Mere AIR information that deposits made in bank account not indicative that income has escaped assessment u/s 147

In a recent judgment, ITAT Amritsar has upheld that the mere AIR information that deposits were made in a bank account do not indicate that these deposits constitute an income which has escaped assessment.

Case Details:
ITA No.129(Asr)/2015 Assessment year:2005-06
Ashwani Kumar vs. Income Tax Officer
Date of Order/Judgment: 23/02/2016

Facts of the Case:
The reassessment proceedings were initiated for the assessee u/s 147. The reasons recorded for issuance of notice u/s 148 were as under:

As per information available from the Annual Information Return (AIR) relating to the financial year 2004-05 relevant to the assessment year 2005-06, the above mentioned person has deposited Rs.11,60,000/- in cash in SB account. However, the aforesaid person has not given ‘Permanent Account Number (PAN)’ to the AIR filer and even the information has been received as ‘AIR data without PAN’ from the concerned AIR filer. It is thus established that the above mentioned person is not assessed to tax. Since, the amount of investment exceeds the maximum amount which is not chargeable to tax, I have reasons to believe that the income to the tune of Rs.11,60,000/- has escaped assessment by reason of the failure on the part of the assessee to make a return u/s 139 or in response to a notice issued under sub-section (1) of section 142 of the Income Tax Act, 1961.

Accordingly, I have reason to believe that the income of Rs.11,60,000/- of the assessee has escaped assessment, besides any other income chargeable to tax which would have escaped assessment and would come to notice subsequently in the course of assessment proceedings under this section, within the meaning of section 147 of the I.T. Act.

CIT(A) upheld the reopening the case.

The assessee contended that these reasons were not reasons in law, since they had been recorded merely on vague information, which cannot be done.

The ITAT observed that  the only material available before the AO was the AIR information of the assessee having deposited an amount of Rs.11.60 lakhs in his savings bank account. However, the reasons recorded did not even mention the bank in which such savings bank account was maintained.

ITAT observed that the facts of the case were ssimilar to those in ‘Bir Bahadur Singh Sijwali vs. ITO, Ward-1, Haldwani’ 53 Taxman. Co. 366 (Delhi – Trib.) and held that the reasons recorded by the AO for issuance of notice u/s 148 of the Act were invalid, being reasons not sufficient to believe escapement of income, based on vague information.

Excerpts from ITAT Judgment:

In ‘Bir Bahadur Singh Sijwali’ (supra), like in the present case, the reasons recorded indicated that cash deposits had been made in the bank account of the assessee. The Tribunal held that the mere fact that the deposits having been made in a bank account does not indicate that these deposits constitute an income which has escaped assessment. It was observed that the reasons recorded did not make out a case that the assessee was engaged in some business and the income from such a business had not been returned by the assessee. In the case at hand also, the reasons recorded do not contain any such recital. The Tribunal held that the factum per se, of deposits in the bank account of the assessee could not be made the basis for holding the view that income had escaped assessment, over-looking that the sources of the deposits need not necessarily be the income of the assessee; and that as such, the reasons recorded were not sufficient to believe escapement of income; that rather, they were reasons to suspect escapement of income, which was not enough for issuance of a notice u/s 148 of the Act.

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