Dheeraj Yadav Vs ITO (ITAT Delhi)
Conclusion: AO had recorded incorrect, wrong and non-existing reasons for reopening of the assessment and also failed to verify the information received by him before recording the reasons for reopening of the assessment. Thus, there was clearly non-application of mind on the part of AO to initiate the re-assessment proceedings. Thus, the reopening of assessment could not be sustained in Law.
Held: AO initiated proceedings under section 147 on the basis of information that assessee had deposited cash amounting to Rs.11,07,160/- with ICICI Bank and also earned commission payment amounting to Rs.2,533/- from Karvat Healthcare Services Pvt. Ltd., in assessment year under appeal and no return had been filed. AO, therefore, proceeded to frame re-assessment for non compliance of statutory notice, non-cooperation attitude of assessee and passed ex-parte assessment order under section 147/144 of the I.T. Act, 1961 and made additions of Rs.11,07,160/- on account of unexplained money under section 69A and further made addition of Rs.756/- on account of interest earned. It was held that the validity of the reopening of the assessment is to be determined with reference to the reasons recorded for reopening of the assessment. Assessee had clearly explained that AO had wrongly assumed that entire cash deposited in the ICICI Bank account was income of assessee as there were deposits and withdrawals multiple times throughout the year for business purposes as assessee was in the business of Hardware, Sanitary and Sanitary-ware at Chawdi Bazar, Delhi. These facts clearly showed that total cash deposited in the Bank Account of assessee with ICICI Bank Ltd., per se might not be the income of assessee. Thus, it was a mere suspicion of the AO based on incorrect facts that income chargeable to tax had escaped assessment. AO had recorded wrong and non-existing and incorrect facts in the reasons for reopening of the assessment. AO had also not applied his mind to the facts of the case and merely based on information without verifying the same recorded reasons for reopening of the assessment. Thus, the reopening of assessment could not be sustained in Law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by assessee has been directed against the Order of the Ld. CIT(A)-16, New Delhi, Dated 28.05.2019, for the A.Y. 2011-2012, challenging the reopening of the assessment under section 147/148 of the I.T. Act, 1961 and addition of Rs.11,07,160/-.
2. We have heard the Learned Representatives of both the parties through video conferencing and perused the material on record.
3. Briefly the facts of the case are that proceedings under section 147 of the I.T. Act, 1961 was initiated on the basis of information that assessee had deposited cash amounting to Rs.11,07,160/- with ICICI Bank and also earned commission payment amounting to Rs.2,533/- from Karvat Healthcare Services Pvt. Ltd., in assessment year under appeal and no return have been filed. The A.O, therefore, proceeded to frame re-assessment for non compliance of statutory notice, non-cooperation attitude of the assessee and passed ex-parte assessment order under section 147/144 of the I.T. Act, 1961 and made additions of Rs.11,07,160/- on account of unexplained money under section 69A of the I.T. Act, 1961 and further made addition of Rs.756/- on account of interest earned. The income was computed at Rs.11,07,916/-. The Ld. CIT(A) dismissed the appeal of assessee.
4. Learned Counsel for the Assessee referred to the reasons recorded by the A.O. for reopening of the assessment, copy of which is filed at pages 2 and 3 of the PB. The same reads as under :
“ANNEXURE-A
“The assessee is an individual whose jurisdiction lies in this Ward. As per ITS. Retails, the Assessee has not filed any return of income.
2. Information has been received from ITO Ward-46(4) vide F.No.ITO/W-46(4)/2017-18/645, Dated 22.03.2018, received in this office on 22.03.2018.
3. The department is having Information that during the F.Y. 2010-11 the assessee has deposited cash amounting to Rs.11.07.160/- with ICICI Bank Ltd., and received commission payments amounting to Rs.2,533/- from KARVAT HEALTH CARE SERVICES PVT LTD.
4. Since the assessee had not filed ROI for the year under consideration, the source of cash deposit made and commission payments received by the assessee amounting to Rs.11,09,693/-remains unexplained and also they exceeds the maximum amount which is not chargeable to tax and for filing the return for A.Y. 2011-12; I have reason to believe that assessee’s income changeable to tax has escaped assessment.
5. In view of the information as above, Explanation 2(a) to section 147 is applicable in the case which lays down that the following shall also be deemed to be case where income chargeable to tax has escaped assessment, “where no return of income has been furnished by the assessee although his total income in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income tax.”
6. In view of the above fact, case, I have the reasons to believe that a sum of Rs.11,09,693/- on account of cash deposit in bank and commission payments received by the assessee during the year chargeable to tax has escaped assessment. Since, four years have lapsed but not more than six years have elapsed from the end of the relevant assessment year, It is therefore, proposed as per the provisions of section 149(1) (b) read with section 151(3) of the I.T Act, 1961 that approval for initiating action u/s 147 of income tax Act, 1961 may be granted in the case.
It is pertinent to mention here that in this case the assessee has chosen not to file return of income for the year under consideration although the total income of the assessee had exceeded the maximum amount which is not chargeable to tax as discussed in paragraph 4 above and the assessee was assessable under the Act. In view of the above, the provisions of clause (a) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment.
In this case, more than four years but not more than six years have elapsed from the’ end of the relevant assessment year. Hence necessary sanction to issue notice u/s 148 is being obtained separately from Pr. Commissioner of Income Tax /Add./JCIT under the amended provisions of section 151 of the I.T. Act w.e.f. 01.06.2016.
Date : 23.03.2018 Sd/- Subhash Chand
Place New Delhi Income Tax Officer,
Ward-46(5), New Delhi.”
4.1. He has also referred to copy of the bank statement and bank flow statement to show that in ICICI Bank there are cash deposits of Rs.11,49,750/-, therefore, A.O. has recorded incorrect facts in the reasons for reopening of the assessment that there was a cash deposit of Rs.11,07,160/-. He has submitted that in the case of Shri Abrar Ahmad Qasimi, Delhi vs., ITO, Ward-46(5), New Delhi in ITA.No.3177/Del./2017, for the A.Y. 2007-2008, the ITAT Delhi SMC-Bench, Delhi vide Order Dated 01.06.2018 has held that “cash deposit per se cannot be income of the assessee and re-assessment proceedings have been quashed.” The Order is reproduced as under :
“IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES “SMC” : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
ITA.No.3177/Del./2017
Assessment Year 2007-2008
