Gurdish Kaur Khular, Jalandhar V. ACIT( International Taxation), Circle, Chandigarh

ITA 121/CHANDI/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9865 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-07-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 04-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA CIT
• Keywords: Principle of natural justice; Tangible material; Reason to believe; Reassessment proceedings; Set aside
• Section: 133(6); 191; 147; 144

Judgement Text

, .. , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCHES, SMC CHANDIGARH (VIRTUAL COURT) .., ! BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT ITA NO.121/CHD/2020 ASSESSMENT YEAR : 2011-12 GURDISH KAUR KHULLAR 192A, URBAN ESTATE, PHASE-II JALANDHAR THE ASSTT. CIT (INTERNATIONAL TAXATION), CIRCLE, CHANDIGARH PAN NO: IDPPK8909A APPELLANT RESPONDENT !' ASSESSEE BY : SHRI ASHRAY SARNA, CA #!' REVENUE BY : SMT. MEENAKSHI VOHRA, ADDL. CIT $ %! & DATE OF HEARING : 14/07/2021 '()*! & DATE OF PRONOUNCEMENT : 22/07/2021 '#/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DT. 26/12/2019 OF LD. CIT(A)-43, NEW DELHI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT THE ORDER PASSED BY THE HON'BLE CIT(A) DATE D 26.12.2019 IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, HON'BLE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. ASSESSING OFFICER IN FRAMING THE IMPUGNED ASSESSMENT ORDER U/S 144 R.W.S 147 AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS U/S 147/148 /151 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, HON'BLE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN MAKING AN ADDITION TO THE EXTENT OF RS. 14,00,000/- U/S 69 OF THE ACT ON ACCOUNT OF CASH 2 DEPOSITS IN BANK ACCOUNT, WITHOUT CONSIDERING THE S UBMISSIONS OF THE ASSESSEE AND FACTS OF THE CASE AND WITHOUT OBSERVING THE PRI NCIPLES OF NATURAL JUSTICE. 4. THAT THE APPELLANT CRAVES THE LEAVE TO ADD, MODI FY, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND ALL THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. VIDE GROUND NO. 2 THE GRIEVANCE OF THE ASSESSEE RELATES TO THE VALIDITY OF REOPENING THE ASSESSMENT UNDER SECTION 147 R.W.S 14 8 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) . 4. FACTS OF THE CASE IN BRIEF ARE THAT THE A.O. ISS UED NOTICE DT. 28/03/2018 TO THE ASSESSEE UNDER SECTION 148 OF THE ACT BY RECORD ING THE FOLLOWING REASONS: AS PER INFORMATION AND DOCUMENTS AVAILABLE WITH T HE DEPARTMENT AN AMOUNT TOTALING TO RS. 35,01,000/- AND WAS DEPOSITED IN CA SH IN THE BANK ACCOUNT NO. 03523000047712 MAINTAINED WITH PUNJAB & SIND BANK, MOTA SINGH NAGAR, JALANDHAR, PUNJAB OF SH. GURDISH KAUR KHULLAR DURIN G THE F.Y. 2010-11. AS PER OFFICE RECORDS, THE ASSESSEE HAS NOT FILED H IS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR I.E. 2011-12. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BELIE VE THAT INCOME OF RS. 35,01,000/- CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T FOR THE FINANCIAL YEAR 2010-11 RELEVANT TO THE ASSESSMENT YEAR 2011-12 AND THE CASE NEEDS TO BE REOPENED U/S 147. IN ORDER TO ASSESS THIS INCOME AND TO ASSESS ANY OT HER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO NOT ICE DURING THE COURSE OF PROCEEDINGS SUBSEQUENTLY, PROCEEDINGS U/S 147 ARE R EQUIRED TO BE INITIATED BY WAY OF ISSUE OF NOTICE U/S 148 FOR THE ASSESSMENT Y EAR 2011-12. 4.1 THE A.O. OBSERVED THAT THE INFORMATION IN HIS O FFICE WAS RECEIVED AS PER WHICH THE ASSESSEE HAD DEPOSITED A SUM OF RS. 35,01 ,000/-AS CASH AND TERM DEPOSIT IN BANK ACCOUNT OF PUNJAB & SIND BANK, MOTA SINGH NAGAR, JALANDHAR, PUNJAB. HE FURTHER OBSERVED THAT NO RETURN OF INCOM E WAS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE EARLIER YEARS, NO REPLY WAS RECEIVED IN RESPONSE TO THE NOTICE ISSUED UNDER SEC TION 148 OF THE ACT SENT AT THE LAST KNOWN ADDRESS OF THE ASSESSEE. THE A.O. FR AMED THE ASSESSMENT UNDER SECTION 144 R.W.S 147 OF THE ACT AND MADE THE ADDIT ION OF RS. 35,01,000/-. 3 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND FURNISHED THE WRITTEN SUBMISSION WHICH READS AS UND ER: THIS IS THE CASE OF ASSESSEE, INDIVIDUAL, NRI RESID ING IN SURREY, CANADA. CASE WAS REOPENED U/S 147 OF THE ACT, NOTICE 148 OF THE ACT WAS ISSUED FOR THE REASON THAT THERE WAS CASH DEPOSIT AMOUNTING TO RS.35,01,000/- IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSMENT] IN THE CASE OF ASSESSEE W AS COMPLETED U/S 144 R.W.S. 147 OF THE ACT FOR THE REASON THAT ASSESSEE BEING N RI AND NOTICES BEING ISSUED BY THE LD. AC WERE NOT SERVED ON THE ASSESSEE. THEREAF TER LD. ASSESSING OFFICER FRAMED ASSESSMENT AT THE TOTAL INCOME OF RS.35,01,0 00/- AS UNDISCLOSED INCOME ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT OF ASSESSEE AND ALSO INITIATED PENALTY U/S 271(L)(C) OF THE ACT. AGGRIEVED BY THE ORDER ASSESS EE PREFERRED APPEAL BEFORE THE WORTHY CIT(A)-42, NEW D ELHI. GROUND: 2 THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES O F THE CASE, LD. AO HAS ERRED IN LAW AND ON FACTS IN FRAMING THE IMPUGNED ASSESSM ENT ORDER U/S 144 R.W.S.147 AND WITHOUT COMPLYING WITH THE MANDATORY CONDITIONS U/S 147 AS ENVISAGED UNDER THE INCOME TAX ACT, 1961. SIR, IN THIS REGARD IT IS SUBMITTED THAT NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE ON ACCOUNT OF CASH DEPOSIT OF RS.35,01,000/- . THE SOL E REASON FOR REOPENING THE ASSESSMENT IS TO ENQUIRE ABOUT THE ALLEGED UNACCOUN TED INCOME IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF CASH DEPOSIT OF RS.35,01 ,000/-.THERE WAS NO OTHER INFORMATION IN POSSESSION OF THE LD. AO WHICH COULD LEAD TO THE BELIEF THAT THIS CASH DEPOSIT WAS THE INCOME OF THE ASSESSEE AND WHI CH COULD POSSIBLY FORM THE BASIS FOR INITIATING PROCEEDINGS U/S 147 OF THE ACT . FURTHER, NO VERIFICATIONS LETTERS U/S 133(6) OF THE ACT, WERE ISSUED BY THE LD. AO TO THE ASSESSEE TO ENQUIRE ABOUT THE CASH DEPOSITS. SIR, IT IS FURTHER SUBMITTED THAT ON PERUSAL OF THE SE REASONS WOULD REVEAL THAT THERE IS NO NEXUS BETWEEN THE MATERIAL IN THE POSSESSION AND THE BELIEF OF ESCAPEMENT OF INCOME FORMED ABOUT ESCAPEMENT OF INCOME. IN OTH ER WORDS NO CAUSE AND EFFECT RELATIONSHIP HAS BEEN ESTABLISHED WITH REGAR D, TO MATERIAL IN HIS POSSESSION AND BELIEF BASED UPON SUCH MATERIAL. IN FACT THERE WAS NO MATERIAL ON RECORD THAT COULD LEAD YOUR GOOD SELF TO A BELIEF THAT INC OME HAS ESCAPED ASSESSMENT. THE REASONS RECORDED MUST BE BASED ON SOME TANGIBLE MATERIAL AS THEIR BASIS, SO AS TO ACCORD THEM LEGAL VALIDITY, BUT ONLY INFORMAT ION AVAILABLE IN THE PRESENT CASE IS THE CASH DEPOSIT OF RS.35,01,000/- IN THE BANK ACCOUNT OF ASSESSEE. THE FACT THAT THERE IS CASH DEPOSIT, CANNOT, IN ANY CAS E, LEAD TO A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THUS FROM THE OPERATIONAL P ARAGRAPH OF THE REASONS RECORDED WE CAN DERIVE ONLY TWO THINGS: 1. THERE IS CASH DEPOSIT OF RS.35,01,000/- IN BANK ACC OUNT OF ASSESSEE. 2. THIS CASH DEPOSIT HAS ESCAPED ASSESSMENT. 4 THE OPERATIONAL PARAGRAPH DOES NOT SPEAK ABOUT THE REASON THAT LED TO FORM OPINION THAT CASH DEPOSIT OF RS.35,01,000/- HAS ESC APED ASSESSMENT. SIR, IT IS SETTLED LAW THAT 'REASON TO BELIEVE' FOR MS THE FOUNDATION FOR ASSUMING JURISDICTION U/S 147. IT IS ALSO SETTLED LAW THAT ' REASON TO BELIEVE' IS NOT JUST AN IDLE FORMALITY AND IT HAS NOT TO BE MERE PRETENCE. IF TH ERE IS NO MATERIAL OR EVEN IF THERE IS MATERIAL WHICH DOES NOT HAVE LIVE NEXUS WI TH THE FORMATION OF BELIEF, REOPENING OF THE ASSESSMENT ON THE BASIS OF SUCH MA TERIAL IS NOT SUSTAINABLE. THE EXPRESSION 'REASON TO BELIEVE' PREDICATED THAT THE ASSESSING OFFICER HOLDS THE BELIEF INDUCED BY THE EXISTENCE OF REASONS FOR HOLD ING SUCH BELIEF. IT CONTEMPLATES EXISTENCE OF REASONS ON WHICH THE BELI EF IS FOUNDED AND NOT MERELY A BELIEF IN THE EXISTENCE OF REASONS INDUCING THE B ELIEF SUCH A BELIEF HAS NOT TO BE BASED ON MERE SUSPICION BUT IT MUST BE BASED ON INF ORMATION AS WAS HELD &Y HON'BLE SUPREME COURT IN THE CASE OF CALCUTTA DISCO UNT CO. LTD. VS.IT0 41 1TR191. RELIANCE IS PLACED ON THE DECISION OF AMRITSAR BENC H IN THE CASE OF AMRIK SINGH V/S ITO, 159 ITD 329 (AMRITSAR) IN WHICH IT WAS HELD AS UNDER: WHEN THE ASSESSMENT PROCEEDINGS U/S 147 ARE INITIATED ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTED UNDIS CLOSED INCOME, OVER-LOOKING THE FACT THAT THE SOURCE OF THE DEPOSITS NEED NOT N ECESSARILY BE THE INCOME OF THE ASSESSEE, THE PROCEEDINGS IS NEITHER COUNTENANC ED, NOR SUSTAINABLE IN LAW. ' FURTHER RELIANCE IS PLACED ON THE DECISION OF ITO V/S LAKHMANI MEWAL DAS, SUPREME COURT, 103 ITR 0437 IN WHICH IT WAS HELD S UNDER: 'REASSESSMENT UNDER S. 147(A)REASON TO BELIEVEMUS T HAVE A MATERIAL BEARING ON THE QUESTION OF ESCAPEMENT