds of appeal during the course of hearing of appeal, if occasion so arises. Submission on Ground No. 1 :- ‘’That the Ld. Assessing officer is erred in initiating the proceedings u/s 148.\" 6 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR The proceedings initiated u/s 148 of the Income Tax Act, 1961 by Ld. Assessing officer are illegal, arbitrary, out of jurisdiction and unjustified because of :- (A) On wrong facts:- (i) Alleged as ITR not filed but the assessee has filed his ITR. (ii) Amount of Rs. 5909500/- deposited in bank account with state bank of Bikaner and Jaipur but in fact only deposited Rs. 1539500/- in this bank account. (B) Out of Jurisdiction: Issued notice u/s 148 where the time for notice u/s 143(2) is still available and also the time of regular as well as scrutiny assessment is available upto 30.09.2016 (A) Wrong Facts:- (i) Alleged as ITR not filed but the ITR is filed: The Ld. A.O. has stated in the grounds for reopening of the assessment, that the assessee has not filed his ITR for A.Y. 2014-15, the ground is available at Page 1 of the assessment order, for the convenience of the Hon'ble Bench the same is reproduced hereunder \"As per information available with this office, during the FY 2013-14, the assessee has deposited cash amounting to Rs. 59,09,500/- in saving account in SBBJ, Neem Ka thana. The assessee has not filed the ITR for the AY 2014-15. The maximum limit of total income not chargeable to tax for the AY 2014-15 was Rs. 2,00,000/- while the volume of cash deposits in the bank account is much higher and is not in consonance with the income of the assessee. Hence, looking to these facts, I have reason to believe that the income to the extent of Rs. 59,09,500/- has escaped assessment within the meaning of section 147/148 of the LT Act, 1961 Therefore, it is a fit case to issue notice u/s 148 of the IT Act, 1961.’’ From the perusal of the above referred ground for reopening. it goes to show that as per the L.d. A.O. the assessee has not filed his ITR for the assessment year under consideration. This fact is incorrect because the assessee has filed his return of income on 25.08.2015 and declared total income of Rs. 187740/- vide acknowledgment No. 300250815001517, which is available on the record but the Ld Assessing officer has not bothered to verify the facts from his own records. The copy of the Acknowledgment of ITR is attached herewith for ready reference of the Hon'ble Bench Hence the act of Ld. A.O. is without proper application of mind and done in very haste manner, which is not permissible in the proceedings of section 148. It is mandatory for the Ld. Assessing officer that before initiating the proceedings under section 148, he must verify each and every record and it is also obligatory on him to apply his mind in judicious manner. It is also worth mentioning here that even the higher authorities who has sanctioned the act of the Ld. Assessing officer has also not verify the facts and 7 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR given the approval on mechanical manner, without application of mind, which is also not permissible for the higher authorities also. Hence the entire proceedings are based on wrong facts and also without application of judicious mind, therefore is required to be declared as illegal. (ii) Amount of Rs. 5909500/- deposited in bank account with state bank of Bikaner and Jaipur but in fact only deposited Rs. 1539500/- in this bank account:- Alleged that Cash deposited in SBBJ account Rs. 59,09,500/- but actual deposit is Rs. 15,39,500/-, hence this fact is also wrong. The Ld. A.O. alleged that the assessee has deposited Rs. 59,09,500/- in the account of State Bank of Bikaner and Jaipur, this is incorrect facts and footings. The assessee has deposited only Rs. 15,39,500/- in the State Bank of Bikaner and Jaipur. This goes to show that the action taken by the Ld. A.O. is without proper information and concrete evidence in his hands. In support of the contentions of the assessee the copy of the bank accounts with state bank of bikaner and Jaipur is attached herewith. The Ld. A.O. has started the proceedings without proper verification of the facts or should say without having proper information in his hands. Hence the action taken without proper and correct information is arbitrary, illegal and out of jurisdiction and because of this it is liable to be quashed. On this issue the reliance is placed on the following judgments:- 1. Arvind Sahdeo Gupta V/s ITO and anr Writ Petition No. 4793 of 2021 (Bombay High Court, Nagpur Bench) 2. Mumtaz Haji Mohmad Memon V/s ITO in Special Civil Application No. 21030 of 2017 (Gujrat High Court) 3. Keshav Saran V/s