2019 (7) TMI 1779 - AT - Income Tax

Reopening of the assessment under section 147/148 - addition on account of unexplained deposit in bank account and addition on account of unexplained other deposits - Reopening based on AIR information assessee made cash deposit in his S.B. Account - HELD THAT - Since the assessee did not respond to the query letter of the A.O A.O. presumed that there is escapement of income. It is an admitted fact that no return of income was filed for the assessment year under appeal and at the time of issue of query letter by the A.O. no proceedings were pending before A.O therefore there was no justification for the A.O. to issue query letter to the assessee asking the explanation of assessee. Since query letter was illegal therefore assessee was not bound to reply to the same. Cash deposit per se would not be income of the assessee. An identical issue have been decided in the case of SHRI MAHAVIR PARSAD VERSUS THE I.T.O REWARI 2017 (10) TMI 1377 - ITAT DELHI Thus the A.O. in the absence of reply from the side of the assessee which assessee was not bound to reply merely presumed that there is escapement of income. There is thus no application of mind on the part of the A.O. to record reasons as per Law. The initiation of re-assessment proceedings are beyond the jurisdiction of the A.O. into the matter. We therefore do not subscribe to the view of the Ld. D.R. that reopening of the assessment is valid into the matter - Decided in favour of assessee.

Summary

Issues:
Reopening of assessment under section 147/148 of the I.T. Act based on unexplained deposits in bank account and other deposits.

Analysis:
1. The appeal was directed against the Order of the Ld. CIT(A), challenging the reopening of the assessment under section 147/148 of the I.T. Act and additions made on account of unexplained deposits. The case involved a cash deposit of ?10,07,400 in the bank account and ?1,95,975 on account of unexplained other deposits for the A.Y. 2012-2013.

2. The A.O. reopened the assessment based on information that the assessee made cash deposits in the bank account without filing a return of income. The A.O. issued a query letter for explanation, but the assessee did not respond, leading to the additions. The Ld. CIT(A) partly allowed the appeal.

3. The Learned Representatives of both parties were heard during the proceedings.

4. The reasons for reopening the assessment were based on the cash deposits made by the assessee as per AIR information, leading to the belief that income had escaped assessment. The assessee argued that the mere cash deposit did not indicate income escapement, citing a similar case where the reopening was quashed due to lack of tangible evidence.

5. The Ld. D.R. supported the reopening based on unexplained cash deposits.

6. The Tribunal considered the reasons recorded for reopening and found that the A.O. lacked justification to issue a query letter as no return was filed, and no proceedings were pending. The Tribunal held that the A.O. did not apply the law correctly, and the reopening was beyond jurisdiction, ultimately quashing the assessment and deleting the additions.

7. Consequently, the appeal of the assessee was allowed, and all additions were deleted.

This detailed analysis of the legal judgment highlights the issues, arguments presented, and the Tribunal's decision based on the validity of the reassessment proceedings.