OF INCOME OF ASSESSEE WHETHER THE GROUNDS ARE ADEQUATE OR NOT IS NOT A MATTER FOR THE COURT TO IN VESTIGATEONLY THE EXISTENCE OF BELIEF CAN BE CHALLENGED BY ASSESSEEEXPRESSION 'REASON TO BELIEV E' DOES NOT MEAN A PURELY SUBJECTIVE SATISFACTION ON THE PART O F ITOIT MUST BE HELD IN GOOD FAITHPOWERS OF ITO TO REOPEN ASSESSMENT, THOUGH WID E, ARE NOT PLENARY INTEREST ALLOWED AS DEDUCTION IN ORIGINAL ASSESSMEN T SUBSEQUENTLY ITO FOUND THAT CREDITORS -WERE NAME-LENDERSCONFESSION FROM CREDIT ORSTHERE WAS NOTHING TO SHOW THAT THE CONFESSION RELATED TO A LOAN ADVANCED TO ASSESSEETHE LIVE LINK OR CLOSE NEXUS BETWEEN MATERIAL BEFORE ITO AND BELIEF H E WAS TO FORM REGARDING ESCAPEMENT OF INCOME WAS MISSINGSAID MATERIAL COUL D NOT HAVE LED TO FORMATION OF THE BELIEF THAT INCOME ESCAPED ASSESSM ENT BECAUSE OF ASSESSEE'S FAILURE OR OMISSION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTSPRE-CONDITIONS FOR EXERCISE OF JURISDICTION UNDER S. 147 WERE NOT FULF ILLED. FURTHER RELIANCE IS PLACED ON THE DECISION OF CIT V S. SMT. PARAMJIT KAUR, (2009) 311 ITR 38, WHERE IT WAS HELD AS UNDER: 'SEC, 147 EMPOWERS THE AO TO ASSESS OR REASSESS INCO ME CHARGEABLE TO TAX IF HE HAS REASONS TO BELIEVE THAT THE INCOME FOR ANY ASSE SSMENT YEAR HAS ESCAPED ASSESSMENT. THE POWER CONFERRED UNDER THIS SECTION IS VERY WIDE, BUT AT THE SAME TIME IT CANNOT BE STATED TO BE A PLENARY POWER. THE AO CAN ASSUME JURISDICTION UNDER THE SAID PROVISION PROVIDED THERE IS SUFFICIE NT MATERIAL BEFORE HIM. HE 5 CANNOT ACT ON THE BASIS OF HIS WHIM AND FANCY, AND THE EXISTENCE OF MATERIAL MUST BE REAL. FURTHER, THERE MUST BE NEXUS BETWEEN THE MATERIAL AND ESCAPEMENT OF INCOME. THE AO MUST RECORD REASONS SHO WING DUE APPLICATION OF MIND BEFORE TAKING RECOURSE TO REASSESSMENT PROCEED INGS. STILL FURTHER THE AO CAN ASSUME JURISDICTION FOR REASSESSMENT PROCEEDINGS PR OVIDED HE HAS REASONS BELIEVE BUT THE SAME CANNOT BE TAKEN RECOURSE TO ON THE BAS IS OF REASONS TO SUSPECT. 5.1 THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE SUSTAINED THE ACTION OF THE A.O. FOR REOPENING THE ASSESSMENT , BY OBSERVING IN PARA 4.8 OF THE IMPUGNED ORDER AS UNDER: 4.8 GROUND NO. 1 AND 2 RELATE TO THE REOPENING OF THE ASSESSMENT AND ITS VALIDITY. IT IS CLEAR FROM THE REASONS RECORDED, THAT THERE W AS A DEPOSIT INTO THE BANK ACCOUNT OF THE APPELLANT WHICH IS NOT DISPUTED. THE APPELLANT DID NOT FILE A RETURN FOR THE SAID ASSESSMENT YEAR. THIS FACT IS ALSO NOT DISPUTED. THE ASSESSING OFFICER THEREFORE HAD A PRIMA FACIE REASON TO BELIEVE THAT IN THE ABSENCE OF ANY INCOME, SAID DEPOSIT IN THE BANK ACCOUNT WOULD CONS TITUTE AS UNEXPLAINED DEPOSITS. IT IS, THEREFORE, NOW EXAMINED WHETHER THE A.O. HAD PRIMA-FACIE REASONS TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT AND WHET HER THE CONDITIONS LAID DOWN UNDER MAIN PROVISION OF SECTION 147 ARE FULFIL LED IN THE CASE OF THE APPELLANT. AS ALREADY MENTIONED HEREINBEFORE, THE C ASE OF THE APPELLANT IS COVERED BY THE MAIN PROVISIONS OF SEC. 147 AND NOT THE PROVISO TO SEC. 147. UNDER THE MAIN PROVISION AS REPRODUCED EARLIER, IF THE AS SESSING OFFICER HAS REASONS TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEE DINGS UNDER THIS SECTION. THUS, UNDER THE MAIN SECTION OF SEC. 147, THE ESSENTIAL P RE-REQUISITE IS THAT THE ASSESSING OFFICER SHOULD HAVE REASONS TO BELIEVE THAT INCOME C HARGEABLE TO TAX HAS ESCAPED ASSESSMENT. UNDER SEC. 148(2), THE ASESSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER SEC. 148, RECORD HIS REASONS FOR I SSUING NOTICE UNDER THE SAID SECTION. IN THE CASE OF THE APPELLANT, THE ASSESSIN G OFFICER RECEIVED INFORMATION THAT THE APPELLANT ENGAGED IN CIRCULATING UNACCOUNT ED INCOME THROUGH ENTRY PROVIDERS WHICH COULD HAVE LED TO A REASONABLE DOUB T THAT THE TOTAL INCOME OF THE APPELLANT AS DECLARED IN THE RETURN WAS INCORRE CT. THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKER S (P) LTD. QUOTED SUPRA, HAS CONSIDERED AND EXPLAINED THE MEANING OF THE PHRASE 'REASONS TO BELIEVE'. AS OBSERVED BY THE HON'BLE SUPREME COURT, THE WORD 'RE ASON' IN THE EXPRESSION 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATI ON AND IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASONS TO BELIE VE THAT INCOME HAD ESCAPED ASSESSMENT. IT IS FURTHER OBSERVED BY THE SUPREME C OURT THAT THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SH OULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSIO N. AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT TH E ESTABLISHED FACT OF ESCAPEMENT 6 OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONL Y QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COUL D HAVE FORMED A REQUISITE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. THE RELE VANT OBSERVATIONS OF THE HON'BLE SUPREME COURT ARE AS FOLLOWS: '16. SECTION 147 AUTHORIZES AND PERMITS THE ASSESSI NG OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEV E THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD 'R EASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATI ON. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCO ME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOM E HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSE SSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR C ONCLUSION. THE FUNCTION OF THE ASSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPA YERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO . LTD. V. ITO [1991] 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILLMENT OF THE TWO REQUISITE CON DITION IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASO N TO BELIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. AT THE ST AGE OF ISSUE OF-NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIA L ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHE R THE MATERIAL COULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCER N AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFF ICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION. ITO V. SELECTED DALURBAND C OAL CO. (P.) LTD. [1996] 217 ITR 597 (SC); RAYMOND WOOLLEN MILLS LTD. V. ITO [199 9] 236 ITR 34 (SC). (PARA 16)' AS OBSERVED BY THE APEX COURT, AT THE INITIATION ST AGE, WHAT IS REQUIRED TO BE SEEN IS WHETHER THERE ARE PRIMA-FACIE 'REASONS TO B ELIEVE' BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT OF INCOME. THE ASSESSING OFFICER ALSO RECORDED PROPER REASONS FOR FORMATION OF THE BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. NOT ONLY HAS THE SUPREME COURT, BUT ALSO A NUMBER OF HIGH CO URTS HELD THAT, AT THE STAGE OF RECORDING OF REASONS AND ISSUANCE OF NOTICE U/S 148, ALL THAT THE AO HAS TO DO IS TO HAVE SUFFICIENT REASONS TO ENTERTAIN THE BELIEF TO ARRIVE AT THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. THIS WAS THE RATIO L AID DOWN BY THE FULL BENCH OF THE DELHI HIGH COURT IN CIT V. USHA INTERNATIONAL L TD. (2012) 348 ITR 485, AND IN THE LATER DECISIONS OF DELHI HIGH COURT NAMELY AGR INVE STMENT LTD. (197 TAXMAN 177), INDIA TERMINAL CONNECTOR SYSTEM LTD. (21 TAXMANN.CO M 69), NIPUN BUILDERS AND DEVELOPERS PVT. LTD. (350 ITR 407), NOVA PROMOTERS & FINLEASE PVT. LTD., ALLAHABAD HIGH COURT IN THE CASE OF PANKAJ HOSPITAL LTD. (44 TAXMANN.COM 230), HIGH COURT OF GUJARAT IN THE CASE OF PEASS INDUSTRIAL ENGINEER S (P) LTD. (72 TAXMANN.COM 302) AND BY THE KERALA HIGH COURT IN INNOVATIVE FOODS LT D. V. UOI (2013) 356 ITR 389 (KER). 6. NOW THE ASSESSEE IS IN APPEAL. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT TH E A.O. WITHOUT APPLYING HIS 7 MIND ISSUED THE NOTICE UNDER SECTION 148 OF THE ACT AND TREATED WHOLE OF THE AMOUNT DEPOSITED IN BANK ACCOUNT OF THE ASSESSEE AS AN INCOME. IT WAS FURTHER STATED THAT EVEN NO NOTICE WAS SERVED UPON THE ASSE SSEE, THEREFORE THE REOPENING UNDER SECTION 147 R.W.S 148 OF THE ACT WA S NOT VALID. THE RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: AMRIK SINGH VS. ITO, 159 ITD 329 (AMRITSAR) ITO VS. LAKHMANI MEWAL DAS 103 ITR 0437 (SC) CIT VS. SMT. PARAMJIT KAUR (2009) 311 ITR 38 SMT. CHARANJIT KAUR VS. ITO (2021) 211 TTJ (CHD) 61 4 7.1 LD. COUNSEL FOR THE ASSESSEE STATED THAT CASH D EPOSITED IN THE BANK ACCOUNT DID NOT MEAN THAT INCOME ESCAPED THE ASSESS MENT. IT WAS ALSO STATED THAT IT WAS NOT CLEAR AS TO HOW, THE A.O. WAS OF TH E OPINION THAT THE DEPOSITS IN THE BANK ACCOUNT WAS ESCAPED INCOME OF THE ASSESSE E PARTICULARLY WHEN THE PROPERTY WAS SOLD BY THE HUSBAND OF THE ASSESSEE AN D HE DEPOSITED THE AMOUNT IN THE BANK ACCOUNT AND THAT BOTH HUSBAND AN D WIFE ARE NON RESIDENT INDIAN (NRI). IT WAS CONTENDED THAT THERE WAS NO NE XUS BETWEEN THE CONCEALED INCOME AND THE DEPOSIT IN THE BANK ACCOUNT OF THE A SSESSEE, THEREFORE THE REOPENING OF THE ASSESSMENT WITHOUT APPLYING THE MI ND BY THE A.O. WAS BAD IN LAW. 8. IN HER RIVAL SUBMISSIONS THE LD. SR. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AS SESSEE NEVER FILED THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION AS WELL AS THE EARLIER ASSESSMENT YEARS. IT WAS FURTHER SUBMITTED THAT EVEN IN RESPON SE TO THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT, NO RETURN WAS FILED BY THE ASSESSEE AND SINCE THERE WAS A DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE FOR WHI CH NO EXPLANATION WAS GIVEN, THE A.O. RIGHTLY REOPENED THE ASSESSMENT AS THERE WAS ESCAPEMENT OF 8 INCOME BY THE ASSESSEE. LD. SR. DR REITERATED THE O BSERVATIONS OF THE LD. CIT(A) AND SUBMITTED THAT SINCE THERE WAS A DEPOSIT OF CAS H AMOUNTING TO RS. 35,01,000/- IN THE ACCOUNT OF THE ASSESSEE AND NO R ETURN OF INCOME WAS FILED, THEREFORE THE A.O. RIGHTLY FORMED THE OPINION AND H AD REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT AND THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O . 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CA SE, IT IS NOT IN DISPUTE THAT THE ASSESSEE AN NRI IS RESIDING IN SURREY, CANADA. IN T HE PRESENT CASE, THE A.O. REOPENED THE ASSESSMENT BY RECORDING THE REASON THA T AS PER THE INFORMATION AVAILABLE WITH THE DEPARTMENT CASH AMOUNTING TO RS. 35,01,000/- WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND THE ASSESSE E HAD NOT FILED THE RETURN OF INCOME, HE, THEREFORE HAD REASON TO BELIEVE THAT IN COME OF RS. 35,01,000/- CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT FOR THE YE AR UNDER CONSIDERATION WHICH CLEARLY SHOWS THAT ONLY ON THE BASIS OF THE I NFORMATION THE A.O PRESUMED THAT THE TOTAL AMOUNT DEPOSITED IN THE BANK ACCOUNT AS ESCAPED INCOME OF THE ASSESSEE. 9.1 ON A SIMILAR ISSUE THE ITAT, CHANDIGARH BENCH B IN THE CASE OF SMT. CHARANJIT KAUR VS. ITO (SUPRA) HELD AS UNDER: 16. SO FAR AS, THE APPLICATION OF MIND BY A.O. IS CO NCERNED, THE REASONS RECORDED BY A.O. FOR REOPENING OF THE CASE PRIMA FACIE INDICA TE THAT HE HAS NOT APPLIED HIS MIND AND PROCEEDED ON ASSUMPTION THAT THE BANK DEPO SIT CONSTITUTES UNEXPLAINED INCOME OF THE ASSESSEE. AS POINTED OUT BY THE LEARNED COUNSEL, THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF BIR BAHA DUR SINGH SIJWALI VS. ITO (SUPRA) HAS SET ASIDE THE ACTION OF A.O. IN REOPENING THE CA SE OF THE ASSESSEE INITIATED ON FALLACIOUS ASSUMPTION THAT BANK DEPOSITS CONSTITUTE UNDISCLOSED INCOME OF THE ASSESSEE, OVERLOOKING THE FACT THAT SOURCE OF DEPOS IT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. WE FURTHER NOTICE THAT IN T HE PRESENT CASE, THE LEARNED PRINCIPAL CIT HAS ACCORDED SANCTION FOR ISSUING NOT ICE UNDER S. 148 OF THE ACT, WITHOUT ENSURING THAT THE A.O. HAS RECORDED THE REAS ONS AFTER DUE APPLICATION OF MIND. 9 9.2 IN THE PRESENT CASE ALSO THE A.O. WITHOUT APPLY ING HIS MIND PROCEEDED ON ASSUMPTION THAT THE TOTAL BANK DEPOSIT OF THE ASSES SEE CONSTITUTES UNEXPLAINED INCOME OF THE ASSESSEE AND OVERLOOKED THIS FACT THA T SOURCE OF DEPOSIT NEED NOT NECESSARILY BE THE INCOME OF THE ASSESSEE. 