Case Law Details
Maniben Amrutlal Patel Vs ITO (ITAT Ahmedabad)
It is pertinent to note that the reasons recorded in assessee and her son’s case are identical and the Assessing Officer has recorded the reasons stating therein that the assessee has entered into monetary transaction i.e. cash deposited in the saving bank account and no return of income was filed by the assessee. But the basic fact that assessee is not eligible for filing return of income was not taken into account and therefore, there was no application of mind while recording the reasons for reopening. Thus, Ground are allowed. As the assessee succeeds on the legal issue there is no need to adjudicate on the issue of cash deposits on merit.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Both appeals filed by the different assessees are against the order passed by the Ld. CIT(Appeals), Gandhinagar on 07.08.2020 & 07.05.2020 for A.Y. 2011-12.
Both the appeals are identical and therefore, we are taking up ITA No. 529/Ahd/2020 for A.Y. 2011-12 first.
2. The grounds of appeal raised by the assessee are as under:
“1. That the Ld. A.O. has erred both in law and on facts while issue of notce u/s 148 of the Income Tax Act, 1961 and therefore the assessment made by Ld. Income Tax Officer, ward-4, Patan is bad in law, illegal and void ab-initio.
2. That the Notice issued U/s 148 of the I.T. Act, 1961 is barred by limitation, and without jurisdiction, therefore the proceedings itself is bad in law and requires to be quashed.
3. That the Notice issued u/s 148 of the I.T. Act, 1961 by Income Tax Officer, ward-4, Patan is without satisfaction as defined u/s 147 and U/s 151(1) of the I.T. Act, 1961 and therefore the assessment my please be quashed.
4. That the 1 CIT(A), Gandhinagar has partly sustained the addition without considering the submissions made by the appellant is against the principal of natural justice and therefore the addition of Rs. 6,15,800/- may please be deleted.
5. That the 1 CIT(A) has not appreciated the facts and circumstances of the case of the appellant and without giving proper opportunity of being heard the addition sustained of Rs. 6,15,800/- requires to be deleted.
6. That the assessee has not concealed or suppressed any particulars of income as per explanation-1, section 271(1)(c) and as such the penalty and interest u/s 234A, 234B and 234C may please be deleted.
7. Your appellant craves leave to add, alter, amend or drop any of the grounds till the appeal is finally heard and disposed off.”
3. On the basis of the Annual Information Return the case of the assessee for A.Y. 2011-12 was reopened with the permission of the Pr. CIT recording the following reasons:
“AIR/CIB information available in this office record that the assessee has entered into monetary transaction i.e. cash deposited of Rs. 16,38,600/- in the saving bank account maintained with Kotak Mahindra Bank, Unjha during the financial year 2010-11. On further verification of this officer record, it is noticed that no return of income has been filed by the assessee.
As per the information received that the assessee has deposited cash amounting to Rs. 16,38,600/- in the saving bank account maintained with IDBI Bank, Unjha. The assessee has made huge cash transaction.”
4. Accordingly, notice under Section 148 of the Income Tax Act 1961 was issued on 31.03.2018. In response to the above notice there was no compliance from the assessee and subsequent notices were also not replied by the assessee, therefore, show-cause notice dated 20.11.2018 was issued for finalizing assessment under Section 144 of the Act. The assessee did not respond the same. Hence, the Assessing Officer made addition of Rs. 12,31,600/- after giving benefit of cash withdrawals made and from the account and re-deposited in the account to the extent of peak amount treated the same is unexplained income of the assessee.
