MANSOOR ABDUL KADIR ROYKAR, Mumbai V. ITO, INT TAX WARD 4(1)(1), Mumbai

ITA 340/MUM/2023

AI Insights

The case involves Mansoor Abdul Kadir Roykar, a non-resident Indian (NRI), who did not file a return of income for the assessment year 2013-14. The Assessing Officer, based on internal system information, issued a notice under section 148 of the Income Tax Act to reassess the income for the said year due to unexplained cash deposits amounting to INR 11,18,997 in the assessee's bank account. The assessee contended that these deposits were from the sale of gold ornaments. The Assessing Officer rejected this explanation, considering the bills of sale as backdated and bogus, and added the amount as unexplained cash credit under section 68 of the Act. The assessee's objections were dismissed by the DRP, leading to the appeal before the Tribunal. The Tribunal found procedural lapses in the reassessment process, particularly regarding the eligibility criteria under section 144C(15)(b) and the lack of TPO's involvement, leading to the quashing of the assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123846 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 04-04-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2023
• Other Referred Cases: National Thermal Power Co., Limited v. CIT, Commissioner of Income Tax Vs Smt. Maniben Valji Shah, Sunrise Education Trust Vs Income Tax Officer (Exemption), Krupesh Ghanshyambhai Thakkar Vs Deputy Commissioner of Income Tax, Principal Commissioner of Income-tax-5 Vs Manzil Dineshkumar Shah, Hindustan Lever Ltd. v. R.B. Wadkar, Commissioner of Income Tax-1 Vs Gagndeep Infrastructure (P.) Ltd., ESPN Star Sports Mauritius SNC et Compagnie, Maquet Holdings B.V. & Co. Vs Deputy Commissioner of Income-tax (I.T.), Circle - 3(2) (1), Mumbai
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Transfer pricing; Retrospective amendment; Reason to believe; Set aside
• Section: 147; 148; 142(1); 144C; 143(2); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “SMC”, MUMBAI BEFORE SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar 408, Maker Bhavan No.3 21, New Marine Lines Mumbai - 400020 PAN: BAIPR3121G v. Income Tax Officer – Ward – 4(1)(1) Room No. 1729, 17 th Floor Air India Building, Nariman Point Mumbai – 400 021 (Appellant) (Respondent) Assessee Represented by : Shri Tanzil Padvekar Department Represented by : Shri S.N. Kabra Date of conclusion of Hearing : 05.04.2023 Date of Pronouncement : 09.06.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against directions of Learned Commissioner of Income Tax (DRP)-3, Mumbai - 1 [hereinafter in short “Ld. DRP”] dated 23.12.2022 for the A.Y.2013-14. ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 2 2. Brief facts of the case are, assessee had not filed the return of income for the A.Y. 2013-14. Based on the information received from the system, the Assessing Officer recorded the reasons for reopening and Accordingly, issued notices u/s. 148 of Income-tax Act, 1961 (in short “Act”) dated 21.04.2020 and served on the assessee. In response assessee filed its Return of income on 09.10.2020. Accordingly, notices u/s. 143(2) and 142(1) of the Act were and served on the assessee through ITBA portal. In response, assessee has filed the relevant information through ITBA portal. 3. After considering the submissions of the assessee and the reasons recorded for reopening the assessment, assessee was asked to explain the source of cash deposits into the bank accounts to the extent of ₹.11,18,997/- vide notice dated 02.02.2021 issued u/s. 142(1) of the Act. In response assessee has submitted as under: - Date Cash Deposited in Bank Remarks 19-04-2012 15,000/- The assessee is an NRI since last more than 30 years and have been nursing a dream to own a house in India and therefore whenever i visited India i could save some money and kept the amount here in India and the same money was deposited into the bank Rs. 10-05-2012 15,000/- 18-06-2012 5,165/- 22-06-2012 15,000/- 19-07-2012 15,000/- 26-07-2012 4,300/- 23-08-2012 15,000/- 25-08-2012 9,400/- ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 3 Date Cash Deposited in Bank Remarks 12-09-2012 15,000/- 10,66,566/- into my ICICI Bank and a flat was booked and paid initial amount of Rs. 7, 00, 000/- 01-10-2012 4,400/ 15-10-2012 15,000/- 19-10-2012 10,300/- 08-11-2012 15,000/- 13-12-2012 15,000/- 19-12-2012 11100/- 24-12-2012 9,6007- 27-12-2012 4,97,191/- 28-12-2012 3,40,000/- 28-01-2013 7,900/- 31-01-2013 75,000/- 21-03-2013 6,070/- 26-03-2013 8,700/- TOTAL 10,66,566/- 4. After considering the submissions of the assessee, the Assessing Officer observed that based on the information submitted by the assessee that assessee is an NRI for more than 30 years and have been in intention to buy a house in India and whenever he visited India, he saved some money and the same was deposited into bank account to the extent of ₹.10,65,566/-. However, the Assessing Officer observed that entire cash deposits of above said amount were made during Financial Year 2012-13 and that to monthly. Accordingly, assessee was asked to explain by submitting the copy of the passport and travelling details to India during Financial Year 2012-13. However, in response to the above assessee has submitted that a cash deposited in ICICI bank accounts out of sale of gold ornament for cash and he submitted copy of ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 4 the bill of M/s. K.J. Jewellers. After considering the above submissions, the Assessing Officer rejected the same and proceeded to make the addition as unexplained cash credit in draft Assessment Order. 5. Aggrieved assessee preferred objection before Ld. DRP and filed detailed submissions, for the sake of clarity it is reproduced below: - “2. Facts Submitted to Assessing Officer The assessee has deposited cash into its ICICI Bank Account No - 643101700661 of Rs. 10,66,566/- in AY 2013-2014, which is out of sale of gold ornaments for cash, vide bill number 1061, dated 20- 12-2012 to M/s K J Jewellers for Rs.4,97,191and received cash From the said sale and the same cash was deposited into my said bank account on 27-12-2012, similarly I have also sold further gold to M/s KJ Jewellers for Rs.3,39,995 vide bill number 1072, dated 24-12-2012 and received cash from the said sale and the same cash was deposited into my said bank account on 28-12-2012-both gold bill sale copies are attached from 33 to 34. As regards deposit of remaining cash of Rs.2,29,380 was deposited on various dates in AY 2013-2014 (FY 2012-2013). Sir as I have said earlier that I have been working and still working abroad and have been saving money in the form of cash and gold jewellery which I have sold and purchase a small house in India and given initial amount of Rs.7,00,000/ to the builder - my passport and visa copiesare attached from 35 to 48. This Para number 5.0 is a part of my letter dated 28-02-2022 which was submitted online on 28-02-2022 at the income tax e Proceeding portal. 3. Facts, if any, modified by the Assessing Officer Yes, the honorable AO has changed the fact of the case and after modification of it has alleged in his draft assessment order "The AO's remarks in Draft Order Para Number 4.3 "The above reply is considered and perused carefully but not found tenable as there are no short-term capital gains or long-term capital gains shown into the recturn of income. The above bills are only an afterthought ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 5 story and contradictory to the reply dated 09-04-2021 mentioned above in para 4. Vide letter dated 09-04-2021 the assessee submitted that the cash deposits is out of saving and now the assessee vide letter dated 28-02-2022 has submitted that the cash deposits source are sale proceeds of Gold Ornaments. Since the assessee had shown Rs 1,05,823/- only as drawings in his capital account he had left with no scope to prove the genuineness of the cash deposits the bills of Gold jewellery are backdated and bogus" And has alleged that these bills are after thought story and contradictory to earlier reply and his order at para number 4.3. Sir, I understand that the sale of gold ornaments is in cash is a part of my old savings and I being more than 67 years old had only saved this much gold by working abroad and which is deposited in my bank account to buy small house in my remote countryside village in Maharashtra. 4. Do you wholly agree with the modifications in the facts by the Assessing Officer. If not, give reasons pointing the specific fact or facts with which you do not agree along with the reasons and documentary evidence, if any No, I don't agree with honorable AO, reason being savings in the form of gold ornaments and selling it subsequently for purchasing a small house - could not be said as out of not my savings, which may be in cash and/or in gold ornaments, which is very normal feature in every Indian household to meet cash requirement like marriage in family. purchasing of a house, meeting sudden accidental or otherwise medical expenses of the family members of the etc. 10. Factual and legal arguments against the addition proposed by the Assessing Officer 4 The Hon'ble ITO Ward 4(1)(1), Mumbai seriously erred in Law and on the facts and in the circumstances of the case in Passing an Alleged Draft Order U/s. 144C of the Income Tax Act, 1961. 5. The Alleged Draft Order U/s 144C is based on guess work, imagination, conjectures, surmise 6. The AO's remarks in Draft Order Para Number 4.3 "The above reply is considered and perused carefully but not found tenable as there are no short term capital gains or long term capital gains shown into the return of income. The above bills are only a afterthought story and contradictory to the reply dated 09.04.2021 mentioned above in para 4. Vide letter dated 09.04.2021 the assessee submitted that the cash deposits is out of saving and now the assessee vide letter dated 28.02.2022 has submitted that the cash deposits source are sale proceeds of Gold Ornaments. Since ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 6 the assessee had shown Rs 1,05,823/- only as drawings in his capital account he had left with no scope to prove the genuineness of the cash deposits the bills of Gold jewellery are backdated and bogus 3.1 1 THE ALLEGED CONCLUSION OF ALLEGED "AFTER THOUGHT "DRAWN IS BASED ON GUESS WORK, IMAGINATION, CONJECTURES, SURMISE AND I VEHEMENLY AND STRONGLY OBJECTS TO SUCH ALLEGEDADVERSE REMARK, OBSERVATION OR CONCLUSION 32 The assessing officer recorded reasons for reopening and issued a notice u/s 148 on 21-04-2020. 