9.3 ON A SIMILAR ISSUE THE ITAT, AMRITSAR BENCH IN THE CASE OF AMRIK SINGH VS. ITO (SUPRA) HELD AS UNDER: WHEN THE ASSESSMENT PROCEEDINGS U/S 147 ARE INITIATED ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTED UNDIS CLOSED INCOME, OVER-LOOKING THE FACT THAT THE SOURCE OF THE DEPOSITS NEED NOT N ECESSARILY BE THE INCOME OF THE ASSESSEE, THE PROCEEDINGS IS NEITHER COUNTENANC ED, NOR SUSTAINABLE IN LAW. ' 9.4 SIMILARLY THE HON'BLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF CIT VS. SMT. PARAMJIT KAUR (SUPRA) WHILE RELYING THE JUDGME NT OF THE HON'BLE APEX COURT IN THE CASE OF ITO & ORS VS. LAKHMANI MEWAL DAS (19 76) REPORTED IN 103 ITR 437 (SC) HELD AS UNDER: THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE I NFORMATION RECEIVED FROM THE SURVEY CIRCLE BEFORE RECORDING HIS OWN SATISFACTION OF ESCAPED INCOME AND INITIATED REASSESSMENT PROCEEDINGS. THE ASSESSING OF FICER HAD THUS ACTED ONLY ON THE BASIS OF SUSPICION AND IT COULD NOT BE SAID THA T IT WAS BASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED INCOME. THE AS SESSING OFFICER HAD TO ACT ON THE BASIS OF REASONS TO BELIEVE AND NOT ON REASONS TO SUSPECT. THE TRIBUNAL RIGHTLY CONCLUDED THAT THE ASSESSING OFFICE R HAD FAILED TO INCORPORATE THE MATERIAL AND HIS SATISFACTION FOR REOPENING THE ASS ESSMENT AND THEREFORE THE ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT FOR REASSESSMENT PROCEEDINGS WAS NOT VALID. 9.5 IN THE PRESENT CASE ALSO THE A.O. IN THE REASON S RECORDED CLEARLY STATED THAT ON THE BASIS OF INFORMATION THAT THE ASSESSEE DEPOSITED CASH OF RS. 35,01,000/- IN THE BANK ACCOUNT FORMED THE OPINION THAT THE SAID DEPOSIT WAS THE INCOME OF THE ASSESSE WHICH ESCAPED THE ASSESSM ENT, WHILE DOING SO HE DID NOT APPLY HIS OWN MIND AND INITIATED THE REASSESSME NT PROCEEDINGS. THUS THE A.O. ACTED ONLY ON THE BASIS OF SUSPICION, SO IT CA NNOT BE SAID THAT IT WAS BASED ON BELIEF THAT THE INCOME CHARGEABLE TO TAX HAD ESC APED ASSESSMENT. 10 THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS AND BY RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE AFORESAID REFERRED TO JU DICIAL PRONOUNCEMENTS, I AM OF THE VIEW THAT THE REASSESSMENT PROCEEDINGS, INITIAT ED BY THE A.O. ON THE BASIS OF SUSPICION WERE NOT VALID AND THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE SAME. ACCORDINGLY THE SAME IS QUASHED. 9.6 SINCE I HAVE QUASHED THE REASSESSMENT PROCEEDIN GS, THEREFORE, NO FINDINGS ARE GIVEN ON THE OTHER ISSUES RAISED BY TH E ASSESSEE ON MERIT. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- .., ( N.K. SAINI) ! / VICE PRESIDENT AG DATE: 22/07/2021 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE