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Income Tax Appellate Tribunal, DELHI BENCHES “SMC-2” : DELHI
Before: SHRI R.K. PANDA
ORDER This appeal filed by the Assessee is directed against the Order dated 18.09.2019 of the Ld. CIT(A)-12, New Delhi, relating to the A.Y. 2011-2012.
Facts of the case, in brief, are that the assessee is a HUF and has not filed its return of income. AIR information was received in respect of the assessee that it has made transaction in commodities exchange at Rs.19,48,71,150/- during the F.Y. 2010-2011 relating to the 2 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi.
A.Y. 2011-2012 and has not filed its return of income. Therefore, the A.O. recorded the reasons for reopening of the case under section 147 and notice under section 148 of the I.T. Act was issued on 31.03.2018. There was no response to the said notice issued under section 148. There was also no compliance to the statutory notice issued under section 142(1) of the I.T. Act, 1961. The A.O, therefore, completed the assessment under section 144/147 of the I.T. Act, 1961 by estimating the profit rate of 0.5% on the commodity transaction of Rs.19,48,71,150/- and made addition of Rs.9,74,355/- to the total income of the assessee. In otherwords, the A.O. determined the total income at Rs.9,74,355/-.
2.1. Before the Ld. CIT(A), the assessee apart from challenging the addition on merit, challenged the validity of the assessment in the absence of service of any notice to the assessee. However, the Ld. CIT(A) was also not satisfied with the arguments advanced by the assessee and upheld the action of the A.O. by observing as under :
3 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. 4 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. 5 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. 6 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi.
3. Aggrieved with such order of the Ld. CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds :
“1. That on the facts and circumstances of the case the Ld. CIT(A) has erred in not treating reassessment proceedings u/s 147 of the I T Act, as invalid, bad in law, unjust and contrary to the facts and law. 2. That on the facts and circumstances of the case the Ld. CIT(A) has made the addition of Rs.5,00,075/- on the other ground then the reason stated u/s 147 / 148 of the I T Act. The Ld. CIT (A)
7 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. has made the addition without verifying all the facts available on the record.
That on the facts and circumstances of the case the Ld. CIT(A) has erred in without considering the facts of the case and without considering the statement of law by the Appellant.
That notice u/s 148 was issued based on borrowed material without independent application of his own mind by the Ld. A.O. & this vitiates the action taken.
5. That the Ld. CIT(A) has made the addition on the basis of assumption that the assessee has not paid any margin money to the broker. The assessee provided the information of the deposit of margin money of Rs.5,00,075/ but Ld. CIT(A) made the addition of flimsy ground, surmises and conjecture only.
6. That there was no “nexus” between the primary facts & “belief” for reopenment.
8 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi.
7. That the addition was made on mere surmise ignoring relevant material & was based on irrelevant material & moreover the assessment was made without grant of a proper opportunity of being heard & without following rules of natural justice.
The appeal craves leave to amend or delete any of the above ground of appeal.”
4. Learned Counsel for the Assessee referred to Para 7.5 of the order of the Ld. CIT(A) and submitted that during the course of appellate proceedings the Ld. CIT(A) has asked the assessee to furnish details of cash deposits in the Bank account, summary of transaction details in future and asset segment, copy of the account of the assessee in the books of brokers and details of margin money etc. He submitted that after discussing the issue thoroughly, the Ld. CIT(A) has sustained the addition of Rs.5,00,075/- only towards margin money, but, has deleted the addition of Rs.4,74,280/-. Referring to provisions of Section 251(2), he submitted that as per the said provision the Ld. CIT(A) shall
9 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. not enhance an assessment or a penalty or reduce the amount of refund unless the assessee has, on a reasonable opportunity of showing cause against such enhancement or reduction. He submitted that the Ld. CIT(A) has not given reasonable opportunity to the assessee before sustaining the addition of Rs.5,00,075/- on account of margin money. Further no notice was served on the assessee by the A.O. He accordingly submitted that the addition sustained by the Ld. CIT(A) should be deleted.
The Ld. D.R. on the other hand relied on the order of the Ld. CIT(A) and submitted that the assessee is a non filer of tax return and the Ld. CIT(A) has already given substantial relief to the assessee and, therefore, the assessee should not have any grievance.
I have heard the rival arguments made by both the sides and perused the record. It is an admitted fact that the A.O. reopened the assessment on the ground that the assessee has made transactions in commodities exchange of Rs.19,48,71,150/- during the impugned assessment year and had not filed its return of income. Since the assessee
10 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi. neither responded to the notice issued under section 148 nor responded to the notice issued under section 142(1) of the I.T. Act, 1961, therefore, the A.O. estimated the profit @ 0.5% of Rs.19,48,71,150/- and added an amount of Rs.9,74,355/- to the total income of the assessee under section 69 of the I.T. Act, 1961 as undisclosed cash deposit in the Bank account. I find the Ld. CIT(A) found that there is no such cash deposit, for which, he deleted the same. However, since the assessee could not explain the details of margin money of Rs.5,00,075/-, he sustained the same, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that no reasonable opportunity was given to the assessee to explain the source of margin money. It is also his grievance that notice was never served on the assessee from the side of the A.O. for which there was no compliance and the A.O. had passed the order under section 144 of the I.T. Act, 1961. Considering the totality of the facts and circumstances of the case and in the interest of justice, I deem it proper to restore the issue to the file of 11 ITA.No.8839/Del./2019 M/s. Ashok Kumar & Family, Delhi.
A.O. with a direction to give one more opportunity to the assessee to substantiate its case and decide the issue as per fact and Law. The assessee is also hereby directed to appear before the A.O. and substantiate its case without seeking any adjournment under any pretext, failing which, the A.O. is at liberty to pass appropriate order as per Law. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, appeal of the Assessee is allowed for statistical purposes.
Order pronounced in the open Court on 24.09.2021.