3.2.1 In response to the said notice, the assessee filed its return of income on 09-10- 2020. The assessee is an and law abiding citizen of the country when the anxiety and uncertainty that is facing all of us in the term of COVID-19 and the assessee being very senior citizen (his Date of birth - 26-01-1954) aged about 68 years and suffering from all aged related comorbidities has still chosen to comply with the income tax notices. 3.2 2 The alleged matter is very old (the matter belongs to FY 2012-2013 and whereas first notice u/s 148 issued on 21.04 2020) the assessee being very senior citizen and suffering from number of ailments and generally working abroad, initially after receiving this notice could not recollect /reconnect the subject matter of this notice of cash deposited in bank and only when assessee came back in India and tried to recollect the documentary evidences of old gold ornaments sold of Rs. 4,97,191 and Rs.3,39,995/- and also recollect Index - 2 of the flat which was purchased on 15.07.2013 3.2.3 Your honor this is a very small matter belongs to such a honest NRI citizen who has complied with all notices of the department inspite of all such adverse and lethal circumstances like COVID-19 and he himself suffering from so many ailments and being very senior citizen still opted happily to comply the notices of honorable AO and said honorable AO has alleged a baseless allegations and adverse remark towards the NRI assessee which is very unfortunate. 3.2.4 Sir I am requesting you to please consider sale of old gold ornaments as my part of savings and after selling these I have deposited cash in my savings account, which in my opinion was not barred in the said AY.2013-2014 and generally in our country almost all the household save money in the form of gold ornaments with the intention to come as a rescue in case of emergency needs ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 7 of the person or for any other purposes purchase of house, marriages of daughters and/or all such auspicious/needy occasions." 6. After considering the submissions of the assessee, Ld. DRP has sent an enquiry letter to M/s. K.J. Jewellers u/s. 144C(7) of the Act and in response M/s. K.J. Jewellers had denied the claim of the assessee and response of the assessee was called for. After considering the submissions of the assessee, a remand report was called from the Assessing Officer. The Assessing Officer has submitted remand report and assessee was asked to file rejoinder, after considering all the above said reports, Ld. DRP dismissed the objections raised by the assessee with the following observations: - “12. We have gone through the draft assessment order. We have considered the written and oral submissions. We have perused the remand report by the assessing officer and the rejoinder by the assessee. Briefly stated the facts of the case that the assessee is a non- resident and did not file return of income for the instant AY 2013-14. The assessing officer had the information that the assessee deposited cash to the tune of Rs.11,18,997/- in his bank account, on the basis of which the assessing officer issued notice u/s 148 of the Act to reassess the income for the instant AY 2013-14. The assessee explained to the assessing officer that the cash of Rs.10,66,566/- was sourced from sale of gold ornaments from the SKJ. The assessee submitted the impugned sale bills issued by the SKJ. The assessing officer noted that the impugned bills were backdated and bogus. The assessing officer proposed to add the impugned cash to the total income of the assessee as unexplained cash credits u/s 68 of the Act. The assessee filed objection before the DRP In the course of the proceedings, as stated supra, the DRP inquired from the SKJ about the veracity of the impugned bills. The SKJ denied to have issued the impugned bills. The assessee was asked to reply to the said denial. The assessee asked for cross ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 8 examination of the proprietor of SKJ: The assessing officer was requested to do the needful and send a remand report. The assessing officer submitted the remand report (supra). The assessing officer stated that despite affording opportunities to the assessee, he did not appear to cross examine the witness, Narendra Kumar Dhanraj Jain. Only the AR of the assessee appeared and submitted written reply and 'copy of original tax invoice' issued during the relevant FY. The AR produced the original of the said invoice before the