Loading judgment…
Facts
The assessee, an individual, failed to file an income tax return for AY 2018-19. The Assessing Officer (AO) reopened the assessment upon discovering cash deposits of Rs. 72,72,500/- in a bank account. The AO made an addition of this amount as unexplained money under Section 69A, and also imposed penalties. The CIT(A)/NFAC upheld the AO's orders.
Held
The Tribunal noted that the bank account in question was claimed by the assessee to belong to his individual capacity, not the HUF, and that the transactions were disclosed in his individual return. Since the CIT(A)/NFAC had not addressed this crucial issue and passed ex-parte orders, the Tribunal restored the matter to the CIT(A)/NFAC for fresh adjudication.
Key Issues
Whether the bank account belonged to the assessee in his individual capacity or HUF, and whether the CIT(A)/NFAC properly adjudicated the appeals without addressing this distinction.
Sections Cited
69A, 148, 142(1), 144, 271AAC(1), 272A(1)(d), 147, 144B, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
The above three appeals filed by the assessee are directed against the separate orders dated 18.10.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2018-19. While relates to the order of the Ld. CIT(A) / NFAC sustaining the addition of Rs.72,72,500/- made by the Assessing Officer as unexplained money u/s 69A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), Ld. CIT(A) / NFAC in confirming the penalty of Rs.5,61,800/- levied by the Assessing Officer u/s 271AAC(1) of the Act and relates to the ex-parte order of the Ld. CIT(A) / NFAC in confirming the penalty of Rs.20,0000/- levied by the Assessing Officer u/s 272A(1)(d) of the Act. For the sake of convenience, all these appeals were heard together and are being disposed of by this common order. as the lead case. Facts of the case, in brief, are that the assessee is an individual and has not filed his return of income for the impugned assessment year. As per the information available with the department it was observed that the assessee has made cash deposits to the tune of Rs.72,72,500/- into the bank account maintained with Maharashtra Gramin Bank. The Assessing Officer, therefore, reopened the assessment after recording reasons and issued notice u/s 148 of the Act. Subsequently, the Assessing Officer issued statutory notice u/s 142(1) of the Act which was served on the assessee. Since there was no compliance from the side of the assessee, the Assessing Officer completed the assessment u/s 144 of the Act determining the total income of the assessee at Rs.72,72,500/- by making addition of the same as unexplained money u/s 69A of the Act.
Since the assessee did not make any submission before the Ld. CIT(A) / NFAC despite three opportunities granted, the Ld. CIT(A) / NFAC upheld the addition made by the Assessing Officer.
4. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
5. The Ld. Counsel for the assessee at the outset submitted that the concerned bank account which is the basis for making the addition in the hands of the assessee HUF does not belong to the HUF but belongs to the assessee in his individual capacity. He submitted that the assessee in his individual capacity has already filed the return of income and has disclosed the transactions in the said bank account. Since the orders were passed by the Assessing Officer as well as the Ld. CIT(A) / NFAC ex-parte, therefore, the matter may be restored to the file of the Assessing Officer for adjudication of the issue afresh. He also submitted that the reopening of the assessment is not in accordance with law.
6. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and Ld. CIT(A) / NFAC. He submitted that despite number of opportunities granted by the Ld. CIT(A) / NFAC the assessee never submitted any details to substantiate his case. Further, the assessee also did not appear before the Assessing Officer for making his submissions, if any. Under these circumstances, Ld. DR submitted that the order of the Ld. CIT(A) / NFAC be upheld and the appeal filed by the assessee be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find before the Ld. CIT(A) / NFAC the assessee has taken the following grounds:
1. "The Learned AO erred in law as well as on the facts in confirming the additions of sum of Rs.72,72,500/- to the total Income of the appellant by passing the order us 147 r.w.s. 144B of the Income Tax Act 1961(Hereafter referred as the "Act").
