VIVEK KUMAR SINGH,INDORE vs. INCOME TAX OFFICER NFAC DELHI, MAU

IN THE INCOME TAX APPELLATE TRIBUNAL CIRCUIT BENCH (SMC), VARANASI BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.234 to 238/VNS/2024 Assessment Year: 2017-18 Vivek Kumar Singh v. The ITO FF-4, Scheme No.54 NFAC, Delhi Vijay Nagar Indore (M.P) TAN/PAN:BHDPS5426B (Applicant) (Respondent) Applicant by: Shri Shailendra Kumar Porwal, C.A. Respondent by: Shri Deepak Yadav, D.R. O R D E R These five appeals have been filed by the assessee against separate orders passed by the National Faceless Appeal Centre, Delhi (NFAC), and all dated 20.08.2024 for Assessment Year 2017-18.

2.0 The brief facts of the case are that the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that the assessee had made cash deposits, amounting to Rs.10,48,000/- in Bank Account No.148813031004 maintained with Dena Bank, Maunath Bhanjan Branch, Mau and Rs.2,10,000/- in Bank Account No.47810001000144 maintained with Punjab National Bank, Maunath Bhanjan Branch, Mau during the demonetization period. The case of the assessee was

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reopened under section 147 of the Income Tax Act, 1961 (hereinafter called 'the Act’) after issuing notice under section 148 of the Act to the assessee. However, in response to notice under section 148 of the Act, there was no response from the side of the assessee. Thereafter, the AO issued statutory notices to the assessee, requiring the assessee to explain the source of cash deposits with supporting evidence. However, there was still no response from the side of the assessee. The AO, subsequently, issued a show cause notice to the assessee for completion of assessment under section 144 of the Act, vide which assessee was required to furnish the details of source of cash deposits. Since again there was no response from the side of the assessee, the AO treated the cash deposits of Rs.12,58,000/- made by the assessee in his Bank Accounts during the demonetization period as undisclosed income of the assessee and added the same to the total income of the assessee under section 69A of the Act.

2.1 The AO further noticed that there were total credits of Rs.65,80,679/- in assessee’s Bank Accounts during the year under consideration. The AO, after excluding the cash deposits of Rs.12,58,000/- from the total credits of Rs.65,80,679/- (which came to Rs.53,22,679/-), treated the same as business receipts of the assessee and estimated the business income of the assessee @15% (Rs.53,22,679 X 15/100), which came to

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Rs.7,98,402/- and added the same to the total income of the assessee.

2.2 The AO completed the assessment under section 147 read with section 144 of the Act, assessing the total income of the assessee at Rs.20,56,402/-.

2.3 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under sections 271AAC(1), 270A, 272A(1)(d) and 271F of the Act.

2.4 The AO imposed a penalty of Rs.20,000/- under section 272A(1)(d) of the Act for failure of the assessee to comply with the statutory notices issued under section 142(1) of the Act, dated 20.09.2020 and dated 01.03.2021.

2.5 The AO also imposed a penalty of Rs.43,610/- under section 270A of the Act being 50% of tax evaded for misreporting/under-reporting of income.

2.6 Further, the AO also imposed a penalty of Rs.75,480/- under section 271AAC(1) of the Act being 10% of tax payable under section 115BBE of the Act evaded for unexplained or undisclosed income.

2.7 The AO also imposed a penalty of Rs.5,000/- under section 271F of the Act for failure of the assessee to file the

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return of income as per provisions of section 139(1) of the Act before the ending of the relevant assessment year.

3.0 Aggrieved by the orders of the AO in quantum as well as penalty proceedings, the Assessee preferred appeals before the NFAC, which dismissed all the appeals of the assessee and confirmed the orders of the AO.

4.0 Now the assessee has approached this Tribunal challenging the orders of the NFAC, by raising the following grounds of appeals:

GROUNDS OF APPEAL IN ITA NO.235/VNS/2024:

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of natural justice and deserves to be quashed. The learned CIT(A) erred in mechanically confirming the same. 3. That on the facts and in the circumstances of the case and in law the Ld. Assessing officer erred in levying a penalty of Rs. 20,000/- whereas the appellant duly replied that the proceedings of another person are being initiated against the appellant. The penalty so levied is therefore, totally wrong, illegal and bad in law. The learned CIT(A) erred in mechanically confirming the same. 4. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in levying a penalty of Rs.20,000/- on the basis of information of another person and therefore, penalty levied on the appellant is totally wrong, illegal and bad in law. The learned CIT(A) erred in mechanically confirming the same. 5. That the appellant craves leave to add, amend, alter and or modify all or any of the ground(s) of appeal before or at the time of hearing of the appeal. GROUNDS OF APPEAL IN ITA NO.236/VNS/2024:

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order under section 270A of the Act, without going through the submissions made, which is against the law of natural justice and deserves to be quashed. The learned CIT(A) erred in mechanically confirming the same. 3. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in levying a penalty of Rs.43,610/- on the additions of income, which are based on income of another person and therefore, penalty levied on the appellant is totally wrong, illegal and bad in law. The learned CIT(A) erred in mechanically confirming the same. 4. That the appellant craves leave to add, amend, alter and or modify all or any of the ground(s) of appeal before or at the time of hearing of the appeal. GROUNDS OF APPEAL IN ITA NO.237/VNS/2024:

