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TMI Blog2018 (12) TMI 289X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Levy of penalty under section 271(1)(c) - A.O. levied the penalty on account of addition made of unexplained cash deposit - Held that:- Since the re-assessment have been quashed and addition have been deleted, therefore, penalty proceedings would not survive. Accordingly, set aside the Orders of the authorities below and cancel the penalty. - ITA.No.2740/Del./2018, ITA.No.1384 & 2647/Del./2018 - - - Dated:- 3-12-2018 - Shri Bhavnesh Saini, Judicial Member For the Assessee : Shri Kapil Goel, Advocate, Shri Somil Aggarwal, Advocate For the Revenue : Shri S.L. Anuragi, Sr. D.R., Shri S.L. Anuragi, Sr. D.R. ORDER I have heard the Learned Representatives of both the parties and perused the material available on record. The issues are common in all the appeals. Therefore, all appeals are decided through this consolidated order as under. ITA.No.2740/Del./2018 (Shri Inder Jeet) : 2. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-1, Gurgaon, Dated 15.03.2008, for the A.Y. 2011-2012, challenging the reopening of the assessment under section 148 of the I.T. Act, 1961 and addition of ₹ 39 lakhs on account of cash de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of escapement of income. He has relied upon the Order of ITAT, Delhi Bench in the case of (1) Shri Bhajan Lal, Delhi vs. ITO, Ward-2, Narnaul, Haryana in ITA.No.3984/Del./2017, Dated 20.09.2018, (2) Order of ITAT, Delhi Bench in the case of Smt. Swati Verma, New Delhi vs. ITO, Ward 3(4), Noida in ITA.No.42/Del./2018, Dated 01.08.2018 and (3) Order of ITAT, Delhi Bench in the case of Shri Jagat Singh, Noida vs. ITO, Ward-1(3), Ghaziabad, Dated 04.09.2018. 5. On the other hand, Ld. D.R. produced the assessment record and filed copy of the reasons recorded under section 148 on record and relied upon the Orders of the authorities below. 6. I have considered the rival submissions and perused the material available on record. The A.O. in this case recorded the reasons for reopening of the assessment under section 147/148 of the I.T. Act on 25.03.2015 which reads as under : Reasons for initiating proceedings under section 147/148 of the Income Tax Act, 1961. As per information available with this office that assessee has deposited cash ₹ 10,00,000/- and above in his saving bank account during the financial year 2010-11 . The assessee has to filed return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income along with query letter was issued for 15.02.2013 and in response to this assessment proceedings were attended by the counsel of the assessee but no return of income was filed. But afterwards return of income declaring Nil income was filed as well as written replies were filed by the assessee s counsel. The Assessing Officer observed that as per information available on record, the assessee made cash deposit of ₹ 12,50,000/- on 08.05.2006 and ₹ 6,50,000/- on 11.05.2006 in his bank account maintained with branch office Ateli. The assessee was asked a query dated 06.02.2013 as to explain the source of these cash deposits with documentary evidence. The assessee vide reply dated 11.03.2013 submitted that the deposit in the bank account was out of the cash received from the agreement to sale. The Assessing Officer rejected the plea of the assessee on the ground that no sale deeds of the land 4 ITA No. 3984/Del/2017 was executed till date for which alleged agreements were made. The Assessing Officer observed that as per material available on record during the F.Y. 2006-7 relevant to A.Y. 2007-08, the assessee sold his share of agricultural land situated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Delhi High Court in the case of Ranbaxy Laboratory Ltd., vs CIT(supra) has held that the assessing officer has the jurisdiction to reassess the issues other than issues in respect of which proceedings were initiated. But he was not justified when the reasons for the initiation of those proceedings seized to survive. Since, in the instant case, there was no addition made in the assessment order on account of which the assessment was reopened but some other additions have been made by the AO, therefore, the AO does not have jurisdiction to make such other additions in absence of any addition made for which the assessment was re14 opened in the light of the decision of Hon ble Delhi High Court in the case of Ranbaxy Laboratory Ltd. (supra). Therefore, the re-assessment proceedings have to be quashed. 10. Even otherwise, also the reopening was made on the basis of AIR information received that the assessee has made cash deposit of ₹ 19 lakhs. I find identical issue had come up before this bench of the Tribunal in the case of Mahavir Prasad (supra). The Tribunal vide ITA no. 924/Del/2015 order dated 09.10.2017 for assessment year 2007-08 had quashed such re-assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi in ITA.No.1508/Del./2017, Dated 07.07.2017 in paras 6 to 8 held as under : 6. I have considered the rival submissions. It is well settled law that the validity of the reassessment proceedings is to be determined on the basis of the reasons recorded by the Assessing Officer. The copy of the reasons is filed at page 1 of the paper book and the same reads as under: - Name address of the assessee : Sh. Arvind Kumar Yadav S/o Sh Harish Chander, Ghaziabad. Assessment Year 2008-09 PAN NA Reasons for issue of notice u/s 148 of I.T. Act, 1961 16.03.2015: In this case Non PAN AIR Information has been received the assessee has deposited cash of ₹ 41,00,000/- in his S.B. A/c during F.Y. 2007-08. Since, the PAN of the assessee is not known and also the return the A.Y. 2008-09 is not available on record, to verify the transaction, q letters were issued to the assessee to furnish, the particulars of PAN, 1TR etc. to explain the source of cash deposit in bank account. However, no response has been received from the assessee till date. Thus, the cash credited to the I account of the assessee remains unexplained. Therefore, I have reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and made the addition of ₹ 13,91, 657/- treated the same as income from business for year under consideration. 5. The assessee challenged the reopening of the assessment as well as addition on merit before Ld. CIT(A). However the Ld. CIT(A) dismissed both the grounds of appeals of the assessee in principle, however, AO was directed to compute the income of a ssessee after giving credit to the turn over already disclosed u/s 44 AD of the I.T. Act. The appeal of assessee was thus partly allowed. 6. Ld. Counsel for assessee referred to the reasons recorded for reopening of assessment as are reproduced in para 3 .3 of the appellate order the same reads as under : In this case on AIR information was received that assessee has been entered into transaction worth ₹ 63,27,996/- in his bank account. In order to verify the genuineness and correctness of this AIR information a verification was issued on dated 16.1.2014 and 17.2.2014 to the assessee which were duly served up on the assessee itself. Through this verification letter the assessee was required to furnish following information (i) Details of cash deposit of ₹ 63/27,996/ - during the F.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the AO in the reasons recorded incorrect fact of deposits of ₹ 63,27,996/ - despite the total deposits were only to the tune of ₹ 41.15 lacs. This fact is considered favourably by Ld. CIT(A) and his findings are in para 5.3 of the appellate order. Therefore wrong facts are recorded in reasons for reopening of assessment. Therefore assumption of jurisdiction u/s 147 of I.T .Act is bad in law. He has relied upon following orders : 1. Order of ITAT Amritsar Bench in the case of Amrik Singh vs. ITO 1591TD 329 (Amritsar) in which it was held as under : When the assessment proceedings u/s 147 are initiated on the fallacious assumption that the bank deposits constituted undisclosed income, over-looking the fact that the source of the deposits need not necessarily be the income of the assessee, the proceedings is neither countenanced, nor sustainable in law. 2. Order of IT AT Delhi Bench in the case of Smt. Rajni vs ITO and others in ITA No. 854/Del/2016 dated 6.11.2017 in which in para 12 it was held as under :- [ 12. With the assistance of the Ld. Representatives, I have gone through the record carefully. Section 147 of the Act contemplates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t addressed the contention of the assessee that reopening of assessment in itself is bad. because there is no nexus between reasons vis-a-vis formation of belief '' exhibiting the escapement of income. Taking into consideration all these aspects, I am of the view that the AO is not justified in reopening of the assessment afresh. I allow this ground, of appeal and quash the assessment. As far as other issues are concerned, since reopening of assessment has been held as bad aqd not. in accordance with the law, therefore, I deem it not necessary to deal with the other grounds of appeal as they have become infructuous. 3) Order of ITA Delhi Bench in the case of Raj Kumar Dugar (HUF) vs. ITO 12 DTR 16 in which it was held as under :- Reason recorded by the AO that assessee had not filed IT return for asstt. year 1998-99 being based on incorrect facts because assessee had in fact filed IT return for the said year, issuance of notice under section 148 and consequent assessment could not be sustained; further, assessment could not be reopened in the absence of any fresh material to show that income has escaped assessment and reopening for making fishing inquiry was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the purpose of reopening of the assessment. The course adopted by the AO was wholly unjustified in recording the incorrect facts in the reasons for reopening of the assessment. The decision cited by the Ld. Counsel for assessee would clearly support the contention of the assessee that reopening of the assessment is bad in law. In this view of the matter I am of the view that AO has wrongly assumed jurisdiction u/s 147 of -the I.T. Act for the purpose of reopening of the assessment. I accordingly set aside the orders of the authorities below and quash the reopening of the assessment in the matter. Resultantly the addition made in the reassessment order would stand deleted and need not to be adjudicated on merit. 10. In the result appeal of assessee is allowed. 8. In this case the Assessing Officer after obtaining the AIR information wanted to verify the same and issued a letter of enquiry to the assessee. The Assessing Officer thus did not apply his independent mind to the information received from AIR. Since no proceedings were pending before the Assessing Officer when he issued a letter of enquiry to the assessee, therefore, such enquiry letter was not valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of reopening of the assessment. I, accordingly, set aside the Orders of the authorities below and quash the reopening of the assessment in the matter. Resultantly, the additions made in the re-assessment would stand deleted. 7. In the result, ITA.No.2740/Del./2018 of the Assessee is allowed. ITA.No.1384/Del./2018 (Shri Ashok Kumar, Ghaziabad) : 8. This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-2, Noida, Dated 23.01.2018, for the A.Y. 2008-2009, challenging the reopening of the assessment under section 147/148 of the I.T. Act, 1961, and addition of ₹ 27,49,400/- on account of cash deposited in the bank account. 9. In this case also, A.O. noted that PAN of assessee is not available on record and information have been received that an amount of ₹ 48,24,200/- has been deposited in the bank account of the assessee. Query letter was issued to the assessee to explain the deposit in the bank account, but, no compliance to the query letter was made. The A.O, therefore, framed the re-assessment and made addition of ₹ 48,24,200/-. The assessee challenged the reopening of the assessment and above addition before Ld. CIT(A). T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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