assessing officer. The witness also submitted written reply and sample copy of sale invoice/ purchase bill issued by him. The witness, Narendra Kumar Dhanraj Jain denied the transactions and reiterated his earlier stand on the impugned bills. The assessing officer noted discrepancies in the above two kinds of bills. The assessing officer found that the bill submitted by the assessee has caption of 'tax invoice', whereas the sample bill submitted by the witness has caption of 'purchase invoice. The assessing officer noted that signature on both the bills differed significantly. We have also noted the differences mentioned by the assessing officer. Besides, we would like to bring on record that the assessee submitted copies of the impugned bills on page nos. 33 and 34 of the paper book attached with the Form No. 35A which were sent to the witness as well as the assessing officer for verification by the DRP (supra). We note that the 'copy of original tax invoice' produced before the assessing officer by the assessee is totally different than the impugned bills submitted with the Form No. 35A. We are of the considered opinion that the assessee has manipulated and fabricated the impugned evidences and therefore the sources of the impugned cash deposits is not proved. Hence, we would not interfere with the findings of the assessing officer in this regard. The grounds of objection (supra) are dismissed. 7. Aggrieved assessee is in appeal before us raising following grounds in its appeal: - “1. On the facts and in law, the learned Assessing Officer erred issuing impugned notice under section 148 of the Act, 1961 without formation of belief that income chargeable to tax has escaped assessment. 2. On the facts and in circumstances in law, the learned Assessing Officer is erred the issuing notice under section 148 of the Act for the purpose of verification, which is not permissible in law. The ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 9 reasons provided by Assessing Officer do not state any formation of belief that income chargeable to tax that escaped assessment. Therefore, the impugned notice issued under section 148 of the Act is without jurisdiction and bad in law. 3. On the facts and in law, the learned Assessing Officer has erred in invoking Jurisdiction under Section 147 of the Act base of suspicion and presumption, it is well settled principles of law that Power under Section 147/148 cannot be invoked based on suspicion and presumption. Therefore, the impugned notice issued under Section 148 of the Act is unsustainable in law. 4. On the facts and in law, the learned Assessing Officer has erred in issuing notice. under Section 148 of the Act to making fishing and roving enquiry as the reason recorded by Assessing Officer not establish any formation of belief that income chargeable to tax has escaped assessment. Therefore, the impugned notice under Section 148 of the Act is bad in law. 5. On the facts and in law, the learned Assessing Officer erred in issuing notice under Section 148 of the Act, based on some information received, without making any independent enquiry. Therefore, the impugned notice issued under Section 148 of the Act is bad in law. 6. On the facts and in law, the learned Assessing Officer erred in issuing notice under Section 148 of the Act. As the reasons provided by Assessing Officer not established any formation of belief nor application of mind which recording such reasons. Therefore, the reasons recorded for issuance of notice under Section 148 of the Act suffer from non-application of mind. 7. On the facts and in law, the sanction/approval granted by PCIT/Thane suffers from non-application of mind. The sanction under Section 151 by PCIT-2 Thane has been granted in mechanical manner as a mere formality. Therefore, the sanction granted under Section 151 is bad in law. 8. On the facts and in law, the learned Assessing Officer has erred in making addition of Rs. 11,64,137/- in arbitrary manner. 9. On the facts and in law, the Dispute Resolution Panel erred in observing that the bills produced by the assessee with Form No. 35A and bills produced by the assessee before Assessing Officer during Remand Proceeding were totally different than the bills produce with Form No.35A. The appellant has produced same copy of bills before Dispute Resolution Panel and the Assessing Officer. ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 10 10. On the facts and in law, the learned Assessing Officer erred by denying opportunity to cross examine the witness to the authorised representative and insisted on presence of the assessee who was out of India. 11. On the facts and in law, the Dispute Resolution Panel and the Assessing Officer have erred in making addition under Section 68 of the Act merely on the basis of denial of M/s SK Jewellers. A denial by M/S SK Jewellers will not ipso facto make the purchase bill of M/s SK Jewellers is bogus. 12. The appellant craves, leave to alter, modify, revise, add/delete ground (s) with the leave of Hon'ble Bench.” 