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and bad in law. The learned CIT(A) erred in mechanically confirming the same. 4. That on the facts and in the circumstances of the case and in law the Ld Assessing officer erred in levying a penalty of Rs.5,000/- on the basis of income of another person and therefore, penalty levied on the appellant is totally wrong, illegal and bad in law. 5. That the appellant craves leave to add, amend, alter and or modify all or any of the ground(s) of appeal before or at the time of hearing of the appeal. 5.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that there was a delay of 59 days each in filing of the appeals before the Tribunal. He further submitted that the assessee had filed an application dated 25.12.2024 for condonation of delay, duly supported by an Affidavit, stating therein that the assessee was not aware about passing of the orders by the NFAC. Moreover, the assessee was not tech-savvy and when the assessee came to know about passing of the orders by the NFAC, he contacted his Counsel on 24.11.2024, but due to marriage of Counsel’s daughter on 28.11.2024, the appeals were filed late by 59 days. The prayer of the Ld. A.R. was that the delay caused in filing the appeals was not deliberate and that it was beyond the control of the assessee, which may please be condoned and the appeals be heard on merits.

5.1 The Ld. Sr. D.R. objected to the delay being condoned.

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5.2 In view of the prayer made by the Ld. A.R., I condone the delay in filing of the appeals and admit the appeals for hearing.

5.0 The Ld. A.R. at the outset submitted that on the facts and in the circumstances of the case and in law, the AO erred in initiating proceedings under Section 147 read with section 148 of the Act against the assessee without properly verifying the true ownership of the impugned Bank Accounts. The submission of the Ld. A.R. was that since the Bank Accounts in question belonged to another individual sharing the same name and a duplicate/wrongly allotted PAN, the assessee had no connection with the credits therein. It was, therefore, prayed that the order/proceedings be set aside and be restored to the AO for fresh verification of Bank KYC records, PAN allocation details, and Bank Account ownership.

6.0 Per contra, the Ld. Sr. D.R. submitted that the reassessment proceedings under section 147 read with section 148 of the Act were validly initiated based on tangible information retrieved from the database maintained by the the Department. It was further submitted that at the stage of issuing notice under section 148 of the Act, the AO was only required to form a prima facie belief regarding the escapement of income based on the official database tagged to the PAN provided in the

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system. The requirement of absolute, conclusive proof of ownership before initiating proceedings is not mandated by law at the threshold stage. The Ld. Sr. D.R. supported the orders of the authorities below and prayed that the appeals of the assessee may be dismissed.

7.0 I have heard both the parties and have also perused the material on record. The sole grievance raised by the assessee in these appeals pertains to the initiation of reassessment proceedings under Section 147 read with section 148 of the Act on account of alleged unexplained credits/transactions in the Bank Accounts which, according to the assessee, do not belong to him but to another individual bearing the same name and a duplicate/wrongly allotted PAN. The Ld. A.R. submitted that the assessee has never maintained, operated, or held any beneficial interest in the impugned Bank Accounts. The prayer of the Ld. A.R. was that the matter be set aside to the AO to verify the true ownership of the Bank Accounts directly from the concerned banking authorities. It is a settled position of law that reassessment proceedings must rest on a valid nexus between the material relied upon and the specific assessee against whom the action is initiated. If the underlying bank account or transaction belongs to an unrelated third party, no income can be said to have escaped assessment in the hands of the present

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assessee. However, whether the impugned bank accounts belong to the assessee or to another person sharing an identical name/duplicate PAN is a purely factual matter which essentially requires examination of primary bank documents and system logs.

7.1 In view of the above facts, and in the interest of natural justice and fair play, I deem it fit and proper to set aside the impugned order and restore the matter to the file of the AO for fresh consideration and factual verification, with the following directions:

(i) The AO shall issue necessary notices/summons under Section 133(6) / Section 131 of the Act to the concerned Banks to call for the Account Opening Form (AOF), KYC documents (Aadhaar, Voter ID, Passport), specimen signatures, and address records of the actual account holder. (ii) The AO shall verify with the Systems Wing / NSDL regarding any reported duplicate PAN allotment or systemic misattribution of AIR transactions. (iii) The AO shall afford a reasonable and effective opportunity of hearing to the assessee to present necessary evidence, including an affidavit of non- ownership and bank statements of lawfully held accounts. (iv) If upon verification, it is conclusively established that the impugned bank account does not belong to the

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assessee, the AO shall drop the proceedings / grant consequential relief in accordance with law. 7.2 Since quantum proceedings under Section 147 / 144 are set aside and restored to the AO for fresh verification, the penalty proceedings initiated under sections 270A, 272A(1)(d), 271AAC(1) and 271F of the Act automatically lose their fundamental basis and hence the penalty appeals are also remitted to the file of the AO, to be decided afresh in accordance with law, based on the result to be arrived at by the AO in the quantum matter.

8.0 In the final result, all the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open Court on 28/08/2026.

Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:28/08/2026 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order

Assistant Registrar/DDO