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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)-15, Delhi, dated 27.06.2019, pertaining to the assessment year 2011-12. The assessee has raised following grounds of appeal:
“1. That the order passed by Ld. CIT (A), in concurring with order of Ld. AO is bad in law. illegal. Perverse and against the facts and circumstances of present case, statutory provisions, established principles of law and principles of natural justice and thus need to | be quashed.
2. That on the facts and circumstances of the case and the provision of law the Ld. CIT(A) 1 has failed to appreciate that the initiation of proceedings u/s 147/148 is illegal and bad in law and consequently the assessment framed being illegal requires to be quashed.
Dev Raj Mahajan Vs. ITO 2.1 That on the facts and circumstances of the case and in law the Ld. CIT (A) erred in sustaining the addition of Rs. 10,72,000/- made u/s 69A on account of cash deposited in Bank Account whereas the cash deposited is fully explained. 2.2 Alternatively and without prejudice to above the appellant disputes the quantum of addition made. 2.3 That on the facts and circumstances of the case and in law the Ld. CIT (A) erred in sustaining the addition of Rs.5.81,000/- made u/s 69C on account of payment made through credit card whereas the payments made are fully explained. 2.4 Alternatively and without prejudice to above the appellant disputes the quantum of addition made.
3. That the appellant craves leave to add, delete or amend any of the grounds of appeal on or before the disposal of the same.”
The facts, in brief, giving rise to the present appeal are that in this case assessment was reopened u/s 147 of the Income Tax Act, 1961, hereinafter referred to as the “Act”, on the basis of cash deposit in bank account and for not filing the income-tax return. A notice u/s 148 of the Act was issued on 28.3.2018 after obtaining the requisite approval of the Principal Commissioner of Income-tax, Delhi-15. In compliance thereof it was stated by the assessee that the original return of income filed u/s 139 may be treated as return filed in response to notice u/s 148 of the Act. Thereafter, the Assessing Officer proceeded to frame the reassessment. Thereby, the Assessing Officer made addition of Rs. 10,72,000/- being the cash deposited into the bank account u/s 69A of the Act and a sum of Rs. 5,81,000/- was added on account of unexplained expenditure. Thus, the Assessing Officer assessed the income at Rs. 19,37,190/- against the income declared at Rs.
Dev Raj Mahajan Vs. ITO 2,84,190/-. Aggrieved against this the assessee carried the matter before the learned CIT(Appeals), who also after considering the material available on record dismissed the appeal and sustained the addition. Now the assessee is in appeal before this Tribunal.
Ground nos. 1 & 2 are against legality of the reopening of the assessment.
Learned counsel for the assessee vehemently argued that the reopening is wholly illegal and unjustified on account of the fact that the basis of reopening was that assessee did not file return of income. However, the assessee had duly filed his return of income and the fact of the same was brought to the notice of the learned CIT(Appeals) by filing the written submissions. He submitted that since the foundation of reopening of the assessment is based upon incorrect appreciation of the facts, hence the same deserves to be quashed.
Per contra, learned Sr. DR opposed the submissions and submitted that there is no dispute with regard to the fact that the Assessing Officer was in possession of information regarding cash deposited by the assessee in his bank account.
Therefore, in the absence of explanation regarding source of deposit of such cash and to verify the correctness of such explanation the assessment was justifiably reopened. He, therefore, submitted that there is no reason to interfere in the finding of the authorities below.
Dev Raj Mahajan Vs. ITO 6. I have heard the learned representatives of the parties and perused the material available on record. There is no dispute with regard to the fact that the Assessing officer was in possession of information regarding deposit of cash into the bank account of the assessee. It is also undisputed fact that the explanation regarding such cash deposit was not furnished to the Assessing Officer by the assessee prior to reopening of the assessment. Therefore, under these facts I am of the considered view that there was reason to form belief regarding escapement of income from assessment. Hence, I do not see any reason to quash the assessment as prayed by the assessee. Ground nos. 1 & 2 of the assessee’s appeal are rejected.
Ground nos. 2.1 to 2.4 are against sustaining the addition of Rs. 10,72,000/- and Rs. 5,81,000/- made by the Assessing Officer by invoking the provisions of Section 69A and 69C of the Act respectively.
Apropos to addition of Rs. 10,72,000/- the learned counsel for the assessee submitted that the authorities below have not considered the fact in right perspective. The authorities below have not given set off of the opening balance and the cash withdrawn from the bank account. He further contended that before the learned CIT(Appeals) it was categorically stated that the assessee had withdrawals from his bank account and this amount was subsequently deposited.
However, both the authorities have not accepted the explanation offered by the assessee. He submitted that the Assessing Officer has not brought any adverse
Dev Raj Mahajan Vs. ITO material regarding withdrawal of cash from the bank account which was available with the assessee for making the deposits.
Learned DR opposed the submissions and supported the orders of the authorities below.
I find that the learned CIT(Appeals) has decided the issue by observing as under:
“4.1 It is noticed that this is a case of NMS project whereby, the cash deposits made in the bank - account were captured by the Individual Transaction Statement (ITS). The assessee had not filed any return u/s 139(1). Later on, the AO recorded the reasons for reopening and issued notice u/s 148. However, no return was ever filed even in response to notice u/s 148. Even during the reassessment proceedings, the AO issued various notices as mentioned on page 3 of his order. It is mentioned by the AO in para 4.2 of his order that assessee had furnished some reply but no documentary evidences in support of his contention were furnished. The AO goes on to mention that this is not the case where assessee is prevented by sufficient cause. Besides, a number of opportunities were given to the assessee which were not availed off. During the course of appellate proceedings, the AR of the appellant has made written submissions that the Ld. AO has completely ignored the submission made by appellant during the assessment. However, It is noticed from The order of the AO in para 4.4 to 4.8, that the AO had duly considered the explanations furnished by the AR but the evidences furnished by the assessee were not found to be satisfactory. Considering the facts and circumstances of the case and the explanation tendered by the AR, the order of the AO appears to be reasonable and accordingly the addition of Rs. 10,72,000/- made by the AO is hereby confirmed.”
From the above finding it is clear that the learned CIT(Appeals) has failed to advert to the explanation offered by the assessee regarding the source of cash
Dev Raj Mahajan Vs. ITO deposit. The learned CIT(Appeals) being the first appellate authority ought to have considered the submissions of the assessee regarding source of cash deposit.
Before me the assessee has filed bank statement. There from, it is clear that there were cash withdrawals as well as cash deposits. Before the assessing authority the assessee has categorically stated that he had withdrawn cash of Rs. 8,25,900/- and Rs. 2,00,000/- was cash receipt during the year under consideration. Further the assessee has also claimed cash in hand from past savings of Rs. 2,50,000/-. Both the authorities have failed to consider the fact and in a cryptic manner sustained the addition which is not permissible under the law. It cannot be presumed that there was no opening cash balance looking to the fact that the assessee has been earning income for the past many years. Further, the assessee has also demonstrated that there were cash withdrawals from the bank account. In the light of these facts I am of the considered view that the addition made by the Assessing Officer is unjustified, hence the same is deleted. Ground nos. 2.1 and 2.2 are allowed.
Ground nos. 2.3 and 2.4 are against sustaining the addition of Rs. 5,81,000/- being unexplained expenditure made u/s 69C of the Act.
Learned counsel for the assessee submitted that the assessee had given explanation regarding expenditure. It was stated before the authorities below that most of the payments were made out of the saving bank account of wife of the assessee. It is contended that before the Assessing Officer it was stated that the Dev Raj Mahajan Vs. ITO credit card statement for the year under consideration was not readily available with the assessee being 8-9 years old. The time was short for furnishing the same.
He contended that when the documents were made available some were filed before the learned CIT(Appeals) but the learned CIT(Appeals) did not consider the same. Under these facts he contended that gross miscarriage of justice has been caused to the assessee.
On the contrary learned DR heavily relied on the orders of the authorities below. He contended that assessee was required to explain the source of expenditure as incurred by him.
I have heard the learned representatives of the parties. I find that the learned CIT(Appeals) has decided the issue by observing as under:
4.2 The next issue is regarding the addition of Rs. 5,81,000/- made by the AO on account of unexplained expenditure. As per the AIR/CIB/26AS information available in ITD system, it was noticed that the assessee had made payment of Rs. 5,81,000/- through credit cards. Neither any submission was furnished in this regard nor the payments could be verified from the bank statements. In absence of any explanation from the assessee side, the order of the AO in making the addition u/s 69C appears to be reasonable. Therefore, the addition of Rs. 5,81,000/- is hereby confirmed.
From the above it is clear that the learned CIT(Appeals) has failed to consider the submissions of the assessee. I find that assessee has given confirmation as well as bank statement relating to wife of the assessee. Therefore, considering the material placed before me I am of the considered view that the Dev Raj Mahajan Vs. ITO authorities below ought to have considered the submissions and evidences filed by the assessee. Non consideration of the same has resulted into miscarriage of justice. Therefore, considering the material available on record, I hereby direct the Assessing Officer to delete the addition. Ground nos. 2.3 & 2.4 are allowed.
Ground no. 3 is general in nature and needs no specific adjudication.
In the result, appeal of the assessee is partly allowed. Order pronounced in open court on 9th June, 2022.