Amitava Dhar, Kolkata V. ITO, Ward-22(1), Kolkata, Kolkata

ITA 1689/KOL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9491 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 24-08-2016
• Court: TRIBUNAL
• Department Lawyers: S ALLONG YADEN CIT LD
• Assessee Lawyers: SUBASH AGARWAL LD
• Keywords: Reopening of assessment; Income from undisclosed sources; Tangible material; Reason to believe
• Section: 44AD; 142(1); 133(6); 147; 148; 139

Judgement Text

ITA NO. 1689/KOL/2016 AMITAVA DHAR 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA D B ENCH, KOLKATA BEFORE SHRI M.BALAGANESH, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1689/KOL/2016 ASSESSMENT YEAR: 2010-11 AMITAVA DHAR 25B, TANUPUKUR ROAD, KOLKATA-700031 PAN:ADZPD1394A. APPELLANT -VS.- I.T.O WARD 22(1), KOLKATA KOLKATA. RESPONDENT APPEARANCES BY: SHRI SUBASH AGARWAL, ADVOCATE, LD.AR FOR THE ASSESS EE SHRI SALLONG YADEN, ADDL.CIT, LD.DR FOR THE REVENUE DATE OF HEARING : 25-11- 2016 DATE OF PRONOUNCEMENT : 3 1-01-2017 ORDER SHRI S.S.VISWANETHRA RAVI, JM: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDERS D T: 29-07-2016 PASSED BY THE COMMISSIONER OF INCOME TAX-(APPEALS), 18, KO LKATA FOR THE ASSESSMENT YEAR 2010-11. ITA NO. 1689/KOL/2016 AMITAVA DHAR 2 2. IN THIS APPEAL THE ASSESSEE HAS RAISED GROUNDS O F APPEAL AS BELOW: 1. FOR THAT THE LD.CIT-(A) OUGHT TO HAVE HELD THAT REASSESSMENT ORDER DATED 28-03- 2014 FRAMED U/S 147/14393) IS VOID AND NULLITY IN T HE EYE OF LAW. 2. FOR THAT THE LD.CIT-(A) OUGHT TO HAVE HELD THAT THE RECORDED REASONS ARE INVALID AND IMPROPER AND AS SUCH, THE REASSESSMENT FRAMED VIDE ORDER DATED 28-03-2014 IS BAD IN THE EYE OF LAW AND LIABLE TO BE QUASHED. 3. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.10,40,00 0/- MADE BY THE AO ON ACCOUNT OF ALLEGED INCOME FROM UNEXPLAINED SOURCES. 4. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN ADDING A SUM OF RS.50,916/- BEING INTEREST ON FIXED DEPOSITS. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL. 3. THE ASSESSEE IS INDIVIDUAL AND IS AN ART PAINTER , ESPECIALLY IN THE NATURE OF HISTORICAL AND MYTHOLOGICAL PAINTINGS AND HE DER IVES HIS INCOME FROM SUCH PROFESSION. ACCORDING TO AO, THE ASSESSEE DID NOT F ILE HIS RETURN OF INCOME FOR THE AY 2009-10 I.E YEAR UNDER CONSIDERATION. IT WAS NOTICED BY THE AO FROM THE SYSTEM THAT THE ASSESSEE INVESTED RS.1,19,076/- IN SHARES AND DEPOSITED CASH TO THE TUNE OF RS.10,40,000/- IN ICICI BANK, L ENIN SARANI BRANCH A/C. BY RECORDING REASONS THE AO ISSUED NOTICE U/S. 148 OF THE ACT ON 07-06-2012. IN RESPONSE TO SUCH NOTICE THE ASSESSEE FILED RETURN O N 07-08-2012 DECLARING HIS TOTAL INCOME OF RS.1,57,000/-. UNDER SCRUTINY, NOTI CES U/S. 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO WHICH, THE L D.A/R OF ASSESSEE APPEARED TIME TO TIME AND PRODUCED PAPERS AND DOCUMENTS. ON VERIFICATION OF SAID RETURN THE AO FOUND THAT THE ASSESSEE HAS SHOWN GRO SS RECEIPTS OF RS.12,45,000/-, GROSS PROFIT OF RS.1,97,305 AND CLA IMED EXPENDITURE OF RS.58,462/-. ITA NO. 1689/KOL/2016 AMITAVA DHAR 3 4. THE LD.AR OF THE ASSESSEE READ TOGETHER GROUND N OS 1,2&3 AND ADVANCED ARGUMENTS COLLECTIVELY AND GROUNDS RAISED THEREON C HALLENGING PROCEEDINGS U/SEC 147 OF THE ACT AND AN ADDITION TO AN EXTENT O F RS.10,40,000/- MADE ON ACCOUNT OF INCOME FROM UNEXPLAINED SOURCES. 5. DURING THE PROCEEDINGS UNDER SCRUTINY, IN EXPLAN ATION TO CASH DEPOSITS AS FOUND BY THE AO IN RESPECT OF ICICI BANK, LENIN SAR ANI BRANCH ACCOUNT THE ASSESSEE OFFERED HIS REPLY VIDE A LETTER DATED 10-1 2-2013 STATING THAT HE RECEIVED RS.12,45,000/- ON SALE OF HIS PAINTINGS AN D DECLARED PROFIT OF RS.1,38,843/- AFTER DEDUCTION OF EXPENSES. THE AO A SKED THE ASSESSEE TO PRODUCE THE I) DETAILS OF PAINTINGS SOLD AND II) NAMES, ADDRESSES, PHONE NUMBERS OF THE PURCHASES AND AMOUNT INVOLVED THEREI N. TO WHICH, THE ASSESSEE SUBMITTED HIS REPLY BY A LETTER DATED 19-0 2-2014 BY STATING THAT SALE OF SUCH PAINTINGS WAS CAUSED FROM HIS RESIDENCE AND AS SUCH NO RECORD OF PURCHASERS AND DETAILS OF PAINTINGS THEREOF WERE AV AILABLE. THE AO, HOWEVER, DID NOT ACCEPT SUCH SUBMISSIONS OF THE ASSESSEE AND HE OBSERVED AS UNDER IN RESPECT OF DEPOSITS OF RS.10,40,000/- :- DATE CASH/CHEQUE AMOUNT (RS.) 23.04.2009 CASH 20,000/- 23.06.2009 CASH 49,000/- 25.06.2009 CASH 4,51,000/- 27.06.2009 CASH 5,00,000/- 29.08.2009 CASH 20,000/- TOTAL 10,40,000/- ITA NO. 1689/KOL/2016 AMITAVA DHAR 4 6. AGAIN THE AO SHOW CAUSED THE ASSESSEE AS TO WHY THE CASH DEPOSITS AS ABOVE TO AN EXTENT OF RS.10,40,000/- SHOULD NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES. AGAINST WHICH, THE ASSESSEE VI DE LETTER DATED 21-03-2014 SUBMITTED AS UNDER:- IN REPLY TO QUERY NO.1 IN RESPECT OF DEPOSIT OF CAS H TO TUNE OF RS. 10,40,000/-. I HEREBY SUBMIT THAT I HAVE ALREADY EXPLAIN THE CAS H DEPOSIT IN TO ICICI BANK VIDE LETTER DATED 10.12. 2013 AND LETTER DATED 06.02.2014. HOWEVER I AM REPRODUCI NG THE FACTS AS BELOW:- A) I HAVE FILED MY RETURN OF INCOME U/S 44AD OF THE I. T. ACT. IN THE RETURN OF INCOME MY GROSS RECEIP TS RS.12,45,000/- WHICH IS AS BELOW:- CASH DEPOSIT IN TO ICICI BANK RS. 10,40,000/- CHEQUE DEPOSIT IN TO ICICI BANK RS. 55,000/ - CHEQUE DEPOSIT IN SBI ON 21/05/2009 RS. 50,000 /- 05/02/2010 RS. 1,00,000/- RS. 1,50,000/- RS. 12,45,000/- B) I SALE PAINTING IN NATURE OF HISTORICAL, MYTHOL OGY BASED ETC. AND ALSO MY OWN PAINTED. I AM A SMAL L TRADER AND DO NOT HAVE ANY DETAILS OF PAINTING SOLD DURING THE F/Y 2009-10. I HAVE ALREADY EXPLAINED THAT I S ALE THE PAINTING FROM MY RESIDENCE TO PROSPEROUS PERSONS MO STLY IN CASH AND AS SUCH DO NOT HAVE RECORD OF THE BUYERS. AS I WAS NOT IN POSITION TO FURNISH THE DET AILS OF CUSTOMERS, I HAVE OFFERED THE ABOVE RECEIPT OF RS. 12,45,000/- WHICH INCLUDES CASH DEPOSIT OF RS. 10,4 0,000/- AND CHEQUE DEPOSIT RS. 1,00,000/- U/S. 44A D OF IT ACT, 1961 AND AFTER DEDUCTING EXPENDITURE SHOWN PROFIT OF RS. 1,38,843/- WHICH IS 11.15%. SINCE THE CASH DEPOSIT OF RS. 10,40,000/- AS WELL AS CHEQUE DEPOSI T OF RS. 2,05,000/- ARE CONSIDERED IN THE RETURN OF INCOME THE AMOUNT ARE FULLY EXPLAINED. 