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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 20.09.2021, pertaining to the assessment year 2012-13. The assessee has raised following grounds of appeal:
“1. That the Id. CIT Appeal has erred in confirming the action of the Assessing Officer in wrongly assuming jurisdiction u/s 147 of the Act and reopening of the case u/s 148 of the Income-tax Act.
That the reopening of the assessment has been made against the facts and circumstances of the case.
3. That without prejudice to the above said grounds of appeal, it is submitted that the Id. CIT(A) has erred in confirming the addition of Rs. 15,85,500/- on account of gift received from his brother Shri Likhi Ram and opening cash balance in hand as income from undisclosed sources.
Harish Chander Vs. ITO 4. That the Id. CIT Appeals has erred in not admitting the additional evidence filed before him which was further step to prove the genuineness, identify and creditworthiness of the donor and the evidence should have been admitted in view of the decision of Hon’ble Punjab & Haryana High Court in the case of Mukta Metal Works 336 ITR 555. 5. That the appellant craves to add, to alter, to delete and or to amend any of the above grounds of appeal before the final hearing.”
2. Facts giving rise to the present appeal are that Assessing Officer was in possession of information regarding deposit of cash of R. 15,85,500/- in the bank account maintained with Punjab National Bank. Since no explanation was given regarding cash deposited in the bank account, the Assessing Officer, therefore, proceeded to reopen the assessment u/s 147 of the Income-tax Act, 1961, hereinafter referred to as the “Act”. A notice u/s 148 of the Act was issued to the assessee. In response thereof, no one attended the proceedings. Thereafter notice u/s 142(1) dated 10.5.2019, 21.8.2019 were also issued to the assessee, but there was no representation on behalf of the assessee. Under these facts the Assessing Officer proceeded to make best judgment assessment and assessed the income u/s 144 read with section 147 of the act at Rs. 15,85,500/-. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals) who also sustained the finding of the Assessing Officer and dismissed the appeal of the assessee.
Aggrieved against this the assessee has preferred appeal before this Tribunal.
Ground nos. 1 & 2 are against reopening of the assessment. Learned counsel for the assessee vehemently argued that the authorities below were not Harish Chander Vs. ITO justified in making the reopening. He further reiterated the submissions as made in the written submissions. For the sake of clarity the submissions of the assessee are reproduced as under:
“i. That it is submitted that it is a well settled law that the validity of reopening of the assessment is to be determined with reference to the reasons recorded for reopening the assessment. ii. In the reasons recorded the AO has mentioned that he has information that the assessee has deposited cash amounting to Rs 15,85,500/- with Punjab National Bank during the FY 2011-12 and thus there is an escapement of income to the tune of Rs 15,85,500/-. iii. The assessee has filed detailed submission before the CIT(A) in paper book in which it is clearly explained that the AO has wrongly assumed the entire cash deposit in his Punjab National Bank account was income of the assessee as there are deposits and withdrawals multiple times throughout the year. iv. That the assesse has received the gift from his family members (real brother ShLikhi Ram). The contention of the CIT(A) that the assessee has not brought any corroborative documentary evidence to prove genuineness of the gift is not correct. v. The gifts received are received by the appellant are one of the gifts that fall within the limits of Section 56(2)(v) of the Act. Reliance is placed upon the decision of Hon’ble Delhi High Court in CIT v. Ramesh Suri [2015] 57 taxmann.com 84/231 Taxmann 380 stating that wherein in case of gifts out of love and affection, AO could not have raised doubt about the capacity of donor. vi. These facts clearly show that total cash deposited in the bank account of the assessee with the Punjab National Bank, per se may not be the income of the assessee. The ITAT Bench in the case of Shri Abrar Ahmed Qasimi, Delhi v. ITO Ward 46(5), New Delhi (supra), following the decisions of the Tribunals has held that deposits in the bank account per se cannot be the income of the assessee. Thus, it was mere suspicion of the A.O. based on incorrect facts that income chargeable to tax has escaped assessment Thus, the A.O. would not get jurisdiction to reopen the assessment on such wrong facts recorded for reopening assessment. Reliance is also placed on the judgements of Harish Chander Vs. ITO CIT v. Atlas Cycle Industries [1989] 180 ITR 319 [P&H] Pr. CIT v. SNG Developers Ltd [2018] 404 ITR 312 (Del.) Shamshad Khan v. ACIT [2017] 395 ITR 265 (Del.)”
On the contrary, learned DR opposed the submissions and supported the orders of the authorities below.
