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Facts
The assessee filed an appeal against the CIT(A)'s order which partly allowed his appeal and treated a sum of Rs. 18,07,500/- as unexplained money. The original assessment order treated Rs. 28,07,500/- as unexplained money. The assessee also filed a separate appeal against a penalty order.
Held
The Tribunal upheld the CIT(A)'s findings on the remaining amount of Rs. 18,07,500/-, treating it as unexplained money. However, the addition of Rs. 10 lakh was sent for further verification. The Tribunal also upheld the penalty order for non-compliance with notices.
Key Issues
Whether the reassessment proceedings initiated under Section 147/148 were valid, and whether the cash deposits were adequately explained. Additionally, whether the penalty for non-compliance with notices was justified.
Sections Cited
147, 148, 143(3), 69A, 144, 246A, 142(1), 271(1)(b), 274
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आदेश/ORDER
PER PARESH M. JOSHI, JM
1. This is an appeal filed by the assessee under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act ] before this Tribunal. The assessee is aggrieved by the order bearing No. ITBA/NFAC/S/250/2024-25/1065147912(1) dated
ITA 800 & 801/CHD/2024 A.Y. 2012-13 2 27.05.2024 passed by CIT(A) under Section 250 of the Act which is hereinafter referred to as the “Impugned Order”. The relevant assessment year is 2012-13 and the corresponding previous year period is from 01.04.2011 to 31.03.2012.
2. Factual Matrix 2.1 That as per information available with the Income Tax Department, a notice under Section 148 r.w.s. 147 came to be issued to the assessee on 29.03.2019 and was served accordingly. It was stated therein that the assessee during assessment year 2012- 13 had made certain cash transactions with Punjab National Bank.
2.2 That the assessee has not filed his return of income in compliance to the notice under Section 148 of the Act.
2.3 That the notice(s) under Section 142(1) of the Act were issued on various date(s) and that the assessee neither attended the office nor gave any reply
ITA 800 & 801/CHD/2024 A.Y. 2012-13 3 whatsoever. The details of notice(s) issued under Section 142(1) of the Act are as under :
Nature of notice Date on which notice Date for which Remarks issued issued case fixed under Section 142(1) 20.05.2019 30.05.2019 None attended under Section 142(1) 13.11.2019 20.11.2019 None attended under Section 142(1) 21.11.2019 27.11.2019 None attended alongwith Show Cause Notice 2.4 That sufficient opportunity of being heard was provided to the assessee and that the assessee miserably failed to comply the same.
2.5 That during the course of the assessment proceedings, it was noticed that the assessee had maintained bank account with Punjab National Bank and had deposited cash of Rs.28,07,500/- in the said bank account during the year under consideration. Since assessee remained non cooperative as he did not attend office nor filed any reply to the aforesaid notice(s), it became quite apparent that the assessee has no explanation to offer with regard to cash deposit of Rs.28,07,500/-. The assessee was show caused as to ITA 800 & 801/CHD/2024 A.Y. 2012-13 4 why should not cash deposits of Rs.28,07,500/- be not treated as unexplained money under Section 69A of the Act and why the same should not be added to the total income of the assessee.
2.6 In case of unexplained money under Section 69A of the Act, onus is on the part of assessee to prove the source /genuineness of credit entries in the bank account maintained with the Punjab National Bank and that the assessee had failed to prove the source/genuineness of cash deposited in the bank account during the year under consideration.
2.7 That ld. AO under the above circumstances was left with no other alternative to treat the aforesaid cash amount of Rs.28,07,500/- as unexplained money under Section 69A of the Act and accordingly income of the assessee was assessed at Rs.28,07,500/- by order in assessment bearing No. ITBA/COM/F/17/2019- 2020/1021422544(1) dated 30.11.2019 in exercise of power under Section 144 of the Act.
ITA 800 & 801/CHD/2024 A.Y. 2012-13 5 2.8 The assessee being aggrieved by the aforesaid assessment order dated 30.11.2019 prefers first appeal under Section 246A of the Act before the First Appellate Authority i.e. CIT(A) who by “impugned order” has partly allowed the first appeal of the assessee, by treating sum of Rs.18,07,500/- as unexplained money under Section 69A of the Act. In so far as remaining amount of Rs. 10 lakh is concerned, CIT(A) in para 5.2.3 held as under :-
“5.2.3 On carefully going through the submissions, the appellant had claimed that part of the cash was received on account of sale of land. On account of sale of land, the appellant had received a sum of Rs.10,00,000 from the buyer. He had also filed ROI (belated) and offered the same/for capital gain taxation. This can be verified by the AO and the- AO can 'treat this sum of Rs.10,00,000 as explained sum after verification. The assessee may file the relevant submissions before the AO for proper verification.”
2.9 That the assessee being aggrieved by the impugned order has preferred this second appeal before this Tribunal and has raised following grounds of appeal against the impugned order in Form No. 36 which are as under :
1 .a) That the Ld. CIT(A) has erred in confirming the re-opening of assessment u/s 148 and which is against the facts and circumstances of the case. 1.b) That the Ld. CIT(A) has failed to appreciate that there was no reason to believe that the income of the assessee has escaped
ITA 800 & 801/CHD/2024 A.Y. 2012-13 6 assessment on account of bank deposit made by the assessee and has also erred in not following the judgments of the High Courts and different benches of the ITAT, under such circumstances the re- opening is bad in law. 1c.) That the Ld. CIT(A) has erred to appreciate that the Ld. AO has not applied his own mind, but only relied upon the information received from the investigation wing and, thus, the proceedings u/s 148 are bad in law and deserve to be quashed. 2.a) Notwithstanding the above said ground of appeal
, the Ld. CIT(A) has erred in confirming the addition of Rs. 18,07,500/- on account of the cash deposit in the bank account treating the same as un-explained money u/s 69 of the Act is against the facts and circumstances of the case. 2.b) That the Ld. CIT(A) has erred in not considering the sources of cash as explained to him during the course of assessment proceedings, which ought to have been considered by the AO.
3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
3. Record of Hearing 3.1 The hearing before this Tribunal took place on 10.12.2024 when ld. AR for and on behalf of the assessee appeared before us and ld. DR for and on behalf of the Revenue appeared before us. Both the parties through their respective ld. AR and ld. DR were given adequate opportunity to raise their respective contentions/submissions in support of their arguments/cases. Both were treated equally.
3.2 The ld. AR has placed on record of this Tribunal following Paper Book/documents which are as under :
ITA 800 & 801/CHD/2024 A.Y. 2012-13 7 i) Synopsis – I ii) Brief Synopsis-II iii) A Paper Book from pages 1 to 32 iv) Copy of ITAT Amritsar Bench order dated 02.03.2023 in in case of Satbir Singh Bhullar Vs ITO Ward 5(4) Amritsar 3.3 The ld. AR interalia contended before us that the assessee is an individual. The assessee derives his income from legal profession and agriculture. For the year under consideration, total income of the assessee was less than the maximum allowed exemption limit, hence the assessee did not file his return of income for relevant assessment year 2012-13.
3.4 The assessment order dated 30.11.2019 is passed ex-parte under Section 144 r.w.s. 147 of the Act wherein addition of Rs.28,07,500/- has been made.
3.5 Since the assessee did not know the ex-parte assessment order dated 30.11.2019 which was made against him in a bonafide state of mind, the assessee filed return of income on 09.12.2019 and declared income of Rs.1,78,656/-. The assessee has claimed to ITA 800 & 801/CHD/2024 A.Y. 2012-13 8 have filed reply dated 10.12.2013 before ld. AO after assessment order dated 30.11.2019 was passed. That assessee basis his written submission on 21.02.2024 contended before CIT(A) that out of cash deposit of Rs.28,07,500/-, Rs. 10,00,000/- has been sourced from sale of shop (50% share) (Booth) which has been declared in ROI (belated one). Source of balance cash deposit of Rs.18,07,500/- was explained as follows :
S. No. Amount Remarks 1. 4,50,000/- Cash received by the assessee during the year under consideration as agriculture income which have also been declared by the assessee in his ITR filed on 09.12.2019. 2. 4,00,000/- Cash received by the assessee against the agreement to sell the agriculture land which was later on returned as the deal of sale did not mature. 3. 3,27,495/- Cash in Hand kept at home by the assessee as accumulated savings since past many years in order to meet the need arising out of medical emergency 4. 6,30,005/- Cash re-deposited out of earlier withdrawals made by the assessee.
That ld. CIT(A) without considering above has passed the impugned order which is as follows :
S. No. Amount Decision of Worthy CIT(A) 10,00,000/- Additions to the extent of Rs. 10,00,000/- (Sale receipts of share of .1 shop) sent to AO for verification. 18,07,500/- Appeal filed by the assessee for the additions to the extent of Rs. 2. 18,07,500/-dismissed.
3.6 Basis above it was contended by ld. AR as follows :
ITA 800 & 801/CHD/2024 A.Y. 2012-13 9 1) With regard to cash deposit of Rs.28,87,500/- in Punjab National Bank which escaped assessment and the said cash deposit are required to be taxed as unexplained money under Section 69A of the Act.
It was submitted that ld. AO was in possession of only bank statement of PNB and it is only on the basis of such bank account statement, the ld. AO has reopened the case of the assessee under Section 147/148 without making any enquiry with regard to alleged escapement of income save and except bank statement of PNB of assessee. It was, therefore, contended that the case of the assessee was reopened only on the basis of “reason to suspect” and not “reason to believe”. To reopen the case on basis of reason to suspect is invalid ground and consequently assessment order of ld. AO deserves to be quashed. Reliance was placed on following decisions and judgements :
(i) (2008) 168 taxman 39 (P&H) Smt. Paramjit Kaur case
ITA 800 & 801/CHD/2024 A.Y. 2012-13 10 (ii) (1976) 103 ITR 437 Shri Lachmani Mewal Dass case (iii) (2023) 157 Taxmann.com 356 (Gujrat) Basis these judgements, it was sought to be contended that re-opening has been on basis of suspicion without having any tangible material on record. Further, reasons have been recorded only on the basis of information received by Investigation Wing of the Department and that there has been no application of mind by ld. AO.
Reasons have been recorded only on basis of borrowed satisfaction, which is clearly reflected in the assessment order itself wherein it is recorded as under :
"As per information available with this office, notice u/s 148 read with section 147 of Income Tax Act, 1961 was issued on 29.03.2019 and served upon the assessee on the grounds that the assessee during FY 2011-12 relevant to AY 2012-13 had made certain cash transactions with Punjab National Bank."
3.7 It was stated and contended that from above it is evident that in the case of the assessee, no independent application of mind by ld. AO at the time of recording of reasons for re-opening of case of the assessee initiating the proceedings as well as even at the time of concluding of assessment proceedings. That re-opening of the case
ITA 800 & 801/CHD/2024 A.Y. 2012-13 11 on account of borrowed satisfaction is not valid in the eyes of law. Reliance was placed on the judgement of Hon'ble ITAT Chandigarh Bench in case of Evershine Recreation Ltd. in ITA No. 718/CHD/2022. Further reliance was placed on : a. Sh. Gopal Sharan vs. Ito in vide order dated 05.09.2012 (Amritsar ITAT) b. Sh. Mohd Yousuf Wani vs. ITO in ITAT) c. Sh. Sanjeev Aggarwal vs. DCIT in ITA NO. 547/Asr/2011 (Amritsar ITAT) d. CIT vs. SFIL Stock Broking Ltd. (Del HC) 325 ITR 285 e. CIT vs. Smt. Paramjit Kaur (P&H HC) 311 ITR 38 f. Geeta Garg vs. CIT, Patiala as reported in 51 IT Rep 215 (Punjab & Haryana HC)
It was therefore, submitted that the facts of the case of the assessee are similar to the above cited citation wherein it has been held that when ld. AO records reasons for re-opening of the case of the assessee without independent application of mind, then the assessment order passed deserves to be quashed.
3.8 The ld. AR on merits has placed reliance on reply to ld. AO dated 10.12.2019 (which is post date of assessment order dated 30.11.2019) [Paper Book page 9].
ITA 800 & 801/CHD/2024 A.Y. 2012-13 12 3.9 The ld. AR basis following table has explained source of cash deposit of Rs.28,07,500/- in following manner :
Amount Remarks S. No. 1. 10,00,000/ Cash deposited out of sale of shop, capital gain duly declared in the return of - income filed in response to notice u/s 148. 2. 450,000/- Cash received by the assessee during the year under consideration as agriculture lease income which have also been declared by the assessee in his ITR filed on 09.12.2019. 3. 4,00,000/- Cash received by the assessee against the agreement to sell the agriculture land which was later on returned as the deal of sale did not mature. 4. 3,27,495/- Cash in Hand kept at home by the assessee as accumulated savings since past many years in order to meet the need arising out of medical emergency. 5. 6,30,005/- Cash re-deposited out of earlier withdrawals made by the assessee.
3.10 It was interalia further contended by ld. AR that in the impugned order sum of Rs.10 lakh which was received by the assessee on account of sale of shop [Booth ½ share] and which amount is also declared towards capital gain in ROI [belated] has been considered subject to verification by ld. AO only as explained sum.
The assessee is directed to file relevant submission before ld. AO for proper verification.
3.11 With regard to remaining deposit of Rs.18,07,500/- it was claimed that assessee had received
ITA 800 & 801/CHD/2024 A.Y. 2012-13 13 cash of Rs.4.50 lakh as agriculture lease income.
Further, sum of Rs. 4 lakh towards sale of agriculture land i.e. Agreement to Sell which was later cancelled.
3.12 The ld. AR in support of Rs.4.50 lakh has submitted as under :
“With regard to Rs. 4,50,000/-, it is hereby submitted that the assessee along with his other brothers own agricultural land measuring 5 Acres approx. (assessee's share), the copy of the Jamabandi evidencing the agricultural landholding of the assessee is placed at page no. 19-32 of the paper book. During the year under consideration, the assessee has earned a net of Rs. 4,50,000/- as agriculture income which has duly been declared by the assessee in his return of income filed in response to the notice u/s 148 of the Act. It is hereby submitted that the said amount has been received by the assessee as lease income from the agriculture land owned by him. In addition to this, it is pertinent to mention that the assessee had declared the said amount of Rs. 4,50,000/- in his return of income along with the cash flow statement filed by the assessee during the course of appellate proceedings for the period 01.04.2011 to 31.03.2012. Copy of the cash flow statement filed by the assessee for the period 01.04.2011 to 31.03.2012 is placed in the paper book at page no. 8 which was filed before CIT(A). Reliance in this regard is placed on the judgment of Hon'ble Amritsar Bench of ITAT in the case of Sh. Satbir Singh Bhullar vs. ITO in wherein, it has been held that the assessee possess sufficient landholding which is evident from the Jamabndi submitted by him and the agricultural operations were also evident from the Khasra/Girdawri filed by him. Therefore, the agricultural income of the assessee is proved beyond doubts. The ld. AR with regard to Rs.4 lakh cash deposit has submitted as under :
“With regard to the amount of Rs. 4,00,000/-, it is hereby submitted that during the year under consideration as the assessee was owning agriculture land, the assessee entered into an agreement for sale of his agriculture land and in accordance with the terms of the agreement, the assessee received an amount of Rs. 4,00,000/- in cash for sale of his agriculture land on 16.04.2011 and the said amount formed part of the cash deposit of Rs. 21,50,000/- made by the assessee on 18.04.2011,
ITA 800 & 801/CHD/2024 A.Y. 2012-13 14 however, later on, the said agreement to sell did not mature and the said amount of Rs. 4,00,000/- was then returned by the assessee to the counter party on 02.05.2011 by making withdrawals from bank account on 02.05.2011. It is hereby submitted that as the agreement did not mature, the copy of the said agreement was discarded, as a result, the assessee is not able to file the copy of the said agreement, however, the cash receipt as well as cash payment of Rs. 4,00,000/- is duly reflecting in the cash flow statement filed by the assessee during the course of appellate proceedings. Moreover, the fact that the case of the assessee pertains to AY. 2012-13 and the appellate order has been passed by Worthy CIT(A) in the year 2024 i.e. after a time period of 12 years and inability of the assessee for production of evidence of entering into an agreement which was cancelled later on after such a long period of 12 years may kindly be considered in a sympathetic manner particularly when the assessee has filed a copy of cash flow statement wherein such transactions of receipt and refunds of amount of Rs. 4,00,000/- is duly reflecting in the cash flow statement. However, worthy CIT(A) did not consider the cash flow statement filed by the assessee and did not accept I the amount of Rs. 4,00,000/- received on the agreement to sell as source of cash deposit in the bank account of the assessee.” The ld. AR with regard to the amount of Rs.3,27,495/- it was submitted that the opening balance of cash in hand as on the first date of financial year i.e. on 01.04.2011.
It is hereby submitted that the assessee has kept such amount of money in his hand in order to meet any contingent medical needs or family emergency. It is hereby submitted that during the course of appellate proceedings, the assessee filed the copy of the cash flow statement of the assessee for the period 01.04.2011 to 31.03.2012 and the LD. CIT(A) has not passed any adverse remark with regard to the said cash flow statement. However, the LD. CIT(A) did not accept
ITA 800 & 801/CHD/2024 A.Y. 2012-13 15 the contention of the assessee and has not considered the opening balance of cash in hand as source of cash deposit in the bank account of the assessee. Hence, it is hereby very humbly requested that the opening balance of cash in hand may kindly be treated as source of cash deposit made in the bank account of the assessee as the department has not given any adverse finding on the amount of Rs. 3,27,495/-.
The ld. AR with regard to the amount of Rs.6,30,005/- submitted that during the year under consideration, the assessee has made aggregate withdrawals to the tune of Rs. 6,30,005/-. For your goodself's reference, it is hereby submitted that in the case of the assessee, the Ld. AO has not passed any adverse remark with regard to utilization of cash withdrawals made by the assessee for any purpose other than the cash redeposit in his bank account. In this regard, it is hereby submitted that it is a settled law that wherein, no utilization of the cash withdrawals has been proved, then the source of ITA 800 & 801/CHD/2024 A.Y. 2012-13 16 cash deposit is out of the earlier cash withdrawals made by the assessee.
3.13 The ld. AR in his concluding argument brought to our notice that source of cash deposit made by the assessee in his bank account is duly explained. Cash Flow Statement has been filed. CIT(A) has not considered Cash Flow Statement filed by the assessee. Confirmation of additions made by the ld. AO is on basis of the assumptions and presumptions. Hence, order of assessment and impugned order be set aside.
3.14 Per contra, ld. DR has supported the order of lower authorities.
Observations,Findings& Conclusions 4.1 We now have to decide legality, validity and proprietary of the impugned order basis records of the case before us and submissions canvassed.
4.2 We observe that impugned assessment order dated 30.11.2019 (supra) of ld. AO under Section 144
ITA 800 & 801/CHD/2024 A.Y. 2012-13 17 r.w.s. 147 is correctly made. The assessee was given many opportunity but he has miserably failed to attend and reply during the course of the assessment proceedings. No plausible explanation worth a credence was offered by ld. AR during first as well as second appellate proceedings. Counsel during assessment proceedings sought adjournment is not backed by any material on record; either before First Appellate Authority and even before us. Provisions of Section 144 are mandatory provisions and has rightly been invoked by ld. AO.
4.3 Being aggrieved the assessee prefers first appeal before CIT(A) without making any application u/r 46A of the Act and Rules for bringing material on record in lawful manner. We, therefore, hold that provisions of law with regard to bringing material on record in a manner known to law has not been followed when admittedly impugned assessment order is under Section 144 of the Act. It was incumbent upon the assessee to have made a proper application for bringing on record all material and ITA 800 & 801/CHD/2024 A.Y. 2012-13 18 for which there is provision and that has not been utilized.
4.4 The impugned order is not proper and is illegal as notice under Section 147/148 is bad in law is a novel method to challenge each and every proceedings opened under Section 147/148 of the Act. We observe and hold that Department of Income Tax had credible information in their possession and basis that information the ld. AO has rightly issued the notice under Section 147/148. The argument of “borrowed information” “reason to suspect” etc. have been taken to ensure that case is set at naught on legal and technical basis which as stated has become a novel method. In the instant case, be it noted, no return of income was filed in the normal course.
Further, no return of income was filed in response to notice(s) under Section 147/148. No plausible and tenable explanation have been furnished to explain this phenomenon. The order of assessment is dated 30.11.2019 under Section 144 r.w.s. 147 whereas assessee has filed belated return post order in ITA 800 & 801/CHD/2024 A.Y. 2012-13 19 assessment on 09.12.2019. The reply to ld. AO is dated 10.12.2019 much after order of assessment dated 30.11.2019. Each individual is in bonafide state of mind. Bonafide state of mind gets disturbed when due to lapses ex-parte order or order under Section 144 comes.
Bonafide mind then takes a legal cover and give explanations on borrowed advises. In instant case, return of income is dated 09.12.2019 and reply is dated 10.02.2019 much after assessment order dated 30.11.2019 under Section 144 r.w.s. 147/148. Prior to that all notices (supra) are not replied or attended to.
We, therefore, have no hesitation in holding that assessee has not approached this Tribunal in a bonafide manner.
4.5 The impugned order against cash deposit of Rs.28,07,500/- sum of Rs. 10 lakh part amount is shown as on account of sale of shop [Booth ½ share] and capital gain is offered for tax in return of income (belated). The CIT(A) has directed the ld. AO to verify and ld. AO can treat this sum as explained after verification. Assessee
ITA 800 & 801/CHD/2024 A.Y. 2012-13 20 has been directed to file relevant submission for proper verification. For remaining amount of Rs.18,07,500/- the ld. CIT(A) has rightly held as under :
“5.2.4 With respect to the other deposits, the appellant had claimed that he had received cash of Rs.4,50,000 as agricultural lease and further sum of Rs.4,00,000 towards sale of agricultural land. He had also submitted that he had returned the sum of Rs.4,00,000 since the deal was not materialized. However he could not submit any valid confirmations/documents with respect to the above cash said to be received on account of agricultural lease and sale or agricultural land. He could not submit any identity of the persons who had given the above cash to the appellant. No other explanation was provided with respect to the other sum deposited in the bank account. Hence the Remaining sum of Rs. 18,07,500/- is to be treated as unexplained money of the appellant and the same needs to be taxed as unexplained money of the 69A of the Act.” The above finding of fact has not been controverted and has remained unchallenged even before us as no document/confirmation in support of lease of land, sale of agriculture land (Agreement to Sell and Deed of cancellation)/confirmations are produced in Paper Book.
Producing agriculture land holding documents evidencing part ownership of land cannot be a valid substitute for documents as listed above. Cash flow does not prove sources of money in the instant case which was originally not there. The remaining amounts too have not been adequately and sufficiently explained leading us to ITA 800 & 801/CHD/2024 A.Y. 2012-13 21 a legitimate source or a valid source of money. In respect of Rs.3,27,495/- the assessee explanation is “opening balance of cash in hand kept at home by assessee out of accumulated savings of past many years in order to meet the need arising out of medical emergency.” Then such amount should remain at home and cannot be explained to give explanation of “source of deposit of money in cash in bank”. In addition, such general explanation has no credence in law in absence of any material evidence in support thereof . We further hold that merely because ld. CIT(A) has not passed any adverse remark with regard to cash flow statement that ipsofacto does not mean and imply that suitable explanation for Rs.3,27,495/- stands given. The case law of Rajinder Singh Vs ACIT in order dated 06.02.2018 (Delhi Bench) (ITAT) is distinguishable on facts. The facts are not parimateria.
4.6 With regard to amount of Rs. 4 lakh, it is an admitted position that there is no agreement of sale on ITA 800 & 801/CHD/2024 A.Y. 2012-13 22 record nor there are any confirmations in support thereof. No deed of cancellation is on record too.
4.7 With regard to amount of Rs.4.5 lakhs as lease income once again, there is no documentary evidence/confirmation on record with regard to lease income. The agriculture lease income cannot be determined basis land holding. There has to be documentary evidence of lease income basis lease document. Case law of ITAT Amritsar Bench in case of Satbir Singh Bhullar Vs ITO in is distinguishable as lease income therein was not in issue.
4.8 With regard to amount of Rs.6,30,005/- which was cash re-deposited out of earlier withdrawals made by assessee, we notice that no plausible explanation was given before CIT(A) and in para 5.2.4 he has rightly observed “that no other explanation was provided with respect to other sum deposited in bank account”. The assessee has not effectively rebutted this finding of fact by any material evidence save and except that amount was from earlier withdrawals. Such general explanation
ITA 800 & 801/CHD/2024 A.Y. 2012-13 23 without any iota of evidence about source of cash deposit remains in realm of mystery. If explanation about “earlier withdrawal is accumulation or withdrawal during year under consideration is concerned is accepted then in each and every case of cash deposit, the assessees would take plea that cash deposits are from past and/or current withdrawals which would lead to absurd situation. The assessee must offer plausible explanation, so Revenue is satisfied. Mere explanation without supporting are no explanations.
4.9 In the factual matrix, we notice that neither the return of income was filed by the assessee nor return of income was filed before assessment order dated 30.11.2019 was passed by ld. AO in exercise of power under Section 144 r.w.s. 147/148. The reply filed before ld. AO is after assessment order was passed. The assessee ventures to file first appeal and does not prefer any application under Section/Rule 46A despite assessment order being under Section 144. Be that as it may, the ld. CIT(A) deals with 1st appeal basis
ITA 800 & 801/CHD/2024 A.Y. 2012-13 24 submissions filed before him on 21.02.2024. In the said submission on page 14, it is averred that case of the assessee is reopened on the basis of AIR/CIB information regarding cash deposit in the bank and non filing of return. We are of the considered view basis above, the ld. AO formed a reasonable belief that income chargeable to tax has escaped assessment and that such income is required to be assessed. Be it noted provision of Section 147 covers assessment too, besides the re-assessment.
In this case, information can be said to be borrowed in worst case scenario but not satisfaction. The satisfaction basis ‘information on record’ is sufficient to form a basis that atleast a notice should be issued. In the instant case, two factors weighed before ld. AO to issue notice under Section 148, one was cash deposited in bank and when correspondingly this information was checked and verified, it was fund that even return of income is not filed. The act of carefully perusing information and cross verification whether return of income is filed or not is sufficient in our considered view
ITA 800 & 801/CHD/2024 A.Y. 2012-13 25 to atleast issue a notice. It can be called ‘Reasons to believe’. An act of receiving information and verifying the same whether return of income is filed or not and thereafter to issue notice after due application of mind by virtue of which due process of law is required to be triggered by no stretch of imagination can be called ‘borrowed information’. Further issue of notice under Section 148 is subject to checks and balances by superior officers. In the entire Paper Book, the assessee has not relied upon ‘Reasons to believe’ nor any ‘regular template’ which is generally maintained before notice under Section 148 is issued. Nothing prevented the assessee to obtain the same by carrying out the inspection of documents. Under these peculiar facts and circumstances, plea of assessee with regard to applicability of Section 148 lacks merits and bonafide too. Further, the information basis which ld. AO applied his mind, before issue of notice under Section 148 has not been disputed by the assessee in any manner
ITA 800 & 801/CHD/2024 A.Y. 2012-13 26 whatsoever. We, therefore, reject the contention of the assessee that notice under Section 148 is bad in law.
4.10 We have carefully perused the reply filed before CIT(A) [Paper Book 10 to 18) and notice that a Sale Deed is claimed to be attached but not available in Paper Book, perhaps it is for this reason issue of addition of Rs.10 lakh is remitted back to AO for verification and submission.
4.11 It is also stated on page 18 of Paper Book i.e. in reply dated 21.02.2024 before CIT(A) that amount of Rs.4.5 lakh is received in bank account of PNB as agriculture lease income as agriculture was given on lease. But no document/confirmation is attached in support. This remains the position even before us too during the course of hearing. Basis that we reject the contention of assessee on Rs.4.5 lakh and sustain the finding of CIT(A).
4.12 It is also stated on page 18 of Paper Book i.e. in reply dated 21.02.2024 before CIT(A) that an amount of ITA 800 & 801/CHD/2024 A.Y. 2012-13 27 Rs.4 lakh is received against Agreement to Sell of agriculture land and later on deal was not matured due to one or other reason. Amount was returned back later on as depicted in cash flow. No Agreement to Sell nor any deed of cancellation was filed before CIT(A) in support of contention and same remains position even before us. Basis this, we reject the contention of the assessee on Rs.4 lakh and sustain the finding of CIT(A).
4.13 It is also stated on page 18 of Paper Book i.e. reply dated 21.02.2024 before CIT(A) that balance deposit in bank were out of first withdrawal from Bank and then deposit. However, save and except bare statement no reliance was placed on any material evidence nor any explanation was offered before CIT(A) that for what purpose withdrawal was made, why withdrawal money could not be spent and why money so withdrawn came to be re-deposited. No plausible explanation was given before CIT(A) and same remains the position before us. Under these circumstances, we sustain the finding of CIT(A).
ITA 800 & 801/CHD/2024 A.Y. 2012-13 28 5. ORDER 5.1 In the premises laid down by us, we sustain the finding of ld. CIT(A) in so far as Rs. 10 lakh is concerned for which matter is sent for further verification to CIT(A) and sustain the finding to ld. CIT(A) on remaining amount of Rs.18,07,500/-.
5.2 In the result, appeal of the assessee is partly allowed.
ITA NO. 801/CHD/2024 – A.Y. 2012-13
Brief facts in this appeal are that by virtue of an order bearing No. ITBA/PNL/F/271(1)(6)/2021- 22/1039000459(1) dated 23.01.2022 a penalty of Rs.10,000/- each for non compliance to notice under Section 142(1) dated 20.05.2019 and 13.11.2019 aggregating to Rs.20,000/- [on two counts] came to be imposed under Section 271(1)(6) of the Act. The said order of penalty dated 23.01.2022 was challenged by the assessee before First Appellate Authority CIT(A) who by order bearing No. ITBA/NFAC/S/250/2024-
ITA 800 & 801/CHD/2024 A.Y. 2012-13 29 25/1065149099(1) dated 27.05.2024 has upheld the original penalty order dated 23.01.2022. The aforesaid order of CIT(A) dated 27.05.2024 is hereinafter referred to as the impugned order. The impugned order was challenged by the assessee by preferring this second appeal under Section 253 of the Act and following grounds of appeal are taken up before this Tribunal which are as follows :
1. That the Ld. CIT(A) has erred in confirming the levy of penalty amounting to Rs. 20,000/- u/s 271 (1 )(b) of the Income Tax Act, 1961.
2. That the Ld. CIT(A) has failed to appreciate the return submission filed by the assessee, thus the levy of penalty is against the facts and circumstances of the case.
3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
During the course of hearing, we have carefully heard the ld. AR and ld. DR respectively in support of their respective cases.
We have carefully perused the records of the case and have heard rival contentions. The statutory provision with regard to non compliance of notice(s) under Section 142(1) are lucid and clear. It is just incumbent upon the assessee to comply with the ITA 800 & 801/CHD/2024 A.Y. 2012-13 30 requisitions which are made in notice(s) under Section 142(1). In the instant case, two notices under Section 142(1) dated 20.05.2019 and 13.11.2019 came to be issued to the assessee and were duly served. The assessee has not effectively replied both the notice(s) nor have attended the proceedings. The assessee has thus defaulted deliberately in complying with statutory notice(s).
4. In the premises, we conquer with the finding of ld. CIT(A) that assessee has deliberately defaulted on notice(s) supra. The assessee has no deterrent of the law. We hold that assessee has failed to give any plausible explanation to the notice(s) issued under Section 274 r.w.s. 271(1)(b). The fiscal laws are required to be construed strictly and no leeways can be given.
Tax Administration must work smoothly and in time bound manner, hence no laxity can be shown.
ORDER 5.1 In the premises, impugned order is upheld and sustained.
ITA 800 & 801/CHD/2024 A.Y. 2012-13 31 5.2 In the result, appeal of the assessee is dismissed. is partly is dismissed.
Order pronounced on 28th February,2025.