Shri Vasantkumar Prahladbhai Kanudawala, Banaskantha V. The ITO, Ward-4, Palanpur

ITA 462/AHD/2019

AI Insights

The case involves an appeal by Shri Vasantkumar Prahladbhai Kanudawala against the order of the Commissioner of Income Tax (Appeals)-4, Ahmedabad, which confirmed the addition of Rs.15,00,000 to the assessee's income under section 68 of the Income Tax Act, 1961. The addition was based on cash deposits in the assessee's bank account, which were reported by the ADIT (Investigation), Mehsana. The primary legal issue was whether the reopening of the assessment under section 147 was justified. The Tribunal examined precedents and found that mere information about cash deposits, without further inquiry or investigation, was insufficient to justify the reopening of the assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133659 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-03-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2019
• Other Referred Cases: Mariyam Ismail Rajwani vs ITO, Bir Bahadur Singh Sijwali vs I.T.O.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MEHUL K. PATEL
• Keywords: Reopening of assessment; Set aside
• Section: 147

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘SMC’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD ] ] BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.462/Ahd/2019 Asstt.Year : 2010-11 Shri Vasantkumar Prahladbhai Kanudawala Risala Bazar Gandhi Chowk Road Deesa, Banaskantha. PAN : AQXPK 9617 N Vs The ITO, Ward-4 Palanpur. (Applicant) (Responent) Assessee by : Shri Mehul K. Patel, AR Revenue by : Shri B.P. Makwana, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 2 1 / 0 3 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 2 9 / 0 3 / 2 0 2 3 आदेश/O R D E R The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals)-4, Ahmedabad, Ahmedabad (in short referred to as ld.CIT(A)) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short), dated 27.11.2018pertaining to Asst.Year2010-11. 2. The grounds raised by the assessee are as under: (1) That on facts, and in law, the re-opening of assessment u/s 147 of the Act is not justified, and it be held as invalid and void ab initio. (2) That on facts, and in law, the learned CIT (A) has grievously erred in confirming the addition of Rs.15,00,000/- made u/s 68 of the Act in respect of deposits in appellant's bank account. ITA No.462/Ahd/2019 2 3. Ground No.1 raised by the assessee challenges validity of the assessment framed in the present under section 147 of the Act. 4. The contention of the ld.counsel for the assessee before us that reopening was resorted to on the information with the AO that there was cash deposits in the bank account of the assessee amounting to Rs.15.00 lakhs. The ld.counsel for the assessee contended that this information alone could not lead to formation of belief of escapement of income for assumption of valid jurisdiction to reopen the case of the assessee under section 147 of the Act. Inthis regard, he relied uponthe decision of the ITAT, Ahmedabad Bench in the case of Mariyam Ismail Rajwanivs ITO in ITA No. 676 /Ahd/2016 dated 09/08/2016 and BirBahadur Singh Sijwali v. I.T.O. [2015] 53 taxmann.com 366 (ITAT-Delhi). The ld.DR however, relied on the order of the ld.CIT(A). 5. We have heard both the parties and gone throughthe orders of the authorities below. We have noted from the assessment order that reopening was resorted to by the AO on the information received from ADIT (Investigation), Mehsana that there were three transactions of cash deposits of Rs.5.00 lakhs each amounting in all to Rs.15 lakhs in the HDFC Bank account of the assessee. This fact finds mention at page no.2 of the assessment order as under: “In this case, the information has been received from the ADIT(Inv.), Mehsana dated 27/2/2017 that to verify the suspicion, summons u/s.131(1A) r.w.s. 131 of the I.T.Act, 1961 was issued to Shri VasantkumarPrahladbhaiKanudawala on 28/11/2016 to explain the source of cash deposit of rs.15, in 3 transactions i.e. Rs.5,00,000/- on 15/4/2009, Rs.5,00,000/- on 16/4/2009 and Rs.5,00,000/- on 17/4/2009 in his HDFC Bank A/c.” ITA No.462/Ahd/2019 3 6. The ld.CIT(A), I have noted, did not entertain contention raised by the assessee that this information solely could not have led to formationof belief of escapement of income, stating that case laws relied upon by the assessee were not applicable to the facts of the case; no reasoning was given by the ld.CIT(A) for the same. 7. I am not in agreement with the ld.CIT(A) in this regard. Only information in the possession of the AO for assuming jurisdiction to reopen the case of the assessee was that of cash deposited in the bank account of the assessee, and this information has been held in various decisions of the ITAT cited by the ld.counsel for the assessee before us, is not sufficient for formation of belief of escapement of income. There isno information on record that on receipt of this information by the AO any inquiry or investigation was conducted by him so as to gather information regarding source of cash deposits either from the assessee or from any other source. In the absence of the same, mere information of cash deposits couldnot have lead to formation of belief of escapement of income. The issue is squarely covered by the decision of the ITAT in the cases Mariyam Ismail Rajwani and BirBahadur Singh Sijwali (supra). In view of the same, we hold that jurisdiction assumed by the AO to reopen the case of the assessee was not in accordance with law in the absence of formation of belief of escapement of income by the AO. The assessment order so framed is therefore not sustainable in law, and is set aside as invalid. ITA No.462/Ahd/2019 4 7. Since we have set aside the assessment order passed under section 147 itself, adjudication of addition on merits is merely an academic exercise. Accordingly, the same are disposed off. 8. In the result, the appeal of the assessee is allowed in above terms. Order pronounced in the Court on 29 th March, 2023 at Ahmedabad. Sd/- (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 29/3/2023