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TMI Blog2022 (10) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... ought to have appreciated that only Non-filing of Return does not amounts to escapement of income and therefore, the reasons recorded for reopening only on the basis of Non-filling of Return is bad in law and therefore, the Notice issued U/s 148 is void-ab-initio 3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 23,05,222/- towards Cheques deposited in the Bank Account by the Assessee without appreciating that the Rs. 8,15,000/- amount were transferred from another Bank Account of the Assessee and amount of Rs. 14,00,000/- was received from his wife for which confirmation and all details were filed. 4. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 13,51,500/- on account of Cash Deposited in the Savings Account without appreciating that the complete source of Cash along with the documentary evidences were produced before both the authorities. 5. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeal) erred in confirming the addition of Rs. 6,31,000/- in respect of Peak Cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative (learned DR'), in all fairness, did not raise this technicality either. 5. During the course of hearing, learned Authorised Representative (learned AR') submitted that the assessee had no taxable income during the year and therefore no return of income was filed. The learned AR further submitted that merely on the basis that cash has been deposited by the assessee, proceedings under section 147 were initiated by the AO. The learned AR also submitted that the reasons recorded by the AO for issuing notice under section 148 of the Act doesn't provide the complete information on the basis of which such notice was issued and the same merely makes reference to some internal codes of the Department. 6. On the other hand, learned DR submitted that no return was filed by the assessee for the year under consideration and after receipt of the information from ITD system, facts were verified and it was noticed that assessee has entered into certain transactions viz. cash deposit of Rs. 50,000 and more, share transaction of Rs. 20,000, or more and TDS return in respect of interest other than interest on securities, during the year under consideration. Despite the said transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662, for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case pertaining to this issue, as emanating from the record, are: Vide notice issued under section 142 (1) of the Act assessee was asked to file the details of bank accounts held along with the copies of bank statements. The assessee was also asked to file copies of personal balance sheets, profit and loss account etc. In response, assessee disclosed the following bank accounts: Name of Bank A/c No. A/c Type Ownership 1. HDFC Bank Ltd. (Malad West, Mumbai) 00471330003555 Saving A/c Single 2. HDFC Bank Ltd. (Goregaon East, Mumbai) 02122100000104 Overdraft A/c Single 3. SVC Bank Ltd. (Goregaon West, Mumbai) 1519 Saving A/c Single 12. The AO, on perusal of return of income filed by the assessee in response to notice issued under section 148 of the Act, found that the assessee had disclosed only the aforesaid 3 bank accounts. Verification of bank statements, submitted by the assessee, revealed that there were several entries of frequent fund transfers to and from certain accounts. The AO therefore asked the assessee's representative to give source and its identification of each deposit in the bank account. In response, the assessee's representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment. Regarding the cash deposits in the aforesaid two undisclosed bank accounts, the AO observed as under: "vii) The explanation of the assessee with regard to the source of cash deposits that these were sourced out of withdrawal by the daughters and brother is self serving and falls flat on logic and facts. The assessee is citing withdrawals by the daughters' made in FY 2007-08 and 2008-09 to explain the deposits by him in 2009-10. It is pertinent to mention that the assessee is regularly maintaining the books of accounts and such cash transfers from the daughters should have been recorded in the books if at all were genuine. It is also seen that one of the daughter of the assessee is not filing her return of income and her source of income is explained to be tuition. Most importantly the assessee lamely tried to explain that a cash corpus was kept ready by the family for the medical treatment of his brother and wife. This argument falls flat on the face of the fact that assessee invested in shares from those cash deposit. In the hearing held on 06/01/2016 the above fact was brought to the notice of the assessee and he was asked to justify the reason of medical treatmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pus of Rs. 15,00,000/- credited for medical treatment of assessee's wife and brother and maintained by the family with him is clearly a story which is far-fetched, away from the facts and cannot be given much credence. It is also the fact that the assessee has tried his level best to keep these undisclosed accounts under the wraps and when faced with the investigation by the AO has made efforts to explain such money from the sources such as savings of daughter, wife, brother etc. In this regard, it is also mentioned that the assessee clearly maintains proper cash book, he has personal balance-sheet and trades and deals in stocks and shares. It is also noted that during the course of the instant proceedings, the assessee himself represented his case. These facts show that assessee is well aware of the nuances of the accounting and is familiar with the provisions of the Income-tax Act if all these transactions which have been found in the undisclosed bank accounts of the assessee were any ways there from the explained sources or explainable sources then there was no reason as to why these accounts were, at first place, not disclosed by the assessee and further thereto why the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k accounts maintained by him and his wife in HDFC bank, while the cash has been deposited from the personal savings and corpus generated to meet the medical treatment of his wife and his brother. In this regard, during the course of hearing, the learned AR referred to the bank account statements of the assessee and his wife maintained with HDFC Bank vide account no. 02122100000104 and 0060210011578 respectively. During the appellate proceedings before the learned CIT(A), assessee provided following details of cheque received in aforesaid two undisclosed bank accounts : ASHOK KUMAR SANGHI STATEMENT SHOWING CHEQUES RECEIVED FROM PARTIES IN NGGSB A/C-16650 & VAISHYA SAHAKARI BANK A/C-6217 S.N Party Name Bank Name Cheque No. Date Amount A) NKGSB Bank - A/c-16650 1. A.K. Singhi HDFC OD A/C-104 85542 04/03/2010 1,40,000 2. HDFC OD A/C-104 85545 12/03/2010 2,50,000 SUB TOTAL- a 3,90,000 3. POONAM SANGHI HDFC OD A/C-11578 961673 26/09/2009 3,50,000 4. HDFC OD A/C-11578 46537 24/02/2010 1,00,000 5. HDFC OD A/C-11578 46539 05/03/2010 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind the same to be duly explained. Therefore, to this extent we direct the AO to delete the addition made under section 69A of the Act. 19. However, as regards wife's bank account no. 0060210011578, the nature of receipts and source of deposit in her account are not explained and the assessee merely submitted that the deposits in aforesaid two undisclosed bank accounts are also from wife's account maintained with HDFC Bank. Further, since the source of deposits in wife's bank account maintained with HDFC Bank, from where amount of Rs. 14,00,000 was transferred through cheque in the aforesaid two undisclosed bank accounts is not clear established, therefore, we deem it appropriate to remand this issue to the file of AO for necessary verification whether the deposits made in wife's account are genuine. We further direct the assessee to file necessary details before the AO for examination. We also direct that if source of deposits in wife's HDFC Bank account is found to be genuine then the addition to the extent of Rs. 14,00,000 be deleted. 20. As regards the transaction of Rs. 90,000 on 24/06/2009, in NKGSB Bank (account No. 16650), the assessee has already admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that there are several entries of cash deposits. The assessee was asked to file source of such cash deposits along with copy of cash book Ledger. In reply, the assessee filed two cash book Ledgers. One as per the books of account maintained and other accounting for the undisclosed bank accounts. The AO vide order passed under section 143(3) r/w section 147 of the Act observed that the cash book Ledger as per books maintained did not show any opening or closing balance. However, as on 21/07/2009 the assessee's cash book had peak credit balance of Rs. 6,31,000. Further, till 27/07/2090 has shown credit entries of cash payments totalling Rs. 7,24,000 and debit entries of cash receipts of Rs. 93,000. The AO further noted that despite being asked the assessee did not explain the source of net cash payment of Rs. 6,31,000 without having any cash in hand. Accordingly, the AO made the addition of peak credit balance of Rs. 6,31,000, by observing as under: "9.1 A typical cash book should always have debit balance in the form of cash in hand. But, the cash book maintained by the assessee was unique in the way it always had credit balance. It means the assessee had an unaccounted cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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