7. THE AO, NOT SATISFIED WITH THE ABOVE EXPLANATION AS OFFERED BY THE ASSESSEE VIDE HIS SAID REPLIES, HE ADDED THE AMOUNT OF RS.10,40,000/- TO THE TOTAL INCOME OF THE ASSESSEE AS INCOME FROM UNEXPLA INED SOURCES. 8. AS AGGRIEVED BY SUCH ORDER OF THE AO THE ASSESSE E FILED AN APPEAL BEFORE THE CIT-A CONTENDING THAT THE AMOUNT COVERING THE I MPUGNED ADDITION WAS FROM HIS PAST ACCUMULATION IN CASH AS WELL AS SALE PROCEEDS OF PAINTINGS. FURTHER, THE ASSESSEE ALSO SUBMITTED THAT HE OFFERE D RS.10,00,000/- TO ALPS TOURIST SERVICES PVT. LTD FOR ALLOTMENT OF SHARES A ND FURTHER PAID RS.1,00,000/- TO M/S. NIRMAL BANG SECURITIES PVT. LTD FOR DOING T HE BUSINESS OF DERIVATIVES ON ITA NO. 1689/KOL/2016 AMITAVA DHAR 5 BEHALF OF ASSESSEE AND EARNED SHORT TERM CAPITAL GA IN OF RS.5230/- AND LOSS OF RS.99,748/- AND FILED THE COPY OF LEDGER. 9. THE CIT-A OBSERVED THAT THE ASSESSEE COULD NOT C LARIFY THE NATURE OF HIS BUSINESS I.E THE CONDUCTING OF BUSINESS, ADDRESS OF BUSINESS PREMISE AND DETAILS OF PERSONS, WHO PURCHASED THE PAINTINGS. AC CORDINGLY, FOR NON SUBMISSION OF EVIDENCE, HE CONFIRMED THE IMPUGNED A DDITION BY OBSERVING AS UNDER:- 4.2 GROUNDS OF APPEAL NO.S 3 TO 6 -AS THE ASSESSEE COULD NOT FURNISH ANY SATISFACTORY EXPLANATION REGARDING CASH DEPOSIT IN THE BANK ACCO UNT, ADDITION OF RS.10,40,000/- HAS BEEN MADE. ASSESSEE HAS SUBMITTED THAT HE IS PAINTER BY PROFESSION AND DURING THE ASSESSMENT YEAR 2010-11 HE HAD RECEIVED RS.12,45,000/ - FROM SALE O F PAINTINGS AND AFTER DEDUCTING VARIOUS EXPENSES, A PROFIT OF RS. 1,38,843/- WAS MADE. IT I S FURTHER SUBMITTED THAT THIS PROFIT IS 11.15% OF THE TOTAL RECEIPTS AND HENCE HE WAS NOT MAINTAIN ING ANY BOOKS OF ACCOUNTS AS PER THE PROVISION FOR SECTION 44AD. CASH HAS BEEN DEPOSITED ON VARIOUS DATES INTO THEIR SAVING ACCOUNT WHICH IS OUT OF THE SALE OF PAINTINGS. APPELLANT HA S HEAVILY RELIED ON THE PROVISION OF SECTION 44AD IN SUPPORT OF HIS ACTION REGARDING NON MAINTEN ANCE OF BOOKS OF ACCOUNTS AND NON FILLING OF RETURN OF INCOME. I HAVE CAREFULLY CONSIDERED THE F ACTS OF THE CASE AND THE SUBMISSION OF THE ASSESSEE. ASSESSEE HAS NOT CLARIFIED HOW HE WAS CON DUCTING HIS BUSINESS. THERE ARE NO BUSINESS PREMISES FROM WHERE HE COULD HAVE CONDUCTED HIS BUS INESS. ASSESSEE HAS ALSO NOT FURNISHED ANY DETAILS OF THE PERSONS WHOM PAINTINGS WERE SOLD . IN THIS LINE OF BUSINESS ART GALLERIES PLAY A MAJOR ROLE OF GETTING THE PROSPECTIVE CUSTOMER FOR AN EMERGING ARTIST. ASSESSEE HAS NOT FURNISHED ANY SUCH DETAILS WITH WHOSE ASSISTANCE PA INTINGS WERE SOLD. NO OTHER EVIDENCE HAS EITHER BEING BROUGHT ON RECORD TO CORROBORATE THE C ONTENTIONS OF THE ASSESSEE. ASSESSEE IS JUST CREATING AN ALIBI TO EXPLAIN THE UNDISCLOSED INCOME . UNDER THE CIRCUMSTANCES CASH DEPOSIT OF RS.10,40,000/- IN THE BANK ACCOUNT OF THE ASSESSEE REMAIN UNEXPLAINED AND ADDITION MADE BY THE A.O. IS CONFIRMED. 10. BEFORE US THE LD.AR SUBMITS THAT MERE FINDING C ASH DEPOSITS IN THE SAID BANK CANNOT BE TAKEN AS INCOME OF ASSESSEE. LIKEWIS E, THE ASSESSEE MADE INVESTMENTS IN SHARES AND ENTIRE INVESTMENT MADE TH EREIN CANNOT BE TERMED AS INCOME AND THERE WAS SOME LOSS. HE FURTHER ARGUE D THAT THE ASSESSEE SUFFERED FROM LOSSES IN SUCH DERIVATIVES BUSINESS AND REFERRED TO PARA 8 OF THE ORDER DATED 20-01-2015 OF THE CO-ORDINATE BENCH OF ITAT DELHI IN THE CASE OF BIR BAHADUR SINGH SIJWALI IN ITA NO.3814/DEL/2011. HE ALSO ARGUED THAT MERE HAVING DEPOSITS IN BANK ACCOUNTS DO NOT CONSTITUTE UNDISCLOSED INCOME AND OPINION THAT IT ESCAPED ASSESSMENT OF INCOME IS FAL LACIOUS ASSUMPTION. HE ALSO SUBMITS THAT THE ASSESSEE PASSED TEACHERSHIP EXAMIN ATION IN FIRST CATEGORY ITA NO. 1689/KOL/2016 AMITAVA DHAR 6 FROM THE GOVT. COLLEGE OF ART & CRAFT, CALCUTTA AND REFERRED TO PAGE 10 & 10A OF THE PAPER BOOK AND ARGUED THAT THE ASSESSEE IS A RENOWNED PAINTER HAVING GOOD NAME AS AN ART PAINTER. THE LD.AR FURTHER SUBM ITS THAT ALL THE TRANSACTIONS WERE CAUSED EFFECT THROUGH M/S. ALPS T OURIST SERVICES PVT. LTD AND REFERRED TO PAGES 6 TO 9 OF THE ASSESSEES PAPER BO OK. IN SUPPORT OF HIS CONTENTIONS THE LD.AR REFERRED TO ORDER DATED 22-01 -2016 OF THE CO-ORDINATE BENCH OF ITAT DELHI IN THE CASE OF PRAVEEN KUMAR JA IN VS. ITO IN ITA NO. 1331/DEL/2015 AND ARGUED THAT THE AO CANNOT MECHANI CALLY CONCLUDE THAT THE CASH DEPOSITS AND BANK DEPOSITS CONSTITUTE INCOME A ND REFERRED TO PARA 12 OF THE SAID ORDER. FURTHER, IN SUPPORT OF THE CONTENTI ONS REFERRED TO THE PARA NO- 20 OF DECISION OF THE HONBLE HIGH COURT OF DELHI I N THE CASE INDO ARAB SERVICES REPORTED IN (2015) 64 TAXMANN. COM 257 (DEL). 11. LD.DR SUBMITS THAT THE AO HAS SUFFICIENT REASON S TO ISSUE NOTICE U/SECTION 148 OF THE ACT AND ARGUED THAT ADMITTEDLY THE ASSESSEE HAS GIVEN AN IMPRESSION THAT HE IS TRADER IN PAINTINGS. THE LD.D R ARGUED THAT ART OF PAINTING IS AN INHERENT QUALITY OF A PERSON AND THE EXPENDIT URE SHOWN FOR SUCH ACTIVITY IS NEGLIGIBLE AND RELIED ON THE ORDER OF CIT-A AND AO. THE LD.DR ALSO ARGUED THAT ADMITTEDLY CASH DEPOSITS IN THE SUM OF RS.10,4 0,000/- IS ABOVE THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX, HENCE, THE RE OPENING DONE BY THE AO IN THE ABSENCE OF ANY RETURN OF INCOME IN THESE FAC TS AND CIRCUMSTANCES CAN NOT BE HELD TO BE INVALID. 12. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS FILED HIS RETURN ON R ECEIVING NOTICE ISSUED U/S. 148 OF THE ACT. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE COULD NOT PRODUCE ANY DETAILS WITH REGARD TO SUCH C ASH DEPOSITS EXCEPT SAYING THAT HE IS A PAINTER AND DOES HIS BUSINESS BY SELLI NG SUCH PAINTINGS AND ITA NO. 1689/KOL/2016 AMITAVA DHAR 7 DEPOSITS AS FOUND ARE PART OF SALE PROCEEDS OF SUCH PAINTINGS. WE FIND THAT BEFORE THE CIT-A ASSESSEE SUBMITTED THAT HE OFFERED RS. 10 LAKHS TO M/S. ALPS TOURIST SERVICES PVT. LTD FOR ALLOTMENT OF SHARES A ND IN SUPPORT, THE LD.AR REFERRED TO BANK STATEMENTS PLACED ON RECORD AT PAG E NOS 6 & 7 OF THE PAPER BOOK. IT DOES NOT SHOW ANYTHING THAT THE ASSESSEE P AID SUCH AMOUNTS TO SAID M/S. ALPS TOURIST SERVICES PVT. LTD. IN FACT, IT SH OWS THAT THE MONEYS CAME TO ASSESSEE FROM SAID M/S. ALPS TOURIST SERVICES PVT. LTD. BEFORE THE CIT-A ASSESSEE SUBMITTED THAT SUCH DEPOSITS INVOLVE HIS P AST ACCUMULATION AND PART OF SALE PROCEEDS OF HIS PAINTINGS. WE FIND THAT NEI THER BEFORE THE AO NOR BEFORE THE CIT-A THE ASSESSEE SUBMITTED ANY KIND OF EVIDEN CE WHATSOEVER TO SUBSTANTIATE HIS CLAIM. 13. WITH REGARD TO THE DECISION OF THE CO-ORDINATE BENCH, ITAT, DELHI IN THE CASE OF BIR BAHADUR SINGH SIJWALI SUPRA THE FACT THEREIN WAS THAT THE AO REOPENED THE ASSESSMENT AND SPECIFIC LEGAL CHALLENG E WAS THAT THE RECORDED HIS REASONS TO REOPEN THE ASSESSMENT AFTER ISSUANCE OF NOTICE U/SECTION 148 OF THE ACT, WHEREAS IN THE PRESENT CASE THE ASSESSEE DID N OT FILE HIS RETURN INITIALLY, BUT, FILED SUBSEQUENT UPON RECEIPT OF NOTICE ISSUED U/S. 148 OF THE ACT. IT COULD BE SEEN FROM PARA NO-10 OF THE SAID ORDER THAT THE REASONS RECORDED BY THE AO THEREIN WERE NOT SUFFICIENT TO REOPEN THE ASSESSMEN T. THEREFORE, IN OUR OPINION THE SAID DECISION IN THE CASE OF SUPRA IS NOT APPLICABLE TO THE PRESENT FACTS OF THE CASE. 14. FURTHER, IN SUPPORT OF HIS CONTENTIONS THE LD.A R REFERRED TO ORDER DATED 22-01-2016 OF THE CO-ORDINATE BENCH OF ITAT DELHI I N THE CASE OF PRAVEEN KUMAR JAIN VS. ITO IN ITA NO. 1331/DEL/2015 AND ARG UED THAT THE AO CANNOT MECHANICALLY CONCLUDE THAT THE CASH DEPOSITS AND BA NK DEPOSITS CONSTITUTE INCOME AND REFERRED TO PARA NO-12 OF THE SAID ORDER , WHICH READS AS UNDER:- ITA NO. 1689/KOL/2016 AMITAVA DHAR 8 12. THUS IT IS CLEAR THAT THE BASIC REQUIREMENT FO R REOPENING OF ASSESSMENT THAT THE AO MUST APPLY HIS MIND TO THE MATERIALS IN ORDER TO HAVE RE ASONS TO BELIEVE THAT THE INCOME OF THE ASSESSEE ESCAPED ASSESSMENT WAS FOUND TO BE MISSING WHEN THE AO PROCEED TO REOPEN THE ASSESSMENT WHICH IS IN NATURE OF A POST MORTEM EXER CISE AFTER THE EVENT OF REOPENING OF THE ASSESSMENT. THEREFORE THE REOPENING OF THE ASSESSME NT WAS FOUND TO BE INVALID AS IT DOES NOT SATISFY THE REQUIREMENT OF LAW THAT PRIOR TO THE RE OPENING OF THE ASSESSMENT THE AO HAS TO APPLY HIS MIND TO THE MATERIAL AND CONCLUDE THAT HE HAS R EASON TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. APPLYING THE ABOVE PROPOSIT ION OF LAW IT LEAVES NO DOUBT IN THE MIND THAT IN THE CASE ON HAND THE AO HAS REOPENED THE AS SESSMENT MECHANICALLY WITHOUT APPLICATION OF MIND TO CONCLUDE THAT THE SAID AMOUNT OF RS.6 LAC D EPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE CONSTITUTES THE INCOME OF THE ASSESSEE AND THE SAME HAS ESCAPED ASSESSMENT THE DECISION RELIED UPON BY THE LD DR IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE BECAUSE IN THE SAID CASE NOT ONLY THE ACCOMMODATION ENTRY WERE FOUND BY THE INVE STIGATION WING BUT THE MODUS OPERANDI WAS ALSO DETECTED AND THEREFORE IT WAS FOUND THAT THE A O WAS HAVING THE SUFFICIENT MATERIAL AND INFORMATION TO FORM THE BELIEVE THAT THE INCOME ASS ESSABLE TO TAX HAS ESCAPED ASSESSMENT. IN VIEW OF THE FACTS AND CIRCUMSTANCES AS WELL AS THE DECISIONS RELIED UPON BY THE AR, THE REOPENING IS IN THE CASE OF ASSESSEE IS NOT VALID AND THE SAM E IS QUASHED. SINCE THE REOPENING OF THE ASSESSMENT HELD TO BE INVALID THEREFORE OTHER GROUN D OF THE APPEAL BECOME INFRACTUOUS. 15. IN THE ABOVE CASE, THE ASSESSMENT WAS REOPENED AND SAID REASSESSMENT WAS HELD TO BE INVALID FOR NOT HAVING SUFFICIENT RE ASONS TO BELIEVE THAT SUCH INCOME HAS ESCAPED ASSESSMENT. IN OUR VIEW THAT IN THE PRESENT CASE THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME PRIOR TO RECEIPT OF SAID NOTICE ISSUED U/S. 148 OF THE ACT. THEREFORE, THE CASE LAWS AS RE LIED ON BY THE LD.AR OF THE ASSESSEE IN THE CASE OF SUPRA IS NOT APPLICABLE TO THE PRESENT FACTS OF THE CASE. 16. FURTHER, REFERRED TO THE DECISION OF THE HONBL E HIGH COURT OF DELHI IN THE CASE INDO ARAB SERVICES REPORTED IN (2015) 64 TAXMA NN. COM 257 (DEL) AND REFERRED TO PARA NO-20, WHICH READS AS UNDER:- 20. KEEPING THE ABOVE LEGAL POSITION IN VIEW WHEN THE CASES ON HAND ARE EXAMINED, IT IS SEEN THAT AS FAR AS INDO ARAB IS CONCERNED WHILE THE AO SET OUT THE INFORMATION RECEIVED FROM THE ED, HE FAILED TO EXAMINE IF THAT INFORMATION PROVIDED T HE VITAL LINK TO FORM THE 'REASON TO BELIEVE' THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT FOR T HE AY IN QUESTION. WHILE THE AO HAS REFERRED TO THE FACT THAT THE ED GAVE INFORMATION R EGARDING CASH DEPOSITS BEING FOUND IN THE BOOKS OF THE ASSESSEE, THE AO DID NOT STATE THAT HE EXAMINED THE RETURNS FILED BY THE ASSESSEE FOR THE SAID AY AND DETECTED THAT THE SAID CASH DEP OSITS WERE NOT REFLECTED IN THE RETURNS. IN FACT, THE AO CONTRADICTED HIMSELF IN THE REASONS RECORDED BY HIM BY NOTICING THE INFORMATION OF THE ED TO THE ABOVE EFFECT AND THEN STATING THAT ON PERUSAL OF THE RECORDS FOR THE AY IN QUESTION IT WAS NOTICED THAT THE ASSESSEE 'HAD NOT DISCLOSED TH ESE TRANSACTIONS IN ITS BOOKS OF ACCOUNT.' FURTHER THE AO REFERS TO THE ED'S INFORMATION THAT MR. CHETAN GUPTA, PARTNER OF THE ASSESSEE, FAILED TO EXPLAIN THE SOURCES OF THE CASH DEPOSITS AS SHOWN IN THE BOOKS OF ACCOUNT. HOWEVER, THAT BY ITSELF COULD NOT HAVE LED THE AO TO EVEN PRIMA F ACIE CONCLUDE THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. THE EXPLANATION OR THE LACK OF IT OF THE ENTRIES IN THE BOOKS OF ACCOUNT MAY HAVE CERTAIN RELEVANCE AS FAR AS ED IS CONCERNED BU T THAT BY ITSELF DOES NOT PROVIDE THE VITAL LINK FOR CONCLUDING THAT FOR THE PURPOSES OF THE ACT ANY PART OF CASH DEPOSITS CONSTITUTED INCOME THAT HAD ESCAPED ASSESSMENT. THERE IS A LONG DISTANCE TO TRAVEL BETWEEN A SUSPICION THAT INCOME HAD ESCAPED ASSESSMENT AND FORMING REASONS TO BELIEVE T HAT INCOME HAD ESCAPED ASSESSMENT. WHILE ITA NO. 1689/KOL/2016 AMITAVA DHAR 9 THE LAW DOES NOT REQUIRE THE AO TO FORM A DEFINITE OPINION BY CONDUCTING ANY DETAILED INVESTIGATION REGARDING THE ESCAPEMENT OF INCOME FR OM ASSESSMENT, IT CERTAINLY DOES REQUIRE HIM TO FORM A PRIMA FACIE OPINION BASED ON TANGIBLE MAT ERIAL WHICH PROVIDES THE NEXUS OR THE LINK TO HAVING REASON TO BELIEVE THAT INCOME HAS ESCAPED AS SESSMENT. 17. IN THE CASE OF SUPRA WHEREIN IT HAS BEEN HELD THAT THE RE-ASSESSMENT IS BAD IN LAW BEING INCONSISTENT WITH SETTLED LEGAL PR OPOSITION I.E FOR NOT HAVING A PRIMA FACIE OPINION REGARDING TANGIBLE MATERIAL PRO VIDING NEXUS OR LINK THAT HAVING INCOME HAS ESCAPED ASSESSMENT. IN OUR CONSID ERED VIEW THAT IN THE ABOVE CASE THE ASSESSMENT WAS PROCESSED U/S. 143(1) AND THEREAFTER ON RECEIVING INFORMATION FROM ENFORCEMENT DIRECTORATE THE AO REOPENED SUCH ASSESSMENT. IT IS NEEDLESS TO SAY THAT IN THE PRES ENT CASE THERE WAS NO RETURN/ASSESSMENT AT ALL PRIOR TO ISSUANCE OF NOTIC E U/S. 148 OF THE ACT. THEREFORE, THE CASE LAWS AS RELIED ON BY THE LD.AR OF THE ASSESSEE IN THE CASE OF SUPRA IS NOT APPLICABLE TO THE PRESENT FACTS OF THE CASE. HENCE, THE ARGUMENTS BY THE LD.AR ON REOPENING OF ASSESSMENT A RE DISMISSED. ACCORDINGLY, THE GROUND NOS 1,2 AND 3 RAISED IN TH IS REGARD ARE DISMISSED 18. GROUND NO. 2 RELATES TO AN ADDITION A SUM OF RS .50,916/- BEING INTEREST @ 9% ACCRUED ON FIXED DEPOSITS. 19. THE ASSESSEE DISCLOSED ONLY INTEREST TO THE EXT ENT OF RS.18,157/- IN RETURN OF INCOME AND THE AO FOUND FROM THE STATEMEN T AS OBTAINED U/S. 133(6) OF THE ACT FROM THE BANK ACCOUNT FOUND RS.50,916/- AS INTEREST ACCRUED ON FIXED DEPOSITS. IN EXPLANATION, THE ASSESSEE SUBMIT TED THAT INTEREST WOULD BE OFFERED FOR TAX ON THE DATE OF MATURITY ON SUCH FIX ED DEPOSIT. THE AO WAS OF THE VIEW THAT THE ASSESSEE MAINTAINED A MERCANTILE SYSTEM OF ACCOUNTING AND THE ASSESSEE HAS TO OFFER SUCH INTEREST ON ACCRUAL BASIS FOR TAXATION. ACCORDINGLY, HE ADDED THE SUM OF RS.50,916/- TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO. 1689/KOL/2016 AMITAVA DHAR 10 20. BEFORE THE CIT-A THE ASSESSEE CONTENDED THAT SU CH FIXED DEPOSIT WAS MATURED ONLY ON 01-09-2010 AND SUCH INTEREST WOULD BE OFFERED FOR TAXATION IN THE SUBSEQUENT A.Y 2011-12. BUT, HOWEVER, NOT ACCEP TING THE SAME, THE CIT-A CONFIRMED THE SAME BY STATING AS UNDER:- 4.3 GROUNDS OF APPEAL NO. 7 - THIS RELATES TO ADDIT ION OF INTEREST OF RS.50,916/- WHICH WAS ACCRUED ON THE FIXED DEPOSITS. IN THE ASSESSMENT OR DER A.O. HAS MADE ADDITION OF RS.69,073/- ON ACCOUNT OF INTEREST INCOME. RS. 18,157/- WAS THE BANK INTEREST WHICH ASSESSEE HAD ALREADY RECEIVED AND ANOTHER ADDITION OF RS. 50,916/- HAS B EEN MADE ON ACCRUAL BASIS ON THE FIXED DEPOSITS IN APPEAL PROCEEDINGS ASSESSEE HAS SUBMITT ED THAT THE FIXED DEPOSITS MATURED ON 01.09.2010 AND HENCE THE INTEREST ON FIXED DEPOSITS IS TAXABLE IN ASSESSMENT ORDER 2011-12. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE ASSESSEE. IT IS SEEN THAT ASSESSEE WAS NOT FILING ANY RETURN. ASSESSEE H AD INVESTED IN FIXED DEPOSIT AND INTEREST WAS ACCRUING ON THAT. HOWEVER, ASSESSEE HAD NOT SHOWN T HIS INCOME EVEN WHILE FILING RETURN IN RESPONSE TO NOTICE U/S 148. IN THE SUBSEQUENT YEAR ALSO ASSESSEE HAS NOT FILED ANY RETURN. AS THE INTEREST HAD ACCRUED ON ADDITION IS CONFIRMED. 21. THE LD.AR REITERATED THE SAME SUBMISSION AS MAD E BEFORE THE CIT-A. ON THE CONTRARY THE LD.DR RELIED ON THE ORDER OF THE A O. 22. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L AVAILABLE ON RECORD. IT IS OBSERVED THAT THE AO AND CIT-A FOUND THE SUBMISS IONS OF THE ASSESSEE NOT ACCEPTABLE THAT INTEREST ACCRUED THEREON FIXED DEPO SIT CAN BE OFFERED ON MATURITY OF THE FIXED DEPOSITS. WE FIND THAT THE AS SESSEE FILED HIS RETURN ON 07- 08-2012 IN RESPONSE TO THE NOTICE DT:07-06-2012 ISS UED U/SECTION 148 OF THE ACT AND THE IMPUGNED AMOUNT IS THE INTEREST ACCRUED ON FIXED DEPOSIT STATED TO BE MATURED ON 01-09-2010 AND IT CLEARLY ESTABLISHES AS ON THE DATE OF FILING RETURN FOR A.Y 2010-11 I.E YEAR UNDER CONSIDERATION THE SAID FIXED DEPOSIT NOT BEEN MATURED AND WE FIND FORCE IN THE SUBMISSIONS O F THE LD.AR THE SAID INTEREST AS ACCRUED ON MATURITY WILL BE DISCLOSED I N SUBSEQUENT YEAR AND WE ARE CONSCIOUS OF THE FACT IN RESPECT OF OBSERVATION OF THE CIT-A CONFIRMED THE IMPUGNED ADDITION ONLY ON THE GROUND THAT THE ASSES SEE DID NOT FILE RETURN OF INCOME FOR SUBSEQUENT YEAR I.E 2011-12, BUT HOWEVE R, WE ARE NOT CONCERNED WHETHER THE ASSESSEE IS LIABLE TO FILE RETURN IN PU RSUANCE OF THE CONDITIONS AS ITA NO. 1689/KOL/2016 AMITAVA DHAR 11 PROVIDED IN CLAUSE (B) OF SUBSECTION 1 OF SECTION 1 39 OF THE ACT. WE ALSO FIND THAT THE OTHER INCOME CONSIDERED BY THE AO IS ALSO BROUGHT TO TAX ONLY ON CASH BASIS. HENCE THE STAND TAKEN BY THE ASSESSEE THAT H E IS FOLLOWING CASH SYSTEM OF ACCOUNTING CANNOT BE DISPUTED. BE THAT AS IT MAY , THE ASSESSEE FILED HIS RETURN ON 07-08-2012 CONSEQUENT UPON ISSUANCE OF NO TICE U/S. 148 OF THE ACT AND THE IMPUGNED ADDITION SAID TO HAVE BEEN ACCRUED ON MATURITY OF FIXED DEPOSIT ON 01-09-2010, IN SUCH CIRCUMSTANCES THE AD DITION OF RS.50,916/- BEING THE INTEREST ON FIXED DEPOSIT IS NOT MAINTAIN ABLE IN THE EYE OF LAW AND IT IS DELETED, ACCORDINGLY, GROUND NO-4 OF ASSESSEE IS ALLOWED. 23. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 31- 01-2017. SD/- SD/- M.BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 31-01-2017 COPIES TO : **PP/SPS (1) APPELLANT/ASSESSEE: SHRI AMITAVA DHAR 25B TANUPUKUR ROAD, KOLKATA-700031. (2) DEPARTMENT/RESPONDENT: THE INCOME TAX OFFICER, W 22(1), KOLKATA BAMBOO VILLA, 169 A J C BOSE ROAD, KOLKATA-700 014. (3)COMMISSIONER OF INCOME-TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL KOLKATA