IN INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA No.190/Bang/2014 Assessment year : 2005-06 Smt. Anita Karuturi, Vs. Assistant Commissioner of No.204, Embassy Centre, Income Tax, No.11, Crescent Road, Circle 11(5), Bangalore 560 001. Bangalore. PAN: ABGPR 1575E APPELLANT RESPONDENT ITA No.213/Bang/2014 Assessment year : 2005-06 Assistant Commissioner of Vs. Smt. Anita Karuturi, Income Tax, Bangalore 560 001. Circle 11(5), PAN: ABGPR 1575E Bangalore. APPELLANT RESPONDENT Assessee by : Shri B.K. Manjunath, CA Revenue by : Shri A.R.V. Sreenivasan, Jt. CIT(DR) Date of hearing : 01.08.2016 Date of Pronouncement : 18.10.2016 ORDER Per A.K. Garodia, Accountant Member These are cross appeals filed by assessee and revenue against order of CIT (Appeals)-I, Bangalore dated 21.10.2013 for assessment year 2005-06. ITA Nos.190 & 213/Bang/2014 Page 2 of 7 2. grounds raised by assessee are as under:- 1. That orders of AO/CIT(A) in so far as it is against appellant is against law, facts, circumstances, natural justice, equity, without jurisdiction, bad in law and all other known principles of law. 2. That total income and total tax liability computed is hereby disputed. 3. That reassessment proceedings were initiated for particular reason/issue whereas assessment has been completed on different issues/reasons. 4. That learned CIT (A) erred in upholding reassessment proceedings which were on issues other than what was recorded in reasons. 5. learned AO/CIT (A) erred in treating agricultural income of Rs. 3,20,000/- as income u/s 68 of Act. 6. learned AO/CIT(A) erred in upholding addition made with respect to hand loan amounting to Rs. 10,00,000, overlooking details submitted by appellant. 7. learned AO/CIT(A) erred in bringing to tax credit card payments amounting to Rs. 2,92,313/-. 8. appellant denies liability for interest u/s 234A, 234B and 234C of Act. Further, interest if any has to be levied only on returned income. 9. Without prejudice to appellant's right of seeking waiver before appropriate authority appellant begs for consequential relief in levy of interest u/s. 234A, 234B and 234C of Act. 10. For above and other grounds and reasons which may be submitted during course of hearing of this appeal, assessee requests that appeal be allowed as prayed and justice be rendered. ITA Nos.190 & 213/Bang/2014 Page 3 of 7 3. grounds raised by revenue are as under:- 1. order of Learned CIT (Appeals) is opposed to law and facts and circumstances of case. 2. CIT(A) erred in holding that as transaction was through cheque and transfer from account to another account, cash credit of Rs 10,00,000 dated 09/03/2005 stands explained without appreciating that assessee has neither explained nature of credit either before AO or CIT(A). 3. For these and such other grounds that may be urged at time of hearing, it is humbly prayed that order of CIT (A) be reversed and that of Assessing Officer be restored. 4. appellate craves leave to add, to alter, to amend or delete any of grounds that may be urged at time of hearing of appeal. 4. It was submitted by ld. AR of assessee that reopening in present case is bad in law and in support of this contention, he placed reliance on Tribunal s order rendered in case of Shri Ashwani Kumar v. ITO in ITA No.129/Asr/2015 dated 23.2.2016. He submitted copy of Tribunal s order. It was also submitted that reasons recorded by AO in present case for reopening are available at page 81 of paperbook (PB). 5. ld. DR supported assessment order. 6. We have considered rival submissions. First of all, we reproduce reasons recorded by AO for reopening which is available at page 81 of PB. This is as follows:- ITA Nos.190 & 213/Bang/2014 Page 4 of 7 As per discussion had with your Authorised Representative & as per your request reasons recorded for re-opening of Assessment u/s 147 for AY: 2005-06 is as follows:- Information gathered in this office in above mentioned case for financial year 1.04.2004 to 31.03.2005 relevant for assessment year 2005-06, is as under: Credit Card Payment Rs.3,54,843/- above mentioned person has not filed return of income for A.Y. 2005-06 relevant to financial year 2004-05. As such I have reason to believe that income chargeable to tax has escaped assessment within meaning of section 147 of Income Tax Act, 1961. 