ITO, NEW DELHI vs. SH. SUMAN KISHORE, NEW DELHI

“1. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in restricting the disallowances to the extent of Rs. 2,00,21,615/-, thereby allowing relief of Rs. 1,95,30,897/-.

2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego the ground(s) of appeal at any time before or during the hearing of this appeal.

(A.Y. 2008-09) (Assessee)

“1. Because, the respondent has acted in arbitrary manner and has simply reassessed the income of the appellant and more specifically did not consider the objection of the appellant as to the assessment done by the assessing officer (AO) оп the grounds observance of the law and the of procedures substantiate the assessment under IT Act. non-to

3. Because, the respondent/ has passed unreasoned order without specifying as to how they come to the conclusion of the substance of the order or again has not considered the grounds mentioned memorandum of appeal to it in The grounds the not considered by the Deputy commissioner are as follows;

A. Because, the car has not given any order on the ground of the appellant that there is no evidence called upon by the AO in support of his contention and the impugned order suffers from the infirmity on the ground of natural justice, equity and good conscience.

B. Because, the CET has not given any order on the ground of the appellant that the order has not been supported by any reason whatsoever and rather contains the unqualified informatics regarding the income and investment.

C. Because, the CIT has not give any order on the ground of the appellant that the impugned order of AO in no manner substantiate the charges leveled on the appellant, rather the appellant lost his total business after the theft took place at the store and office of the appellant at Kotdwar, Uttranchal and while the theft took most of the papers were either destroyed or lost and consequently the appellant did not keep the proper update of his business in normal course and the insurance company also did not indemnify the loss and as such from last two years or so the appellant is without business or job.

D. Because, believe the assessing officer/AO the notwithstanding theft the At fact the that they did not premises police officials have thoroughly investigated the matter and has opined for the theft took place at the office of R.S. Perfumers i. e. the concern of the appellant.

E. Because, the CIT has not given any order on the ground of the appellant nor it considered in its order that the appellant has filed one suit for declaring him as insolvent wherein, he has filed an affidavit that his total assets after adjusting the debt and credit is less than Rs.500/- and this itself evidence that the appellant has got no income and the same is pending in appeal over a legal issue.

F. Because, the Chas not given any order of considered the ground that the creditors of the appellant has not received any payment towards the loan and have filed numerous cases against the appellant and therefore there is no point for having such income.

G. Because, the CIT has not given any order on the ground of the appellant that even otherwise the appellant has been granted deduction over his income under Sec. 80 IC Income Tax

Act, covering his industrial policy under the scheme of the Government. H. Because, the 7 has not given any order on the ground of the appellant that the assessing officer failed to call and verify the bank statements of the bankers of the appellant regarding any deposits made by the appellant.

I. Because, the CIT has not given any order on the ground of the appellant that the assessing officer has relied on the assessment, however failed requirements there under. bestjudgement to comply the J. Because, the off has not observed/considered the ground of the appellant that the best judgement assessment presupposes that the assessing officer has all the relevant documents to decide and compute the total income and also to consider the losses if any, but even a part guess work which has been allowed under the provision the same should not be arbitrary and in the particular circumstances of the present case the assessing officer has failed to cite in his judgement as to what record he relied upon notwithstanding the fact that the appellant presented his case of not having any material documents with him.

K. Because, the CIT has not given any order on the ground of the appellant that the assessing officer did not put any discovery in respect of the investments, sale and purchases, outstanding of the creditors form any corner while he disbelieved the submissions of the appellant.

L. Because, the CIT has not given any order on the ground of the appellant that the respondent did not paid any weight to the explanation given by the appellant nor the respondent considered the same in spite of the fact the credible evidence was produced by the appellant.

8. Because, the appellant has no other means left than to approach adjudication. ThisHon'ble forum for proper adjudication.”

4. Brief facts of the case are that, the Assessee filed return of income at Rs. 4,47,488/-. The case of the Assessee was picked up for scrutiny through CASS and statutory notices were issued. The Assessee participated in the assessment proceedings, however, no books of accounts or any supporting documents were filed during the course of assessment proceedings. It was the case of the Assessee before the A.O. that the books of account and other records have been lost due to theft in the business premises of the Assessee. To substantiate the same, the Assessee produced the FIR filed with Jurisdictional Police Station, however, the said claim of the Assessee has not been believed by the A.O., accordingly, proceeded to estimate the income of the Assessee on best judgment basis and made addition of Rs. 4,00,00,000/- vide assessment order dated 30/12/2010. Aggrieved by the assessment order dated 30/12/2010, the Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A) vide order dated 24/11/2011, restricted the disallowance to the extent of Rs. 2,00,21,615/- by granting relief of Rs. 1,95,30,897/-. Aggrieved by the said deletion of the addition, the Department has preferred the Appeal and as against sustaining the addition, the Assessee preferred the present Appeal.

5. The Ld. Departmental Representative vehemently submitted that the Ld. CIT(A) committed grave error in deleting the partial addition made by the A.O. out of total addition of Rs. 4 crore, without assigning any reason and by relying on the findings and conclusion of the A.O. sought for allowing the Appeal of the Revenue and dismissal of the Appeal of the Assessee.

6. We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while restricting the disallowance held as under:-

“Determination of income by the AO being arbitrary

9. With regard to the appellant's contention that the estimation of income by the A.O. has been made without any basis and without any material on record, the same is however found to be correct. As already reproduced above, the A.O. has not stated on what basis, he has estimated the income of the appellant at Rs. 4.00 Crores. After considering the facts of the case and the material available on record, the income of the appellant is computed as under:

(i) The appellant has not filed any evidence in support of claim of deduction under Chapter-VIA of the Act amounting to Rs. 14,39,503/-. The same is therefore disallowed and added to the income of the appellant.

(ii) In the bank account of the appellant with PNB, Circle Office, North Delhi, RajindraBhawan, 4th Floor, Rajindra Place, New Delhi, A/c No. 012200210606658 there are cash deposits of Rs. 1,87,62,000/-. No evidence has been filed by the appellant to explain the source of these cash deposits. A copy of the bank account was called for by the A.O. u/s 133(6) of the Act and the same was confronted to the appellant during the course of assessment No proceedings. (No explanation was filed by the appellant regarding source of these cash deposits. The appellant may have lost his books of accounts but no efforts whatsoever have been made by him for explaining the source of cash deposits in his bank account. In the copy of the petition before the Insolvency Judge filed with appeal documents, it is seen that the appellant has mentioned details of various bank accounts at Annexure-1, Personal loan account Annexure-II, Car Loan a/c Annex. III, PNB, ChandniChowk Annex.-V. Balance Sheet of pervious 2 years Annex.-VI and details of liabilities at Annex.-VIII. The appellant had attached only Annex-IV and Annex.-VIII with the petition. Thus, even though the appellant had balance Annexures with him as stated in the petition dated 02.09.2009 which is after the date of theft, no such documents were filed by the appellant either at the time of assessment proceedings or at the time of appellate proceedings, which clearly reflects the non corporative attitude of the appellant. As no effort has been made by the appellant to explain the source of cash deposits, the same are treated as the appellant's income from unexplained sources u/s 68 of the Act.

(iii) Keeping in view the discussion made above the disallowance/additions are confirmed to the extent of Rs. 2,00,21,615/- (14,39,503/- on account of disallowance of deduction under Chapter-VIA and Rs. 1,87,42,000/- on account of unexplained cash deposits in the appellant's bank account with Punjab National Bank).

7. It is seen from the above, the Ld. CIT(A) while granting the relief of Rs. 1,95,30,897/- has not assigned any reason. Further it is the specific contention of the Assessee in his grounds of appeal that the Ld. CIT(A) has not decided all the Grounds of Appeal of the Assessee.

However, the Ld. CIT(A) has observed that the Assessee has not made any effort to explain the source of cash deposit. Considering the above facts and circumstances, we set aside the order of the Ld. CIT(A) and restore the Appeal to the file of the Ld. CIT(A) with a direction to consider all the Grounds of Appeal of the Assessee and decide the Appeal afresh and passed speaking order in accordance with law after providing opportunity of being heard to the Assessee.