ACIT in ITA No. 382/Del/2019 (Delhi ITAT) According to the facts of the case very foundation of the case is on wrong footings, the prime basis is incorrect and far away from the facts. The proceedings initiated under section 148 on wrong facts, without application of mind of the Ld. Assessing officer as well as higher authorities and hence is liable to be quashed. (B) Out of Jurisdiction : Action u/s 148 is void where the time for scrutiny assessment is available:- As per the provisions of section 143(2) the Ld. A.O. has power to issue notice and make enquiry about the income declared in the return of income, in case the assessee has filed his return of income and the Ld. A.O. is of believe that the income declared is not correct. Here in this case also the Ld. A.O. is of the belief 8 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR that amount deposited in the bank account is escaped from assessment because the assessee is not filed return of income. The assessee is filed his return of income on 25.08.2015 and the Ld. A.O. is having 6 month time, from the end of the financial year in which the return of income is furnished, to serve a notice u/s 143(2) i.e. up to 30.09.2016. For the ready reference the proviso of clause (ii) of Section 143(2) which is applicable for the assessment under consideration is being reproduced hereunder :- \"Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.\" Hence the 1.d. Assessing officer is having the time to initiate the scrutiny assessment proceedings up to 30.09 2024, but rather to choose the scrutiny assessment proceedings he has chosen the reassessment proceedings. Hence the act of the Ld. Assessing officer is out of jurisdiction. The Jurisdiction u/s 148 can only be acquired in the following conditions:- (a) Where the assessment is completed and some income has been escaped from assessment according to the belief of the A.O. (b) Where the return of income is not filed and because of this the income is escaped from assessment. But here in this case both the conditions are not fulfilled, because the assessee has filed his return and time for selection of case under scrutiny assessment is still pending, therefore the question of escaped assessment does not arises, hence the entire proceedings are out of jurisdiction. Submission on Ground No. 2:- \"That the Ld. Assessing officer if erred in making the addition of Rs. 49,09,500/- w/s 69 as the assessee has proved the prime facie burden about the source of amount.\" The Ld. A.O. made the addition of the entire amount deposited in to bank accounts with the State Bank of Bikaner and Jaipur. During the course of hearing of the appeal the assessee submitted the affidavits with proper identity proof of the persons from whom the amount was taken/received. During the course of the appellate proceedings, the Ld. CIT(A) has called for the remand report from the Ld. A.O. on the submissions of the assessee. The Ld. A.O. has recorded the statements of the persons and all the persons has admitted 9 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR about the amount so given to the assessee, the copy of the remand report submitted by the Ld. A.O. is annexed herewith. The assessee has submitted his submission to the Ld. CIT(A) on the remand report of the Ld. A.O., the copy of the same is attached herewith. In the remand report L.d. A.O. has mentioned about the admission of the persons who has given the amount to the assessee. It is humbly submitted that from the perusal of the remand report it is very well proved that all the persons have admitted about the amount given by them to the assessee. But even after admission of the lenders the Ld. CIT(A) has wrongly sustained the additions. It is also as settled law that the assessee is only liable to prove the source of the amount but not the source of source. It is not the liability of the assessee to prove the source of source. The assessee has proved his initial burden of proof by submitting:- (i) the affidavits, (ii) identity proof of the lenders, and (iii) the capacity The assessee also submitted the detailed reply to the Ld. CIT(A) on the remand report of the Ld. A.O. and explained the things in detail. The copy of the reply is annexed herewith but the Ld. CIT(A) has not appreciated in proper manner and he has dismissed the appeal just to dismiss. Submission on Ground No. 3 :- \"That the Ld. Assessing officer is erred in initiation the penalty u/s 271(1)(c).\" That the Ld. Assessing officer is initiated the penalty proceedings on account of concealment of income of Income. In this connection it is stated nothing has been concealed, the assessee has submitted the detailed submission as well as submission on the amount so received by him, which was deposited in the bank accounts. Hence the initiation of penalty is illegal and against the law, therefore the proceedings may kindly be quashed. Submission on Ground No. 4: This ground is general in nature does not require any specific submission. 10 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR Therefore, it is humbly prayed that looking to the above submission and facts as well as circumstances of the case the appeal of the assessee may kindly be allowed and order of the Ld. A.O. as well Ld. CIT(A) may kindly be quashed. Hope the Hon'ble Bench will consider the request in the interest of justice. To support his contention, the ld. AR of the assessee has filed the following paper book containing 1 to 55 pages and also case laws. Paper Book No. 1 S.N. Particulars Page Nos. 1. Written submission before the Hon’ble Bench dated 14- 12-2014 alongwith the following attachments 1-8 (a) Copy of acknowledgement of income tax return 9 (b) Copy of bank statement of assessee with State Bank of Bikaner and Jaipur 10-12 2. Copy of written submission filed before CIT(A) 13-46 3. Copy of Remand Report dated 28-01-2019 47-51 4. Copy of submission on remand report of the ld. AO 52-55 Paper Book No.2 S.N. Particulars Page Nos. 1. Arvind Sahadeo Gupta vs ITO in WP No. 4793 of 2021 (Hon’ble Bombay High Court) 1-16 2. Keshav Saran vsACIT,Circle 6(1), New Delhi in ITA No.382/Del/2019 (ITAT Delhi) 17-24 3. Mumtax Haji Mohmad Memon vs ITO in Special Civil Application No.21030/2017 (Hon’ble Gujarat High Court) 25-33 4. Rajesh Kumar vs ACIT,CentralCircle-2, Gurgaon in ITA No. 16/Del/2023 (ITAT Delhi) 34-55 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A) and filed the following submission alongwith case laws. ‘’This humble counter submission is presented on behalf of the Revenue in the case of Deshraj Jakhar ITA No. 1261/JPR/2024 FOR Α.Υ 2014-15 A. Background of the case 11 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR The assessee had not filed his return of income for the AY 2014-15 voluntarily The case was opened by way of issuing notice u/s 148 of the Income Tax Act. 1961 on 27-09-2016, after recording the reasons and having obtained the approval. The said notice was duly served upon the assessee on 29-09-2016. Appellant has submitted written submission on 17/12/2024. The following submission is counter submission on same before the Hon'ble Bench. A. Submission of Appellant GOA Point No. 1 That the Ld. Assessing officer is erred in initiating the proceedings u/s 148. Submission on Ground No. 1:- \"That the Ld. Assessing officer is erred in initiating the proceedings u/s 148\" The proceedings initiated u/s 148 of the Income Tax Act, 1961 by Ld. Assessing officer are illegal, arbitrary, out of jurisdiction and unjustified because of - (A) On wrong facts - (i) Alleged as ITR not filed but the assessee has filed his ITR (ii) Amount of Rs. 5909500/- deposited in bank account with bank of Bikaner and Jaipur but in fact only deposited Rs. 1539500/- in this bank account. (B) Out if Jurisdiction Issued notice u/s 148 where the time for notice u/s 143(2) is still available and also the time of regular as well as scrutiny assessment is available upto 30.09.2016. (A) Wrong Facts.- (1) Alleged as ITR not filed but the ITR is filed: The Ld. A.O. has stated in the grounds for reopening of the assessment, that the assessee has not filed his ITR for A.Y 2014-15, the ground is available at Page 1 of the assessment order, for the convenience of the Hon'ble Bench the same is reproduced hereunder- \"As per information available with this office, during the FY -14, the assessee has deposited cash amounting to Rs. 59,09,500/- in saving account in SBBJ. Neem Ka thana. The assessee has not filed the ITR for the AY 2014-15. The maximum limit of total income not chargeable to tax for the AY 2014-15 was Rs. 2,00,000/- while the volume of cash deposits in the bank account is much higher and is not in consonance with the income of the assessee. Hence, looking to these facts, I have reason to believe that the income to the extent of Rs. 59,09,500/- has escaped assessment within the meaning of section 147/148 of the LT Act, 1961. Therefore, it is a fit case to issue notice ws 148 of the IT Act, 1961 From the perusal of the above referred ground for reopening, it goes to show that as per the L.d. A.O. the assessee has not filed his ITR for the assessment year under consideration. This fact is incorrect because the assessee has filed his 12 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR return of income on 25.08.2015 and declared total income of Rs. 187740/-vide acknowledgment No. 300250815001517, which is available on the record but the Ld. Assessing officer has not bothered to verify the facts from his own records. The copy of the Acknowledgment of ITR is attached herewith for ready reference of the Hon'ble Bench. Hence the act of Ld. A.O. is without proper application of mind and done in very haste manner, which is not permissible in the proceedings of section 148. It is mandatory for the Ld. Assessing officer that before initiating the proceedings under section 148, he must verify each and every record and it is also obligatory on him to apply his mind in judicious manner. It is also worth mentioning here that even the higher authorities who has sanctioned the act of the Ld. Assessing officer has also not verify the facts and given the approval on mechanical manner, without application of mind, which is also not permissible for the higher authorities also Hence the entire proceedings are based on wrong facts and also without application of judicious mind, therefore is required to be declared as illegal (ii) Amount of Rs. 5909500/- deposited in bank account with state bank of Bikaner and Jaipur but in fact only deposited Rs. 1539500/- in this bank account Alleged that Cash deposited in SBBJ account Rs 59.09.500/- but actual deposit is Rs. 15.39,500/-, hence this fact is also wrong The Ld. A.O. alleged that the assessee has deposited Rs. 59,09,500/- in the account of State Bank of Bikaner and Jaipur, this is incorrect facts and footings The assessee has deposited only Rs. 15,39.500/- in the State Bank of Bikaner and Jaipur. This goes to show that the action taken by the Ld. A.0. is without proper information and concrete evidence in his hands. In support of the contentions of the assessee the copy of the bank accounts with state bank of bikaner and Jaipur is attached herewith. The Ld. A.O. has started the proceedings without proper verification of the facts or should say without having proper information in his hands. Hence the action taken without proper and correct information is arbitrary, illegal and out of jurisdiction and because of this it is liable to be quashed. On this issue the reliance is placed on the following judgments - 1. Arvind Sahdeo Gupta V/s ITO and anr Writ Petition No. 4793 of 2021 (Bombay High Court, Nagpur Bench) 2. Mumtaz Haji Mohmad Memon V/s ITO in Special Civil Application No. 21030 of 2017 (Gujrat High Court) 13 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR 3. Keshav Saran Vis ACIT in ITA No. 382/Del/2019 (Delhi ITAT) According to the facts of the case very foundation of the case is on wrong footings, the prime basis is incorrect and far away from the facts. The proceedings initiated under section 148 on wrong facts, without application of mind of the Ld Assessing officer as well as higher authorities and hence is liable to be quashed. Counter Submission of Revenue- 1. This submission seeks to distinguish the scope, purpose, and applicability of Section 143(2) and Section 148 of the Income Tax Act, 1961, supported by relevant judicial precedents. 1.1 Section 143(2) - Scope and Purpose: a) Section 143(2) is a procedural provision that empowers the Assessing Officer (AO) to scrutinize the return of income filed by the assessee. b) Notice under Section 143(2) is issued when the AO considers it necessary to ensure the correctness of the retum and requires detailed scrutiny c) The issuance of a notice under Section 143(2) is limited to cases where the return of income has already been filed by the assessee within the stipulated time. 1.2 Judicial Precedents for Section 143(2): a) CIT v. Hotel Blue Moon [(2010) 321 ITR 362 (SC)]: Held that the issuance of notice under Section 143(2) is mandatory for completing an assessment under Section 143(3). b) ACIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [(2007) 291 ITR 500 (SC)] Clarified that intimation under Section 143(1) is not an assessment and scrutiny can only be initiated through a Section 143(2) notice. The Hon'ble High Court Gujrat it held in Paragraph 16: \"So long as the ingredients of Section 147 are fulfilled, the Assessing Officer is free to initiate proceedings under Section 147, and failure to take steps under Section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under Section 143(1) has been issued.\" c) Yogendrakumar Gupta v. Income Tax Officer ((2014) 366 ITR 186 (Guj)] Paragraph 8: \"The Assessing Officer, therefore, cannot be said to have acted without jurisdiction in issuing notice under section 148 of the Act even when time for issuance of notice under section 143(2) of the Act had not expired.