Mere deposit of cash in bank account cannot give rise to a belief of Assessing Officer that income had escaped assessment. ITAT quashed reassessment order
ABCAUS Case Law Citation:
ABCAUS 2527 (2018) 09 ITAT
Important Case Laws Cited/relied upon by the parties:
National Thermal Power Co. Ltd. vs. CIT 229 ITR 383 (SC)
Gurpal Singh vs. Income Tax Officer  71 Taxmann.com 1-8
Principal Commissioner of Income Tax vs. Meenakshi Overseas (P.) Ltd.
Income Tax Officer vs. Sky View Consultants (P.) Ltd.  96 taxmann.com 424 (SC)
Anita Srivastava vs ACIT
Bir Bahadur Singh Sijwalia vs. Income Tax Officer
The case of the appellant assessee was reopened u/s 147 of the Income Tax Act, 1961 (the Act) by issue of notice u/s 148. As per reasons recorded, the belief of the Assessing Officer that income has escaped assessment was cash deposit in bank account of the assessee.
The reassessment order of the AO was upheld by the CIT(A).
Before the Tribunal, the assessee challenged that reasons recorded were not valid as no independent application of mind was made by the Assessing Officer as to how the income had escaped assessment. Therefore the notice issued u/s 148 was void ab initio.
It was also contended that the Assessing Officer had not made any addition on account of cash deposits and had made addition on other grounds which were also not legal.
Further, it was argued that non statutory notice and notice u/s 133(6) for verification of cash deposits was not legal as no proceedings were pending at the time of issue of notice u/s 133(6) and AO was not empowered to issue any notice without the prior approval of Principal Director or Principal Commissioner.
The Tribunal observed that from the above reasons recorded, it was apparent that the AO had in his possession certain information regarding deposit of cash in bank account of the assessee. The AO wanted assessee to furnish source of cash deposit to which the assessee furnished his PAN and had also furnished information regarding filing of his return. The Assessing Officer did not examine the original return of income to find out the source of cash deposits but he again required the assessee to explain source of cash deposits to which the assessee did not reply and therefore, he held that the income of assessee had escaped assessment and therefore, he issued notice u/s 148.
The Tribunal noted that the Assessing Officer wanted assessee to furnish source of cash deposits to which the assessee did not reply.
The Tribunal opined that mere deposit of cash in the bank account cannot give rise to a belief of Assessing Officer that income had escaped assessment as the cash deposit can be from any other source other than income. Such satisfaction was needed by the Assessing Officer which has not been made. It was observed that Delhi Tribunal had decided the similar issue in favour of the assessee
Further, the Tribunal found that Hon’ble Delhi High Court quashed a reassessment when there was no independent application of mind by AO to tangible material and, conclusions were reproduction of investigation report.
The Tribunal allowed the additional grounds and quashed the assessment order holding both the notice issued u/s 148 and assessment as void ab initio.