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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
ORDER Captioned appeals filed by the assessee arise out of two separate orders of learned Commissioner of Income-Tax (Appeals)-15, New Delhi pertaining to assessment year 2010-11.
While arises out of proceedings for imposition of penalty under Section 271(1)(c) of the Income-Tax Act,1961, arises out of quantum proceedings.
At the outset, I propose to deal with the quantum appeal, being . In this appeal, assessee has raised, in total, seven grounds, both, challenging the validity of the assessment order passed under Section 144 read with section 147 of the Act as well as the merits of the addition made.
Briefly, the facts are, assessee is a resident individual. For the assessment year under dispute, assessee didn’t file any return of income voluntarily. Subsequently, the assessing officer received information that during the year under consideration, assessee has deposited cash amounting to Rs.11,25,000 in an account held with State Bank of Patiala, Bali Nagar, Delhi. Based on such information, the assessing officer formed a belief that income chargeable to tax for the year under consideration has escaped assessment. Accordingly, he reopened the assessment under Section 147 of the Act by issuing a notice under Section 148 of the Act. As observed by the assessing officer, assessee did not respond to either the notice issued under Section 148 of the Act or other statutory notices. Ultimately, the assessing officer had to serve the show cause notice by way of affixture. Still, there was no response from assessee.
Thus, the assessing officer proceeded to complete the assessment ex parte, to the best of his judgment, by invoking the provisions of section 144 of the Act. While doing so, he added back an amount of Rs.8,50,000 on peak basis qua the cash deposited in the bank account.
Further, he added back the interest income credited to the saving bank account amounting to Rs.27,276. Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals). Learned First appellate authority granted partial relief to the assessee by reducing the addition made of Rs.8,50,000 to Rs.6,50,000.
Before me, learned Authorized Representative of the assessee submitted that the assessing officer has completed the assessment without serving any notice under Section 148 of the Act. Thus, he submitted, the assessment order is invalid.
Learned Departmental Representative submitted, assessee did not file any return of income for the year showing his current address.
He submitted, in absence of any information from assessee’s side, the assessing officer was compelled to serve the notice on assessee’s address available in PAN data base and ultimately notice was served through affixture.
I have considered rival submissions and perused the material available on record. Admittedly, for the year under consideration, assessee did not file any return of income under Section 139(1) of the Act. Whereas, assessing officer had tangible material in his possession indicating that assessee had deposited cash into her bank account.
Thus, based on such information, assessing officer reopened the assessment under Section 147 of the Act. Therefore, in my view, the reopening of assessment under Section 147 of the Act is valid. In so far as assessee’s contention regarding non-service of notice under Section 148 of the Act, from the observations of learned first appellate authority, it is noticed, assessee had submitted that she had moved to a new address in May 2010. On a specific query put to the learned counsel by the Bench, whether the change of address was intimated to the assessing officer, learned counsel fairly submitted that no such intimation was given to the assessing officer. Thus, in absence of any intimation from assessee’s side regarding change of address, the only course left open to the assessing officer was to serve notice found mentioned in PAN database, by way of affixture as all his previous attempts to serve notice on the assessee had failed.
In view of the aforesaid, I do not find any merit in the grounds raised by the assessee, challenging the validity of the assessment order.
With regard to the merits of the issues, it is the contention of the learned counsel before me that in the year under consideration, assessee had not only deposited cash in her bank account, but, has also made withdrawals which are more than the deposits. He submitted, though, the details regarding the withdrawals made by assessee were furnished before the learned first appellate authority, however, he has completely ignored them. Thus, he submitted, an opportunity may be granted to assessee to substantiate her claim regarding source of cash deposited in the bank account.
Though, learned Departmental Representative relied upon the observations of the departmental authorities, however, he fairly submitted that the issue can be restored back to the assessing officer for examining the source of cash deposits.
Having considered rival submissions, I find, before learned first appellate authority assessee has submitted that her husband, who was working in USA, had regularly remitted certain amounts, which are deposited in the bank account. It also appears that assessee herself was engaged in professional work as a beautician earning some amount of income. To certain extent, learned Commissioner (Appeals) has accepted this fact. It is also the contention of the assessee before me that withdrawals made during year have not been considered by the departmental authorities.
considering the fact that the assessment was completed ex parte, for which reason the assessee could not furnish the source of cash deposits and also the fact that assessee’s claim of availability of withdrawals made from the bank account was not properly considered, I am inclined to restore the issue relating to the addition made to the file of Assessing Officer for fresh adjudication after considering assessee’s submission, as well as, supporting evidences filed, or to be filed by the assessee. Accordingly, issue is restored back to the Assessing Officer for deciding afresh after due opportunity of being heard to the assessee.
As regards undisputedly, this appeal is challenging the penalty imposed under Section 271(1)(c) of the Act.
While deciding the quantum appeal, being in the earlier part of the order, I have restored the issue relating to the addition made on account of cash deposits to the Assessing Officer for fresh adjudication. Thus, for the present, there is no surviving addition. That being the factual position, penalty imposed under Section 271(1)(c) of the Act cannot survive. Accordingly, I set aside the impugned order of learned Commissioner (Appeals).
However, the Assessing Officer, if warranted, is free to initiate proceedings for imposition of penalty under Section 271(1)(c) of the Act, depending upon the fate of the addition in respect of cash deposited in the bank account.
In the result, both the appeals are allowed for statistical purposes.