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Facts
The assessee's appeal for AY 2011-12 arose from an order confirming the addition of Rs. 57.19 Lacs from undisclosed sources. The AO reopened the case based on information of cash and time deposits, after the assessee, a non-filer, failed to provide justification.
Held
The Tribunal held that the reopening of assessment was valid as the assessee was a non-filer and failed to provide justification for financial transactions. However, the CIT(A) should not have decided the case on merits without admitting the appeal.
Key Issues
Whether the reassessment proceedings were validly initiated against a non-filer, and whether the CIT(A) erred in deciding the appeal on merits without admitting it.
Sections Cited
147, 148, 144, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
(िनधा�रणवष� / Assessment Year: 2011-12) Shri Bharpur Singh ITO. Ward No. 6(2), House No. 430 Phase 2 बनाम/ Vs. Mohali. Mohali-160055 �थायीलेखासं./जीआइआरसं./PAN/GIR No. ABZPS-6480-Q (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ�कीओरसे/ Appellant by : Sh. Ajay Jain (CA) – Ld. AR ��थ�कीओरसे/Respondent by : Sh. Vivek Vardhan (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 14-05-2025 घोषणाकीतारीख /Date of Pronouncement : 16-05-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2011-12 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 12-01-2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 147 r.w.s. 144 of the Act on 28-12-2018. The sole grievance of the assessee is confirmation of addition of cash deposit for Rs.57.19 Lacs. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.
Pursuant to receipt of information of cash deposit and time deposits in bank accounts during financial year 2010-11, an office letter was issued to the assessee on 22-02-2018 seeking justification of financial transactions. The assessee remained non-compliant. No return of income was filed by the assessee. Accordingly, to examine the sources of these deposits, the case was reopened and notice u/s 148 was issued on 28-03-2018 following due process of law. The notice was sent at the last known address of the assessee. In response, the assessee filed return of income on 16-05-2018. In subsequent notices, the assessee was required to explain the sources of these deposits.
There was total credit of Rs.75.34 Lacs in three bank accounts as held by the assessee which has been tabulated in para-3 of the assessment order. The assessee’s representative filed various information and documents. The assessee claimed that it received sale proceeds of Rs.77 Lacs on sale of agricultural land. However, as per sale deed, the assessee was joint owner to the extent of 50% and his share in the sale consideration worked out to be Rs.12.30 Lacs only. The agreement for sale of land for Rs.77 Lacs was not registered and the assessee failed to file the original agreement and accordingly, the same was doubted by Ld. AO. The claim of cash gifts was also not accepted. Finally, the source to the extent of Rs.57.19 Lacs was held to be from undisclosed sources and accordingly, added to the income of the assessee.
The first appeal was filed with a delay of 32 days which was not condoned by Ld. CIT(A). On merits also, the assessment was confirmed for want of any new submissions from the assessee. Aggrieved, the assessee is in further appeal before us.
The Ld. AR has raised various legal issues challenging the reopening of the assessment. These arguments, though appears attractive, do not find our concurrence at all. It could be seen that the assessee is a non-filer despite maintaining three bank accounts and also indulging in sale of land and making time deposits with the bank. Pursuant to receipt of information, an opportunity was granted to the assessee vide letter dated 22-02-2018 seeking justification of financial transactions. The assessee remained non-compliant. Left with no option, the case was reopened following due process of law and after obtaining the requisite approval of appropriate authority. The Ld. AR has stated that the approval was mechanical approval. However, the plea could not be accepted since whatever information was available before Ld. AO at the time of reopening, the same was put in the proposal. Concurring with the proposal, the requisite approval was granted. We see no infirmity in the same. Another argument is that the quantum of escapement of income was not correct. The same is bereft of any substance since no information was supplied by the assessee with regard to correct amount of deposit. In our considered opinion, at the time of reopening, only prima-facie belief is required to be formed qua escapement of income and Ld. AO is not expected to make out conclusive case of escapement of income. The Ld. AR also assailed the jurisdiction of Ld. AO which could not be accepted since the assessee was a non-filer. Accordingly, all the legal grounds as urged by Ld. AR stand rejected and the reassessment proceedings are held to be valid in the eyes of law.
Having said so, we find that Ld. CIT(A), having not admitted the appeal, should not have gone into the merits of the case. The Ld. AR has stated that the assessee received copy of the order and demand notice on 31-01-2019 and considering this date, the first appeal was filed within time. Be that as the case may be, we restore the appeal back to the file of Ld. CIT(A) for de novo adjudication on merits with a direction to the assessee to substantiate its case. The issue of delay shall not be raised by Ld. CIT(A).
The appeal stand partly allowed for statistical purposes. Order pronounced on 16-05-2025.