PRADEEP,NEW DELHI vs. ITO WARD-30(2), NEW DELHI

Briefly the facts are, the assessee is a resident individual engaged in the business of trading in sugar through his proprietary concern M/s. Maa Chandi Traders. On the basis of information available on record, the Assessing Officer noticed that in the year under consideration, the assessee had deposited cash amounting to Rs.12,60,000/- in his savings bank account. Whereas, the assessee had not filed any return of income for the impugned assessment year, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceeding, the Assessing Officer called upon the assessee to explain the source of cash deposits in the bank account. In response, the assessee submitted that the cash deposits were actually made in current account held in the name of proprietary concern, M/s. Maa Chandi Traders and were made out of business receipts. The Assessing Officer, however, was not convinced with the submissions of the assessee. He observed that the documentary evidences furnished by the assessee to demonstrate that he has effected purchases of sugar from M/s. S.B.M. & Company Pvt. Ltd. are not believable, as, the notice issue under section 133(6) of the Act to the concerned party returned back unserved. Thus, he ultimately concluded that the 2 | P a g e claim of the assessee that he is carrying out business activity is bogus. Accordingly, he treated the amount of Rs.12,60,800/- as unexplained cash credit under section 68 of the Act and added back to the income of the assessee. Against the assessment order so passed, though, the assessee preferred an appeal before the learned Commissioner (Appeals), however, the appeal was dismissed.

I have considered rival submissions and perused the materials on record. As regards the issue relating to reopening of assessment under section 147 of the Act, admittedly, for the year under consideration, the assessee did not file any return of income under section 139(1) of the Act. Whereas, the Assessing Officer received information indicating that in the year under consideration, the assessee had deposited cash in the account held with the bank. Since, the assessee did not file any return of income for the impugned assessment year, the Assessing Officer was entitled to entertain the belief that cash deposits made in the bank account represents the escaped income of the assessee. Therefore, in my view, the Assessing Officer had tangible material available with him to reopen the assessment. Merely because in the reasons recorded the Assessing Officer referred to the account 3 | P a g e