Loading judgment…
Facts
The assessee received cash deposits of Rs. 33,00,000/- in her bank account. The Assessing Officer (AO) initiated proceedings under section 147 of the Income Tax Act, 1961, as the assessee had not filed a return of income. The assessee later filed a return showing capital gain and interest income. The AO treated the cash deposits as unexplained income and made an addition.
Held
The Tribunal found that the addition was made due to the assessee's failure to establish the title of the property purportedly sold. The Tribunal, considering the facts, decided to give the assessee one more opportunity to present her case and produce necessary evidence regarding the ownership of the property.
Key Issues
Whether the addition of Rs. 33,00,000/- as unexplained cash deposit is sustainable when the assessee claims it arose from property sale, and whether proper procedure was followed in assessment and appellate proceedings.
Sections Cited
147, 148, 143(3), 271(1)(c), 69A, 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2011-12 Smt. Rachna Varyani v. The Income Tax Officer 117, R.N. Block Ward 2(3) Ratan Lal Nagar Kanpur Kanpur TAN/PAN:AAXPV4296Q (Appellant) (Respondent) Appellant by: Shri Jitendra Kumar Yadav, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 23 04 2025 Date of pronouncement: 28 04 2025 O R D E R
This appeal has been preferred by the assessee against order dated 02.12.2022, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2011-12.
2. The brief facts of the case are that the Income Tax Department was in possession of information that the assessee had made cash deposits to the tune of Rs.33,00,000/- with Bank of Baroda during the year under consideration and the assessee had not filed the return of income. Accordingly, proceedings under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) were initiated after issuing notice under section 148 of the Act. In response to notice under section 148 of the Act, the assessee filed her return of income, showing capital gain at Nil and interest income at Rs.1,16,047/- and declaring a total income of Rs.46,047/-. In response to notice under section 143(2) of the Act issued by the Assessing Officer (AO), the assessee, with regard to the cash deposits of Rs.33,00,000/-, submitted that the same was received by the assessee from sale of property, bearing No.252 allotted by Kanpur Development Authorityi (KDA) in favour of Shri Bhupender Singh S/o Shri Agya Singh R/o 113/158, Swaroop Nagar, Kanpur on 07.09.1981, purchased by her in November, 1990 for Rs.1,30,000/-. After perusing the documents submitted by the assessee, the AO noticed that the said property was sold on 02.11.2010 for a consideration of Rs.33,92,500/- by Shri Bhupender Singh S/o Shri Agya Singh R/o 113/158, Swaroop Nagar, Kanpur through Power of Attorney holder, Shri Indra Kumar Talreja S/o Shri Tikam Das Talreja R/o 120/500A, Lajpat Nagar, Kanpur. The AO noted that the assessee has neither sold this property in her name and had thus not received the consideration as stated by her in her reply dated 17.12.2018. Since the assessee had failed to prove that the assessee was the owner of the said property, the AO treated the cash deposits of Rs.33,00,000/- made by the assessee in her bank account as unexplained income and added the same to the income of the assessee. The AO completed the assessment under section 147 read with section 143(3) of the Act, assessing the total income of the assessee at Rs.33,46,047/-.
2.1 The AO also initiated penalty proceedings under section 271(1)(c) of the Act, separately.
3. Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority. The appeal was migrated to the NFAC, which dismissed the appeal of the assessee confirming the order of the AO.
4. Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining addition of Rs. 33,00,000/- made by AO as unexplained cash deposit as the explanation submitted by assessee concerning the cash deposit made by assessee has been misinterpreted and erroneously rejected by the Ao as well as the Ld. CIT(Appeals).
2. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining addition of Rs. 33,00,000/- made by AO as the assessee has filed an affidavit that the cash deposit made by her is arising out of the sale proceeds received by the assessee from sale of property and without considering the said facts the Ld. CIT(Appeals) confirmed the addition which is unsustainable in law and the same is liable to be set-aside and quashed.
3. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law as the money deposited in the bank account of the assessee is evidenced out of conveyance deed and in case the AO disputes the title of the property to belong to assessee then under no circumstance can an addition arising out of same transaction be made in the hands of the assessee.
4. BECAUSE, on the facts and in the circumstances of the case, the Impugned Assessment Order passed by the Ld. Assessing Officer, is wholly without jurisdiction and bad in law as the statutory jurisdictional Notice u/s 143(2) of the Act has not been issued by the jurisdictional Assessing Officer as also not within the prescribed time.
5. BECAUSE, the impugned assessment proceedings are further bad in law and liable to be quashed as the jurisdictional Notice under Section 143(2) of the Act, has not been issued by the jurisdictional Assessing Officer, rendering the Order of Assessment bad in law.
6. BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the statement of reasons recorded for reopening assessment do not lead to the formation of belief that income chargeable to tax of the assessee has escaped assessment. There is no tangible material available with the AO to re-open the assessment and therefore Notice U/s 148 only without jurisdiction and bad in law.
7. BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the notice u/s 148 is time barred.
8. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order is bad in law and liable to be set aside and quashed as the assessment order is barred by limitation.
9. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and liable to be set aside as addition of Rs.33,00,000/- under Section 69A of the Act cannot be made in relation to money deposited in the bank account of the assessee since the bank account do not constitute books of account of the assessee and addition u/s 69A presupposes entry made in books of account.
10. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and without lawfully appreciating the true and correct facts and circumstances of the case and wholly in an arbitrary, imaginary and illegal manner; the sum of money deposited by the assessee has been duly explained and is supported with evidence and hence do not represent unexplained money taxable under Section 69A of the Act.
11. BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is bad in law as no due and proper opportunity of hearing was granted to the assessee to explain its case hence the order of Ld. Commissioner of Income Tax (Appeals) deserves to be set aside and quashed.
12. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and liable to set-aside and quashed since the Ao-do not provided the cross examination of Shri Indra Kumar Talreja and as also has utilized evidence which was obtained behind the back of the assessee. In the case of Kishn Chand Chelaram it is settled that evidence obtained behind the back of the assessee and which has not been confronted to the assessee cannot be utilized for making the addition.
13. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in law as the assessing officer is not a competent person to decide the title of a property further no confirmation has been shot from the parties to the transaction and the entire hypothesis of the AO is unsustainable in law.
14. BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is plain arbitrary and purely based on conjectures and surmises and hence bad in law and liable to be set-aside and quashed.
15. The humble assessee craves for leave to add/amend any other ground with the prior permission of your honours.
5. During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the AO had made the addition of Rs.33,00,000/- deposited in the bank account of the assessee for the reason that the assessee failed to prove the title of the property sold by the assessee. It was further submitted that the NFAC too confirmed the action of the AO for the same reason. The Ld. A.R. prayed that the matter may be restored to the file of the AO where the assessee shall produce necessary documents/evidence to prove the ownership of the property in question at the relevant period.
6. The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer.
7. I have heard both the parties and have also perused the material on record. I find that the addition has been made by the AO on account of failure of the assessee to establish the title of the property in question and the NFAC too confirmed the order of the AO for the same reason. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present her case and, therefore, I restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the Assessee to present her case and produce the necessary evidences/documents in support of the ownership of the property in question. I also caution the Assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
8. In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 28/04/2025.
Sd/- [SUDHANSHU SRIVASTAVA] JUDICIAL MEMBER DATED:28/04/2025 JJ: Copy forwarded to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR By order Assistant Registrar/DDO
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, LUCKNOW BEFORE SHRI. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER Assessment Year: 2011-12 Smt. Rachna Varyani v. The Income Tax Officer 117, R.N. Block Ward 2(3) Ratan Lal Nagar Kanpur Kanpur TAN/PAN:AAXPV4296Q (Appellant) (Respondent) Appellant by: Shri Jitendra Kumar Yadav, Advocate Respondent by: Shri Sunil Kumar Rajwanshi, D.R. Date of hearing: 23 04 2025 Date of pronouncement: 28 04 2025 O R D E R
This appeal has been preferred by the assessee against order dated 02.12.2022, passed by the National Faceless appeal Centre, Delhi (NFAC) for Assessment Year 2011-12.
The brief facts of the case are that the Income Tax Department was in possession of information that the assessee had made cash deposits to the tune of Rs.33,00,000/- with Bank of Baroda during the year under consideration and the assessee had not filed the return of income. Accordingly, proceedings under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) were initiated after issuing notice under section 148 of the Act. In response to notice under section 148 of the Act, the assessee filed her return of income, showing capital gain at Nil and interest income at Rs.1,16,047/- and declaring a total income of Rs.46,047/-. In response to notice under section 143(2) of the Act issued by the Assessing Officer (AO), the assessee, with regard to the cash deposits of Rs.33,00,000/-, submitted that the same was received by the assessee from sale of property, bearing No.252 allotted by Kanpur Development Authorityi (KDA) in favour of Shri Bhupender Singh S/o Shri Agya Singh R/o 113/158, Swaroop Nagar, Kanpur on 07.09.1981, purchased by her in November, 1990 for Rs.1,30,000/-. After perusing the documents submitted by the assessee, the AO noticed that the said property was sold on 02.11.2010 for a consideration of Rs.33,92,500/- by Shri Bhupender Singh S/o Shri Agya Singh R/o 113/158, Swaroop Nagar, Kanpur through Power of Attorney holder, Shri Indra Kumar Talreja S/o Shri Tikam Das Talreja R/o 120/500A, Lajpat Nagar, Kanpur. The AO noted that the assessee has neither sold this property in her name and had thus not received the consideration as stated by her in her reply dated 17.12.2018. Since the assessee had failed to prove that the assessee was the owner of the said property, the AO treated the cash deposits of Rs.33,00,000/- made by the assessee in her bank account as unexplained income and added the same to the income of the assessee. The AO completed the assessment under section 147 read with section 143(3) of the Act, assessing the total income of the assessee at Rs.33,46,047/-.
2.1 The AO also initiated penalty proceedings under section 271(1)(c) of the Act, separately.
Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority. The appeal was migrated to the NFAC, which dismissed the appeal of the assessee confirming the order of the AO.
4. Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
1. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining addition of Rs. 33,00,000/- made by AO as unexplained cash deposit as the explanation submitted by assessee concerning the cash deposit made by assessee has been misinterpreted and erroneously rejected by the Ao as well as the Ld. CIT(Appeals).
2. BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in sustaining addition of Rs. 33,00,000/- made by AO as the assessee has filed an affidavit that the cash deposit made by her is arising out of the sale proceeds received by the assessee from sale of property and without considering the said facts the Ld. CIT(Appeals) confirmed the addition which is unsustainable in law and the same is liable to be set-aside and quashed.
3. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law as the money deposited in the bank account of the assessee is evidenced out of conveyance deed and in case the AO disputes the title of the property to belong to assessee then under no circumstance can an addition arising out of same transaction be made in the hands of the assessee.
BECAUSE, on the facts and in the circumstances of the case, the Impugned Assessment Order passed by the Ld. Assessing Officer, is wholly without jurisdiction and bad in law as the statutory jurisdictional Notice u/s 143(2) of the Act has not been issued by the jurisdictional Assessing Officer as also not within the prescribed time.
BECAUSE, the impugned assessment proceedings are further bad in law and liable to be quashed as the jurisdictional Notice under Section 143(2) of the Act, has not been issued by the jurisdictional Assessing Officer, rendering the Order of Assessment bad in law.
BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the statement of reasons recorded for reopening assessment do not lead to the formation of belief that income chargeable to tax of the assessee has escaped assessment. There is no tangible material available with the AO to re-open the assessment and therefore Notice U/s 148 only without jurisdiction and bad in law.
7. BECAUSE, on the facts and in the circumstances of the case, the impugned assessment proceedings are without jurisdiction and bad in law, as the notice u/s 148 is time barred.
8. BECAUSE, on the facts and in the circumstances of the case, the Impugned Order is bad in law and liable to be set aside and quashed as the assessment order is barred by limitation.
BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and liable to be set aside as addition of Rs.33,00,000/- under Section 69A of the Act cannot be made in relation to money deposited in the bank account of the assessee since the bank account do not constitute books of account of the assessee and addition u/s 69A presupposes entry made in books of account.
BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and without lawfully appreciating the true and correct facts and circumstances of the case and wholly in an arbitrary, imaginary and illegal manner; the sum of money deposited by the assessee has been duly explained and is supported with evidence and hence do not represent unexplained money taxable under Section 69A of the Act.
BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is bad in law as no due and proper opportunity of hearing was granted to the assessee to explain its case hence the order of Ld. Commissioner of Income Tax (Appeals) deserves to be set aside and quashed.
BECAUSE, on the facts and in the circumstances of the case, the Impugned Order of Ld. CIT(Appeals) Dt. 02.12.2022 is bad in law and liable to set-aside and quashed since the Ao-do not provided the cross examination of Shri Indra Kumar Talreja and as also has utilized evidence which was obtained behind the back of the assessee. In the case of Kishn Chand Chelaram it is settled that evidence obtained behind the back of the assessee and which has not been confronted to the assessee cannot be utilized for making the addition.
BECAUSE, on the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in law as the assessing officer is not a competent person to decide the title of a property further no confirmation has been shot from the parties to the transaction and the entire hypothesis of the AO is unsustainable in law.
BECAUSE, on the facts and in the circumstances of the case, the order passed by the Ld. Commissioner of Income Tax (Appeals) is plain arbitrary and purely based on conjectures and surmises and hence bad in law and liable to be set-aside and quashed.
The humble assessee craves for leave to add/amend any other ground with the prior permission of your honours.
5. During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the AO had made the addition of Rs.33,00,000/- deposited in the bank account of the assessee for the reason that the assessee failed to prove the title of the property sold by the assessee. It was further submitted that the NFAC too confirmed the action of the AO for the same reason. The Ld. A.R. prayed that the matter may be restored to the file of the AO where the assessee shall produce necessary documents/evidence to prove the ownership of the property in question at the relevant period.
6. The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer.
I have heard both the parties and have also perused the material on record. I find that the addition has been made by the AO on account of failure of the assessee to establish the title of the property in question and the NFAC too confirmed the order of the AO for the same reason. Looking into the facts of this case, I am of the considered view that the Assessee deserves one more opportunity to present her case and, therefore, I restore this file to the Office of the Assessing Officer with the direction to provide one more opportunity to the Assessee to present her case and produce the necessary evidences/documents in support of the ownership of the property in question. I also caution the Assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 28/04/2025.