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Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI
Before: SHRI KUL BHARAT
ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2008-09 is directed against the order of Ld. CIT(A), Ghaziabad dated 26.08.2020. The assessee has raised following grounds of appeal:-
1) “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not holding the proceedings under section 148 of The Income Tax Act, 1961 to be illegal ab initio on account of the learned Assessing Officer having erred in law in wrongly assuming jurisdiction under section 148 of the Income tax Act, 1961 for reopening of impugned assessment without there being application of mind and moreover making a wrong statement in the approval note that the appellant did not file any return of income, which is contrary to the fact of filing the return of income on date as mentioned in the impugned assessment order that the appellant did not file any return of income, which also constituted mis- representation of facts and non application of mind.
That having regard to the facts and circumstances of the case, Ld. ClT(A) has erred in law and on facts in not holding the proceedings under section 148 of The Income Tax Act, 1961 to be illegal ab initio on account of the learned Assessing Officer having erred in law in not serving notice u/s 148 of The Income Tax Act 1961 (which was returned back undelivered), and thereafter not fulfilling the mandate of law by not properly serving the notice u/s 148 of The Income Tax Act 1961 by Affixture mode, without complying the laid down principles of law in that regard.
3. Having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not holding the proceedings under section 148 of The Income Tax Act, 1961 to be illegal on account of the learned Assessing Officer having erred in law in not fulfilling the mandate of law by not properly serving the notice u/s 142(1) of The Income Tax Act, 1961 as per law, thus defying the principles of natural justice.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not holding the assessment order under section 144 of The Income Tax Act, 1961 to be illegal on account of the learned Assessing Officer having erred in law in not making best judgment assessment under Section 144 as per the established principles of law and making the assessment arbitrarily and capriciously without exercising his judgment reasonably and also without serving any show cause notice in that regard.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition of RS.7,01,500/- fully as made by Ld. AO on account of cash deposits in Bank and that too without any basis, material and evidences available on record. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the additions/disallowance and passing the impugned assessment order being contrary to law and facts and without considering the principles of natural justice and the same is not sustainable on various legal and factual grounds. 6. That having regards to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of the Ld. AO in charging interest u/s 234B of the Income Tax Act, 1961.
7. That having regards to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of the Ld. AO in charging interest u/s 234C of the Income Tax Act, 1961.
8. That the appellant craves to leave to add, modify, amend or delete any of the grounds of appeal
at the time of hearing and all the above grounds are without prejudice to each other.”
2. At the time of hearing, no one appeared on behalf of the assessee before us despite various opportunities were given to the assessee. The notice sent through speed post was returned by the Postal authority with remark “left”. The assessee has not furnished any new address to the Registry. Therefore, the appeal was taken up for hearing in the absence of the assessee and being disposed off on the basis of material available on record.
FACTS OF THE CASE
Facts giving rise to the present appeal are that the return was filed by the assessee disclosing income of Rs.1,97,450/- on 12.03.2009. Thereafter, the case was re-opened for assessment u/s 147 of the Income Tax Act, 1961 (“the Act”) after obtaining necessary approval on the basis of AIR information received that the assessee deposited cash of Rs.11,41,500/- in saving bank account Page | 4 during the year. Thereafter, the notice sent through Speed post which was received back undelivered. Thereafter, a copy of the same was served upon the assessee through affixture by the ITI on 27.04.2015. Again a notice u/s 142(1) of the Act dated 28.04.2015 issued for compliance on 21.05.2015 and sent through speed post.
In response to such notices, neither the assessee attended the proceedings nor any written replies/submissions were received.
Thus, it is apparent that the assessee is deliberately avoiding compliance to the statutory notices issued by this office from this time to time and has not filed requisite details inspite of ample opportunity provided as above.
Ground Nos. 1 to 4 of assessee’s appeal are against the re- opening of the assessment and framing assessment u/s 144 of the Act by the Assessing Officer. The contentions of the assessee regarding Ground Nos. 1 to 4 are that the Assessing Officer only had information regarding cash deposits. This information could not be sufficient to form reason to believe for re-opening of the case u/s 147 of the Act. Moreover, in the case he would have perused the saving bank account and could have easily verified that there was cash withdrawals from time to time to justify the cash deposits.
Ld.Sr.DR opposed these submissions of the assessee and supported the orders of authorities below. He submitted that the AO was within the power to verify the source of such deposits by re- opening of the assessment.
I have heard the Ld.Sr.DR and perused the material available on record and gone through the orders of the authorities below. I see no infirmity into the order of Assessing Officer for re-opening of the case on the basis that there was cash deposits in the saving account of the assessee. It was incumbent upon the AO to verify the source of such deposits. Therefore, I find no merit in Ground Nos.1 to 4 of the assessee’s appeal. Thus, Ground Nos.1 to 4 of assessee’s appeal are dismissed.
Ground No.5 of assessee’s appeal is against the sustaining the addition of Rs.7,01,500/-made by the AO on account of cash deposits.
Ld. Sr. DR supported the orders of the authorities below and submitted that the AO has rightly made addition in respect of the cash deposits as the assessee did not furnish any explanation before the assessing authority and a remand report was called by the Ld.CIT(A). Page | 6
I have heard the Ld. Sr. DR and perused the material available on record and gone through the orders of the authorities below. I find that before Ld.CIT(A), the assessee had filed explanation regarding credit entries into the bank account of the assessee. For the sake of clarity, the same is reproduced hereunder:-
Date Particulars Withdrawal Deposit in Source of cash from Bank (Rs.) deposited Bank/Source of cash (Rs.) 01.04.2007 Opening Balance 110210 20.04.2007 Union Bank of India 10000 Opening balance 07.05.2007 GARG MEDICOS 74000 Withdrawal from Bank 07.05.2007 Union Bank of India 74000 Deposited from withdrawal from M/s. Garg Medicos 07.05.2007 GARG MEDICOS 186000 Withdrawal from Bank 07.05.2007 Union Bank of India 168000 Deposited from withdrawal from M/s. Garg Medicos (Also verified by the AO in his remand report) 04.06.2007 Union Bank of India 700000 Withdrawal from Bank Union Bank of India 12.06.2007 30000 Rs.2,75,000 deposited Union Bank of India from withdrawal of 12.06.2007 190000 Union Bank of India Rs.7,00,000/- from 19.06.2007 5000 Union Bank of India Bank 30.06.2007 10000 Union Bank of India 09.07.2007 20000 Union Bank of India 20.07.2007 20000 Withdrawal from Bank Union Bank of India 07.08.2007 200000 Union Bank of India 31.08.2007 340000 Withdrawal from Bank Union Bank of India 08.09.2007 40000 Union Bank of India 01.10.2007 20000 Union Bank of India 05.10.2007 16000 Union Bank of India 10.10.2007 35000 Union Bank of India 22.10.2007 9500 Union Bank of India 01.11.2007 30000 Union Bank of India 03.11.2007 10000 Union Bank of India 05.11.2007 5000 Union Bank of India 12.11.2007 40000 Union Bank of India 20.11.2007 10000 Union Bank of India 30.11.2007 30000 Rs.6,16,500 deposited Union Bank of India 04.12.2007 15000 from withdrawals of Union Bank of India 10.12.2007 40000 Rs.7,00,000, Union Bank of India 24.12.2007 10000 Rs.2,00,000 and Union Bank of India 01.01.2008 20000 Rs.3,40,000 from Union Bank of India 07.01.2008 22000
Union Bank of India 10.01.2008 30000 Bank. Union Bank of India 21.01.2008 10000 Union Bank of India 01.02.2008 18000 Union Bank of India 04.02.2008 22000 Union Bank of India 11.02.2008 40000 Union Bank of India 18.02.2008 5000 Union Bank of India 20.02.2008 10000 Union Bank of India 01.03.2008 9500 Union Bank of India 01.03.2008 500 Union Bank of India 07.03.2008 5000 Union Bank of India 10.03.2008 3000 Union Bank of India 10.03.2008 33000 Union Bank of India 24.03.2008 7000 Union Bank of India 26.03.2008 71000 Total(A) 1590210 1141500 Deposits through Banking Channel
Date Particulars Deposit Amount Verification/Evidence (Rs.) submitted 12.04.2007 Rent from Flat in Parkview 5700 Verified in Remand Report Apartments (1/2) 08.05.2007 Rent from Flat in Parkview 5700 Verified in Remand Report Apartments (1/2) 21.05.2007 GARG MEDICOS 40000 Audited Balance Sheet and Capital Account of M/s Garg Medicos 01.06.2007 Religare Loan (Shuchi 200000 Verified in Remand Report Gupta) 01.06.2007 GARG MEDICOS 300000 Audited Balance Sheet and Capital Account of M/s Garg Medicos 01.06.2007 Religare Loan (Gunjan 200000 Verified in Remand Report Gupta) 08.06.2007 Rent from Flat in Parkview 5700 Verified in Remand Report Apartments (1/2) 13.06.2007 Closure of Loan 703200043 8391 Bank Statement 04.07.2007 Gunjan Gupta Capital A/c 388 D/W UBI (Bank charge reversed) 06.07.2007 Rent from Flat in Parkview 5700 Verified in Remand Report Apartments (1/2) 12.07.2007 HSNC Personal Loan 345785 Verified in Remand Report 04.08.2007 Standard Chartered 488784 Verified in Remand Report Personal Loan 06.08.2007 Saving Bank Intt. 78 Bank Statement 08.08.2007 Rent from Flat in Parkview 5700 Verified in Remand Report Apartments (1/2) 30.08.2007 Citibank Personal Loan 150000 Verified in Remand Report Citibank Personal Loan 30.08.2007 150000 Verified in Remand Report Citibank Personal Loan 40635 Verified in Remand Report 30.08.2007 5700 Verified in Remand Report 11.09.2007 Rent from Flat in Parkview Apartments (1/2) 5700 Verified in Remand Report 08.10.2007 Rent from Flat in Parkview Apartments (1/2) 6200 Verified in Remand Report 08.11.2007 Rent from Flat in Parkview Page | 8
Apartments (1/2) 6200 Verified in Remand Report 07.12.2007 Rent from Flat in Parkview Apartments (1/2) 6200 Verified in Remand Report 08.01.2008 Rent from Flat in Parkview Apartments (1/2) 08.02.2008 Saving Bank Intt. 148 Bank Statement 08.02.2008 Rent from Flat in Parkview 6200 Verified in Remand Report Apartments (1/2) 07.03.2008 GARG MEDICOS 2000 08.03.2008 Rent from Flat in Parkview 6200 Verified in Remand Report Apartments (1/2) Total (B) 2015089 Grant total (A+B)-11,41,500 + 20,15,089=31,56,589
As such all the credits in the Bank during the year of Rs.31,56,589 is fully explained and verifiable from the evidence adduced in our application under 46A of the Income Tax Rules, 1962.
As such it is prayed that on the basis of our above submissions and our earlier submissions dated 20.07.2020, the assessment order may be quashed.”
However, Ld.CIT(A) partly allowed the appeal of the assessee by holding as under:-
8.4 “Ground nos. 5 to 7: The appellant has challenged the best judgment assessment under section 144, viz a viz, the addition of the cash deposited of Rs.l1,41,500/- and credits in bank of Rs.20,15,089/-. The appellant has tried to explain the source of the cash deposits from opening balance, from his partnership firm M/s Garg Medicos and from re-deposit of cash withdrawn from the bank account during the year. The appellant has also filed the cash book of M/s Garg Medicos along with his rejoinder dated 19.08.2020. I have gone through the remand report of The AO, rejoinder of the appellant and the various evidences filed by the appellant and it is observed that the cash deposit of Rs.10,000/- on 20.04.2001 from opening balance of cash in hand is valid. Besides, Rs.74,000/- and Rs.l,66,000/- deposited on 7.5.2007 has been claimed from Garg Medicos in which he is partner and the same is substantiated by the return of income, audited balance sheet, capital account and cash book of M/s Garg Medicos submitted by the appellant. Also, cash deposit of Rs. 1,90,000/- on 12.06.2007 has been verified by the AO from out of cash withdrawals of Rs. 1,00,000/-. As such I find that the source of cash deposit of Rs.4,40,000/- in the bank account stands explained, while the contention of appellant that the cash has been re-deposited from cash withdrawals during the year is not tenable. I also do not find force in the appellant’s claim that the course of cash deposit is the business income of the assessee.”
The basis of sustaining of addition of Rs.7,01,500/- was that the assessee could not place any supporting evidence regarding deposits of the amount so withdrawn from the bank account. I am of the considered view that this observation of Ld.CIT(A) is fallacious as the AO has not brought any evidence on record that the amount withdrawn from the saving bank account was utilized elsewhere by the assessee. Therefore, in the absence of such finding by the Assessing Officer, Ld.CIT(A) was not justified in sustain such addition. I therefore, direct the AO to delete this addition. Thus, Ground No.5 of assessee’s appeal is allowed.
Ground Nos. 6 and 7 are against the levy of interest u/s 234B & 234C of the Act. The levy of interest u/s 234B & 234C of the Act being consequential in nature, I hold accordingly. Thus, Ground Nos. 6 & 7 of assessee’s appeal are dismissed.
Ground No.8 is general in nature, needs no separate adjudication.
In the result, the appeal of the assessee is partly allowed.