SUMER SINGH DAGAR,FARIDABAD V. ITO WARD - II(4), FARIDABAD

ITA 1634/DEL/2024

AI Insights

The case involves Sumer Singh Dagar, the Assessee, who appealed against the order of the Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (NFAC) which dismissed his earlier appeal. The original assessment for the Assessment Year 2012-13 included an addition of Rs. 1,49,52,900 to the Assessee's income, treating it as undisclosed and unexplained money due to unproven sources of cash deposits in his bank account. The Tribunal examined whether the reassessment was validly initiated under Section 147 of the Income Tax Act, 1961, based on AIR information for Financial Year 2011-12. The Tribunal concluded that the A.O. had not conducted an independent analysis and merely relied on the AIR data, leading to the quashing of the reassessment proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312923 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Other Referred Cases: Bhajan Lal Vs. ITO, Krishan Kumar Vs. ITO, Shri Mahavir Prasad Vs. ITO, Shri Karan Khurana Vs. ITO, Space Chem Engineers Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAHIL KUMAR BANSAL
• Assessee Lawyers: S.S. NAGAR
• Keywords: Reassessment proceedings; Reason to believe
• Section: 147; 148

Judgement Text

" 1 ITA No. 1634/Del/2024 Sumer Singh Dagar Vs. ITO IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘G’ NEW DELHI BEFORE SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No. 1634/Del/2024 (A.Y. 2012-13) Sumer Singh Dagar House No. 1436, Ssector-7-E, Faridabad, Haryana PAN: AJBPD6908J Vs. ITO Ward-11(4) Faridabad, Haryana Appellant Respondent Assessee by CA S. S. Nagar, Revenue by Sh. Sahil Kumar Bansal, Sr. DR Date of Hearing 16/04/2025 Date of Pronouncement 30/04/2025 ORDER PER YOGESH KUMAR, U.S. JM: The present appeal is filed by the Assessee against the order of the Commissioner of Income Tax (Appeal)/National Faceless Appeal Centre (‘NFAC’ for short) dated 15/02/2024 pertaining to Assessment Year 2012-13. 2. Brief facts of the case are that, the Assessee filed return of income of Rs. 2,82,400/-. After claiming deduction under Chapter VI-A of the Income Tax Act, 1961 (‘Act’ for short). The return of the Assessee was 2 ITA No. 1634/Del/2024 Sumer Singh Dagar Vs. ITO processed u/s 143(1) of the Act. Further, on the basis of AIR Information for Financial Year 2011-12, a notice u/s 148 of the Act was issued to the Assessee in response to the notice. The Assessee filed his reply. A statutory notice u/s 143(2) of the Act was also issued and the Assessee filed his reply. The assessment order came to be passed on 17/10/2019, by making an addition of Rs. 1,49,52,900/- on the ground that the Assessee has not proved the source of cash deposit in his bank account for the Financial Year 2011-12 and the same has been treated from undisclosed source and as unexplained money. Accordingly, the income of the Assessee has been computed at Rs. 1,52,35,300/- by way of assessment order dated 17/10/2019. As against the assessment order dated 17/10/2019, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 15/02/2024 dismissed the appeal filed by the Assessee, which is under challenge in the present Appeal. 3. The Ld. Counsel vehemently submitted that the reasons recorded as per Section 147 of the Act was mechanical and based on the suspicion derived from AIR data and based on the AIR data, the Ld. A.O. reopened the case of the Assessee without independently analyzing the entries before forming belief that income has escaped assessment. The 3 ITA No. 1634/Del/2024 Sumer Singh Dagar Vs. ITO Ld. Counsel for the Assessee has relied on following judicial pronouncements and sought for allowing the Appeal:- i. Order of the Delhi Tribunal in the case of Bhajan LalVs. ITO dated 20/09/2018 in ITA No. 3984/Del/2017. ii. Order of the Delhi Tribunal in the case of Krishan Kumar Vs. ITO dated 15/12/2017 in ITA No. 3985/Del/2017. iii. Order of the Delhi Tribunal in the case of Shri Mahavir Prasad Vs. ITO dated 09/10/2017 in ITA No. 924/Del/2015. iv. Order of the Delhi Tribunal in the case of Shri Karan Khurana Vs. ITO dated 17/03/2021 in ITA No. 1783/Del/2019. iv. Order of the Delhi Tribunal in the case of Space Chem Engineers Vs. ITO dated 18/03/2021 in ITA No. 1791/Del/2019. 4. Per contra, the Ld. Department's Representative submitted that the information mentioned in the reasons recorded is a credible information and A.O. has applied its mind while recording the reasons and A.O. had reason to believe that income chargeable to tax has escaped assessment, thus sought for rejecting the contentions of the Ld. Assessee's Representative and sought for dismissal of the Appeal. 5. It can be seen from the assessment order and reasons recorded u/s 147 of the Act, the A.O. made basis on the data of AIR which indicating 4 ITA No. 1634/Del/2024 Sumer Singh Dagar Vs. ITO alleged cash deposits. It can be seen from the reasons recorded except relying on the data available with the ITD system, A.O. has not made independent anaylization of the entries before forming belief that income has escaped assessment. The identical issue came up before the Co- ordinate Bench of the Tribunal in the case of Mahavir Prasad (supra). In ITA no. 924/Del/2015 vide order dated 09.10.2017 for assessment year 2007-08, had quashed such re-assessment proceedings by observing as under: 9. After going through the reasons recorded by the ITO, Ward-2, Rewari, am of the view that there is no nexus between the prima facie inference arrived in the reasons recorded and information; the information was restricted to cash deposits in bank account but there was no material much less tangible, credible, cogent and relevant material to form a reason to believe that cash deposits represented income of the assessee; that even the communication dated 24.1.2012 could not be made a basis to assume jurisdiction in view of the fact that such an enquiry letter is an illegal enquiry letter and thus cannot be relied upon; that the proceedings initiated are based on surmises, conjectures and suspicion and therefore, the same are without jurisdiction; that the reasons recorded are highly vague, far- fetched and cannot by any stretch of imagination lead to conclusion of escapement of income and these are merely presumption in nature; that it is a case of mechanical action on the part of the AO as there is non-application of mind much less independent application of mind so as to show that he formed an opinion based on any material that such deposits represented income. Keeping in view the facts and circumstances of the present case and the case law applicable in the case of the assessee, I am of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed.” 6. In view of the above discussion, the reassessment proceedings initiated by the AO are held to be void. Since Assessee succeeds on this legal ground i.e. validity of reassessment proceeding, the grounds on 5 ITA No. 1634/Del/2024 Sumer Singh Dagar Vs. ITO merit become academic in nature and therefore are not being adjudicated. 7. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 30th April, 2025 Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 30 .04.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "