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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 2009-10 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.
2. 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 not properly serving notice u/s 148 of The Income Tax Act, 1961 on the assessee.
3. 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 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.
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 law and making the assessment arbitrarily and capriciously without exercising his judgment reasonably.
5. That having regard to the facts and circumstances of the case, Ld.CIT(A) has erred in law and on facts in not Page | 2 deleting the addition of Rs.10,81,000/- 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 234A 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 2348 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.”
At the time of hearing, no one appeared on behalf of the assessee before this Tribunal despite various opportunities were given to the assessee. The notice sent through speed post was Page | 3 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 manually filed by the assessee disclosing income of Rs.2,14,310/- on 23.11.2009. 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.14,81,000/- in saving bank account No.508502010000841 held with Union Bank of India, Ghaziabad during the year. Thereafter, various notices sent through Speed post and served upon the assessee. In response to such notices, the assessee failed to file any documentary evidence/explanation with regard to source of the cash deposit and also did not file return of income for Assessment Year 2009-10 and further made non- compliance of notice issued u/s 142(1)/144 of the Act. Thus, the assessee chose to make no compliance and continued to exhibit non-cooperative attitude towards the assessment proceedings.
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.10,81,000/-.
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 assessee.
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:-
“The assessee is a regular assessee and has been filing his return of income for the last many years in the past with the learned AO, we would like to bring Your Honors' notice to the fact that the cash and cheques deposited in the bank is from withdrawals from Bank recycled and also from M/s Garg Medicos, wherein he is a partner and his ITR~ Computation of Income and audited Balance Sheet for the relevant period have all been placed at serial no, iv and v, respectively of our application under rule 46A of The Income Tax Rules, 1962 dated 20.07.2020 and also his Capital Page | 6
Account in the Books of M/s Garg Medicos is placed at Serial No. vi. Also the learned AO never asked for the cash book of M/s. Garg Medicos from us. However we are producing this relevant information as part of our rejoinder for your kind perusal and in order peruse the facts. In any case it may be relevant to note that the same AO is the assessing officer of M/s Garg Medicos (PAN AADFG3710E). The source of deposit for ready reference are again being summarized as follows: Summary of Source of Cash Deposit during the year Date Particulars Withdrawal Deposit in Source of cash deposited from Bank/ Bank (Rs.) Source of Cash (Rs.) 01.04.2008 Opening Balance 423330 03.04.2008 Union Bank of India 26000 05.04.2008 Union Bank of India 22000 Rs.1,08,000 deposited out of 10.04.2008 Union Bank of India 30000 opening Balance 22.04.2008 Union Bank of India 10000 01.05.2008 Union Bank of India 20000 05.05.2008 Union Bank of India 50000 Withdrawal from Savings Bank 12.05.2008 Union Bank of India 100000 Withdrawal from Savings Bank 02.06.2008 Union Bank of India 10000 05.06.2008 Union Bank of India 30000 Rs.90,000 deposited out of opening Balance and Rs.1,50,000 09.06.2008 Union Bank of India 40000 withdrawals from Bank 20.06.2008 Union Bank of India 10000 30.06.2008 Union Bank of India 265000 Withdrawal from Savings Bank 01.07.2008 Union Bank of India 10000 Rs.1,15,000 deposited out of 07.07.2008 Union Bank of India 10000 opening balance Rs.1,50,000 and Union Bank of India Rs.2,65,000 withdrawals from 10.07.2008 20000 Union Bank of India Bank 21.07.2008 25000 Union Bank of India 01.08.2008 20000 Union Bank of India 05.08.2008 30000 Union Bank of India 07.08.2008 140000 Withdrawal from Savings Bank Union Bank of India 07.08.2008 150000 Withdrawal from Savings Bank Union Bank of India 11.08.2008 25000 Union Bank of India 13.08.2008 11000 Union Bank of India 21.08.2008 10000 28.08.2008 Union Bank of India 10000 Union Bank of India 01.09.2008 10000 Union Bank of India 10.09.2008 40000 Union Bank of India 13.09.2008 7000 Union Bank of India 23.09.2008 10000 Union Bank of India 01.10.2008 20000 Union Bank of India 10.10.2008 40000 Union Bank of India 13.10.2008 5000 Union Bank of India 31.10.2008 18000 Union Bank of India 04.11.2008 20000 Union Bank of India 10.11.2008 40000 Union Bank of India 14.11.2008 12000 Union Bank of India 14.11.2008 7000 Rs.6,28,000 deposited out of Union Bank of India 01.12.2008 30000 opening balance, Rs.4,23,330 and Union Bank of India 08.12.2008 12000 1,50,000, Rs.2,90,000 withdrawals Union Bank of India 10.12.2008 7000 from Bank Union Bank of India 10.12.2008 40000 Page | 7
