Income Tax Appellate Tribunal - Delhi
Braham Prakash Lakra , Delhi vs Ito, Ward- 67(1), New Delhi on 19 November, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'SMC' BENCH,
NEW DELHI
BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
ITA No. 7650/DEL/2018
[A.Y 2012-13]
Braham Prakash Lakra Vs. The I.T.O
D - 12, Ranhola Extension Ward 67(1)
Meera Enclave, Delhi New Delhi
PAN: AASPL 9105 H
(Applicant) (Respondent)
Assessee By : Shri Sachin Kumar, Adv
Department By : Shri Pradeep Singh Gautam, Sr. DR
Date of Hearing : 18.11.2019
Date of Pronouncement : 19.11.2019
ORDER
With this appeal, the assessee has challenged the correctness of the order of the Commissioner of Income Tax [Appeals] - 21, New Delhi dated 17.09.2018 pertaining to assessment year 2012-13. 2
2. The challenge of the assessee is two-fold - firstly, the assessee has challenged the validity of the assessment framed u/s 143(3) r.w.s 147 of the Income-tax Act, 1961 [hereinafter referred to as 'The Act']. The contention of the assessee is that the Income Tax Officer has no reason to believe to initiate the proceedings u/s 147 of the Act.
3. The second challenge is on merits where addition of Rs. 20,40,848/- made u/s 68 of the Act has been questioned.
4. Briefly stated, the facts of the case are that assessment proceedings u/s 147 of the Act were initiated on the basis of information received from the Income Tax Officer [I&LD. CI]-II, New Delhi. The satisfaction note was recorded by the Assessing Officer which reads as under:
"As per i nformation received from /TO (I&C1)-
II, New Delhi vide letter TTO (I&Cl)-
I/UCB/Dep./9/20l4-15/2095 dated 24.03.2016
regarding cash deposit by Shri Bhram Prakash Lakra was taken-up for verification under As per the information. it is seen that the above mentioned asses 3 see. PAN AASPL9105I1 has made cash deposit amounting to Rs. 38 during the 12. However, no return of income has been filed for 2012-13.
In view of the above information, I have reasons to believe an amount of Rs. 38 lac chargeable to tax has es/ assessment within the meaning section 147 of the I.T. Act.
1961. It is a fit case to issue notice under section 148 of the Income Tax Act. 1961."
5. Accordingly, notice u/s 148 of the Act was issued. In response to the same, the assessee furnished copy of return of income filed on 24.12.2013 and asked the Assessing Officer to treat the same as return of income in response to notice u/s 148 of the Act.
6. The assessee has challenged the validity of this notice as the same is devoid of any application of mind.
7. On a perusal of the satisfaction note mentioned hereinabove, it can be seen that the Assessing Officer has questioned the cash deposit amounting to Rs. 38 lakhs. I also find that the Assessing Officer has 4 categorically mentioned that no return of income was filed for Assessment Year 2012-13.
8. The bank deposit details are mentioned at page 2 of the assessment order. A perusal of the same shows that total cash found to be deposited on various dates amounts to Rs. 28.50 lakhs. This means that the Assessing Officer is contradicting himself. Secondly, the Assessing Officer says that no return of income was filed whereas, at second para of his order, the Assessing Officer himself states that the assessee has furnished copy of return of income electronically filed on 24.12.2013 declaring total income of Rs. 5,84,130/-.
9. In my considered opinion, reasons given by the Assessing Officer are devoid of any application of mind since not only the Assessing Officer assumed incorrect figure of cash deposits but also completely ignored the fact that return for the year under consideration was already filed on 24.12.2013. These facts can be gathered from the body of the assessment order itself.
5
10. The Hon'ble High Court of Gujarat in the case of Sunrise Education Trust, 92 taxmann.com 74 has observed as under:
"5. Having heard Ld. Counsel for the parties and having perused the documents on record, it could be straightway seen that the Assessing Officer in the reasons recorded, proceeded on the erroneous footing that the assessee had not filed return at all. The first premise for issuing the notice was thus factually incorrect. It is now not disputed by the Revenue that the assessee did file return of income for the year under consideration which was duly acknowledged by the Department. The entire reasoning thus proceeded on the wrong premise that the assessee had never field the return. This itself would be sufficient to annul the notice of reopening the assessment."
11. On identical set of facts, the Coordinate Bench in the case of Ashwani Kumar in ITA No. 129/Asr/2015 order dated 23.02.2016 has held as under:
"7. The facts are not disputed. A bare perusal of the reasons recorded for issuance of notice u/s 148 of the Act, shows that the only material available before the AO was the AIR Information of the assessee having deposited an amount of Rs. 11.60 lakhs in his savings bank account. Remarkably, the reasons 6 recorded did not even mention the bank in which such savings bank account was maintained. The assessee, as available from the first page of the assessment order, was issued a notice u/s 148 of the Act, in pursuance to the aforesaid reasons. The assessment order u/s 143(3) of the Act is dated 25.03.2013. The assessee had filed the return of income on 05.10.2005 and it had been stated in response to the notice u/s 148 of the Act that this return be treated as having been filed in response to this notice. In 'Bir ITA Nos. 745/Del/2014 & 4144/Del/2018 Bahadur Singh Sijwali' (supra), like in the present case, the reasons recorded indicated that cash deposits had been made in the bank account of the assessee. The Tribunal held that the mere fact that the deposits having been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. It was observed that the reasons recorded did not make out a case that the assessee was engaged in some business and the income from such a business had not been returned by the assessee. In the case at hand also, the reasons recorded do not contain any such recital. The Tribunal held that the factum per se, of deposits in the bank account of the assessee could not be made the basis for holding the view that income had escaped assessment, over-looking that the sources of the deposits need not necessarily be the income of the assessee; and that as such, the reasons recorded were not 7 sufficient to believe escapement of income; that rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s 148 of the Act."
