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TMI Blog2024 (3) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... SPPL on 29th May 2008 and assessee has made total cash deposits of Rs. 1,87,39,187/- for FY 2012-2013. The HDFC Bank has also confirmed by its letter that there were nil cash deposits for firm Cello Stationery Products. Therefore, the AO should have recorded in the reasons to believe as to how he has come to the conclusion that apart from the amount of Rs. 1,87,39,187/- certified to have been deposited in cash by HDFC Bank, there is another deposit of Rs. 1,86,33,520/-, because admittedly there is only one bank account. Moreover, in the certificate which is annexed to the petition issued by the HDFC Bank giving details of cash deposited during the said financial year, the cash deposited is in two parts, i.e., more than Rs. 2,00,000/- and less than Rs. 2,00,000/-. The total deposit of more than Rs. 2,00,000/- comes to Rs. 1,86,33,520/- and cash deposit of less than Rs. 2,00,000/- is Rs. 1,05,667/- and the total of these two figures is Rs. 1,87,39,187/-. Therefore, the AO without examining these details has recorded the reasons to believe, which indicates non-application of mind. When these details have been brought to his notice admittedly in the objections filed by Petitioner, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order dated 3rd February 2022 passed by Respondent No. 1 rejecting the objections of Petitioner challenging the validity of impugned notices as being ex-facie illegal, unsustainable, untenable, unreasonable and contrary to the provisions of Act. Prior to July 2017, Petitioner s business was collectively housed in the companies viz. Cello Stationery Products Private Limited, Cello Writing Instruments and Containers Private Limited, Cello Tips and Pens Private Limited, Cello Pens Private Limited, Cello Plastic Products Private Limited Pentek Pen and Stationery Private Limited. In July 2017, pursuant to the scheme of merger duly approved by the National Company Law Tribunal, Mumbai Bench and Ahmedabad Bench vide orders dated 13th July 2017 14th July 2017 respectively, which became effective on 20th July 2017, the aforesaid five companies were merged into sixth company viz. Cello Plastic Products Private Limited ( CPPPL ), which was also renamed to BIC Cello India Private Limited (the present Petitioner). 4. The present reassessment notices have been initiated in the case of Petitioner in its capacity as successor in interest of Cello Stationery Products Private Limited ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Act are not fulfilled in the facts of present case. Therefore, reassessment proceedings ought to be dropped. In the impugned reasons to believe, there was duplicity in the amount of cash, alleged to have been deposited in the bank account on account of double counting, i.e., reasons recorded that cash deposits of Rs. 3,73,72,707/- resulted in escapement of income, whereas the fact is CSPPL made cash deposits of only Rs. 1,87,39,187/- during AY 2013-2014. The documents evidencing the same, including list of cash deposits made in the HDFC Bank Account No. 03988640000010, Malad Branch, bank statement for the relevant period as well as certificate from the bank were also enclosed and it was submitted that the said error deserved to be rectified at the threshold. In absence of any income escaping assessment in the present case, the notices issued for initiating the impugned reassessment proceedings, were without jurisdiction. As the price at which the products of CSPPL were sold, was low, as is common practice in the trade, many customers purchased the products in cash rather than making payment through banking channels. Accordingly, in the relevant year, sales considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs are initiated without jurisdiction. If the approval of Respondent No. 2 is not obtained before issuance of impugned notices, reassessment proceedings are invalid and bad-in-law. 8. The objections filed by Petitioner were rejected by Respondent No. 1 by an order dated 3rd February 2022, which is also impugned in this petition. In the said order, Respondent No. 1 observes that the issue regarding duplicity of alleged amount of cash deposited in the bank account, no income escaping assessment and Explanation-2(c) to Section 147 of the Act not being applicable, are not factually correct and not acceptable as the claim of Petitioner needs to be checked and verified after receiving and perusing the necessary and required details during the course of reassessment proceedings. In short, the AO has quoted various judgments in the order disposing the objections, but has not dealt with Petitioner s assertion that during the assessment year, CSSPL has deposited only Rs. 1,87,39,187/- in cash, which has also been confirmed by the HDFC Bank. 9. Mr. Suresh Kumar submitted that the Director of Petitioner has filed an indemnity bond on 23rd December 2019, wherein he has indemnified the cash dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Malad (East) Branch vide its letter dated 19th December 2019 has stated that the Account No. 039886400000010 has cash deposits for AY 2013-2014 and the account was opened for CSPPL on 29th May 2008 and assessee has made total cash deposits of Rs. 1,87,39,187/- for FY 2012-2013. The HDFC Bank has also confirmed by its letter dated 23rd December 2019 that there were nil cash deposits for firm Cello Stationery Products. Therefore, the AO should have recorded in the reasons to believe as to how he has come to the conclusion that apart from the amount of Rs. 1,87,39,187/- certified to have been deposited in cash by HDFC Bank, there is another deposit of Rs. 1,86,33,520/-, because admittedly there is only one bank account. Moreover, in the certificate which is annexed to the petition issued by the HDFC Bank giving details of cash deposited during the said financial year, the cash deposited is in two parts, i.e., more than Rs. 2,00,000/- and less than Rs. 2,00,000/-. The total deposit of more than Rs. 2,00,000/- comes to Rs. 1,86,33,520/- and cash deposit of less than Rs. 2,00,000/- is Rs. 1,05,667/- and the total of these two figures is Rs. 1,87,39,187/-. Therefore, the AO without exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained. Moreover, if according to Respondent No. 1 only the sale of shares of TCS Ltd. was business income and not profits arising of sale of investment to say that the amount of Rs. 22,71,25,79,374/- has escaped assessment, also indicates non-application of mind. We would also go a step ahead and observe that if only the approving authority under Section 151 of the Act had considered the reasons properly, either he would have directed Respondent No. 1 to re-work on the reasons or would not have granted the approval. Moreover, we may keep in mind this is a case where the scrutiny assessment was completed and order under Section 143(3) of the Act has been passed followed by a rectification order under Section 154 of the Act. Therefore, Petitioner s case has been considered at two stages, (i) When the assessment order was passed after scrutiny under Section 143(3) of the Act and (ii) When an order under Section 154 of the Act was passed. (emphasis supplied) 17. It is also useful to reproduce Paragraph Nos. 6 7 of the judgment of this Court in Ankita A. Choksey v. Income Tax Officer and Others [2019] 411 ITR 207 (Bom)., which read as under : 6. It is a settled position in law that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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