Bharatbhai Parsottambhai Patel, Mehsana V. ITO, Ward-5, Kadi

ITA 464/AHD/2019

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 1912 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Ahmedabad
• Assessment Year: 2011-2012
• Appeal Filed On: 19-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 142(1); 143(2)

Judgement Text

ITA No.464/Ahd/2019 A.Y. 2011-12 Page 1 of 6 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER (Conducted through Virtual Court) ITA No.464/Ahd/2019 Assessment Year: 2011-12 Bharatbhai Parsottambhai Patel, vs. The Income Tax Officer, 17, Rajmahel Society, Ward – 5, Kadi. Raj City, Karannagar, Kadi, Mehsana – 382 715. [PAN – ARNPP 1863 A] (Appellant) (Respondent) Appellant by : Shri Hem Chhajed, CA Respondent by : Shri R.R. Makwana, Sr. D.R. Date of hearing : 08.12.2021 Date of pronouncement : 04.01.2022 O R D E R PER SUCHITRA KAMBLE, JUDICIAL MEMBER : This appeal is filed by the assessee against the order dated 31.01.2019 passed by the CIT(A)-13, Ahmedabad for the Assessment Year 2011-12. 2. The grounds of appeal raised by the assessee are as under : “1) The order passed by the Ld. CIT(A) is against the law, equity and justice. 2) The Ld. A.O. has erred in law and on facts in considering transactions shown in books of accounts as unexplained investment by invoking Sec. 69 of the Act. 3) The Ld. A.O. has erred in law and on facts in making addition of Rs.17,00,000/- as unaccounted investment in Bank Account. 4) The reopening of assessment is bad and illegal as no proper sanction as required u/s 151 of the Act is obtained from PCIT. ITA No.464/Ahd/2019 A.Y. 2011-12 Page 2 of 6 5) The order passed by the Ld. AO is bad and illegal as the reasons recorded for reopening of assessment and addition made by the Ld. AO are different ground. 6) The Ld. AO has erred in law and on facts in reopening of assessment merely on the basis of deposits in bank account. 7) The appellant craves for liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” 3. The assessee has also raised additional grounds of appeal which read as under: Additional Grounds of Appeal “(1) The assessment order passed by Ld. A.O. is bad and illegal as the Ld. A.O. has recorded incorrect reasons for reopening of assessment. (2) The assessment order passed by Ld. A.O. is bad and illegal as the notice u/s 148 of the Act was issued prior to approval u/s. 151 of the Act.” 4. The assessee is an individual and deriving income from agricultural income. No return has been filed by the assessee for Assessment Year 2011-12. The Assessing Officer issued reasons dated 24.03.2017 thereby stating as under : “Reasons recorded for re-opening of assessment in the case of Shri BHARATBHAI PARSOTTAMDAS PATEL, PAN : ARNPP1863A for A.Y. 2011. In this case, the assessee had not filed any Return of Income for A.Y. 2011. As per the data available in this office, assessee had made time deposits of Rs.19,00,000/- with BANK OF INDIA. The cash deposits were made during the F.Y. 2010. The assessee did not make any compliance in response to letters issued for clarification of such financial transactions vide dated 25/07/2016 and 23/08/2016. However, despite having such huge amount of time deposits, the assessee had not filed any return of income for the year under consideration. Therefore, income to the extent of Rs.19,00,000/- is not offered to tax. The escapement has occurred on the part of assessee and the income is required to be brought to tax. In view of the above facts, I have reason to believe that income chargeable to tax has escaped assessment to the extent of Rs.19,00,000/-. ITA No.464/Ahd/2019 A.Y. 2011-12 Page 3 of 6 Date:- 24/03/2017 Sd/- (Viswanathan R.) Income-tax Officer, Mehsana Ward-5, Kadi” 5. The proposal for approval for issuance of notice under Section 148 of the Income Tax Act, 1961 in assessee’s case was passed by Pr. CIT, Gandhi Nagar vide letter dated 28.03.2017 along with form of obtaining the approval of the Pr. CIT on 24.03.2017. The Assessing Officer observed that as per the data available, the assessee made time deposit of Rs.19,00,000/- with Bonk of India. The cash deposits were made in Financial Year 2010-11. Notice dated 27.03.2017 was issued for reopening under Section 148 of the Act. The assessee did not make any compliance in response to letters issued for clarification of such financial transactions (letters dated 25.07.2016 & 23.08.2016). Therefore, income to the extent of Rs.19,00,000/- was not offered to tax. The Assessing Officer thereby reopened the assessment of the assessee holding that amount of Rs.17,00,000/- invested in Bank account by the assessee should be treated as unexplained investments and same was added to the income of the assessee under Section 69 of the Act. 6. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 7. The Ld. AR submitted that the assessee has filed additional grounds in respect of Mechanical approval for reopening as well as the approval is not from the proper authority as the case is reopened beyond 4 years. The Ld. AR submitted that the assessee has recorded reasons for reopening of assessment on the basis of AIR information that the assessee made time deposit of Rs.19,00,000/- The Assessing Officer sent proposal for approval of reopening of assessment under Section 151 of the Act to Joint CIT, Mehsana. The Assessing Officer in the said reason mentioned that the assessee made time deposit of Rs.12,93,000/-. Reasons mentioned for reopening of assessment are totally different and hence such process is invalid and not tenable in the eyes of law. The Ld. AR further submitted that the Joint CIT, Mehsana has not given approval as required under ITA No.464/Ahd/2019 A.Y. 2011-12 Page 4 of 6 the Act and simply mentioned “submit”. Secondly, under Section 151 of the Act, for the reopening made of period more than 4 years, sanction of CCIT/CIT is required. In fact, the approval is required to obtain from PCIT/CIT which the Assessing Officer has not obtained from PCIT/CIT. The Assessing Officer has obtained approval of JCIT. The ld. AR further submitted that the Pr. CIT has not granted approval/sanction as per the Act and the JCIT only mentioned that the case is recommend for reopening of the assessment while approving it. Thus, none of the higher authorities has given approval for reopening of the assessment. The Assessing Officer has not taken valid approval and the reassessment proceedings initiated was based on invalid approval which itself is void ab initio. The Ld. AR further submitted that the assessee’s reasons for showing the balance in his bank account was that his son was going for further studies to abroad and for his admission purpose, the assessee was required to show balance in his bank account. Therefore, the assessee has deposited cash lying with him and taken temporary loan from friends and relatives. The Assessing Officer has issued notice under Section 143(2) and 142(1) of the Act. The assessee furnished cash book, bank book, confirmation in the form of Affidavits of persons from whom loans were taken during the year. The Assessing Officer issued summons to all the creditors and recorded their statements under Section 131 of the Act. All the creditors confirmed that they have given loan to the assessee. The assessee has deposited cash of Rs.17,93,000/- into his bank account. The cash deposit by borrowing from friends and relatives amounting toRs.10,50,000/- and Rs.5,00,000/- out of cash withdrawal from bank and balance from past savings and agricultural income and cash in hand as on 01.04.2010. The Ld. AR submitted that the Assessing Officer has not given cogent reason as to why the affidavits filed by the parties were not accepted. The Assessing Officer without taking cognizance has simply stated that the persons who had given loan to the assessee do not have creditworthiness. The Assessing Officer failed to consider the case of the assessee in respect of withdrawal of Rs.5,00,000/- from the Bank which were re-deposited by the assessee. The Assessing Officer has not considered the cash on hand lying with the assessee on 01.04.2010 which was deposited in the bank. The assessee also submitted that the bills of agricultural produce of Rs.2,59,261/- which was later on accepted by the Assessing Officer but was not rectified under Section 154 of the Act. Thus, the Ld. AR submitted that the assessment should be quashed. ITA No.464/Ahd/2019 A.Y. 2011-12 Page 5 of 6 8. The Ld. DR submitted that the Assessing Officer has rightly observed that the parties have not established the agricultural income in their hands and, therefore, the credit worthiness of those parties were in doubt. Ld. DR relied upon the Assessment Order and order of the CIT(A). The Ld. DR, as regards additional grounds, submitted that the Assessing Officer has rightly reopened the assessment and there is no contradiction between the reasons and the action on the additions made in assessee’s hands. 9. We have heard both the parties and perused all the relevant materials available on record. From the perusal of the reasons dated 24.03.2017 and the proposal for approval for issuance of notice under section 148 of the Act dated 28.03.2017, it is clear that the Revenue was in dilemma as to which amount is actually escaped from the purview of assessment which is chargeable to tax. The proposal for approval dated 28.03.2017 is a common proposal and the same is delegated later which was not signed by the Pr. CIT though issued by Pr CIT. The form for obtaining the approval of the Pr. CIT has mentioned “yes” in column no.13 but signatory of that column is without any designation. Thus, the approval seems to be very mechanical and the procedure prescribed under the Income Tax Act has not been followed by the Revenue Authorities. Though the various decisions of Hon’ble High Court in India has stated that the mere mention of “yes” in certain cases is a proper satisfaction for the approval. In this case, when we correlate it with the reasons recorded as well as proposal for approval for issuance of notice under Section 148, the same seems to be lacking the actual foundation of reopening of the assessment. In this case, the approval is not just technically lacking but legally it is not as per the procedure prescribed by the Income Tax Act 1961. Therefore, the foundation of reopening is bad in law and hence the assessment itself becomes null and void. Since the assessment is void ab initio, there is no need o comment on the merits of the case. ITA No.464/Ahd/2019 A.Y. 2011-12 Page 6 of 6 10. In the result, appeal of the assessee is allowed. Order pronounced in the open Court on this 4 th day of January, 2022. Sd/- Sd/- (WASEEM AHMED) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 4 th day of January, 2022 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad