The Amritsar bench of Income Tax Appellate Tribunal (ITAT) while quashing the revision order, held that cash deposit made in a savings bank account is sale consideration earned from the agricultural land.
The assesee Satvir Kaur is earning income in the form of salary and is also an agriculturist.
During the year under consideration, the assessee was under the impression that the tax was applicable on the salary income of the assessee that has already been deducted in the form of Tax Deduction at Source (TDS) and the agricultural income being in the nature of exempt income, the assessee opted for not filing of Income Tax Return for the year under consideration that is the assessment year 2011-12.
Further, the bank account maintained by the assessee in Oriental Bank of Commerce is in the joint name of the assessee as well as her husband. The receipts of the assessee as well as her husband including the agricultural income are deposited in the said bank account.
Thus assessment was completed under section 143(3) read with Section 147 of the Income Tax Act, at an income of Rs. 4,76,150 against returned income of Rs 3,00,830 declared in the return of income filed in response to notice under Section 148 of the Income Tax Act after making addition of Rs. 1,75,322 on account undisclosed interest on savings/deposits.
The assessee’s case was reopened on the reason that the assessee had deposited cash of Rs. 60,00,000 in her savings bank account maintained with the Oriental Bank of Commerce during the financial year 2010-11 and that no return had been filed for the year. Therefore the notice for the revision of assessment order was issued.
Further while considering the assessment order, the Principal commissioner of Income Tax noted that “absence of enquiry by the AO that goes to the very root of the exercise to determine the correct income assessable to tax and this failure of the Assessing Officer renders the assessment as erroneous and prejudicial to the interest of the revenue”
Aggrieved by the revision order passed under section 263 of the Income Tax Act, the assessee filed an appeal before the tribunal.
Sudhir Sehgal, the counsel for the assessee submitted that the Principal commissioner of Income Tax has no valid and justified reason for initiating the revisionary proceedings under Section 263 of the Income Tax Act and it was initiated on the basis of ”Difference Of Opinion”.
Further the counsel submitted that AO was conscious of all the facts of the case of the assessee and the AO has consciously accepted that there was a sale of agricultural land by the assessee that other than the income disclosed by the assessee in her return of income and out of sale of agriculture land, there is no other source of income in the hands of the assessee and the deposit of cash in the bank account of the assessee is only out of the sale consideration of agriculture land.
Girish Bali, Counsel for the revenue supported the decision of the Principal commissioner of Income Tax .
It was observed that all the facts have been independently verified by the AO. Thus, there appears to be merely a change of the opinion of the Principal commissioner of Income Tax in observing that there was incorrect application of mind by the AO by not carrying proper enquiry in the case of the assessee, and thus, a Show-Cause Notice issued under Section 263 of the Income Tax Act to the assessee on account of difference of opinion is bad in law.
Therefore the tribunal of M. L. Meena, (Accountant Member) and Anikesh Banerjee, (Judicial Member) observed that there is a direct nexus between the transaction of sale and the cash deposited in the bank account of the assessee as the transaction of sale of land is registered on 26.04.2010 and the cash was also deposited by the assessee on the same date. Thus the bench allowed the appeal filed by the assessee.
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