5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
6. The Ld. A.R. submitted that the assessee has not received notice under Section 148 and therefore, could not reply the same. As regards, Ground Nos. 1, 2 & 3 the Ld. A.R. submitted that reopening of assessment was not valid and it is nearly on suspicion. The Ld. A.R. further submitted that cash deposit in saving bank cannot be a reason to believe that all the cash deposits are income of the assessee. The same ITO has recorded reasons under Section 147 in case of son of the assessee i.e. Arvindbhai Amrutlal Patel and the wording of the said reasons are identical in both the cases. Thus, the Assessing Officer who reopened the case of the assessee was not sure or does not have any reason to believe that the cash deposit in bank account belong to assessee i.e. Maniben Patel or her son Arvindbhai Amrutlal Patel. Thus, Ld. A.R. submitted that the ITO does not make any independent enquiry and also did not come to the conclusion that about the source of the income of the assessee which is unexplainable. The Assessing Officer is not sure about the income whether belongs to the assessee or her son and the reasons recorded in both the assessee’s case are vague. The Ld. A.R. further submitted that notice under Section 148 was issued on the date on the basis of information received from AIR that there is a deposit of Rs. 16,38,600/- in the bank account of the assessee. There was no enquiry as such made by the Assessing Officer while recording the reasons as well as while passing the assessment order. The Ld. A.R. relied upon the decision of Bir Bahadur Singh Sijwadi vs. ITO (2015) 53 com (Delhi-Trib.). The Ld. A.R. relied upon the following decisions as well:
(i) Sunrise Education Trust vs. ITO (Guj. HC)
(ii) ITO, Ward-3(1)(1), Rajkot vs. Shri Girishkumar Mohanlal Puruswani ITA No. 405 to 407/Rjt/2016, ITAT – Rajkot Bench
(iii) Ashish Natvarlal VAshi vs. ITO, Ward-1, Navsari (ITAT – Surat) ITA 3522/Ahd/2016
(iv) Mariyam Ismail Rajwani vs. ITO, Ward – 3(2), Surat, ITA No. 676/Ahd/2016 (ITAT –Ahd)
(v) Dadasaheb Vithoba Navale vs. DCIT, ITA No. 255/Pun/2019 and ITA 266/Pun/2019, ITAT- Pune
(vi) Lalchand Mehrumal Jagwani vs. ITO, ITA No. 1240/Pun/2019, ITAT-Pune
On merit the Ld. A.R. submitted that assessee and her son are joint owner of a saving bank account with Kotak Mahindra Bank Ltd. During the year under consideration some cash was deposited and also withdrawn from the said account. The assessee and the son of the assessee does not have taxable income during the year and therefore, they have not filed any return of income. The family of the assessee are having some agricultural income and small income from share transactions. The assessee is residing in very small village where no private bank are available also no core banking is available during the year under consideration. Therefore, the assessee and their family members used to deposit their cash in this account and apply for initial public issue. The Ld. A.R. submitted that the family statement to that extent itself is self-explanatory. The Ld. A.R. submitted that the cash deposited on various occasions belong to various persons of assessee’s family on whose behalf the assessee may share application money. The assessee and the son of the assessee of the assessee have their life savings in cash which they are used to deposit and withdraw from time to time. The Ld. A.R. further submitted that the Assessing Officer as well as the CIT(A) did not consider the peak balance was that of Rs. 11,02,800/-.
7. The Ld. D.R. relied upon the assessment order and the order of the CIT(A) and further submitted that the Assessing Officer had made verification and issued notices under Section 133(6) but none of the party has confirmed the cash deposit. Thus, the Ld. D.R. submitted that the addition was just and proper. As relates to reason recorded the Ld. D.R. relied upon the assessment order.
8. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the reasons recorded in assessee and her son’s case are identical and the Assessing Officer has recorded the reasons stating therein that the assessee has entered into monetary transaction i.e. cash deposited in the saving bank account and no return of income was filed by the assessee. But the basic fact that assessee is not eligible for filing return of income was not taken into account and therefore, there was no application of mind while recording the reasons for reopening. Thus, Ground Nos. 1, 2 & 3 are allowed. As the assessee succeeds on the legal issue there is no need to adjudicate on the issue of cash deposits on merit. Since both the appeals are identical the appeals are allowed.
9. In result, both the appeals are allowed.
This Order pronounced in Open Court on 29/03/2023