8. Further, assessee has raised following additional grounds:- “1. On the facts and in law, the Dispute Resolution Panel (DRP') erred in issuing direction when the Dispute Resolution Panel did not have jurisdiction over the application filed by the Appellant. As per Section 144C(15)(b)(ii) the appellant does not fall within the definition of eligible Assessee which specifically states that eligible Assessee means the person in who's case variation has been made by Transfer Pricing Officer under Section 92CA(b) and Assessee is a foreign company. The criteria set out in see 144C(15)(b) is not met in the present case and therefore, the direction of the Dispute Resolution Panel are without jurisdiction. 2. On the facts and in law, the Ld. AO erred by treating the Assessee as eligible assessing under Section 144C(15)(b)(ii), when the criteria's stated under Section 144C(15)(b) were not met. Therefore, the Draft Order under Section 144C of Income Tax Act is wholly without jurisdiction. 3. On the facts and in law, the impugned Assessment Order dated 06.01.2023 is time barred. As per time limit for completion of assessment as per Section 153(2) of the Act, the assessment ought to has been passed within 12 months from the end of the Financial Year in which Section 148 notice was served i.e. by 31st March 2022.” 9. Ld. Counsel for the assessee submitted that the above additional grounds of appeal are purely legal grounds and do not require any fresh ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 11 examination of facts. Therefore, Ld. Counsel for the assessee prayed it may be admitted. 10. Ld. DR objected for admission of the additional grounds as they were never raised before lower authorities and therefore cannot be admitted. 11. Considered the rival submissions and material placed on record, we observe that as the said additional grounds are legal grounds, wherein, the facts are on record and facts do not require fresh investigation, following the decision of Hon’ble Supreme Court in the case of National Thermal Power Co., Limited v. CIT 229 ITR 383 (SC), we admit the said additional grounds of appeal. 12. At the time of hearing, Ld. AR of the assessee submitted written submissions, for the sake of clarity it is reproduced below: - “Submission on 1st issue- Where the reassessment is bad in law considering the 'one line' reason was recorded which do indicate that there was any reason to believe that income chargeable to tax has escaped assessment. The Appellant contends that the perusal of reasons recorded provided to assessee only state "To explain the courses of Cash deposit into your bank account maintained with ICICI Bank Ltd". The appellant contends that that reasons do not demonstrate that the Ld. Assessing officer had any reason to believe that income chargeable to tax has escaped assessment. The reason only demonstrates that the Ld. Assessing officer want to conduct a ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 12 rowing and fishing enquiry and make verification of the bank cash deposited in the bank. The reason also do not indicate any tangible material based on which the Ld. AO has come to a conclusion that income chargeable to tax has escaped assessment. The Appellant contends that the basic condition for the Ld. AO while exercising power under section 148 of the Act is that he as to form a belief that income chargeable to tax has escaped assessment. This formation of believe should be based on tangible material. It is not open for the AO to reopen the case based on reason to suspect. Moreover, the reason provided by the Ld. AO is ambiguous and unclear. In light of the above submission that appellant relies on following judicial precedents of which relevant para are reproduced as under :- Commissioner of Income Tax Vs Smt. Maniben Valji Shah - [2006] 283 ITR 453 "Having heard Shri Desai, learned senior counsel for the appellant, as well as Shri Bhujale, learned counsel for the respondent, it is an admitted position that the assessee had invested a sum of Rs. 2,50,000 for the purpose of purchasing the flat and what was sought to be investigated was the source of income. A bare perusal of the aforesaid notice dated October 10.1991. clearly indicates that the officer was wanting to know the details with regard to the source of funds with regard to purchase of the said flat for a sum of Rs. 2,50,000. Obviously in the above, there is no question of the Assessing Officer having any basis to reasonably entertain the belief that any part of the income of the assessee had escaped assessment and that such escapement was by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts. Under the aforesaid facts and circumstances, we find no merit in the above appeal, hence the same stands dismissed, however, no order as to costs Sunrise Education Trust Vs Income Tax Officer (Exemption) - [2018] 92 taxmann.com 74 (Gujarat) "......It is well settled through series of judgments of this Court that re-assessment, even in a case where the return was not scrutinized before acceptance originally, ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 13 cannot be resorted to unless the Assessing Officer had a reason to believe that the income chargeable to tax has escaped assessment. In other words, for mere verification or for a fishing inquiry. reopening of the assessment is not permissible." Krupesh Ghanshyambhai Thakkar Vs Deputy Commissioner of Income Tax- [2017] 77 taxmann.com 293 (Gujarat) 13. Applying the aforesaid two decisions to the facts of the present two cases on hand and the reasons recorded to reopen the assessment, we are of the opinion that under the guise of reopening of the assessment, the Assessing Officer wants to have a roving inquiry: as observed hereinabove. Even as per the Assessing Officer in the reasons recorded has specifically mentioned that for the purpose of verification/deep verification of the claim, it is necessary to reopen the assessment. Under the circumstances, it cannot be said that the Assessing Officer had any tangible material to form an opinion that the income chargeable to tax has escaped the assessment. Under the circumstances, the impugned action of reopening of the assessment in exercise of power under Section 148 of the IT Act for the reasons recorded here in above cannot be sustained." Principal Commissioner of Income-tax-5 Vs Manzil Dineshkumar Shah - [2018] 95 taxmann.com 46 (Gujarat) 6. By now it is well settled that even in case where the original assessment is made without scrutiny, the requirement of the Assessing Officer forming the belief that income chargeable to tax has escaped assessment, would apply. Reference in this respect can be made of the judgment in case of Inductotherm (India) (P) Ltd. v. M. Gopalan. Du. CIT [2013] 356.ITR 481/217 Taxman 132/36 taxmann.com 401 (Guj.). 7. It is equally well settled that the notice of reopening can be supported on the basis of reasons recorded by the Assessing Officer. He cannot supplement such reasons. The third principle of law which is equally well settled and which would apply in the present case is that reopening of the assessment would not be permitted for a fishing or a roving inquiry. This can as well be seen as part of the first requirement of the ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 14 Assessing Officer having reason to believe that income chargeable to tax has escaped assessment. In other words, notice of reopening which is issued barely for making fishing inquiry, would not satisfy this requirement. Principal Commissioner of Income-tax-32 Vs Rajesh D. Nandu (HUF) - [2019] 101 taxmann.com 401 (Bombay) "7. It is equally well settled that the notice of reopening can be supported on the basis of reasons recorded by the Assessing Officer. He cannot supplement such reasons. The third principle of law which is equally well settled and which would apply in the present case is that reopening of the assessment would not be permitted for a fishing or a roving inquiry. This can as well be seen as part of the first requirement of the Assessing Officer having reason to believe that income chargeable to tax has escaped assessment. In other words, notice of reopening which is issued barely for making fishing inquiry, would not satisfy this requirement." Hindustan Lever Ltd. v. R.B. Wadkar [2004] 268 ITR 332 (Bombay) "20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 15 should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced." In lieu of the above submissions, it is contended that the impugned Notice issued under section 148 of the Act is bad in law Submission on 2nd Issue - Whether the Ld. AO erred in treating the assessee as 'eligible Assessee' under section 144C(15)(b)(ii) when the said section has been amend with effect from 1/4/2020 and therefore the Assessee could not be treated as eligible assessee as a result, the Impugned assessment order dated 06/01/2023 time barred and thereof bad in law. The Appellant states and submits that the Ld. AO has erred in treating the Assessee as eligible Assessee in terms of section 144C(15)(b)(ii) of the Act. It is submitted that the Appellant could not have been treated to be 'eligible assessee' for the year under consideration Le. A.Y. 2013-14. The Appellant submits that the section 144C(15)(b)(ii) was amended with 'effect from 1/04/2020. Prior to the amendment section 144C(15)(b)(i) stood as under :- (15) For the purposes of this section.- (a) "Dispute Resolution Panel" means a collegium comprising of three (Principal Commissioners or] Commissioners of Income-tax constituted by the Board for this purpose; ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 16 (b) eligible assessee" means,- (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA: and [(ii) any foreign company] Whereas after amendment Section 144C(15) stood as under (15) For the purposes of this section,- (a) "Dispute Resolution Panel" means a collegium comprising of three [Principal Commissioners or] Commissioners of Income-tax constituted by the Boarda for this purpose (b) "eligible assessee" means, - (i) any person in whose case the variation referred to in sub-section (1) arises as a consequence of the order of the Transfer Pricing Officer passed under sub-section (3) of section 92CA: and (ii) any non-resident not being a company, or any foreign company. 