Rameshbhai N. Patel, Ahmedabad V. The Income Tax Officer, Ward-7(2)(4), Ahmedabad

ITA 2380/AHD/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5479 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 16-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIV SEWAK
• Assessee Lawyers: CHHAJED
• Keywords: Reopening of assessment; Principle of natural justice; Tangible material; Reason to believe; Reassessment proceedings
• Section: 250; 139(1); 68; 148; 139

Judgement Text

, ,L ,L,L ,L- -- -,E ,E,E ,E- -- -LH LHLH LH IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] LKOZJH OLHE VGEN] YS[KK LNL; ,OA EK/KQFERK JKW;] U; KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 2380/AHD/2016 ( / ASSESSMENT YEAR : 2010-11) RAMESHBHAI N. PATEL, A-10, PULIN PARK SOCIETY 2, NEAR GAUTAM FLATS, MACHHALI CIRCLE, NARODA, AHMEDABAD - 382 330 / VS. ITO, WARD 7(2)(4), AHMEDABAD. ./ ./ PAN/GIR NO. : AIBPP 5527 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI M.S. CHHAJED, A.R. / RESPONDENT BY : SHRI SHIV SEWAK, SR. D.R. / DATE OF HEARING 24/08/2018 ! / DATE OF PRONOUNCEMENT 01/11/2018 '# / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL)-7, AHMADABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-7 /10/15-16 DATED 05.07.2016 ARISING IN THE MATTER OF ASSESSMENT ORDE R PASSED UNDER S.144 R.W.S. 147 OF THE INCOME TAX ACT, 1961(HERE-IN-AFTE R REFERRED TO AS 'THE ACT') DATED 17.03.2015 RELEVANT TO ASSESSMENT YEAR (AY) 2010-11. ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 2 - 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.1 THE ORDER PASSED U/S 250 ON 09.04.2016 FOR AY 2010-11 BY CIT(A)-7, AHMEDABAD UPHOLDING THE ADDITION OF RS. 1 2,32,500/- AS UNEXPLAINED CASH DEPOSITS IN UNDISCLOSED BANK AC COUNT MADE BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE P RINCIPLES OF NATURAL JUSTICE. 1.2 THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN LA W AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO C ONFIRMATION OF IMPUGNED ADDITIONS OF RS. 12,32,500/-. 1.3 BOTH THE LOWER AUTHORITIES HAVE GRIEVOUSL Y ERRED IN UPHOLDING THE IMPUGNED ADDITION OF RS. 12,32,500/- AS UNEXPLAINED DEPOSITS IN UNDISCLOSED BANK ACCOUNT WITHOUT BRINGING ANY EVIDE NCES ON RECORDS. 2.1 THE LD.CIT (A) HAS GRIEVOUSLY ERRED IN LAW AN D ON FACTS IN CONFIRMING THE ADDITION RS. 12,32,500/- AS UNEXPLAI NED DEPOSITS IN UNDISCLOSED BANK ACCOUNT BY NOT APPRECIATING PRO PERLY EVIDENCES PLACED IN THE FORM OF COPY OF REGISTER MA INTAINED FOR SALE OF AGRO PRODUCE AND RECEIPTS THEREOF AND COPIE S OF FIXED DEPOSITS MADE BY JOINT ACCOUNT HOLDERS OUT OF THEIR CASH DEPOSIT IN THE BANK. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THE ADDITION OF RS.12,32,500/- AS UNEXPLAINED DEPOSITS IN UNDISCLOS ED BANK ACCOUNT. 3.1 THE OBSERVATIONS MADE AND CONCLUSION REACH ED BY BOTH THE LOWER AUTHORITIES SO AS TO HELD THAT CASH DEPOSITS IN BANK ACCOUNT IS UNEXPLAINED DEPOSITS IN UNDISCLOSED BANK ACCOUNT IS NOT ADMITTED BY THE APPELLANT IN SO FAR AS THE SAME WERE CONTRARY TO THE FACTS OF THE CASE AND EVIDENCE ON RECORD OR PREJUDICIAL TO THE APPELLANT. 3. THE ASSESSEE VIDES APPLICATION DATED 23.08.2018 HAS ALSO RAISED ADDITIONAL GROUNDS OF APPEAL AS DETAILED UNDER: 1. THE REOPENING OF ASSESSMENT IS BAD AND ILLEGAL AS REASONS RECORDED FOR REOPENING OF ASSESSMENT IS VAGUE AND N OT SUFFICIENT. 2. THE LD AO HAS ERRED IN LAW AND ON FACTS IN MAKIN G ADDITION U/S 68 OF THE ACT IN ABSENCE OF CREDIT ENTRIES IN THE B OOKS OF ACCOUNTS. ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 3 - 4. THE ASSESSEE IN ITS FIRST ADDITIONAL GROUND OF A PPEAL HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT MADE U/S 14 7 OF THE ACT. 5. AT THE OUTSET, WE NOTE THAT THE ASSESSEE HAS CHA LLENGED THE REOPENING OF THE ASSESSMENT MADE U/S 147 OF THE ACT BY WAY OF ADDITIONAL GROUNDS OF APPEAL. THE ISSUE RAISED IN A DDITIONAL GROUNDS OF APPEAL IS LEGAL IN NATURE AND GOES TO THE ROUTE OF THE MATTER. THEREFORE WE ADMIT THE ADDITIONAL GROUNDS OF APPEAL RAISED BY TH E ASSESSEE AFTER HAVING RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT I N THE CASE OF NTPC 229 ITR 383. THEREFORE, WE PROCEED TO ADJUDICATE FI RST LEGAL GROUND OF APPEAL AS DISCUSSED ABOVE. 6. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IN TH E PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE AGRICULTURAL BUSINESS . THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS NOT FILED RETURN OF IN COME U/S 139(1) OF THE ACT. HOWEVER, THE AO ON THE BASIS OF AIR INFORMATIO N FOUND THAT THE ASSESSEE HAS DEPOSITED CASH AMOUNTING TO MORE THAN RS.10,00,000/- IN HIS BANK ACCOUNT. ACCORDINGLY, THE AO INITIATED THE PRO CEEDINGS U/S 147 OF THE ACT ON THE PREMISE THAT THE INCOME OF THE ASSES SEE HAS ESCAPED ASSESSMENT. 7. THE LD. AR BEFORE US SUBMITTED THAT THE REOPENIN G U/S 147 OF THE ACT CAN BE MADE ONLY WHEN THE AO HAS INFORMATION IN HIS POSSESSION GIVING RISE TO THE REASON TO BELIEVE THAT THE INCOM E OF THE ASSESSEE HAS ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 4 - ESCAPED ASSESSMENT. IN THE INSTANT CASE, THE AO WIT HOUT FORMING ANY PRIMA FACIE BELIEF FOR ESCAPEMENT OF INCOME HAS INITIATED PROC EEDINGS U/S 147 OF THE ACT WHICH IS CONTRARY TO THE PROVISION O F LAW. THE LD. AR FURTHER SUBMITTED THAT THE AIR INFORMATION DOES NOT LEAD TO FORM A BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSM ENT. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE ASSESSMENT PROCEEDINGS FR AMED U/S 147 OF THE ACT ARE NOT SUSTAINABLE. 8. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE ASS ESSEE HAS NOT FILED ANY RETURN OF INCOME U/S 139 OF THE ACT. THERE WAS ALSO AIR INFORMATION REVEALING THE FACT THAT THE ASSESSEE HAS DEPOSITED CASH AMOUNTING MORE THAN RS.10,00,000/-. THUS, THE AO FORMED PRIMA FACIE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 9. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF AU THORITIES BELOW. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE REOPE NING WAS MADE BY THE AO U/S 147 OF THE ACT ON THE BASIS OF AIR INFORMATI ON SUGGESTING THAT THE ASSESSEE HAS DEPOSITED CASH MORE THAN RS.10,00, 000/- IN HIS BANK ACCOUNT. 10.1 THE PROVISION OF SECTION 147 OF THE ACT REQUIR ES FORMING A BELIEF ON TANGIBLE MATERIAL WHICH SHOULD PROVIDE LIVE LINK I.E. THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IN THE CASE BEFORE US, THE MATERIAL WHICH WAS AVAILABLE WITH THE AO WAS AIR INFORMATION WHICH IN OUR ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 5 - CONSIDERED VIEW DOES NOT ESTABLISH THE FACT THAT TH E INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. 10.2 IN HOLDING SO, WE FIND SUPPORT AND GUIDANCE FR OM THE ORDER OF DELHI TRIBUNAL IN THE CASE OF BIR BAHADUR SINGH SIJWALI VS. ITO REPORTED IN 53 TAXMANN.COM 366 WHEREIN, IT WAS HELD AS UNDER: ALL THAT THE REASONS RECORDED FOR REOPENING INDICA TE IS THAT CASH DEPOSITS AGGREGATING TO RS. 10,24,100 HAVE BEEN MAD E IN THE BANK ACCOUNT OF THE ASSESSEE, BUT THE MERE FACT THAT THE SE DEPOSITS HAVE BEEN MADE IN A BANK ACCOUNT DOES NOT INDICATE THAT THESE DEPOSITS CONSTITUTE AN INCOME WHICH HAS ESCAPED ASSESSMENT. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT DO NOT MAKE OUT A CASE THA T THE ASSESSEE WAS ENGAGED IN SOME BUSINESS AND THE INCOME FROM SUCH A BUSINESS HAS NOT BEEN RETURNED BY THE ASSESSEE. IT IS NOT OPEN TO DE AL WITH THE QUESTION AS TO WHETHER THE ASSESSEE COULD BE SAID TO BE ENGAGED IN ANY BUSINESS; ALL THAT IS TO BE EXAMINED IS WHETHER THE FACT OF THE D EPOSITS, PER SE, IN THE BANK ACCOUNT OF THE ASSESSEE COULD BE BASIS FOR HOL DING THE VIEW THAT THE INCOME HAS ESCAPED ASSESSMENT. THE ANSWER IS IN NEG ATIVE. THE ASSESSING OFFICER HAS OPINED THAT AN INCOME OF RS. 10,24,100 HAS ESCAPED ASSESSMENT OF INCOME BECAUSE THE ASSESSEE H AS RS. 10,24,100 IN HIS BANK ACCOUNT BUT THEN SUCH AN OPINION PROCEE DS ON THE FALLACIOUS ASSUMPTION THAT THE BANK DEPOSITS CONSTITUTE UNDISC LOSED INCOME, AND OVERLOOKS THE FACT THAT THE SOURCES OF DEPOSIT NEED NOT NECESSARILY BE INCOME OF THE ASSESSEE. OF COURSE, IT MAY BE DESIRA BLE, FROM THE POINT OF VIEW OF REVENUE AUTHORITIES, TO EXAMINE THE MATTER IN DETAIL, BUT THEN REASSESSMENT PROCEEDINGS CANNOT BE RESTORED TO ONLY TO EXAMINE THE FACTS OF A CASE, NO MATTER HOW DESIRABLE THAT BE, U NLESS THERE IS A REASON TO BELIEVE, RATHER THAN SUSPECT, THAT AN INCOME HAS ESCAPED ASSESSMENT. 10.3 AFTER CONSIDERING THE FACT IN TOTALITY AS DISC USSED ABOVE, WE NOTE THAT THE AO HAS NOT APPLIED HIS MIND TO REACH TO TH E CONCLUSION THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. THE AO INITIATED PROCEEDINGS U/S 147 OF THE ACT MERELY ON THE BASIS OF AIR WHICH IN OUR ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 6 - CONSIDERED VIEW IS NOT SUFFICIENT MATERIAL FOR INIT IATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT. IT IS RELEVANT TO REFER THE REASONS RECORDED FOR IN ITIATING THE PROCEEDINGS UNDER SECTION 147 OF THE ACT WHICH ARE AS UNDER: REASONS RECORDED FOR REOPENING U/S. 147 OF THE I. T. ACT, 1961. IN THIS CASE., THE ASSESSEE HAS MAINTAINED SAVING B ANK ACCOUNT WITH THE UNION CO-OP. BANK LTD. NARODA BRANCH AHMED ABAD, AS PER AIR INFORMATION RECEIVED BY THIS OFFICE, THE ASSESS EE HAS DEPOSITED CASH AMOUNTING TO MORE THAN RS. 10, 00,000 IN HI: BANK A CCOUNT. DURING THE F.Y. 2009-10. THE ASSESSEE WAS REQUESTED VIDE THIS OFFICE LETTER NO. NMS/AIBPP5527G/375402 DATED 06.08.2013 TO GIVE THE DETAILS OF RETURN OF INCOME FILED BY HIM FOR THE YEAR. TILL DA TE THE ASSESSEE HAS NOT REPLIED NOR RESPONDED. SINCE NO RETURN OF INCOME FO R THE YEAR UNDER CONSIDERATION I.E. A.Y. 2010-11 IS FILED BY THE ASS ESSEE. I HAVE THEREFORE REASON TO BELIEVE THAT INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERA TION, I.E. A.Y. 2010- 11. THE CASH DEPOSITED MADE BY THE ASSESSEE IN HIS BANK ACCOUNT HAS ESCAPED ASSESSMENT AS THE NATURE AND SOURCE OR THE DEPOSITED MADE HAVE NOT HE EXPLAINED BY THE ASSESSEE. THE PROVISIO N OF SECTION 147, EXPLANATION 2(A) ARE SQUARELY APPLICABLE TO THE FAC TS OF THE CASE. ISSUE NOTICE U/S. 148 OF THE IT. ACT. 10.4 ON PERUSAL OF THE ABOVE REASONS WE NOTE THAT I T DOES NOT LEAD TO DRAW AN INFERENCE THAT THE INCOME OF THE ASSESSEE H AS ESCAPED ASSESSMENT. THEREFORE WE QUASH THE PROCEEDINGS INIT IATED U/S 147 OF THE ACT. ITA NO.2380/AHD/2016 SHRI RAMESHBHAI N. PATEL VS. ITO A .Y. 2010-11 - 7 - 10.5 AS WE HAVE QUASHED THE REASSESSMENT PROCEEDING S, THE ISSUE RAISED ON MERIT DOES NOT REQUIRE ANY SEPARATE ADJUDICATION . THEREFORE, THE ISSUE RAISED ON MERIT BECOMES IN FRUCTUOUS. IN VIEW OF AB OVE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . THIS ORDER PRONOUNCED IN OPEN COURT ON 01/11/2018 SD/- S D/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; YKS[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; U;KF;D LNL; YK S[KK LNL; (MADHUMITA ROY) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 01/11/2018 PRITI YADAV, SR.PS !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. % &' ( / CONCERNED CIT 4. ( () / THE CIT(A)-7, AHMEDABAD. 5. +,- ..&' , &'! , 01'%' / DR, ITAT, AHMEDABAD. 6. -23 4 / GUARD FILE. $ % / BY ORDER, + . //TRUE COPY// &/% () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD