ITO, WARD-52(2), NEW DELHI vs. GAURAV KHULLAR, NEW DELHI

Considering non-cooperation from the assessee and final show cause notice under section 144 of the Act issued on 13.12.2017 through email and speed post.

On 15.12.2017 the Learned authorised representative through e-mail sought more time for two days. In response to notice under section 148 dated 18.12.2017 assessee e-filed return at 6.45 PM declaring total income of Rs. 5,92,260/- for the assessment year 2010-11 which was time barred for assessment on 31.12.2017. Further Learned authorised representative requested reasons for issuing of notice under section 148 just to buy some more time. Notice under section 142(1) and 143(2) of the Act were issued on 19.12.2017. On this date reply through e- mail was received in which assessee requested to provide details of bank deposits in which the transactions has been made by the assessee. The same was provided by return post along with ITS Detail and notice under section 142(1) issued for 20.12.2017 but none appeared nor any written submission received . 6. Another opportunity was offered and a show cause notice under section 144 of the Act was issued and sent through e-mail to assessee fixing the case for 25.12.2017 and also informed to authorised representative. After show cause notice assessee had requested through e-mail adjournment for two days. On 18.12.2017 assessee filed the income tax return for the assessment year 2010-11 in response of notice under section 148 and requested for the reasons. Reasons duly recorded along with notice under section 143(2) issued on 18.12.2017 to comply on 19.12.2017. However Learned authorised representative of the assessee further sought adjournment for 2-3 days. On 19.12.2017 notice under section 142(1) was issued along with questionnaire for 20.12.2017.

From above it was evident that assessee is not interest in providing the details required by the office. In this context attention is invited to Rule 46A of the Income Tax Rules 1961 which provides that “The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer”. A final opportunity was offered to produce details and documents on or before 26.12.2017 at 11.00AM. Assessee submitted reply. After considering the same the Learned AO vide order dated 30.12.2017 made addition of Rs. 16,51,06,510/- 8. Assessee preferred an appeal before the Learned CIT(A) which was accepted vide order dated 29.01.2018.

Being aggrieved department of revenue preferred present appeal with following grounds:- “(i) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in quashing the assessment proceedings by observing that the Assessing Officer had issued notice u/s 148 of the Act, without any application of mind? (ii) Whether the Ld. CIT(A) has erred in allowing the appeal of the assessee by overlooking the facts which was duly recorded in the reasons for initiation of assessment proceedings w/s 147/148 of the Act that the assessee failed to furnish any reply to the Assessing Officer who had issued a query letter to assessee on 20.02.2017 as per NMS data wherein it was clearly mentioned that assessee has not filed return of income for the Assessment Year 2010-11?

Learned Representative for assessee submitted that it is well settled that the cash deposited in bank per se cannot be reason to believe that assessee’s income has escaped assessment. Hon’ble ITAT New Delhi in in the case of Shri Saurabh Saini vs ITO has held –

Learned representative for assessee submitted that mechanical reopening without any application of mind and without due verification of record is not maintainable. Reliance is placed on PCIT vs. G&G Pharma India Limited (2017) 81 taxmann.com 109 (Delhi). So, appeal may be rejected.

From examination of record in light of aforesaid rival contention it is crystal clear that first para on page one of assessment order mentions – “The case was reopened under section 147/148 of the Income Tax Act, 1961 (hereinafter referred to “the Act”) on 29.03.2017 on the basis of the information regarding cash deposit of Rs. 22,71,000/- in saving bank account, payment against credit card bills amounting to Rs. 39,25,346/- sale or purchase of motor vehicles amounting to Rs. 43,95,000/- & payment in cash for purchase of bank draft/cheques amounting to Rs. 89,46,000/- totalling to Rs. 1,95,37,346/- as per individual transaction statement during the Financial Year 2009-10 ...” Para 10 on page 21 of assessment order provides :- “As on the perusal of ITR of AY 2009-10 it is found that the total of balance sheet and other income of the assessee is NIL”

From above it is evident that the case was reopened on the basis of ITS Information that the assessee has made various deposits and payments in cash amounting to Rs. 1,95,37,346/-. AO recorded that on physical verification as well as from the ITD Database, it had been gathered that the assessee has not filed the return of income for AY 2010-11. On the contrary assessee had duly filed the return of income on 15.10.2010 which was processed under section 143(1) of the Act by the CPC and the said information ought to have been available on the ITD Database available to the AO. The assessment order acknowledges filing of income tax return by the assessee. Accordingly the opening of reassessment proceedings were rightly held to be void and quashed by Learned CIT(A). In view of above material fact and well settled principle of law impugned order deserves to be upheld.

No other point was argued.