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2019 (8) TMI 1484 - AT - Income TaxReopening of assessment u/s 147 - unexplained money deposited in the bank account - HELD THAT - Facts are identical as have been considered in the case of Tajendra Kumar Ghai Vs ITO 2017 (6) TMI 491 - ITAT DELHI in which it was held that since no proceedings were pending before the AO when he issued the letter of inquiry to the assessee, therefore, such inquiry letter was not valid in the eyes of law. It was further held that the assessee was not required to respond to this invalid and non est inquiry letter issued by the AO. The deposit in the bank account per se cannot be income of assessee. In this case, reopening of assessment was quashed. Set aside the orders of authorities below and quash the reopening of assessment. Resultantly, all additions are deleted. In the result, appeal of the assessee is allowed. In the case of assessee Hameeda Begum, assessee challenged the reopening of assessment as well as addition of ₹ 16,00,000/- being money deposited in the bank account. The reasons and facts are identical. Resultantly, all additions stands deleted. Appeal of assessee is allowed.
Issues Involved:
1. Reopening of assessment under Section 147 of the Income Tax Act, 1961. 2. Addition of unexplained money deposited in bank accounts. Issue-wise Detailed Analysis: 1. Reopening of Assessment under Section 147 of the Income Tax Act, 1961: In the case of Abdul Samad, the reopening of the assessment was challenged on the grounds that the mere deposit of cash in a bank account cannot be treated as the income of the assessee. The assessee's counsel argued that the reopening was illegal and referenced the ITAT Delhi 'SMC' Bench decision in the case of Tajendra Kumar Ghai Vs ITO, where similar circumstances led to the quashing of the reopening of the assessment. The Tribunal agreed, emphasizing that the validity of reassessment proceedings must be determined based on the reasons recorded by the Assessing Officer (AO). The AO's reasons were based on AIR information about cash deposits and the lack of compliance from the assessee, leading to the belief that income had escaped assessment. However, the Tribunal found that the AO’s reasons were not sufficient to justify the reopening, as mere deposits in a bank account do not prima facie indicate income. The Tribunal quashed the reopening of the assessment, citing the need for specific and tangible material to form a belief that income had escaped assessment. Similarly, in the case of Hameeda Begum, the reopening of the assessment was challenged on identical grounds. The Tribunal followed the reasoning and decision in Abdul Samad's case, quashing the reopening of the assessment and deleting all additions. 2. Addition of Unexplained Money Deposited in Bank Accounts: In Abdul Samad's case, the AO added ?26,40,000/- to the income, representing money deposited in the bank account. The Tribunal, however, found that the AO's assumption that the deposits constituted undisclosed income was not justified. The Tribunal referenced the ITAT Amritsar Bench decision in Amrik Singh vs. ITO, which held that bank deposits do not necessarily constitute undisclosed income. The Tribunal also cited the ITAT Delhi Bench decision in Smt. Rajni vs. ITO, emphasizing that the AO must have a valid basis for believing that income has escaped assessment, and mere bank deposits do not suffice. Consequently, the Tribunal deleted the addition made by the AO. In Hameeda Begum's case, the AO added ?16,00,000/- based on similar reasons. The Tribunal, following the decision in Abdul Samad's case, quashed the reopening of the assessment and deleted the addition, as the facts and reasons were identical. Conclusion: The Tribunal allowed both appeals, quashing the reopening of assessments and deleting the additions of ?26,40,000/- in Abdul Samad's case and ?16,00,000/- in Hameeda Begum's case. The Tribunal emphasized that mere bank deposits do not constitute sufficient grounds for reopening assessments and making additions without specific and tangible evidence of undisclosed income.
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