2. The Learned AO has grossly erred by invoking the provisions of section 69A r.w.s. 115BBE of the Act and taxed the amount of Rs.72,72,500/- as unexplained money of the appellant, in fact the same does not belongs to the appellant. Thus the LFAO has taxed the income which was never been earned by the appellant.
3. The Learned AO has failed to appreciate the fact that the credits in the bank account with Bank of Maharashtra, CC A/c No.60128923574, pertains to appellant in his Individual capacity and the same have already been considered at the time of filing the Income Tax Return of the appellant for the AY 18-19 which were filed through his individual PAN number AAHPC1983B.
4. The FAO has failed to appreciate the fact the receipts in the bank account was out of sale proceeds from the kirana business of the appellant in his capacity as Individual. 5 The FAO has not appreciated the fact that the turnover in the bank account pertains to appellants individual PAN and the banker has wrongly linked the said bank account no. with PAN of HUF. Thus the assessment framed by the LFAO is bad in law and spirits.
6. In the facts and according to the circumstances of the case, the disallowance made may be deleted.
7. The appellant reserves the right to put some fresh or new grounds during the course of hearing of appeal."
8. We find although the assessee has taken various grounds before the Ld. CIT(A) / NFAC and had pleaded that the said bank account does not belong to the assessee HUF but belongs to the assessee in his individual capacity and the transactions of the same have already been reflected in the return filed in his individual capacity, however, the Ld. CIT(A) / NFAC has not addressed this issue by calling for a remand report from the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that given an opportunity the assessee is in a position to substantiate his case by filing the requisite details before the Ld. CIT(A) / NFAC. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make its submissions, if any, before the Ld. CIT(A) / NFAC on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
9. Grounds raised by the assessee in the above two appeals are as under: Grounds in 1. The Ld. Commissioner of Income Tax (Appeals) has erred in dismissing the appeal of the assessee.
2. The Ld. Commissioner of Income Tax (Appeals) failed to appreciate the fact that PAN No. of the appellant as Karta of HUF was wrongly punched by his banker in his Cash Credit Account held in the capacity as Individual.
3. The penalty levied amounting to Rs.5,61,800/- in this case u/s 271AAC(1) of the Income Tax Act is not sustainable in law, as the income in respect of which the penalty has been levied does not belong/pertain to the appellant as Karta of HUF. The said income actually belongs/pertains to appellant in his capacity as Individual. He has duly disclosed the same in his return of income and the said income has been also assessed in his hands as Individual.
The learned CIT (A) has brushed aside merits in the case of the appellant and ignored evidences produced at the time of filing appeal in form No.35.
The penalty order is therefore unjust, invalid and ab-initio-void. The penalty order may be cancelled/quashed.
The appellant craves leave to add to or amend/modify or delete any or all of the above grounds of appeal. Grounds in ITA No.2671/PUN/2024:
The Ld. Commissioner of Income Tax (Appeals) has erred in dismissing the appeal of the appellant.
The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that the income assessed in the hands of the appellant does not belong/ pertain to him. As such no penalty can be levied in the case of the appellant u/s 272A(1)(d) of the Income Tax Act 1961.
3. The Ld. Commissioner of Income Tax (Appeals) has grossly erred in understanding the reasonable cause and reasons beyond his control for failure on his part in non complying with the notices issued during the course of assessment proceedings. 4. The appellant craves leave to add to or amend/modify or delete any or all of the above grounds of appeal.
10. After hearing both sides, we find the quantum appeal has already been restored to the file of the Ld. CIT(A) / NFAC with certain directions. Since the quantum appeal has been restored to the file of the Ld. CIT(A) / NFAC, therefore, these two appeals are also restored to his file for fresh adjudication. The grounds raised by the assessee in these two appeals are accordingly allowed for statistical purposes.
In the result, all the three appeals filed by assessee are allowed for statistical purposes.
Order pronounced in the open Court on 9th April, 2025.