PREM SINGH,SONIPAT vs. ITO, WARD-3, SONIPAT

Briefly, the facts of the case are that the assessee is a Farmer and sold his agricultural land for a 2 ITA.No.598/Del./2020 Shri Prem Singh, Sonepat, Haryana. consideration of Rs.38 lakhs through cheque. Out of the amount received against the sale of land, the assessee withdrawn cash from time to time and deposited the same in his Bank A/c maintained with Oriental Bank of Commerce. On the basis of the information available with the Department that the assessee has deposited a cash deposit of Rs.35,90,000/-, the case of the assessee was reopened under section 148 of the I.T. Act, 1961 after recording reasons in writing and getting necessary approval from the Pr. Commissioner of Income Tax, Rohtak and the A.O. issued notice under section 148 of the I.T. Act, 1961 dated 30.03.2017 which was duly served upon the assessee. Since the assessee failed to comply with the notice issued under section 148 of the I.T. Act, 1961 within the stipulated time, therefore, notice under section 142(1) of the I.T. Act, 1961 calling the assessee to explain the source of cash deposits of Rs.35,90,000/-. Several notices were issued under section 142(1) of the I.T. Act, 1961, but, since, there were no compliance from the side of the assessee, the A.O. passed the ex-parte assessment order under section 3 ITA.No.598/Del./2020 Shri Prem Singh, Sonepat, Haryana. 144/147 of the I.T. Act, 1961 by working out the peak credit entries of his Bank A/c at Rs.42,75,483/- and treated the said amount as total taxable income of the assessee from his undisclosed sources as the assessee has not filed any return of income. The A.O. also initiated penalty proceedings separately. Aggrieved by the order of the A.O, the assessee preferred an appeal before the Ld. CIT(A) and the Ld. CIT(A) granted part relief to the assessee.

Now the moot question before me is, as to whether the addition made by the A.O. and partly confirmed by the Ld. CIT(A) pertaining to Bank A/c.No.xxxxx2891 amounting to Rs.21,65,483/- is sustainable when no addition has been made by the A.O. on account of cash deposits to Bank A/c.xxxxx6990 which was picked-up for initiation of re-assessment proceedings under section 147 of the I.T. Act, 1961 and issuing notice under section 148 of the I.T. Act, 1961 to the assessee.

During the course of hearing, the Learned Counsel for the Assessee pressing into service the decision

Reply to the above, the Ld. D.R. supported the assessment order as well as first appellate order and submitted that the Ld. CIT(A) has considered the remand report of A.O. in right perspective and, therefore, made addition pertaining to Bank A/c. of assessee i.e., xxxxx2891 and did not made any addition on account of cash deposit to another Bank A/c.xxxxx6990 and the A.O. is very well empowered to make impugned addition. He submitted that considering the totality of the facts and circumstances of 5 ITA.No.598/Del./2020 Shri Prem Singh, Sonepat, Haryana. the case, the addition made by the A.O. and partly confirmed by the Ld. CIT(A) may kindly be upheld.

Placing rejoinder to the above, Learned Counsel for the Assessee drew my attention towards copy of the reasons recorded by the A.O. for initiation of re-assessment proceedings and issuing notice under section 148 of the I.T. Act, 1961 and submitted that the A.O. has only picked-up Bank A/c.xxxxx6990 of assessee and no issue has been raised therein. She further drew my attention towards remand report of the A.O. reproduced by the Ld. CIT(A) in para-5 of first appellate order and submitted that in the last paragraph at page-20 it is clearly discernible that the A.O. has not made any adverse comments or remarks against the cash deposits to the Bank A/c.No.xxxxx6990 of the assessee and clearly reported that the cash deposits made to this Bank A/c are from cash withdrawals from the same Bank A/c which appears to be reasonable. The Learned Counsel for the Assessee further submitted that in second para at page-20 the A.O. stated that on perusal of Bank A/c.xxxxx2891 shows transfer credit entry of 6 ITA.No.598/Del./2020 Shri Prem Singh, Sonepat, Haryana. Rs.21,90,000/- on 26.12.2009 has been transferred from assessee’s Bank A/c.xxxxx6990, therefore, assessee is entitled for a relief out of total addition of Rs.42,75,483/-. The Learned Counsel for the Assessee further explained that keeping in view these paras of remand report the Ld. CIT(A) has only restricted the addition to Rs.21,65,483/- pertaining to the cash deposits to another Bank A/c xxxxx2891 and no addition has been made or confirmed pertaining to impugned Bank A/c.xxxxx6990. The Learned Counsel for the Assessee vehemently pointed-out to these factual position which is amply clear that there is no addition or disallowance in the hands of assessee pertaining to the issue alleged by the A.O. in the reasons recorded, but, addition has been made on other Bank A/c which was not subject matter of reasons recorded by the A.O. before issuing notice under section 148 of the I.T. Act, 1961. She lastly drew my attention to paragraphs-18 and 19 of Judgment of Hon’ble jurisdictional High Court in the case of Ranbaxy Laboratories Ltd., vs., CIT (supra).

On careful consideration of above rival submissions, I am of the considered view that undisputedly the Ld. CIT(A) has only confirmed addition of Rs.21,65,483/- on account of cash deposits by the assessee to Bank A/c.No.xxxxx2891 and no addition has been made or confirmed in the hands of assessee pertaining to the cash deposits made by the assessee to another Bank A/c.xxxxx6990 which was picked-up by the A.O. for reopening of the assessment.

Since in the earlier part of this order I have granted relief to the assessee on the strength of proposition of Hon’ble jurisdictional High Court in the case of Ranbaxy Laboratories Ltd., vs., CIT (supra), therefore, the other grounds of assessee have become academic and infructuous and thus, the same are not being adjudicated upon. Accordingly, the appeal of the assessee is allowed.

In the result, appeal of the Assessee is allowed.