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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:
This appeal is filed by the Department against the order of Ld. CIT(A)-NFAC, DELHI dated 07-Nov-2023 arising from the Assessment order dated 30.03.2022 passed under section 147 of the Act by the NFAC, Delhi for the Assessment Year 2014-15.
The Department has raised the following grounds of appeal:
1)(i) Law and on facts of the case by giving relief of Rs.5,20,87,000/-by deleting the addition made by the Faceless Assessing Officer who has made the addition after recording the detailed reasons for doing so in length in the order itself.
2)(ii) Law and on facts of the case by deleting addition of Rs. 5,20,87,000/- after admitting the evidences given by the assessee by filing an application u/s 46A of the IT Rules by the assessee without giving the Assessing Officer an opportunity to examine such additional evidences filed during the course of appellate proceeding and without controverting the finding of A.O mentioned in point.2 of Page no. 4 and therefore has erred by violating the procedure laid down in Rule No. 46A of IT Rule, 1962.
3)(iii) Law and on facts and failed to examine the application of 40(A3) as entire sale and purchase are made in cash.
4)(iv) Law and on facts of the case by ignoring the A.O to examine such evidences and Ld. CIT (A) had accepted the additional evidence in the matter, the Ld. CIT(A) erred in deleting the addition without making any independent enquiry merely relying on the documents submitted by the appellant and failing to collect corroborative evidence and comparable past business activity of the appellant.
5)2. The appellant craves the leave to add or alter or withdraw any other ground(s) during appellate proceedings.
Brief facts of the case are that the assessee had filed the original return electronically in the status of individual on dated 05.09.2014 declaring the total income of Rs.7,65,750/-. The same was processed u/s 143(1) of the Act on 30.11.2014. The notice u/s 148 of the Act was issued on 31.03.2021 on the basis of the information that the assessee had high value of cash deposits and other deposits aggregating to Rs.5,20,87,000/- in Bank. It is also pertinent to mention here that while reopening the case the AO found that the assessee has not disclosed the said account in his ITR for A.Y. 2014-15. The assessee had filed the income tax return in response to notice u/s 148 of the Act on dated 27.04.2021 declaring the same income which has been already declared in Return of Income filed under section 139(1) of the Act. The notice u/s 143(2) of the Act was issued on dated 03.08.2021. The assessment order was passed on 30.03.2022 u/s 147 r.w.s 144 read with section 144B of the Act on the total income of Rs.5,28,52,750/- after making addition of Rs.5,20,87,000/- as unexplained deposit u/s 69 of the Act in Allahabad Bank (now Indian Bank).
Aggrieved, assessee has filed the appeal before the ld. CIT(A) and the Ld. CIT (appeal) who allowed the appeal Aggrieved the Revenue is before us.
Before ITAT, ld. Counsel for the assessee stated that assessee is in the business of grain traders and the case of the assessee was re-opened on account of cash deposit of Rs.5.21 cr. in the instant A.Y 2014-15. The reasons states that there is no bank account declared by the assessee in his ITR. Further, the ld. Counsel stated that the assessee filed an application invoking Rule 27 of Income Tax (Appellate Tribunal) Rule, 1963 for filing additional grounds arguing that the notice under section 148 is based on incorrect and non-existing of facts that there is a deposit of Rs.5,20,87,000/- during the F.Y. 2013-14 in the bank account which has not been disclosed in his ITR.
The ld. Counsel for the assessee pointed to the return of income filed, and stated that the return was accompanied with Form 3CD wherein bank account of Allahabad bank was duly disclosed in the return of income. At that point of time of filing return for AY 2014-15, there was no provision for declaring bank account details apart from the bank where the refund is to be granted. In any case, bank account of Allahabad Bank is declared in the balance sheet which is attached to the Form 3CD. Therefore, the Assessing Officer is incorrect on facts that the bank account was not declared in the return of income. The ld. Counsel vehemently argued that since the bank account was declared and was part of the balance sheet, the conclusion of the AO that the same as an escaped income cannot be based on correct facts.
Per contra, ld. DR stated that the assessment order has mentioned all the details and the deposits made by the assessee.
We have heard the rival submissions and perused the material available on record. We find it would be prudent to reproduce the reasons recorded for reopening the case at page no.28 of the paper book. The following reasons recorded by the AO; reads as under:
“The assessee has made high value cash transactions through his bank account and purposely on a number of occasions cash deposits have been made somewhat less than the threshold limit of Rs.10,00,000/- to avoid any suspicious triggering. Further the assessee has not disclosed the said bank account in his ITR and thereby, the transactions undertaken through it amounting to Rs.5,20,87,000/- during the F.Y. 2013-14, I have reasons to believe that income to the extent of Rs.5,20,87,000/- has escaped assessment for the year under consideration i.e. Assessment Year 2014-15.”
From the perusal of the reasons recorded, we find that there is no detail of bank account where cash transactions have been made. Further, the AO has recorded that the said bank account where transactions worth Rs. 5,20,87,000/- for F.Y. 2013-14 has been made is not disclosed in ITR. On perusal of the Return filed for AY 2014-15, we find it is accompanied with Form 3CD. We further find that the bank account of Allahabad Bank has been duly disclosed in the ITR vide Form 3CD which give details of all bank accounts. We, therefore, conclude that the reasons for reopening are based on incorrect facts which has vitiated the assumption of jurisdiction vide notice under section 148 of the Act. We, therefore, quash the notice dated 30.03.2021 under section 148 of the Act as well as the consequent assessment order under section 147 r.w.s 144 of the Act.
In the result, appeal filed by the assessee in ITA No.37/Del/2024 is allowed.