Case Law Details
Vineet Mittal Vs ITO (ITAT Delhi)
In this case it is evident that the addition ultimately made by the Assessing Officer while completing the assessment has no connection with the income for escapement of which the Assessing Officer reopened the assessment under section 147 of the Act. Thus, it is patent and obvious, the Assessing Officer reopened the assessment for assessing a particular item of income, whereas, instead of assessing that income he has added another item of income which was not the subject matter of reopening. The ratio laid down in the decisions cited before me by learned Counsel for the assessee makes it clear that the Assessing Officer can add other items of income along with the income for the escapement of which the assessment was reopened. However, without assessing that escaped income the Assessing Officer cannot make assessment of other items of income.
FULL TEXT OF THE ORDER OF ITAT DELHI
This is an appeal by the assessee against order dated 29.06.2018 of learned Commissioner of Income Tax (Appeals), New Meerut for the assessment year 2014-15. The grounds raised by the assessee are as under:
1. “That CIT(A) has erred in law and on facts by confirming the action of AO who invoked reassessment proceedings under section 147 on the basis of a vague reason that the cash deposit in bank was per se escaped income of appellant.
2. That CIT(A) has erred by not verifying the approval by Addl. CIT under section 151 which apparently gives the impression that the AO has typed the satisfaction note of approving authority in approval form, thus the action was without proper approval and satisfaction of approving authority independently.
3. That CIT(A) has erred by confirming the action of AO who assessed the income by disallowing the expenses against tuition income as against the escaped income as mentioned in his reason. The reassessment proceedings are not tenable in the eyes of law as has been held in the cases of CIT vs. Jet Airways Ltd. 331 ITR 236 (Mum) and Ranbaxy Laboratories Ltd. vs. CIT 336 ITR 136 (Delhi).
4. That CIT(A) has erred by confirming the action of AO who rejected the evidences and sources of cash deposit in bank out of sale proceeds of appellant’s property at Meerut.
5. That the reassessment proceedings being illegal and purely based upon the surmises of AO deserves to be quashed.
6. That the appellant craves leave to add, delete or alter any ground of appeal.”
2. Briefly the facts are, the assessee is a resident individual.
Based on AIR information received, the Assessing Officer found that the assessee in the year under consideration had deposited cash amounting to Rs.12,68,500/- in a savings bank account held with HDFC Bank. Based on such information, the Assessing Officer called upon the assessee to furnish necessary information regarding the source of such deposits. As alleged by the Assessing Officer, the assessee did not comply with the query raised. Thus, being of the view that income assessable to tax has escaped assessment, the Assessing Officer reopened the assessment under section 147 of the Income Tax Act, 1961 by issuing a notice under section 148 of the Act. In response to the notice issued under section 148 of the Act the assessee, on 24.03.2017, furnished his return of income declaring income of Rs.3,25,000/-. In course of assessment proceeding, the Assessing Officer called upon the assessee to explain the source of cash deposits in the bank account. In response, assessee submitted that the cash deposits were made out of income earned from private tuition amounting to Rs.12,43,500/-. On examining the return of income filed by the assessee, the Assessing Officer noticed that against the income earned from tuition, the assessee has shown expenditure of Rs.9,68,500/-. Noticing this fact, the Assessing Officer called upon the assessee to prove the expenditure claimed of Rs.9,68,500/- through supporting evidence. However, as alleged by the Assessing Officer, despite sufficient opportunities being granted to the assessee, he was unable to furnish proper supporting evidences to prove the expenses claimed of Rs.9,68,500/-. Accordingly, he disallowed the expenses of Rs.9,68,500/- by treating it as bogus and added back to the income of the assessee. Though, assessee contested the aforesaid disallowance before learned Commissioner (Appeals), however, he was unsuccessful.
3. I have considered rival submissions and perused materials on record.
4. The primary contention of learned Counsel appearing for the assessee is to the effect that, though, the Assessing Officer had reopened assessment under section 147 of the Act for assessing the cash deposits made in the bank account, however, while concluding the assessment he has not made that addition but has disallowed the expenditure claimed by the assessee against income earned from tuition. Thus, he submitted the disallowance made is legally unsustainable. In support of such contention he relied upon the following decisions:
1. CIT vs. Jet Airways Ltd. 331 ITR 236 (Mum);
2. Ranbaxy Laboratories Ltd. 336 ITR 136 (Del.);
5. Per contra, learned Departmental Representative strongly relied upon the observations of the departmental authorities.
6. Having considered the submission of the parties, I find, as per the reasons recorded under section 147 of the Act, the Assessing Officer reopened the assessment, being of the view that there is escapement of income, as, in the year under consideration the assessee had deposited cash amounting to Rs.12,68,500/- in his savings bank account with HDFC Bank. While explaining the source of such cash deposits in course of assessment proceedings, the assessee had explained that the deposits were out of income earned from tuition.
7. On a reading of the impugned assessment order, it appears, the Assessing Officer apparently has accepted the explanation of the assessee regarding the source of deposits in the bank account, since, he has not made any addition in the assessment order with reference to the cash deposits made in the bank account. However, on examining the return of income he found that against the tuition income the assessee has claimed expenses of Rs.9,68,500/-, the genuineness of which, according to the Assessing Officer, the assessee failed to establish through supporting evidence. Thus, ultimately while completing the assessment the Assessing Officer treated the expenditure claimed as bogus and disallowed it. This is the only addition made by the Assessing Officer while completing the assessment. From the aforesaid discussion of facts, it is evident that the addition ultimately made by the Assessing Officer while completing the assessment has no connection with the income for escapement of which the Assessing Officer reopened the assessment under section 147 of the Act. Thus, it is patent and obvious, the Assessing Officer reopened the assessment for assessing a particular item of income, whereas, instead of assessing that income he has added another item of income which was not the subject matter of reopening. The ratio laid down in the decisions cited before me by learned Counsel for the assessee makes it clear that the Assessing Officer can add other items of income along with the income for the escapement of which the assessment was reopened. However, without assessing that escaped income the Assessing Officer cannot make assessment of other items of income. Thus, following the settled legal position, I have no hesitation in holding that the addition made by disallowing the expenses claimed is unsustainable. Accordingly, I direct the Assessing Officer to delete the addition.
8. In the result, appeal is allowed, as indicated above.
Order pronounced in the open court on 22/12/2022
