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TMI Blog2023 (10) TMI 1275X X X X Extracts X X X X X X X X Extracts X X X X ..... sons recorded such as not filing the return in response to the notice issued u/s 148. To be fair and showing unbiased nature of action, the AO had supplied the reasons for the reopening suo moto. As seen from the reasons narrated, it appears that there is no presumption or assumption against the assessee in reopening the case. When the twin situations are fulfilled viz. not filing the return of income and huge cash deposits which are disproportionate to the amounts of income admitted in the returns of earlier years; I find this is the sufficient reason to reopen the case u/s 147. The admission of meager incomes in the earlier AY returns certainly forms a basis for belief that there is an escapement of income in the assessee's case. Therefore, the ground of appeal raised on the reopening of the case without having proper reasons is considered as not having merits, thus dismissed. Cash deposits - as argued entire credit entries in the bank statement should not be treated as income of the assessee and it would be appropriate to note the background of the assessee`s case - We note that the peak credit in the bank account during the year is considered for making such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idual and had not filed his original return of income for assessment Year (A.Y.) 2011-12, u/s 139 of the Act. The Assessing Officer observed that assessee's return was appearing in NMS data Cycle-2 and as per the AIR information available in the assessee`s case, it was gathered that the assessee had deposited cash of Rs. 55,73,500/- on different occasion, during A.Y, 2011-12, in his Akhand Anand Bank Ltd account. As the assessee`s ITR for A.Y 2011-12 was not found filed therefore, a query letter was issued on 23.02.2016 by the Assessing Officer. In response to said letter issued, assessee neither submitted any details nor attended in the case before the Assessing Officer. 5. Therefore, subsequently, the assessee s case was reopened by issuing a notice u/s 148 of the Act, on 28.03.2018. The notice was duly served upon the assessee. From the CIB data available in the assessee`s case it was noticed by Assessing Officer that the assessee had deposited cash of Rs. 55,73,500/- on different occasions in his bank account maintained with Akhand Anand Bank Ltd, during the F.Y. 2010-11 relevant to A.Y. 2011-12. On verification of the record available in the assessee`s case, it was note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee, which has escaped assessment, for that ld Counsel relied on the judgment of Hon'ble ITAT, Delhi bench in the cases of Bir Bahadur Singh Sijwali v. ITO 68 SOT 197 and Mahavir Parsad v ITO- ITA No.924/Del/2015 dated 09.10.2017. The ld Counsel also stated that Assessing Officer was not having sufficient material to form the reason to believe at the time of re-opening of the assessment, therefore, reopening of assessment may be quashed. 10. On merit, ld Counsel submitted that assessee`s nature of business is cheque discounting business and in such business there is hardly a margin, therefore addition may be sustained at the rate of 1% of total credit in the bank account. Alternatively, ld Counsel stated that peak credit in the bank account may be sustained as an addition in the hands of assessee. 11. On the other hand, ld DR for the Revenue argued that Assessing Officer had information in his hand about the deposits made in the bank account. The bank had provided the information as part of Annual Information Return (AIR) to comply with the provisions of Section 285BA and the authenticity of information is backed by the KYC details submitted by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued u/s 148. To be fair and showing unbiased nature of action, the AO had supplied the reasons for the reopening suo moto. The copy of the reasons is not submitted for examination during the appeal proceedings. Therefore, to adjudicate the appeal I have to depend solely on the assessment order. The reasons made available in the assessment order are considered and it is concluded that the reasons recorded were after thoroughly verifying the records available with the AO. As seen from the reasons narrated, it appears that there is no presumption or assumption against the assessee in reopening the case. When the twin situations are fulfilled viz. not filing the return of income and huge cash deposits which are disproportionate to the amounts of income admitted in the returns of earlier years; I find this is the sufficient reason to reopen the case u/s 147. In this connection, the appellant had referred two case laws of Hon'ble ITAT, Delhi bench in the cases of Bir Bahadur Singh Sijwali v. ITO 68 SOT 197 and Mahavir Parsad v ITO- ITA N0.924/Del/2015 dated 09.10.2017. 17.01 With due respect to the decisions of the non-jurisdictional Hon'ble ITAT, Delhi, I find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial cannot be gone into, but relevancy certainly can be gone into. The reasons for the belief should have a rational connection or a relevant bearing on the formation of the belief and should not be extraneous or irrelevant. That is, there must be live nexus between information, assesses and escaped income: - The AO had information in his hand about the deposits made in the bank account. The bank had provided the information as part of Annual Information Return (AIR) to comply with the provisions of Sec.285BA and the authenticity of information is backed by the KYC details submitted by the assessee to the bank. Therefore, the information received from the assessee's bank is the basis for the formation of belief coupled with non-filing of return. If assessee had filed the return admitting the income or loss from the business transactions, the reopening the case without making further enquiries could have led to a conclusion that there was no belief but existence of suspicion. The information received is certainly a relevant and sufficient material to consider the case to be reopened. It is irrational if the AO has not considered of reopening the case even after having t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn for the AY relevant to the cash deposits, the act of reopening of the case can be said to be made on suspicion not based on reasons to believe. The case of the assessee is not having such facts. The admission of meager incomes in the earlier AY returns certainly forms a basis for belief that there is an escapement of income in the assessee's case. Therefore, the ground of appeal raised on the reopening of the case without having proper reasons is considered as not having merits according to the discussion above and the corresponding ground is dismissed. 14. We have gone through the above findings of NFAC/ld CIT(A) and noted that NFAC/ld CIT(A) has considered the arguments of the assessee and then reached on a right conclusion. The arguments made by ld Counsel for the assessee, before us, have already been dealt and considered by NFAC/ld CIT(A). On a careful reading of the NFAC/ld.CIT(A) order and the findings thereon, we do not find any valid reason to interfere with the decision and findings of the NFAC/ld.CIT(A), so far technical issue of reopening of assessment u/s 147 is concerned. Hence, we dismiss ground No.1 raised by the assessee. 15. Coming to ground No. 3 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iately. In respect of such transactions, it is not possible to file any documentary evidences and inference has to be drawn on the basis of modus operandi of the transaction and the circumstantial evidences. Here, reliance is placed on following case laws wherein under identical facts, cheque discounting activity has been taken into consideration and entire cash/cheque deposit has not been regarded as income and only percentage (%) of profit has been taxed: Manoj Agarwal V DCIT - 113 ITD 377 (Del) DCIT V Anil J. Kothari - ITA No. 2645/Ahd/2013 ITO V Mahesh T. Patel - ITA no. 2285/Ahd/2015/Srt Rohit Pravinchandra Panwala - IT (SS) A no. 608 to 612/Ahd/2010 ITO V Rajpal Singh Shekhawat - ITA No. 1399/Ahd/2011 In the above cases, only % of commission ranging from 0.15% to 0.50% of total amount was held to be taxable. 18. It was further submitted by ld Counsel that addition on account of entire credit entries reflected in bank statement can never be made. The addition, if any, can be made only to the extent of peak credit balance Rs. 1,38,029/- on 02.11.2010 (A/c no. 1001201003683) vide paper book page No.27, Rs. 36,137/- on 04.02.2011 (A/c no. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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