DCIT, IN. TAX. CIRCLE-2(2)(2), NEW DELHI vs. HOTCHAND TECKCHAND PUNJABI, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI

BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER

ITA No.1680/Del/2021 Assessment Year: 2012-13 DCIT, Vs. Sh. Hotchand Techchand International Taxation, Punjabi, Circle -2(2)(2), C/o- Nidhi Goyal, CA, A-3 New Delhi Mod Apartment 61, Vasundhara Enclave, Delhi PAN :AQUPP2417I (Appellant) (Respondent)

Appellant by Ms. Tanya, Advocate Sh. Rohit Tiwari, Advocate Respondent by Sh. Munish Kumar Gupta, CIT (DR)

Date of hearing 31.01.2023 Date of pronouncement 17.02.2023

ORDER PER SAKTIJIT DEY, JM: This is an appeal by the Revenue arising out of order dated

17.08.2021 of learned Commissioner of Income Tax (Appeals)-43,

New Delhi, pertaining to assessment year 2012-13.

ITA No.1680/Del/2021 AY: 2012-13

conducting a third party verification and without calling for remand report from the assessing officer which is in clear violation of Section 295(2) (mm) of the Income Tax Act, 1961 read with Rule 46A of the Income Tax Rule, 1962. 2. Whether Ld. CIT(A) has inadventently erred in accepting the genuineness of the source of investments of Rs.9.50 crores based on admissibility of the additional evidence without calling for remand repot from the assessing officers which is in clear violation of Section 295(2) (mm) of the Income Tax Act, 1961 read with Rule 46A of the Income Tax Rules, 1962.

grievance of the Revenue is against admission of additional

evidences in violation of Rule 46A of the Income-tax Rules, 1962.

individual. From the information generated in the system of the

department the Assessing Officer found that in the year under

consideration the assessee had made time deposits with Banks

aggregating to Rs.19,72,95,564/-. Whereas, the assessee has not

filed any return of income. Based on such information, the

Assessing Officer formed an opinion that the income chargeable to

tax has escaped assessment. Accordingly, he reopened the

assessment under section 147 of the Act by issuing of notice

under section 148 of the Act. As alleged by the Assessing Officer,

the assessee neither responded to notice issued under section

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148 of the Act, nor to the notices issued under section 142(1) of

the Act. Therefore, he proceeded to complete the assessment to

the best of his judgment under section 144 of the Act. In course of

assessment proceedings, the Assessing Officer issued notice

under section 133(6) of the Act to Canara Bank. As per the

information received from the Bank, he found that the assessee

had made time deposits amounting to Rs.19,72,95,564/-.

Subsequently, the Assessing Officer issued one more notice to the

assessee electronically. In response to the said notice, the

assessee sent mail to the Assessing Officer on 12.12.2019 stating

that he never stayed in India for a period exceeding one month

since last 35 years. It was further stated that the time deposits

made with the bank are from NRI account and interest income

has been earned. It is submitted, since, the assessee is a NRI and

the entire funds, except the interest, was earned/generated

outside India, it cannot be taxed in Indian. The Assessing Officer,

however, did not accept the explanation of the assessee and

proceeded to add an amount of Rs.16,86,47,782/- as unexplained

investment under section 69B of the Act. The assessee contested

the aforesaid addition before earned Commissioner (Appeals).

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that due to prevailing restrictions on account of Covid -19, the

assessee was unable to participate in the assessment proceeding.

Further, the assessee submitted the relevant bank statement and

fixed deposit receipts to emphasize that time deposits were made

out of NRI savings bank account. Further, the assessee pointed

out discrepancy in the amount of fixed deposit as reflected in the

system of the department by submitting that the actual fixed

deposit amount as on 31.03.12 was Rs.9,50,00,000/- only and

not Rs.19,72,95,564/-. Based on the submissions made, learned

Commissioner (Appeals) called upon the assessee to seek further

clarification from the bank in this regard, which was obtained by

the assessee and furnished before learned Commissioner

(Appeals). From the details submitted from bank, learned

Commissioner (Appeals) found that actual amount of fixed deposit

standing in the account of the assessee as on 31.03.2012 was

9,50,00,000/-. Thus, based on such information learned

Commissioner (Appeals) deleted the differential amount of

Rs.10,22,95,564/-.

Commissioner (Appeals) noticed that the source of the aforesaid 4 | P a g e

ITA No.1680/Del/2021 AY: 2012-13

amount used in time deposit were remittances from assessee’s

overseas bank accounts and were out of his overseas earnings. In

this regard, the assessee had also furnished the source of credit

entries appearing in the bank statements. Thus, considering the

fact that the time deposits were made out of income earned

overseas, learned Commissioner (Appeals) deleted the balance

addition.

materials on record. The basic grievance of the Revenue is,

learned Commissioner (Appeals) should not have deleted the

addition based on additional evidences furnished by the assessee

without forwarding them to the Assessing Office for his

examination and opinion. It is fairly well settled, powers of the

first appellate authority is co-terminus with the Assessing Officer.

On a reading of section 250 and 251 of the Act, it is very much

clear that learned Commissioner (Appeals) while deciding an

appeal can consider and decide any matter arising out of

proceedings in which the order appealed against was passed,

notwithstanding that such matter was not raised by the

appellant. In fact, sub-section (4) of section 250 of the Act

empowers the first appellate authority to make further inquiry as 5 | P a g e

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he thinks fit for disposing of the appeal. Even, sub-rule (4) of Rule

46A empowers the first appellate authority to call for and examine

evidences and make necessary inquiry. Thus, as could be seen,

the statutory provisions empower the first appellate authority to

make necessary inquiry and call for evidences to decide the

appeal.

Commissioner (Appeals) exercising statutory power vested with

him has called for and examined necessary evidences for deciding

the issue. Such exercise of power by learned first appellate

authority assumes importance in the present case considering the

fact that the assessee did not get a fair opportunity to represent

his case before the Assessing Officer. On a careful reading of the

impugned order of learned Commissioner (Appeals) it is very

much clear that considering the fact that the assessee did not get

a fair opportunity to represent his case before the Assessing

Officer, learned Commissioner (Appeals) took the responsibility

upon himself to inquire into the matter and in the process has

called for necessary evidences, not only from the assessee, but

from the concerned bank through the assessee. After examining

the evidences, learned Commissioner (Appeals) has factually 6 | P a g e

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found that the actual quantum of time deposits in Canara Bank

was to the tune of Rs.9,50,00,000/-. He has further found that

even Rs.9,50,00,000/- deposited in Canara Bank was out of

overseas remittances from the income earned by the assessee as a

resident in USA for past so many years. No contrary material has

been brought on record by the Revenue to disturb the aforesaid

factual findings of learned Commissioner (Appeals). Therefore, if,

upon examining the material on record learned Commissioner

(Appeals) has recorded a factual finding, without pointing out any

deficiency or discrepancy in such finding, the decision of learned

Commissioner (Appeals) cannot be reversed merely on the

allegation of violation of Rule 46A.

decision of learned Commissioner (Appeals). Accordingly, we

confirm the order of learned Commissioner (Appeals) by

dismissing the grounds raised.

Order pronounced in the open court on 17th February, 2023 Sd/- Sd/- (G.S. PANNU) (SAKTIJIT DEY) PRESIDENT JUDICIAL MEMBER Dated: 17th February, 2023. RK/- 7 | P a g e

ITA No.1680/Del/2021 AY: 2012-13