PREMJIT KUMAR,PATIALA vs. ITO-WARD-4, PATIALA

The present appe al has been preferred by the assessee against the order dated 09.09.2019 of the Commissioner of Income Tax (Appeals), Patiala (hereinafter referred to as ‘CIT(A)’ ) pertaining to 2010-11 assessment year. The assessee in this appeal has taken following grounds of appeal:

The brief facts of the case are that the assessee had not filed his return of income for the assessment year 2010-11.

Being aggrieved by the said order, the assessee preferred appeal before the CIT(A) and explained that the aforesaid bank account was neither opened by the assessee nor run by the assessee. In fact, the said account was opened by one Mr. Sonu (since deceased) as well as by one Mr. Goyal and Mr. Singla of Singla Cements for doing commodity derivative transaction. The assessee worked for one Mr. Sonu (since deceased) and that the bank account in question was used by the above persons for depositing margin money for doing commodity derivative transactions at MCX. Mr. Sonu committed suicide due to heavy losses in the commodity trade. That the transactions were done by them through the broker M/s Prasar Commodity (P) Ltd. Delhi. That the assessee was a person of meager resources and was getting salary of Rs. 4000/- to 5,000/- per month from Mr. Sonu. The assessee moved an application for additional evidence before the ld. CIT(A) to prove the above contention. The matter was remanded by the ld. CIT(A) to the file of AO.

In the re mand proceedings before AO, the assessee produced the concerned persons who made statement before the AO that they used to deposit margin money in the account of the assessee for the purpose of carrying out transaction in the commodity derivatives.

After considering the submissions of the assessee, relevant evidences and the state ments and affidavits of 14 persons, the ld. AO was satisfied that the deposits did not belong to the assessee and forwarded the remand report to the ld. CIT(A).

The ld. CIT(A) considered the remand report of the AO and examined the evidences and state ment and affidavits of the concerned pe rsons and agreed that the amount in question cannot be said to be unexplained income of the assessee u/s 68 of the Income Tax Act. However, the ld. CIT(A) proceeded further to conclude that the aforesaid commodity transactions were done through the account of the assessee without any broker licence etc. and therefore, the said transactions were not legal and under the circumstances, money could be treated as advance in cash by the said persons to the assessee. He, accordingly, directed that the amount of deposit be taxed u/s 269SS of the Act.

Being aggrieved by the above order of the ld. CIT(A), the assessee has come in appeal before this Tribunal.

I have heard the rival contentions and gone through the record. The first and foremost contention of the ld. counsel for the assessee has been that no notice u/s 148 of the Act was served upon the assessee. He, in this respect has invited

I find force on the above submissions of the ld. counsel for the assessee. It has not been explained that when the notice was sent through post on 29.03.2017, how come the AO was satisfied on the same day that the notice would not be served through the post/ordinary way. Even the address was mentioned of a shop i.e. M/s Singla Cement Agency, Kheri Gujran, Patiala. However, there was no mention by the concerned Mr. Gunit Sandhu, Inspector and Shri Vijay Kumar, Notice Server as to whether they had affixed the notice on the ITA-1595/CHD/2019 A.Y. 2010-11 Page 6 of 8 conspicuous part of the shop and whether at that time the shop was opened or closed or whether they had enquired from the shopkeeper about the whereabouts of the assessee. There is no mention on the notice that where the notice was affixed and in whose presence it was affixed. Under the circumstances, it is e vident that infact no notice u/s 148 was ever served upon the assessee. The aforesaid affixture notice seemed to have been prepared post dated for self serving purpose. As per Section 148 of the Act, the service of notice on the assessee is a sine qua non before making the assessment, re-assessment or re-computation u/s 147 of the Act. Therefore, the assessment framed by the AO without service of notice u/s 148 of the Act was bad in law and as such is liable to be quashed.

Now coming to the merits of the case, the assessee in the remand proceedings duly explained the source of deposits and also produced the concerned persons and furnished their affidavits who confirmed that the account of the assessee was used by them for deposit of margin money for carrying out commodity derivative transactions. The AO was satisfied with the evidences and statements of witnesses and reported accordingly to the ld. CIT(A).

Even the ld. CIT(A) did not point out any discrepancy in the evidences furnished by the assessee. However, he proceeded on a wrong footing that since the transactions carried out by those persons through bank account of the assessee were not done in a legal way, therefore, the said amount was to be treated as advance in cash by those persons to the assessee. However, I find that both the lower authorities were satisfie d with the contention of the assessee that he was a person of meager resources and that the bank account was not opened by him, rather by one Mr. Sonu and other persons and that they had used the account for carrying out their commodity derivative transactions. Under the circumstances, in my view, the ld. CIT(A) wrongly held that the amount could be treated as advance by those persons to the assessee.

The appeal of the assessee stands allowed.