\" 1.3 Section 148-Scope and Purpose: 14 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR a) Section 148 empowers the AO to reopen an assessment if there is a \"reason to believe\" that income has escaped assessment. b) It is a remedial provision enabling the reassessment of income beyond the original scrutiny c) Section 148 is not dependent on the issuance of a notice under Section 143(2) 1.4 Judicial Precedents for Section 148: a) Yuvraj v. Union of India ((2009) 315 ITR 84 (Bom)): Held that reopening under Section 148 can be initiated even when time for issuing notice under Section 143(2) is available. b) Kalyanji Mavji & Co. v. CIT [(1976) 102 ITR 287 (SC)]: Confirmed that Section 148 can be invoked if there is new information or material leading to a reason to believe income has escaped assessment. 1.5 Key Distinctions: a) Nature: Section 143(2) is procedural for scrutiny, while Section 148 is substantive for reopening assessments. b) Timing: Section 143(2) applies after a retum is filed, while Section 148 can apply even when no return has been filed or assessment completed. c) Trigger Section 143(2) arises from the AO's discretion for scrutiny, while Section 148 requires a \"reason to believe\" income has escaped assessment d) For your kind perusal section 143(2) and section 148 of Income Tax Act, 1961 is reproduced here under: \"Section 143(2) of the Income Tax Act, 1961 Notice for Scrutiny Assessment: \"Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of three months from the end of the financial year in which the return is furnished.\" 15 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR Section 148 of the Income Tax Act, 1961 Issue of Notice Where Income Has Escaped Assessment: \"(1) Before making the assessment, reassessment or recompilation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the assessment year in question, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed, and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.\" a) It is submitted that the scope and purpose of Section 148 and Section 143(2) are distinct. Section 148 is invoked for reassessment purposes when the Assessing Officer (AO) has reason to believe that income has escaped assessment, while Section 143(2) is a procedural notice issued for regular scrutiny of the return filed by the assessee. Section 143(2) also applies as a procedural safeguard when the return is filed in response to a notice under Section 148 or when a return is filed voluntarily. b) The Hon'ble Supreme Court in the case of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. [(2007) 291 ITR 500 (SC)] has clearly held that reassessment proceedings under Section 148 can be initiated even if the time for issuing notice under Section 143(2) has not expired, provided the AO has valid reasons to believe that income chargeable to tax has escaped assessment. c) Further, in the case of Hotel Blue Moon v. DCIT [(2010) 321 ITR 362 (SC)], it was held that a valid notice under Section 143(2) is mandatory when the AO seeks to regularize a return filed in response to a notice under Section 148, failing which the entire assessment can be invalidated. d) Additionally, in CIT v. Laxman Das Khandelwal ((2019) 417 ITR 325 (SC)], it was reiterated that the failure to issue notice under Section 143(2) before completing the assessment would render the assessment void. In this case the Hon'ble Apex Court has held that according to Section 29BB of the Act, if the assessee had participated in the proceedings, by way of legal fiction, notice would deemed to be valid even if there be infractions as detailed in said section. The relevant part of same is reproduced here under for your kind perusal- 9. According to Section 2928B of the Act. if the assessee had participated in the proceedings by way of legal fiction, notice would be deemed to be valid even if 16 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR there be infractions as detailed in said Section. The scope of the provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of the assessee It is, however, to be noted that the Section does not save complete absence of notice. For Section 292BB to apply the notice mat have emanated from the department. It is only the infirmities in the manner of service of notice that the Section seeks to cure. The Section is not intended to cure complete absence of notice itself e) The jurisdictional requirement under Section 148 mandates the AO to record reasons to believe before initiating reassessment proceedings, ensuring a fair and lawful exercise of power. The satisfaction recorded in the present case justifies the issuance of notice under Section 148. 