13. Substituted by the Finance Act, 2020, w.e.f. 1-4- 2020. Prior to its substitution, sub-clause (ii) read as under: "(ii) any foreign company." The Appellant states that the said section has been amended 'with effect from 01/04/2020. Which would mean that the said amendment would be application from A.y. 2021-22. The appellant further states this the said amendment is not an amendment to procedural law but an amendment to substantive law. A Substantive Law is a Statutory law that defines and determines the rights and obligations of the citizen to be protected by law. Procedural Law or Adjective Law deals with the enforcement of Law that is guided and regulated by the practice, procedure and machinery. The change in the definition of "eligible assessee" under Section 144C of the Income Tax Act would be considered a change in substantive law. Section 144C of the Income Tax Act provides for a dispute resolution mechanism for taxpayers who are subject to transfer pricing adjustments. The definition of "eligible assessee" ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 17 determines which taxpayers are entitled to access this dispute resolution mechanism. If a change in the definition of "eligible assessee" expands or narrows the scope of taxpayers who are eligible for this mechanism, it would be considered a change in substantive law, as it affects the substantive rights and obligations of taxpayers. It is important to note that the exact nature of the change and its impact on the substantive rights of taxpayers would depend on the specific details of the change in definition. However, in general, changes to eligibility criteria for access to dispute resolution mechanisms would be considered a change in substantive law. It is therefore contended that the said amendment to section 144C(15) would have a prospective effect. Hence the Ld. AO erred in treating the Assessee to be eligible Assessee as per the amended section 144C(15) of the Act. in light of the above submission the appellant places reliance on following decision Commissioner of Income Tax-1 Vs Gagndeep Infrastructure (P.) Ltd. - [2017] 80 taxmann.com 272 (Bombay) "e) We find that the proviso to section 68 of the Act has been introduced by the Finance Act 2012 with effect from 1st April, 2013. Thus it would be effective only from the Assessment Year 2013-14 onwards and not for the subject Assessment Year. In fact, before the Tribunal, it was not even the case of the Revenue that Section 68 of the Act as in force during the subject years has to be read/understood as though the proviso added subsequently effective only from 1st April, 2013 was its normal meaning. The Parliament did not introduce to proviso to Section 68 of the Act with retrospective effect nor does the proviso so introduced states that it was introduced "for removal of doubts" or that it is "declaratory". Therefore it is not open to give it retrospective effect, by proceeding on the basis that the addition of the proviso to Section 68 of the Act is immaterial and does not change the interpretation of Section 68 of the Act both before and after the adding of the proviso....." The petitioner further relies on the decision of Asst. Commissioner of Income Tax, Range-1, Circle- 1(2)(2), New Delhi Vs ESPN Star Sports Mauritius SNC et Compagnie [2019] 103 taxmann.com 189 (Delhi - Trib.)14 which is a case of 2013-14 and a correct law position for A.Y. 2013 14 has been held that in order to be eligible assesse the there should a proposed adjustment by TPO under ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 18 section 144C(15)(i) or that the company should be a foreign company as per section 144C(15)(ii), In view of the above, it is opined that the assessee is not an 'eligible assessee' in accordance with section 144C(15)(b) as neither the TPO proposed any variation in the returned income nor the assessee is a foreign company. Thus, TPO does not have the jurisdiction over the case. Similarly in Maquet Holdings B.V. & Co. Vs Deputy Commissioner of Income-tax (I.T.), Circle - 3(2) (1), Mumbai - [2019] 106 taxmann.com 68 (Mumbai Trib.) it was held for A.Y. 2013-14 that: Where assessee was not a foreign company and TPO had not proposed any variation to draft assessment order, assessee not being an 'eligible assessee' under section 144C(15)(b). draft assessment order under section 144C(1) as well as final assessment order passed in pursuance thereof was to be quashed and set aside In light of the above submission, it is contended that the Ld. AO erred in treating the Appellant as eligible Assessee. Further as the Assessee was not an eligible Assessee, the DRP proceedings are bad in law and therefore the Ld. AO ought ot have completed the Assessee by 31/03/2022. Therefore, the assessment order passed under section 147 r.w.s. 144C dated 06/01/2023 is time barred” 13. On the other hand, Ld.DR objected that the current issue raised by the assessee were not raised before any authority and he relied on the findings of the lower authorities in this regard. 