12. A similar view was taken by the Delhi Bench in the case of Bahadur Singh Sijwali 53 taxmann.com 366. The relevant findings read as under:
"8. Let us, in the light of this legal position, revert to the facts of the case before us. All that the reasons recorded for reopening indicate is that cash deposits aggregating to Rs. 10,24,100/- have been made in the bank account of the assessee, but the mere fact that these 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 that the assessee was engaged in some business and the income from such a business has not been returned by the assessee. As we do not have the liberty to examine these reasons on the basis of any other material or fact, other than the facts set out in the reasons so recorded, it is not open to us to deal ITA Nos. 745/Del/2014 & 4144/Del/2018 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 deposits, per se, in the bank account of the assessee could be basis of holding the view that the income has escaped assessment. The answer, in 8 our humble understanding, is in negative. The Assessing Officer has opined that an income of Rs. 10,24,100/- has escaped assessment of income because the assessee has Rs. 10,24,100/- in his bank account but then such an opinion proceeds on the fallacious assumption that the bank deposits constitute undisclosed income, and overlooks the fact that the sources of deposit need not necessarily be income of the assessee. Of course, it may be desirable, from the point of view of revenue authorities, to examine the matter in detail, but then reassessment proceedings cannot be resorted to only to examine the facts of a case, no matter how desirable that be, unless there is a reason to believe, rather than suspect, that an income has escaped assessment.
9. Ld. Departmental Representative has referred to a number of judicial precedents in support of her stand that even deposits in the bank account, as having come to the notice of the Assessing Officer through AIR, can be reason enough for holding the belief that income has escaped assessment. She has relied upon the decisions in the cases of CIT vs. Nova Promoters & Finlease (P) Ltd. [2012] 342 ITR 169/206 Taxmann 207/18 taxmann.com 217 (Delhi) but then none of the questions before Hon'ble High Court had anything to do with reopening of assessment and this decision cannot, therefore, be taken as an authority on the legal issue which did not even come up for specific adjudication before their Lordships. As for her reliance on Hon'ble Supreme Courts 9 judgment in the case of Phool Chand Bajrang Lal vs. ITO [1993] 203 ITR 456/69 Taxman 627, that was case in which their Lordships concluded that the AO "rightly initiated the reassessment proceedings on the basis of subsequent information, which was specific relevant and reliable, and after recording the reasons for formation of his own belief that in the original ITA Nos. 745/Del/2014 & 4144/Del/2018 assessment proceedings, the assessee had not disclosed the material facts truly and fully and, therefore, income chargeable to tax had escaped assessment" and we are unable to see anything on the facts of the present case which are materially similar to the facts of the said case. As regards her reliance on the decision of a coordinate bench in the case of Mithila Credit Services Ltd. vs. ITO [IT Appeal No. 1078/Delhi of 2013, dated 23.05.2014], it is important to bear in mind the fact that it was a case in which the Assessing Officer had reopened the assessment on the basis of receipt of information from Directorate of Investigation, and, as noted by the Assessing Officer in the reasons recorded for reopening the assessment, "the name of the assessee figures as one of the beneficiaries of these alleged bogus transactions" in the information given by the directorate. If the assessee was a beneficiary of such a scam, the income was indeed to have been taxed in its hands but then in the case before us the only reason for reassessment proceedings was the fact of deposit of bank account which by itself does 10 not lead to income being taxed in the hands of the assessee. Ld. Departmental Representative has referred to several other judicial precedents in support of the proposition that at the stage of initiation of reassessment proceedings, all that is to be seen as existence, rather than adequacy, of the material to come to the conclusion that income has escaped assessment. To us, there cannot be any, and there is no, doubt on the correctness of this proposition but then, as we have elaborately explained earlier in this order, the material must indicate income escaping assessment rather then desirability of further probe in the matter which may or may not lead to income escaping the assessment. On the basis of reasons as recorded in this case, such an inference about income escaping assessment, in our humble understanding, cannot be drawn.
10. In view of the reasons set out above, as also bearing in mind entirety of the case, we are of the considered view that the reasons recorded by the Assessing Officer, as set out earlier, were not sufficient reasons for reopening the ITA Nos. 745/Del/2014 & 4144/Del/2018 assessment proceedings. We, therefore, quash the reassessment proceedings. As the reassessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous."11
13. In the light of judicial decisions discussed hereinabove, and on finding parity in the facts with the facts of the case in hand, I am of the considered opinion that the assumption of jurisdiction by the Assessing Officer by issuing notice u/s 148 of the Act is bad in law. I accordingly, quash the notice issued u/s 148 of the Act, thereby quashing the assessment order.
13. Since the assessment order has been quashed, I do not find it necessary to dwell into the merits of the case.
14. In the result, the appeal of the assessee in ITA No. 7650/DEL/2018 is allowed.
The order is pronounced in the open court on 19.11.2019.
Sd/-
[N.K. BILLAIYA] ACCOUNTANT MEMBER Dated: 19th November, 2019 VL/ 12 Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order