Union Bank of India 15.12.2008 34000 Union Bank of India 22.12.2008 34000 Union Bank of India 29.12.2008 65000 Union Bank of India 12.01.2009 11000 Union Bank of India 14.01.2009 12000 Union Bank of India 22.01.2009 15000 Union Bank of India 02.02.2009 20000 Union Bank of India 14.02.2009 10000 Union Bank of India 16.02.2009 8000 Union Bank of India 19.02.2009 7000 Union Bank of India 20.02.2009 11000 Union Bank of India 24.02.2009 27000 Union Bank of India 05.03.2009 320000 Withdrawals of Rs.3,20,000 by Shuchi Gupta (Joint Account Holder) from her Current Account of M/s. Garg Distributor) her proprietorship firm on the same date Bank statement enclosed at S.No.x of application u/r 46A Union Bank of India 05.03.2009 40000 Withdrawal from M/s Garg Medicos Union Bank of India 05.03.2009 320000 Deposit out of Rs.2,90,000 withdrawn and Rs.40000 received from M/s Garg medicos Union Bank of India 09.03.2009 165000 Deposited out of Rs.2,90,000 withdrawn and Rs.40000 received from M/s Garg Medicos Union Bank of India 12.03.2009 60000 Withdrawal from Savings Bank Union Bank of India 19.03.2009 10000 Rs.55,000 deposited out of Union Bank of India Rs.60,000 withdrawn and 19.03.2009 14000 Union Bank of India Rs.40000 received from M/s Garg 20.03.2009 10000 Union Bank of India Medicos 31.03.2009 21000 Total (A) 1548330 1481000 4. The learned AO has however reported the rent receipts to be verifiable from the ITR and also some other entries have been also be reported by him to be verifiable. Deposits through Banking Channel Date Particulars Amount Verification/Evidence (Rs.) submitted 09.04.2008 Rent from flat in Parkview 6200.00 Verified in remand report Apartment (1/2) 10.04.2008 Misc Loans and Advances 10000.00 Cheque received through Banking Channel, Bank Statement 02.05.2008 Barclays Bank 225713.00 Verified in remand report 08.05.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartment (1/2) 08.06.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartment (1/2) 30.06.2008 GARG MEDICOS 265000.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 05.07.2008 GARG MEDICOS 30467.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 08.07.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartments (1/2) 08.07.2008 Gunjan Gupta Capital A/c 776.00 Some bank charge reversal 06.08.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartments (1/2) 06.08.2008 ABN Amro bank Personal 284025.00 Verified in remand report Loan 09.08.2008 Saving Bank Intt. 130.00 Bank Statement 11.08.2008 GARG MEDICOS 15000.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 05.09.2008 Gunjan Gupta Capital A/c 5520.00 Cheque received through Banking Channel, bank statement 05.09.2008 GARG MEDICOS 30500.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 06.09.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartments (1/2) 03.10.2008 GARG MEDICOS 30500.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 10.10.2008 Rent from Flat in Parkview 6200.00 Verified in remand report Apartments (1/2) 06.11.2008 Rent from Flat in Parkview 6750.00 Verified in remand report Apartments (1/2) 08.12.2008 Rent from Flat in Parkview 6750.00 Verified in remand report Apartments (1/2) 01.01.2009 Misc Loans and Advances 25000.00 Cheque received through Banking Channel, bank statement 07.01.2009 Rent from Flat in Parkview 6750.00 Verified in remand report Apartments (1/2) 10.01.2009 GARG MEDICOS 40000.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 07.02.2009 Saving Bank Intt. 117.00 09.02.2009 Rent from Flat in Parkview 6750.00 Verified in remand report Apartments (1/2)
10.02.2009 GARG MEDICOS 38000.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 12.02.2009 GARG MEDICOS 19000.00 Audited Balance Sheet and Capital Account of M/s. Garg Medicos 27.02.2009 GARG DISTRIBUTORS 500000.00 Bank statement of Garg Distributors at S.No.X of application u/r 46A 02.03.2009 GARG DISTRIBUTORS 500000.00 Chq No.915203 of Garg Distributors returned unpaid, reversal entry on Bank Statement pg No.13 of Paper Book submitted on 30.07.2019 06.03.2009 Rent from Flat in Parkview 6750.00 Verified in remand report Apartments (1/2) 10.03.2009 Neft Reversal 82368.000 Bank Statement 13.03.2009 Neft Reversal 82368.00 Bank Statement 31.03.2009 Aapka Stock Broker 100010.00 Statement of Account (shuchi Gupta) of Aaapka Stock Brokers and Consultants Pvt.Ltd. at S.No.11 Application u/r 46A 31.03.2009 Apka Stock Broker 200015.00 Statement of Account (Gunjan Gupta) of Aaapka Stock Brokers and Consultants Pvt.Ltd. at S.No.11 Application u/r 46A Total (B) 2561659.00
Grant total (A+B)=14,81,000 + 25,61,659 =Rs40,42,659
As such all the credits in the Bank during the year of Rs.40,42,659 is fully explained and verifiable from the evidence adduced in our application under 46A of the Income Tax Rules, 1962. Incidentally, Garg Medicos is also assessed by the same assessing officer. 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 with the direction to delete the entire additions of Rs.40,42,659.”
However, Ld.CIT(A) partly allowed the appeal of the assessee by holding as under:-
8.3.4. “All other credit entries have been reported to be verified from the evidences produced by the appellant. In light of the above observations these grounds of appeal are partially allowed and the AO is directed to delete the addition of Rs.3,60,000/- out of cash deposit of Rs.14,81,000/- and Rs.25,61,659/- on account of credit entries in the bank account. Thus, out of the total addition of Rs.40,42,659/- on these grounds, an amount of Rs.29,61,659/- is deleted and the balance addition of Rs.10,81,000/- is confirmed. Thus, these grounds of appeal are partly allowed.”
11. The basis of sustaining of addition of Rs.10,81,000/- 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.
12. Ground Nos. 6 and 7 are against the levy of interest u/s 234A & 234B of the Act. The levy of interest u/s 234A & 234B of the Act being consequential in nature, I hold accordingly. Thus, Ground Nos. 6 & 7 of assessee’s appeal are dismissed.
13. Ground No.8 is general in nature, needs no separate adjudication.
In the result, the appeal of the assessee is partly allowed.