I have heard the rival contentions of the parties. There is no dispute with regard to the fact that cash was deposited in the bank account of the assessee.
Before the Assessing Officer no explanation was furnished regarding the source of such cash deposit. Therefore, the Assessing officer had reason to believe regarding escapement of income from assessment. The assessee was required to explain the source of cash deposit. Once the assessee failed to do so, the Assessing Officer was justified in reopening the assessment. Accordingly, ground nos. 1 & 2 are rejected.
Ground nos. 3 & 4 are against sustaining the addition made by the Assessing Officer.
Learned counsel for the assessee reiterated the submissions as made in the written submissions. For the sake of clarity the submissions of the assessee are reproduced as under:
“i. That during the assessment proceedings the assessee being not being tax literate, not aware of the nitty gritties of either tax laws or the Rules and his health issues due to age factor, could not produce the relevant documents for substantiating the sources of cash deposits.
Harish Chander Vs. ITO ii. That the assessee submitted before the Commissioner (Appeals), application dated 28-04-2021 for admission of additional evidences under Rule 46A of I.T. Rules, 1962. On the same date written submissions were also submitted before the CIT(A) wherein detailed submission were made for admission of additional evidences. iii. That the assessee in the application under rule 46A submitted that the additional evidences goes to the root of deciding the issue and hence they should be admitted. The following documents were submitted as an additional evidence before the CIT(A):- (a) Copy of bank statement of Sh Likhi Ram, brother of assessee from whose account the money was withdrawn and given to the assessee;
(b) Summarized cash book of the assessee evidencing available cash in hand utilized to deposit the amount along with explanation of each entry for the period 22.01.2011 to 26.08.2011. iv. The CIT(A) did not admit the additional evidence mainly on the ground that the assessee did not avail the opportunity to submit the requisite information before the Assessing Officer and that the assessee’s case does not fall in any of the exception listed under Rule 46A. v. The CIT(A) in his order dated 20-09-2021 has stated that the bank account of the brother of assessee were produced from where a sum of Rs 9.00 Lakhs were withdrawn and given to the assesse but the copy of the bank statement produced are not very legible. vi. At this stage it would be worthwhile to refer to Section 250(4) of the I.T. Act which reads as under:- "The Commissioner (Appeals), may before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals) " vii. As per the above provision, the CIT(A) at the time of hearing of the appeal can make such further inquiry as he deems fit and may ask the assessing officer as he deems fit to make further inquiry. It is well settled that the above provision in the Act vests the CIT(A) with the power to make further inquiry which would include the power to admit further evidence. It is relevant to observe here that the procedure and manner in which such evidence is to be produced is provided in Rule 46A of I.T. Rule 1962. Sub-rule (1) of rule 46A provides the grounds on which the CIT(A) can allow additional evidence. Sub-rule (2) provides that the Harish Chander Vs. ITO CIT(A) while admitting such evidence must record its reasoning in writing. Sub- rule (4) of Rule 46A reads as under:—
"(4) Nothing contained in this rule shall affect the power of the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the [Assessing Officer]) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.]" viii. As per the Sub-rule (4) of Rule 46A, the C!T(A) himself has the power to direct for production of any document or witness to enable him to dispose of the appeal or for any other substantial cause. In the instant case the additional evidence mentioned hereinabove was produced not on the direction of CIT(A) but by the assessee herself. The assessee explained that he produced this evidence because of his non- appearance before the Assessing Officer and therefore, the CIT(A) ought to have admitted the additional evidence in terms of section 250(4) of the Act and Rule 46A of the Act.”
Learned DR opposed the submissions and supported the orders of authorities below
I have heard the rival contentions, perused the material available on record.
It is contended that before learned CIT(Appeals) request was made for admission of additional evidences. It was also stated that the assessee is an illiterate person, therefore, could not produce relevant documents for substantiating the source of cash deposits. Looking to the evidences placed before me in the form of bank statements etc., I deem it proper and to sub serve the principles of natural justice that the evidences be admitted and the matter be restored to the file of the Assessing Officer for verification of the evidences so filed. The Assessing Officer would, after verifying the source of cash deposits, decide the issue afresh.
Needless to say, the Assessing officer would provide adequate opportunity of hearing to the assessee. Grounds are allowed for statistical purposes.
In the result assessee’s appeal is partly allowed for statistical purposes.
Order was pronounced orally in open court, during the course of hearing, on 24.05.2022. However, the written order has been signed on 10.06.2022.