1) The appellant's reliance on the time availability under Section 143(2) is, therefore, not legally sustainable as the provisions operate independently and cater to different situations. The Hon'ble Courts have upheld the Revenue's right to issue notice under Section 148 despite the availability of time for regular scrutiny 3.4 We have heard both the parties and perused the materials available on record. The Bench noted from the records that the assessee has filed his return of income on 25.08.2015 for the assessment year under consideration and declared total income of Rs. 1,87,740/- vide acknowledgment No. 300250815001517. The AO issued notice u/s 148 on 27.09.2016 on account of Cash deposited in bank account and not filing of income tax return, therefore he treated that the amount deposited in bank account as escaped from assessment. The assessee filed reply and submitted that the original return filed on 25.08.2015 shall be treated as return u/s 148. Thereafter the AO issued notice u/s 143(2) dated 04.07.2017. The AO also issued other notices, and the assessee filed the replies accordingly. The assessment was completed on 27.12.2017 as per 17 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR provision of section 148/143(3) of the Income Tax Act. The addition of Rs. 59,09,500/- was made by the AO and created the demand accordingly. In first appeal, the ld. CIT(A) sustained the addition so made by the AO. The Bench noticed that the ld. AR of the assessee has filed a copy of Bank statement of assessee with the State Bank of Bikaner and Jaipur detailing therein the details of the amount so transacted. It may be noted that the assessee vide his submission (PB 13-14) submitted the details of the gift from relatives deposited in bank account and the amount received from various persons as partnership in various business of bajri and wine and also the past saving of various years thus totaling the amount to the tune of Rs.59,09,500/-. We also noticed from the remand report dated 28-01- 2019of the ITO, Ward Neem Ka Thana (Shri B.S. Shekhawat) addressed to ld. CIT(A)-4, Jaipur in which he submitted the statement of the persons who had given the gifts to the assessee amounting to Rs.49,09,500/- and concluded at para 5 of his remand report as under:- ‘’The assesseehas clearly held that he has deposited the cash in his bank account No. 51053440598 held with the SBI (Earlier SBBJ Bank) a sum of Rs.15,39,500/- and in account No. 57402287 held with the Axis Bank a sum of Rs.43,70,000/- in the F.Y.2013-14 and the amount was from his past savings, father savings and agricultural income and the borrow some money from the friend and relatives. Whereas in the affidavits and reply submitted before your honour the assessee submitted that he has deposited the cash from the gift received and the partner’s capital invested in the firm made from liquor shop contract and bajari royalty contract. 18 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR Further, the assessee has accepted in his reply dated 20-12-2017 that he has no proper documents in support of the cash deposit of Rs.59,09,500/- and for the sake of income tax proceedings and peace of mind voluntarily surrendered a sum of Rs10,00,000/- and agreed to pay all the interest on the surrender amount As is evident from the above remand report that the ld. AO has not dealt with the aspect of the chargeability of the gift as per provision of section 56(2)(v) of the Act which deals that the gift received and established as genuine from relative will not be taxed but if the same is from other than relative the same is chargeable to tax. Thus, since that issue was not dealt with by both the lower authority when the assessee has offered lumpsum amount of Rs. 10 lac as income rest of the amount to be checked considering the provision of section 56(2)(v) of the Act. Considering that aspect of the matter we consider in the interest of the justice to the assessee as well as to the revenue to verify the chargeability of the gift so claimed to be received by the assessee and pass the order in accordance with the lawafter affording due opportunity to the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO. 4. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having 19 ITA NO. 1261/JP/2024 SHRI DESH RAJ JAKHAR VS ITO, WARD NEEM KA THANA, SIKAR any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law. 5. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 25 -02-2025. Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 25 /02/2025 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Desh Raj Jakhar, Neem Ka Thana 2. izR;FkhZ@ The Respondent- The ITO, Neem KaThana 3. vk;dj vk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZ QkbZy@ Guard File (ITA No. 1261/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "