RAJESH KUMAR,MIRZAPUR vs. NFAC,, DELHI

The facts of the case are that the ld. AO observed that the assessee was having two PAN numbers. He further observed, that while the assessee was using one PAN number to file returns, there was another PAN number being used in the bank. He, therefore, came to a conclusion that the bank account linked to the other PAN number that was undisclosed and the credits in the same were unexplained income and he, accordingly issued notices to the assessee to furnish a return under section 148. The ld. AO records that the assessee made compliance to his various notices on 7.03.2022 but also states that the he did not furnish the necessary information as required in the notices under section 142(1). The ld. AO points out, that he subsequently issued notices to the assessee pointing out that the assessee had not furnished the complete details but the assessee did not make compliance. The ld. AO, therefore, observed that the assessee had only disclosed one bank account in his income tax returns maintained with M/s Canara Bank but had not disclosed another account,which had been mapped to another PAN in the name of the assessee and in which, the cash deposits to the extent of Rs.21,40,000/-, had been made in the demonetization period. The ld. AO, thereafter, made enquiries with the bank and found that the assessee was maintaining three accounts with the said bank which were transferring amounts to one another. Upon going through the three bank accounts numbering 0599, 0166 and 0471, he found that there were total credits of Rs.2,23,12,806/- in these accounts and total debits of Rs.2,36,19,458/- from these accounts. The total amount of cash deposits in these accounts were Rs.26,41,500/- during the demonetization period and Rs.1,36,16,605/- in the complete financial year. The ld. AO inferred that the credits in these three bank accounts were over and above the receipts declared by the assessee in his ITR. He, therefore, added back the cash deposit of Rs.1,36,16,605/- made in these three accounts over the course of the financial year and credits of Rs.16,96,801/-, computed by him and brought the same to tax under section 69A of the Income Tax Act, 1961.

Aggrieved with the said additions, the assessee went in appeal before the ld. CIT(A). However, this appeal was filed late and the ld. CIT(A) observed that the assessee had stated in Form No.35 that the demand notice had been served nearly three and a half months after the appeal order, but had failed to prove the same. He, therefore, held that the assessee was bound to explain the delay of 105 days in the filing of the appeal and he observed that in Form No. 35, the assessee had denied that there was any delay in the filing of the appeal. The ld. CIT(A), thereafter, relying upon various case laws, pointed out that the assessee had failed to give sufficient reasons for the delay in the filing of the appeal. He, therefore, refused to condone the delay of 105 days and dismissed the appeal in limine. The assessee is aggrieved with the summary dismissal of his appeal by the ld. CIT(A) and has accordingly come in appeal before us.

Shri. Praveen Godbole, C.A. (hereinafter referred to as the ld. AR) appearing on behalf of the assessee, submitted that before both the lower authorities compliance could not be made owing to the illness of the assessee and it was for this reason that ex parte assessment was framed. It was submitted that the assessee had pointed out before the ld. CIT(A) in the appeal memo itself, that the bank account was linked with a PAN number that was lost and therefore, the assessee applied for a duplicate PAN and was allotted a duplicate PAN number. Therefore, he declared his income under his new PAN, but the deposits in the bank account had been duly disclosed in the returns. It was submitted that earlier, the notice had been issued against the PAN number linked to the bank account and it was only when the assessee had submitted that this bank account had been disclosed and reconciled and considered in the return filed with PAN number AOOPK0542B, that the Department accepted his version of the facts and dropped the earlier proceedings initiated against PAN number AMJPK3096K. Only thereafter, action under section 147 had been initiated against the assessee on the present PAN. It was submitted that in compliance to the notice under section 142(1), the assessee had submitted the details and also enclosed copy of balance-sheet as well as the audit report showing that the cash deposit was made from definite sources and accounted for in the books of accounts. However, without providing opportunity for explanation, the ld. AO had straightway added the amount back. While doing so, the ld. AO had only added back the credit entries without considering the debit entries. The bank account should have been considered as a whole, but a one side addition had been made. It was, therefore, submitted that the assessee may kindly be given an opportunity to explain his case properly in view of the fact that his ill health had prevented him from making compliance earlier.

On the other hand, Shri. A.K. Singh, Sr. DR (hereinafter referred to as the ‘ld. Sr. DR’) appearing on behalf of the Revenue, submitted that the maintenance of two PAN numbers caused suspicion with regard to the notice of the assessee and the failure to comply had resulted in the addition. Therefore, if the Tribunal in its wisdom decided to restore the matter back to the file of the ld. AO or the ld. CIT(A), a direction may be given to the assessee, to make compliance failing which, it should be presumed that the assessee had nothing to submit in this regard.

We have duly considered the facts and circumstances of the case. We observe that the assessee has been handicapped in representing his case before the lower authorities on account of his illness. We also observe that the earlier proceedings under section 147, initiated in respect of PAN number AMJPK3096K had been dropped once the assessee had been able to satisfy the Department that his real PAN number was AOOPK0542B and that the bank transactions in question, had been disclosed against the said PAN number. We, however, observe that this re- conciliation has not been furnished before the ld. AO, which led the ld. AO to conclude that the said transactions were unexplained. We, therefore, restore the matter back to the file of the ld. AO, with a direction to the assessee to produce the