7. Now we reproduce relevant para Nos.4 and 7 to 9 of Tribunal s order cited before us. This is as under:- 4. AO recorded reasons for issuance of notice u/s 148 of I. T. Act, 1961, to believe escapement of income. These reasons are as follows: Reasons for issuance of notice u/s 148 of I. T. Act, 1961. As per information available from Annual Information Return (AIR) relating to financial year 2004-05 relevant to assessment year 2005-06, above mentioned person has deposited Rs.11,60,000/- in cash in SB account. However, aforesaid person has not given Permanent Account Number (PAN) to AIR filer and even information has been received as AIR data without PAN from concerned AIR filer. It is thus established that above mentioned person is not assessed to tax. Since, amount of investment exceeds maximum amount which is not chargeable to tax, I have reasons to believe that income to tune of Rs.11,60,000/- has escaped assessment by reason of failure on part of assessee to make return u/s 139 or in response to notice issued ITA Nos.190 & 213/Bang/2014 Page 5 of 7 under sub-section (1) of section 142 of Income Tax Act, 1961. Accordingly, I have reason to believe that income of Rs.11,60,000/- of assessee has escaped assessment, besides any other income chargeable to tax which would have escaped assessment and would come to notice subsequently in course of assessment proceedings under this section, within meaning of section 147 of I.T. Act. Sd/- Dated: 20.03.2012 (Dr. Tarundeep Kaur) Asstt. Commr. of Income Tax, Circle-1, Bathinda. .. .. 7. facts are not disputed. bare perusal of reasons recorded for issuance of notice u/s 148 of Act, shows that only material available before AO was AIR information of assessee having deposited amount of Rs.11.60 lakhs in his savings bank account. Remarkably, reasons recorded did not even mention bank in which such savings bank account was maintained. assessee, as available from first page of assessment order, was issued notice u/s 148 of Act, in pursuance to aforesaid reasons. assessment order under section 143(3) of Act is dated 25.03.2013. assessee had filed return of income on 05.10.2005 and it had been stated in response to notice u/s 148 of Act that this return be treated as having been filed in response to this notice. In Bir Bahadur Singh Sijwali (supra), like in present case, reasons recorded indicated that cash deposits had been made in bank account of assessee. Tribunal held that mere fact that deposits having been made in bank account does not indicate that these deposits constitute income which has escaped assessment. It was observed that reasons recorded did not make out case that assessee was engaged in some business and income from such business had not been returned by assessee. In case at hand also, reasons recorded do not contain any such recital. Tribunal held that factum per se, of deposits in bank account of assessee ITA Nos.190 & 213/Bang/2014 Page 6 of 7 could not be made basis for holding view that income had escaped assessment, over-looking that sources of deposits need not necessarily be income of assessee; and that as such, 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 notice u/s 148 of Act. 8. Bir Bahadur Singh Sijwali (supra), as discussed, is clearly applicable to present case. No decision to contrary has been cited before me. 9. In view of above, finding merit in grievance raised by assessee by way of Ground no.1, reasons recorded by AO for issuance of notice u/s 148 of Act are held to be invalid, being reasons not sufficient to believe escapement of income, based on vague information. All proceedings pursuant thereto, including assessment order dated 25.03.2013 and impugned order dated 29.01.2015 are thus annulled and cancelled. Accordingly, all other issues on merits are rendered academic and infructuous. 8. It is seen that in that case also, reopening was on basis of AIR only and in present case also, reopening is merely on basis of AIR. In that case, it was stated in reasons recorded by AO that, that person is not assessed to tax because he has not quoted his PAN to AIR filer. In present case, AO says that since present assessee has not filed return of income for AY 2005-06, he has reason to believe that income has escaped assessment. In our considered opinion, facts in present case are similar if not identical to that case, wherein Tribunal held that reasons recorded by AO for issuance of notice u/s. 148 of I.T. Act are not valid being reasons were not sufficient to believe escapement of income. ITA Nos.190 & 213/Bang/2014 Page 7 of 7 9. Respectfully following this Tribunal s order, we hold that in present case also, assessment is not valid because reasons recorded by AO for issuance of notice u/s. 148 of Act are invalid, because these reasons are not sufficient to believe escapement of income. Hence present assessment order is annulled and cancelled. 10. In view of our decision, no adjudication is called for regarding other grounds raised by assessee and in respect of appeal filed by revenue. 11. In result, appeal of assessee is allowed and appeal of revenue is dismissed. Pronounced in open court on this 18th day of October, 2016. Sd/- Sd/- (SUNIL KUMAR YADAV ) ( A.K. GARODIA ) Judicial Member Accountant Member Bangalore, Dated, 18-10-2016. /D S/ Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file By order Assistant Registrar, ITAT, Bangalore. Anita Karuturi v. Assistant Commissioner of Income Tax, Circle 11(5), Bangalore