Without cogent reasons for belief towards escapement, even a non-filer can not be forced to file a return u/s 147. ITAT held notice u/s 147 bad in Law
ABCAUS Case Law Citation
ABCAUS 3391 (2020) (09) ITAT
Important case law relied upon by the parties:
Shri Ravindrasinh N. Gohil vs. ITO
In the instant case, the assessee had challenged the order passed by the CIT(A) in upholding the additions made u/s 68 of the Income Tax Act, 1961 (the Act) arising in the assessment order passed by the Assessing Officer (AO) u/s 143(3) r.w .s. 147 of the Act.
The case of the assessee was reopened by issue of notice u/s 147 of the Act on the basis of information available with the AO which gave rise to the alleged belief that chargeable income of the assessee had escaped assessment.
A notice u/s 148 of the Act was issued.
On issuers of the notice, the assessee sought the reasons recorded for the formation of beliefs about the income having escaped assessment to enable him to file a proper and correct return of income.
The assessee was informed that he had deposited cash in excess of Rs. 10 lakhs in the bank and entered into share transactions above Rs. 2 lakhs which has resulted in the formation of belief toards escaped assessment against the assessee.
Before the Tribunal, the contention of the assessee was that in the absenceof any objective and intelligible reasons and quantum of escapement, the so called belief could not pass the scrutiny of law.
The Tribunal observed that Explanation 2 to Section 147 of the act inter alia deems escapement of chargeable income where no return of income has been furnished by the assessee although the total income of the assessee in respect of which he is assessable under the act exceeds the maximum amount which is not chargeable to income tax.
The Tribunal opined that the essential prerequisite for invocation of power under section 147 of the act is escapement of chargeable income both in the event of return having been fired or where nor return has been fired.
The Tribunal stated that the AO can compel the assessee to file a return of income under section 147 of the act salary in the event of escapement of income.
The Tribunal further stated that without having cogent reasons for belief towords escapement, even a non-filer of return of income cannot be forced to file a return with the aid of section 147 of the act.
The Tribunal observed that the salary income of the assessee was not chargeable to tax on standalone basis being lower than threshold limit. Secondly there were allegations of cash deposits in bank account in excess of 10 lakhs as per some nondescript and vague information as per AIR. Similarly a non specific reference had been made regarding share transactions.
The Tribunal stated that the entire gamut of information available with the AO was without any proper identification and quantification of alleged escaped income.
The Tribunal observed that the Coordinate Bench had held that mere cash deposits in the bank account can not justify the belief or inference of escapement of income per se.
The Tribunal opined that the initial onus which lays upon the AO towards alleged escapement of chargeable income at the time of issuance of the notice and section 147 was not found to be discharged.
The Tribunal opined that in the absence of specific details of escaped income above the threshold limits shown in the possession of the AO the notice u/s 147 of the Act was erroneous and bad in Law.
Accordingly, the proceedings u/s 147 was quashed and the appeal was allowed.
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