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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), Karnal, dated 20.11.2018, pertaining to the assessment year 2009-10. The assessee has filed revised grounds of appeal, that read as under:
“1. That on the facts and circumstances of the case, the Id CIT(A) has erred in confirming the assessment order of the Ld AO passed without going into the facts of the case.
2. That on the facts and circumstances of the case, the Ld AO has erred in law in making the assessment u/s 144/147 without service of statutory notice u/s 143(2) upon the appellant before making the assessment.
3. That on the facts and circumstances of the case, the assessment made by the Ld AO without supplying the copy of reasons recorded to the appellant is against the law.
4. That on the facts and circumstances of the case, the Ld AO has erred on facts calculating the net income/profit @ 8% on total amount of Rs 13129597/-(total credit side of bank statement) determining the turnover of appellant which also includes capital receipts of Rs 8200000/- and Rs 1720000/- cash withdrawal from same bank before deposited the amount into bank.
5. That on the facts and circumstances of the case, the Ld CIT (A) has erred in law and on facts confirming the order of the Ld AO without considering the submissions/documents submitted by the appellant during the appeal proceedings. The Ld CIT(A) is not justified in confirming the order of the Id Ld AO whereas the appellant has rebutted the remand report of Ld AO on facts. That the appellant hereby requests to accept the appeal, quash the orders of lower authorities and oblige.”
The facts giving rise to the present appeal are that the Assessing Officer noticed that the assessee had entered into a financial transaction in respect of cash deposit of Rs. 1,73,30,000/- in his savings bank account during the assessment year under consideration. The case of the assessee reopened u/s 147 of the Income-tax Act, 1961, hereinafter referred to as the “Act”. In response to the statutory notice learned Authorized Representative Shri Balbir Singh, Advocate attended the proceedings. The Assessing Officer treating the bank deposits as the business receipts computed the net profit @ 8% and made addition of Rs. 10,50,368/-. Thus he assessed income of the assessee at Rs. 10,50,368/-.
Aggrieved against this the assessee carried the matter before the learned CIT(Appeals), who after considering the submissions and calling for remand report from the AO, dismissed the appeal. Now the assessee is in appeal before this Tribunal.
Ground no. 1 is general in natures, needs no separate adjudication.
Ground nos. 2 & 3 are against reopening of the assessment. Learned counsel for the assessee vehemently argued that the notice u/s 148 of the Act was not received by the assessee, therefore, non-service of the notice u/s 148 and 143(2) has vitiated the proceedings. Further, he submitted that the AO has recorded incorrect facts. He submitted that in fact the assessee had filed the return of income. He had also enclosed the income-tax return for A.Y. 2009-10.
6. On the contrary learned DR opposed the submissions and supported the orders of the authorities below. He further placed on record the comments of the AO regarding issuance of notice
“In continuation of the same it is submitted that, the proceedings in the case of the assessee were reopened u/s 147/148 after recording reasons in writing and obtaining the prior approval of the competent authority. The notice u/s 148 of the Act in the said case of the assessee was issued to the assessee on 16.03.2016. The notice was also dispatched to the assessee through DAK on the address Shri Jai Bhagwan S/o Shri Ram Dhari, Village-Sandal Kalan, Distt-Sonepat, Haryana. No notice in the case of the assessee issued to the assessee on the above mentioned address has been returned back to this office by the postal authorities. Moreover, the copy of the vakalatnama placed at S. No. 21 of the assessment record which is duly signed by the assessee in favor of Shri J.B.Sharma, Advocate and Page S.No. 22 in favor of Shri Balbir Singh is itself a proof that the notice has already been served upon the assessee in response to which the vakalatnama has been Filed during the course of the assessment proceedings. Further, the address mentioned on the vakalatnama and the Driving license of the assessee is Shri Jai Bhagwan S/o Shri Ram Dhari, Village-Sandal Kalan, Distt-Sonepat, Haryana. The assessee has also attended the assessment proceedings through its counsel. However, failed to file any plausible explanation with regard to the credits appearing in its bank account.”
I have heard learned representatives of the parties and perused the material on record. I find that undisputedly the authorized representative of the assessee attended the proceedings before the assessing authority. It is recorded by the AO that the learned authorized representative had sought adjournment and no objection was raised regarding non-service of the notice, the fact that authorized representative of the assessee attended the proceedings. It is also pointed out by the Revenue that vakalatnama was duly executed in favour of the said authorized representative of the assessee. Therefore, it cannot be inferred that no notice was served upon the assessee. The Revenue has also placed on record the dispatch register of the notice. Therefore, considering the totality of the facts, I am of the considered view that there is no infirmity into the action of the AO in reopening of the assessment. Grounds 2 & 3 according stand rejected.
Ground no. 4 is against sustaining the impugned action of the AO, treating the bank deposits as the business receipts of the assessee. Learned counsel for the assessee has stated that before the authorities below the assessee had furnished the evidence regarding source of deposit of the amount. It was contended that amount of Rs. 17,20,000/- was the cash deposited out of the withdrawal made in the bank account. It was further contended that a sum of Rs. 82,00,000/- was out of the sale consideration of the amount received by mother of the assessee. Learned counsel drew my attention to the sale-deed and the agreement to sell to buttress the contention that the amount was received as the sale consideration of the agricultural land.
On the other hand, learned DR opposed the submissions and supported the orders of the authorities below.
I find that the learned CIT(Appeals) has decided the issue by observing as under:
“I have examined the facts of the case, the submissions made by the appellant, the remand report of the Assessing Officer (A.O.) and the counter comments of the appellant.
The A.O. has clearly stated in the remand report that the cash deposited remains unexplained. The explanation of the assessee is, at best, flimsy in respect of the findings of the A.O. The assessed has merely tried to circumvent the issue of explaining the sources of the said deposits. Therefore, the addition in this case, after considering the business activities of the assessee in various years as detailed by the AO is justified and I confirm the same.”
From the above it is clear that the learned CIT(Appeals) has failed to advert to the objection of the assessee. On the other hand before the authorities below the assessee has categorically stated that amount was out of the funds received from mother and father. The bank statement of father is placed on record which suggest cash withdrawal of Rs. 25,00,000/- and the amount of R. 82,00,000/- was deposited in the bank account of the assessee. Therefore, considering the evidences placed before me I am of the considered view that the authorities below failed to appreciate the evidences in right perspective and treated the deposit as business receipts, which is contrary to the records. Therefore, I hereby delete the impugned addition. This ground of the assessee’s appeal is allowed.
Ground nos. 5 & 6 are general in nature, need no separate adjudication.
In the result, appeal of the assessee is partly allowed.
Order pronounced in open court on 14th February, 2023.