FIYAZ AHMAD KHAWAJA ,BANDIPOR vs. INCOME TAX OFFICER , BARAMULLA
Facts
The assessee deposited Rs. 48,27,500/- cash in a bank account during FY 2011-12. Due to the absence of a regular return and uncomplied notices, an ex-parte assessment was completed under sections 144/147, treating the entire deposit as undisclosed income. The assessee contended that the deposit represented business sales, and only the profit percentage should be taxed, but the CIT(A) confirmed the addition.
Held
The Tribunal noted discrepancies in the opportunity of hearing and the address used for notices. It found that the CIT(A) had considered only deposits without accounting for withdrawals and that the assessee had presented bank statements, Aadhar card, and cash flow statements before the Tribunal. Therefore, the Tribunal remanded the matter back to the Assessing Officer for fresh assessment, directing the assessee to furnish all necessary evidence and cooperate.
Key Issues
Whether cash deposits in a bank account constitute undisclosed income or business proceeds; whether proper opportunity of hearing was afforded to the assessee; correctness of the address used for issuing notices.
Sections Cited
Section 250, Section 144, Section 147, Section 133(6), Section 148, Section 142(1), Section 282, Rule 127 of the I.T. Rules, 1962, Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. MANOJ KUMAR AGGARWAL & SH. UDAYAN DASGUPTA
Per Udayan Dasgupta, J.M.:
This appeal is filed by the assessee against the order of ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 14.11.2023 passed u/s 250 of the
Income Tax Act, 1961 which has emanated from the order of the Income Tax Officer, Ward 3(5), Baramullla dated 04.12.2019 passed u/s 144/147 of the I.T. Act, 1961.
2 I.T.A. No. 382/Asr/2023 Assessment Year: 2012-13 2. The facts emerging from the records are that the assessee has deposited cash in
his bank account with SBI/Pattan, (A/c No. xxxx20966) amounting to Rs.48,27,500/-
during the financial year 2011-12 and in absence of any regular return on record and
no response to notices issued u/s 133(6) of the Act, proceedings were initiated vide
notice u/s 148 on 25.03.2019 after necessary approval from Higher authorities.
Subsequently, notices u/s 142(1) were also issued on various dates followed by final
show cause notice dated 24.10.2019 and all has remained un-complied. In absence of
any representation from the assessee in response to various notices issued, the
assessment was completed ex-parte on a total income of Rs.54,03,175/-.
The matter was carried in appeal before the first appellate authority and the
written submissions were filed in course of appellate proceedings. It was submitted
that the assessee is engaged in business and in the instant case, the entire deposit in
bank account has arisen out of sale proceeds, but the same has been treated as
undisclosed income of the assessee which is not as per the provisions of law and it
was the claim of the assessee that only the profit percentage embedded in such gross
receipts (turnover) which should be brought to tax and not the entire deposit.
However, the ld. CIT(A) has confirmed the addition by observing as follows:
(relevant portion reproduced)
3 I.T.A. No. 382/Asr/2023 Assessment Year: 2012-13 “5.5 In the absence of any material/explanation or evidence in support of credit entries in the SBI bank account, I infer that the appellant has failed to prove that the deposits in bank are business receipts or sales. It is observed that although the appellant has submitted the copy of Adhar Card but the documents of business involved is not submitted. Hence, the action of the assessing officer is confirmed and the ground nos. 3 and 4 are dismissed accordingly.”
Now, the mater is in appeal before the Tribunal on the grounds contained in
the memorandum of appeal. The ld. AR of the assessee submits that no proper
opportunity of hearing has been granted by the Assessing Officer because the notice
has been issued at a wrong address. He further submitted that the re-assessment
proceedings has been initiated on the basis of information received from banks
regarding deposit of cash and it was a non PAN case and he submits that the address
mentioned on the bank statement was Zangam Pattan, Baramullah, Jammu &
Kashmir 193121 but no notices has been issued and served on the assessee on this
particular address. He further stated that Aadhar card of the assessee which is issued
on 12.10.2014 stipulates the same address at Zangam Pattan, Baramullah as stated in
the bank statement.
The ld. DR submitted that the notices u/s 148 and subsequent notices u/s
142(1) were all issued through speed post on the address as stated in the PAN data
base, which is Trigam Sumbal Sonawari near Darul Uloom Badipora and none has
returned unserved.
4 I.T.A. No. 382/Asr/2023 Assessment Year: 2012-13 6. We have heard the rival submissions and considered the materials on record.
We find that in course of appellate proceedings before the Tribunal, the assessee has
submitted a paper book containing copies of bank statement, copies of Aadhar card
and a certificate issued by the office of the Deputy Commissioner, Baramullah,
certifying the residential address of the assessee as Tehsil Pattan, District
Baramullah, and the assessee has also filed copies of the cash flow statements (page
nos. 25 to 29 of the paper book) explaining the source of the cash deposited in bank
on different dates and other incidental papers. It is observed by us from the copy of
the bank statement furnished, that there are transactions of debits and credits in the
said bank account throughout the entire financial year. It is also seen that there are
deposits of cash on various dates, as well as withdrawals of cash from the said bank
account throughout the entire financial year. The ld. CIT(A) has only considered the
deposit part (credits in the said bank account without considering the withdrawals)
and the submission of the assessee is that these transaction relates to the assessee’s
business and can be properly explained provided an opportunity of fresh hearing is
granted.
We also note that the ld. first appellate authority has recorded a finding that
evidence relating to existence of business has not been produced by the assessee and
as such, the genuineness of the business activities could not be said to have been
proved. However, considering the factual issues, we are of the opinion that interest of
5 I.T.A. No. 382/Asr/2023 Assessment Year: 2012-13 justice will be served if the matter is remanded back to the files of the ld. Assessing
Officer for fresh assessment and we also direct the assessee to furnish all necessary
documentary evidences relating to its business activity along with the cash flow
statement and to fully explain the source of the cash deposit in the bank as well as the
utilization of the withdrawals from the said account and to fully co-operate in fresh
assessment proceedings. The assessee will be allowed reasonable opportunity of
being heard. Notices to be issued as per the provisions of section 282 of the Act (read
with rule 127 of the I.T. Rules, 1962) at the proper address has contained in the bank
statements and certified by the Deputy Commissioner of Baramullah.
Since we have set aside the matter for fresh assessment, the legal grounds of
appeal are not adjudicated upon. All legal contentions are left open.
We have not expressed any opinion on merits.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate
Tribunal) Rules, 1963 as on 29.05.2025.
Sd/- Sd/- (Manoj Kumar Aggarwal) (Udayan Dasgupta) Accountant Member Judicial Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant:
6 I.T.A. No. 382/Asr/2023 Assessment Year: 2012-13 (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order
