SUNIL KUAMAR,PANIPAT vs. ITO WARD-4, PANIPAT

Although a number of grounds have been raised by the assessee, these all relate to the order of the CIT(A) in upholding the validity of reassessment proceedings and thereby sustaining addition of Rs.10,26,000/- made by the AO u/s 69A of the IT Act.

Facts of the case, in brief, are that the assessee is an individual. As per Non PAN AIR information available with the Department it was found that the assessee deposited cash of Rs.10,26,000/- in S.B. Account number 11812191001393 maintained by him with Oriental Bank of Commerce, Noorwala, Panipat during the financial year 2009-10. The AO noted from records that the assessee did not file his return of income for the asstt. year 2010-11. Therefore, for verification of the source of cash deposited in bank account and other credit entries proceedings u/s 147 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) were initiated and notice u/s 148 of the Act was issued on 27.03.2017, after recording reasons, and the same was served through ‘Regd. Post’. In response to notice u/s 148 of the Act, the assessee was required to file his return of income within thirty days from the service of notice, but no return of income was filed within the stipulated period of thirty days.. On 11.08.2017 notice u/s 142(1) of the Act along with questionnaire was issued and duly served through Speed Post requiring the assessee to furnish the following information/details to this office on 22.08.2017:- i. Nature and sources of his income. ii. Furnish return of income in response to the notice issued u/s 148 of the Act for the Asstt. Year 2010-11. iii. Furnish source of cash amounts deposited in bank account maintained with OBC, Noorwala, Panipat during financial year 2009-10 and also furnish narration of all the bank entries with relevant documentary evidences. iv. Furnish bank statement(s) of all other bank account(s) and FDRs, if any, maintained by him during the financial year 2009-10 with narration of all entries.

However, on 22.08.2017 neither anybody attended the assessment proceedings nor any written communication was filed. The assessee was issued a letter No. 8448 dated 11.09.2017 duly served through Speed Post requiring him to furnish the requisite information on 21.09.2017. The said letter also remained un-complied with. Keeping in view the non co-operative attitude of the assessee, notice u/s 142(1) of the Act along with show cause notice for making ex-parte assessment was issued on 23.10.2017 and duly served on 09.11.2017 requiring him as to why ex-parte assessment may not be made by making the following additions: - i. Cash deposit amount of Rs. 10,26,000/-: ii. Interest income credited by bank in your account. iii. As to why all other credit entries of your bank account may not be added to your taxable income as narration of the same have not yet been provided.

As usual the assessee did not make any compliance of the said show cause. In view of these facts the AO proceeded to finalize the assessment ex-parte u/s 144 of the Act on the basis of information/material available on records. Invoking 3

Before the CIT(A), the assessee, apart from challenging the addition on merit, challenged the validity of reassessment. However, the ld.CIT(A), was not satisfied with the arguments advanced by the assessee and upheld the validity of reassessment proceedings as well as the addition on merit by observing as under:- “3.4. Findings:- I have examined the facts of the case, the submissions made by the assesses and the Remand Report of the Assessing Officer (A.O.) dated 18.02.2019 and the counter comments made by the appellant in response to the Remand Report. An addition of Rs. 10,26,000/- had been made on account of unexplained cash deposits in the assessee's bank Account. Since, the assessee had been prevented by reasonable cause in providing an explanation during assessment, proceedings, an application was received under Rule 46A of the Income Tax-Rules to submit additional evidence, which was admitted. The issue of notice u/s 148 of the I.T. Act was perfectly legal as it was done with a view to examine the source of cash deposits in the bank accounts. At the remand stage, the AO has duly examined the explanation/documents submitted the by the assessee and accepted the assessee's contentions in respect of proceeds of land sale amounting to Rs, 4,61,000/- as well as cash deposits amounting to Rs, 67,000/- (Rs. 42,000+Rs. 25,000). Hence, I grant relief to the extent of Rs. 5,28,000/ In respect of the remaining deposits of Rs.3,39,000/- which the assessee stated related to the sale of building material, the AO has stated that the assessee has not given proof of the same. Even at the appellate stage, the assessee has not been able to rebut the AO’s finding. Hence, I confirm the addition on this account. In respect of the explanation offered by the appellant of Rs. 1,59,000 - being relatable to family savings, sale of milk and brother's business too, no documentary evidences were filed and therefore, I confirm the addition to extent too.

The ld. Counsel for the assessee, at the time of hearing, did not press the grounds challenging the validity of reassessment proceedings. So far as the addition on merit is concerned, the ld. Counsel submitted that the lower authorities have not properly appreciated the facts of the case. He submitted that the assessee is doing the business of handloom goods with small turnover of Rs.8,67,400/- and earned income of approximately Rs.1,44,300/-. He submitted that the deposit in the bank account is out of business proceeds and the lower authorities have erroneously made the addition treating the same as unexplained cash deposit. He submitted that given an opportunity, the assessee is in a position to substantiate his case with evidence to the satisfaction of the AO regarding the nature and source of deposits. He accordingly submitted that he has no objection if the matter is restored to the file of the AO for adjudicating the issue afresh.

The ld. DR, on the other hand, supported the order of the ld.CIT(A). He, however, has no objection for setting aside the matter to the file of the AO.