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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI SANDEEP SINGH KARHAIL, HONBLE
O R D E R PER S. RIFAUR RAHMAN (AM)
These appeals are filed by the Revenue against different orders of Learned Commissioner of Income-tax (Appeals)-45, Mumbai [hereinafter for short "Ld. CIT(A)] dated 18.12.2017 for the A.Y.2009-10.
2 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing ITA.No. 7443/MUM/2018 (A.Y: 2009-10)
Brief facts of the case are, assessee has filed its return of income on 25.03.2010 declaring total income of ₹.NIL. The original Assessment Order passed u/s. 143(3) of Income-tax Act, 1961 (in short “Act”) on 26.12.2011 determining total income at ₹.4,25,39,142/- by recasting the Profit and Loss Account, the details and circumstances of the addition was discussed in the above Assessment Order. With regard to original assessment u/s. 143(3) of the Act, assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) sustained the additions made by the Assessing Officer. Aggrieved assessee preferred appeal before ITAT and ITAT restored the matter back to the file of the Assessing Officer for verification of the documentary evidences.
Subsequently, Assessing Officer received information from ADIT (Inv.), Unit-5(2) that on investigation of assessee’s bank account statements of ICICI Bank Account No. 053905000450 and 015805006243, there were cash credits and few cheque credits in both the accounts maintained by the assessee firm as under: -
Financial Total credits in A/c. Total credits in A/c. Total credits Year No.053905000450 No.015805006243 in Rs. 2008-09 4,70,97,909 17,34,11,406 22,05,09,315
3 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing 4. Assessee is in the business of marketing and the cash deposits and credit in the banks are relating to the sale of products made by the firm. The Assessing Officer observed that the credit in the above bank account of ₹.22,05,09,315/- should be the turnover of the company. Whereas in the return of income filed by the assessee the turnover was shown only ₹.2,62,961/-. Accordingly, Assessing Officer reopened the assessment with the reason to believe that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all the material facts necessary for the assessment within the meaning of section 147 of the Act.
Accordingly, Assessing Officer issued notice u/s. 142(1) of the Act and served on the assessee in several occasions. Since assessee has not attended, Assessing Officer proceeded to complete the re-assessment by making addition of ₹.17,10,63,280/- as escaped income. Further, Assessing Officer initiated the proceedings u/s. 271(1)(c) of the Act on the above said escapement of income.
Aggrieved assessee preferred an appeal before the CIT(A) and before the Ld.CIT(A) assessee submitted detailed submissions that there is an arithmetic mistake in the credit mentioned in the bank statement.
4 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing After considering the detailed submissions Ld.CIT(A) dismissed the grounds raised by the assessee on jurisdictional issue of reopening of assessment. However, he allowed the grounds raised by the assessee relating to addition of undisclosed income with the following observations:- “5.3. I have examined the account statements of the above 3 banks accounts filed before me and added up the credits in the bank accounts. The observations are as under: (1) Both, the SBI account and ICICI Bank (053905000450) account in Kandivali Branch were used for depositing the receipts. Total deposits in SBI A/c & ICICI Kandivli Branch are about 4.60 crores. (2) ICICI Bank Malad (W) Branch account (015805006243) was used making payments by the assessee firm. Funds were transferred from other two bank accounts to ICICI Malad Branch for the purpose of payments. 5.4 Therefore, the information from the DDIT(Inv) that there are credits of Rs.17,34,11,406 in the ICICI account Malad branch appears to be wrong. It appears to be a mistake in totaling by the staff of DDIT. Instead of credits, the staff appears to have added all the totals of daily balances in the bank account and reported as credits in the bank account. The AO apart from mentioning that the information was received, from the DDIT that total credits in the bank accounts are Rs.22,05,09,315 had not done anything as can be seen from the assessment order. He could have called for statements of both the accounts from the ICICI Bank and examined the deposits/credits as the account numbers were available with him, to take a considered decision in the assessment. After verification of the Bank accounts, I am of the considered opinion that the addition of Rs.17,10,63,280 is unwarranted as it was made without any verification of the bank accounts. Therefore, the addition of Rs.17,10,63,280 is directed to be deleted. Assessee gets relief. Ground nos. 7 to 11 are allowed.”
5 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing 7. Aggrieved revenue is in appeal before us raising following grounds in its appeal: -
1. "Whether on the facts and circumstances of the case and in law the Learned CIT(A) was right in deleting the addition on account of unexplained cash deposit in bank account of Rs. 17,10,63,280/- though the source thereof has not been explained by the assessee at the assessment stages though sufficient opportunity was provided by the Assessing Officer". 2. "Whether on the facts and circumstances of the case and in law the Learned CIT(A) was justified in granting relief by merely observing that the A.O should have made further verification without giving any opportunity to the Assessing Officer especially when no compliance was made by the assessee before the Assessing Officer in the course of the assessment proceedings". 3. "The appellant prays that the order of the Ld. CIT(A) on the grounds be set aside and that of the Assessing Officer be restored". 4. "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary".
At the time of hearing, Ld. AR of the assessee pointed out the arithmetic error in computing the credits in bank statements, accordingly, Ld. DR was asked to get the report from the Assessing Officer and Ld. DR submitted a letter filed by the Assessing Officer dated 24.02.2022 which is placed on record, for the sake of clarity, contents of the above letter are reproduced below: - “Sub.: Requisition of brief/paper book in the case of M/s. Alaska India Marketing (AAPFA2927B) AY 2009-10-reg. Ref: No CIT(DR)/ITAT-7/'A' Bench/2021-22 dated 12.01.2022 Kindly refer to the above. 2. This is in continuation to the factual report furnished as requested, the bank account statements of both the accounts 6 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing bearing no. 053905000450 & 015805006243 for FY 2008-09 have been received from the bank (copies of the same are attached herewith). The credit balance in these accounts is Rs. 4,70,97,910/- & Rs. 2,55,63,200/- as on 31.03.2009 respectively.
3. On perusal of the bank statements, the account no. 015805006243 contains credits of Rs. 2,55,63,200 and not Rs.17,34,11,406/-. Therefore, the matter may be decided on the merits of the case.”
After considering the report of the Assessing Officer, it is clear that Assessing Officer himself considered that in the bank account No. 015805006243 contains credits of ₹.2,55,63,200/- and not ₹.17,34,11,406/-. As submitted by the Ld.AR that the original assessment made by the Assessing Officer which was remitted back to the file of the Assessing Officer to redo the assessment and with regard to reassessment we observe that Assessing Officer proceeded with a view that bank statement contains more credits than the credit declared by the assessee in their books of accounts. After verification of the credit balance in the bank account maintained by the assessee with ICICI bank it clearly indicates that the Assessing Officer has taken additional credits by mistake which was confirmed by the Assessing Officer in his letter dated 24.02.2020. Therefore, it clearly indicates that the re-assessment initiated with the wrong notion that there is escapement of income and we observe that Ld.CIT(A) has rightly allowed the grounds raised by the assessee by deleting the additions made by the Assessing Officer.
7 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing Therefore, we do not find any reason to disturb the findings of the Ld.CIT(A). Accordingly, grounds raised by the revenue are dismissed.
In the result, appeal filed by the Revenue is dismissed.
ITA.No. 7444/MUM/2018 (A.Y: 2009-10)
Coming to the appeal in ITA.No. 7444/Mum/2018, Revenue has raised following grounds in its appeal: - 1. "Whether on the facts and in circumstances of the case and in law the Learned CIT(A) was justified in deleting the penalty of Rs.5,82,00,000/- imposed u/s. 271(1)(c) of the Income Tax Act, 1961, without appreciating the fact that the assessee has furnished inaccurate particulars of income by not disclosing the deposits in its ICICI Bank accounts?".
2. Whether on the facts and in circumstances of the case and in law the Learned CIT(A) was justified in deleting the penalty imposed u/s. 271(1)(c) of the Income Tax Act, 1961, merely on the ground that the addition on the basis of which the penalty is imposed has been deleted without appreciating the fact that the said decision has not been accepted by the Department and appeal has been filed before Hon'ble ITAT?". 3. "The appellant prays that the order of the Ld. CIT(A) on the grounds be set aside and that of the Assessing Officer be restored". 4. "The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary".
This appeal is filed by the Revenue on deletion of penalty on the addition made by the Assessing Officer in reassessment proceedings. Since the additions made in re-assessment itself is deleted in the appellate
8 ITA.NOs. 7443 & 7444/MUM/2018 (A.Ys: 2009-10) M/s. Alaska India Marketing proceedings and the penalty on the same amount cannot be sustained. Accordingly, the appeal filed by the Revenue in this regard is dismissed.
In the result, both the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on 27th July, 2022