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2022 (2) TMI 1141 - AT - Income TaxValidity of Reopening of assessment u/s 147 - Second set of reassessment proceeding - assessee had failed to explain the source of the cash deposit in his bank account - HELD THAT - Now when the reassessment proceedings were initiated by the A.O, i.e, ITO, Ward-5(2), Amritsar, vide Notice u/s 148, dated 29.03.2016, for bringing to tax the unexplained cash deposits in the assessee s bank account that as per him had escaped assessment (which thereafter had culminated into an assessment u/s 147 r.w.s 143(3), dated 08.11.2016), he was clearly divested of his jurisdiction from initiating another set of reassessment proceeding, i.e, the impugned reassessment proceeding in question by issuing another Notice u/s 148, dated 29.03.2016, on the ground, that the assessee had failed to prove the source of cash deposit in his another bank A/c. The reassessment proceedings initiated by the A.O, vide the impugned Notice u/s 148, dated 29.03.2016, i.e, during the pendency of the other reassessment proceeding for the year under consideration, cannot be sustained. We, thus, are unable to persuade ourselves to subscribe to the validity of the reassessment proceedings, i.e, the proceedings that had culminated into the impugned assessment order u/s 144 r.w.s 147, dated 27.12.2016. Valid sanction/approval as contemplated in sub-section (1) of section 151 - Pr. Commissioner of Income Tax-II, Amritsar despite the aforesaid serious infirmity, wherein the AO, i.e, ITO, Ward-5(2), Amritsar had on the same day, i.e, 28.03.2016 approached hi for his sanction/approval for taking recourse to parallel reassessment proceedings against the assessee, i.e, for the same year and, he had in a most mechanical manner, on the same day, i.e, on 28.03.2016 granted his sanction/approval as contemplated in sub-section (1) of section 151 of the Act, i.e, for both the reassessment proceedings that were taken recourse to by the A.O. On a perusal of the sanction granted by the Pr. Commissioner Of Income Tax-II, Amritsar, we find that on both the occasions the same has been granted by him in a mechanical manner by simply scribbling. Manner in which the approval/sanction had been granted by the Pr. Commissioner of Income-tax-II, Amritsar, we may herein observe, that the same in the backdrop of the facts involved in the case before us, i.e., granting of sanction/approval by him to the parallel set of reassessment proceedings initiated by the AO, on the same date, and for the same year, therein clearly reveals the non-application of mind by him. While sanctioning the issuance of the second Notice u/s 148, dated 29.03.2016, which as observed by hereinabove had culminated into the impugned assessment order u/s 144 r.w.s 147, dated 27.12.2016, there is no reference or mention about the approval/sanction that was already granted by him on the earlier occasion, and the same therein leads to serious doubts as regards application of mind by him at the time of grant of approval to the impugned reasons to believe - we are of a strong conviction that the sanctioning authority, i.e, the Pr. Commissioner of Income-tax-II, Amritsar had granted his sanction u/s 151 of the Act, in a mechanical manner, i.e, without application of mind to the facts of the case and the material available on record. Thus neither able to concur with the lower authorities as regards the validity of the reassessment order passed by the AO u/s 144 r.w.s. 147 of the Act, dated 27.12.2016, for the reason, that the same were initiated at a point of time when reassessment proceeding vide another Notice u/s 148, dated 29/03/2016, i.e, as regards the unexplained cash deposits already stood triggered and were pending at the relevant point of time and, had thereafter culminated into an assessment u/s 147 r.w.s 143(3), dated 08.11.2016; nor are able to persuade ourselves to subscribe to the mechanical manner in which the approval under sub-section (1) of Sec. 151 of the Act had been granted by the approving authority, i.e., the Pr. Commissioner of Income-tax-II, Amritsar, therefore, quash the impugned assessment order passed by the AO u/s 144 r.w.s 147 - Decided in favour of assessee.
Issues Involved:
1. Validity of the order passed by CIT(A) under section 250(6) of the Income Tax Act, 1961. 2. Validity of the assessment order passed under section 144 instead of section 143(3). 3. Legality of reassessment under section 148 without proper notice. 4. Issuance of two notices under section 148 for the same assessment year. 5. Reopening of assessments based on AIR information and the validity of the reasons recorded. 6. Adequacy of the reasons recorded for reopening the assessment under section 147. 7. Conduct of ex-parte assessment without providing a reasonable opportunity to the assessee. 8. Non-receipt of notice under section 142(1) by the assessee. 9. Failure to provide reasonable opportunity of being heard. 10. Non-consideration of evidence regarding the source of deposits. 11. Justification of additions made for cash deposits and interest income. 12. General grounds for adding, amending, or withdrawing grounds of appeal. Issue-wise Detailed Analysis: 1. Validity of the order passed by CIT(A) under section 250(6): The assessee argued that the CIT(A)'s order was illegal and arbitrary. However, the tribunal did not specifically address this ground separately, implying that the main focus was on the procedural and jurisdictional aspects of the reassessment. 2. Validity of the assessment order under section 144 instead of section 143(3): The assessee contended that the assessment order should have been framed under section 143(3) instead of section 144, indicating a lack of application of mind by the AO. The tribunal observed that the AO proceeded with the assessment under section 144 due to the non-compliance of the assessee with the notices issued. 3. Legality of reassessment under section 148 without proper notice: The assessee claimed that the AO did not fulfill the mandatory requirement of serving notice under section 148 within the stipulated period. The tribunal found that notices were issued and served via speed post and affixture, but the addresses were incomplete, leading to undelivered notices. This procedural lapse contributed to the quashing of the reassessment. 4. Issuance of two notices under section 148 for the same assessment year: The tribunal noted that the AO issued two separate notices under section 148 on the same date for different cash deposits in the assessee’s bank accounts. This was a significant procedural error as it led to parallel reassessment proceedings, which is not permissible under the law. The tribunal emphasized that only one notice should have been issued covering all reasons for reassessment. 5. Reopening of assessments based on AIR information and the validity of the reasons recorded: The assessee argued that the reopening was based solely on AIR information without independent verification. The tribunal found that the reasons recorded for reopening lacked a live nexus with the income escaping assessment and were vague. This contributed to the tribunal’s decision to quash the reassessment. 6. Adequacy of the reasons recorded for reopening the assessment under section 147: The tribunal observed that the reasons recorded by the AO for reopening the assessment were not adequate and lacked proper application of mind. The approval granted by the Principal Commissioner of Income Tax was also found to be mechanical and without due consideration of the facts, further invalidating the reassessment proceedings. 7. Conduct of ex-parte assessment without providing a reasonable opportunity to the assessee: The tribunal noted that the AO proceeded with an ex-parte assessment without affording reasonable opportunities to the assessee to be heard, which is against the principles of natural justice. This procedural lapse was another ground for quashing the reassessment. 8. Non-receipt of notice under section 142(1) by the assessee: The assessee claimed non-receipt of notices under section 142(1). The tribunal found that the notices were either undelivered or served through affixture without proper address details, which contributed to the procedural irregularities in the reassessment process. 9. Failure to provide reasonable opportunity of being heard: The tribunal reiterated that the AO failed to provide a reasonable opportunity to the assessee to present his case, which is a fundamental requirement for a fair assessment process. 10. Non-consideration of evidence regarding the source of deposits: The assessee argued that the AO and CIT(A) did not consider the evidence provided regarding the source of deposits. The tribunal did not delve into this issue in detail as the reassessment was quashed on jurisdictional and procedural grounds. 11. Justification of additions made for cash deposits and interest income: The tribunal did not specifically address the merits of the additions made by the AO for cash deposits and interest income, as the reassessment was quashed on other grounds. 12. General grounds for adding, amending, or withdrawing grounds of appeal: The tribunal dismissed this ground as not pressed by the assessee. Conclusion: The tribunal quashed the reassessment order passed by the AO under section 144 read with section 147 dated 27.12.2016, primarily on the grounds of procedural irregularities, lack of proper jurisdiction, and mechanical approval by the Principal Commissioner of Income Tax. The appeal filed by the assessee was allowed, and the tribunal refrained from adjudicating other contentions on the merits of the additions.
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