14. Considered the rival submissions and material placed on record, we observe that the assessee a non resident, has not filed any return of income for the present assessment year. Based on the internal system information, the AO came to know that the assessee had deposited cash to the extent of Rs.10,65,566/-. In order to verify the same and it is fact ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 19 on record that the assessee has not filed any return of income, hence AO issued notice u/s 148 in order to make the assessee file the return. Only upon filing of return of income, the AO may be in a position to form an opinion or decided further course of action. The submissions made by the Ld AR objecting to reopen the assessment without forming an opinion, improper reasons recorded all these are applicable only in the case in which the assessee has filed the return of income and the assessment for the same were already completed. The situations and case law relied by the assessee are distinguishable to the present fact on record. Therefore, we are not inclined to entertain the same. 15. Coming to the additional grounds raised, with regard to additional ground no 1, we observe that the assessee has raised improper recording of reasons, as stated in the above paragraph, this issue also relates to post filing of return of income, in the case of the assessee, the assessee has not filed the return of income in the first place. Therefore, the submissions of the assessee are not entertained and case law relied are distinguishable. 16. Coming to the next additional ground raised, it is fact on record that the assessee is a non resident individual and the AO has passed ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 20 draft assessment order invoking the provisions of section 144C(15)(b)(ii). On careful consideration, we observe that the AO has invoked the amended provision which is applicable with effect from 1.4.2020 whereas, the issue relates to AY 2013-14. The relevant applicable provisions would be the provision existed at the point of time of filing of return of income or as per relevant assessment year. In the similar situation, the ITAT Delhi bench decision in the case of ESPN Star Sports Mauritius SNC et Compagnie [2019] 103 taxmann.com 189 in which it was held that in order to be eligible assessee there should a proposed adjustment by TPO under section 144C(15)(i) or that the company should be a foreign company as per section 144C(15)(ii), In view of the above, it is opined that the assessee is not an 'eligible assessee' in accordance with section 144C(15)(b) as neither the TPO proposed any variation in the returned income nor the assessee is a foreign company. Thus, TPO does not have the jurisdiction over the case. Similarly in Maquet Holdings B.V. & Co. Vs Deputy Commissioner of Income-tax (I.T.), Circle - 3(2) (1), Mumbai - [2019] 106 taxmann.com 68 (Mumbai Trib.) it was held for A.Y. 2013-14 that: Where assessee was not a foreign company and TPO had not proposed any variation to draft assessment order, assessee not being an 'eligible ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 21 assessee' under section 144C(15)(b). draft assessment order under section 144C(1) as well as final assessment order passed in pursuance thereof was to be quashed and set aside. In the given case, the assessee is a non resident individual and the provisions of section 144C, to be a eligible assessee is not proved and the AO also not referred the matter to the TPO. Further the issue involved is relating to only the issue of bank deposits. When the assessee is not an eligible assessee and not referred the issue to the TPO, there is no jurisdiction on the part of the AO to pass an Draft assessment order and subsequent final assessment order, after reference to the DRP. Therefore, the whole process of reference to dispute resolution panel is bad in law. Accordingly, the assessment order passed by the AO is bad in law and accordingly, the same is quashed. In the result, the additional ground no 2 is allowed. Further, we observe that the assessee has deposited the cash in his bank account and the AO has not brought on record any material to indicate that the cash deposited by the assessee are out of source in India. It is fact on record that the assessee is a NRI and no material is brought on record to indicate that the cash deposited is out of income ITA NO. 340/MUM/2023 (A.Y: 2013-14) Mansoor Abdul Kadir Roykar Page No. | 22 generated in India. In absence of the same, mere on suspicion, the addition can not be made. 17. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 9 th June, 2023. Sd/- /- /- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER Mumbai / Dated 09/06/2023 Giridhar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum