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Income Tax Appellate Tribunal, JAIPUR BENCHES, SMC JAIPUR
Before: SHRI SANDEEP GOSAIN, JM & DR MITHA LAL MEENA, AM
ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 20-09-2023, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2017-18 wherein the assessee has raised the following grounds of appeal. ‘’1. On the facts and circumstances of the case the Hon’ble CIT, (Appeals) has grossly erred in not considering the facts that the notice issued u/s 143(2) by the Ld. A.O. Sikar was invalid as he was not a jurisdictional A.O. The assessee has raised this objection before the Ld. AO. Therefore, the assessment completed thereafter based on this notice is invalid in the eyes of law and therefore illegal and deserves to be quashed or set aside.
2 SARVAN GUPTA VS ITO, WARD-SIKAR 2. Without prejudice to GOA-1, On the fact and circumstances of the case the Hon’ble CIT, (Appeals) has grossly erred in not considering the facts and circumstances of case and completed the assessment. Therefore, the assessment made by Ld. AO is illegal and deserves to be quashed.
On the fact and circumstances of the case the Hon’ble CIT, (Appeals) has grossly erred in confirming the addition made by the Ld. AO on account of an addition u/s 69A despite the fact that all the requisite information has already been filed and there was no room available for further assumption. The addition of income u/s 69A and initiation of proceedings u/s 271AAC by Ld. AO was illegal and deserved to be quashed.’’ 2.1 Brief facts of the case are that the assessee has filed her return of income for the year under consideration on 14.3.2018 declaring the total income at Rs. 9,93,890/- & agriculture income at Rs. 5,15,000/- in ITR-2.The case of the assessee was selected for limited scrutiny through CASS. The reason for the limited scrutiny case is “Large agriculture income shown in ITR and large cash deposits during demonetization”. The details of e-proceedings notices issued in chronological order and the response submitted by the assessee was as under: Notice date Issued u/s Reply date Remarks 24.09.2018 ITO Sikar. 143(2) 09.04.2019 ITO Sikar. 142(1) Replied on 18/04/2019 25.04.2019 ITO Sikar. 142(1) 07.10.2019 Not aware and once came in to notice replied immediately. 30.05.2019 ITO Sikar. 142(1) 07.10.2019 23.08.2019 ITO Sikar. 142(1) 04.10.2019 Not aware and once came in notice replied immediately. to 07.10.2019 ITO Sikar. 142(1) 10.10.2019 04.11.2019 ITO Sikar. 142(1) 08.11.2019 11.11.2019 ITO Sikar. 143(3) 24.11.2019 3 ITA NO. 674/JP/2023 SARVAN GUPTA VS ITO, WARD-SIKAR 29.11.2019 ITO Sikar. 143(3) During the assessment proceedings, the assessee objected to the initiation of assessment proceedings as the notice u/s 143(2) was issued by the non- jurisdictional AO. The assessee replied and explained the source of cash deposit with special mention that she is an old (Age-62 years during A.Y. 2017-18) and widow lady and doesn’t have any other source of income except as declared but the A.O. disregard the facts and concluded the assessment by holding as under:-
‘’3.7. Basically, the assessee cooked a story of agriculture income & cash deposit out of cash withdrawals of 20 months ago to explain the nature & source of cash deposited during demonetization period. The assessee had not earned any agriculture income during the year under consideration & cash withdrawal of Rs.20,00,000/- was already used by the assessee for the purposes for which cash was withdrawn. The cash withdrawal made on 03.04.2015 can not be source of cash deposit during demonetization period due to long span of time i.e. 20 months which is also not found justified & logical. The assessee failed to the nature & source of cash deposited during demonetization period. Hence, the nature & source of total cash deposit of Rs. 14,92,000/- remained unexplained.
3.8 In view of the facts discussed above, the cash deposit of Rs. 14,92,000/- in bank account of the assessee during demonetization period represents income assessable u/s 69A of the L.T.Act, 1961. Basically assessee has earned income during the year under consideration out of undisclosed sources which she deposited in the bank accounts. Therefore, the cash deposit at Rs 14,92,000/- is treated as deemed income as unexplained money u/s 69A of the Income Tax Act, 1961 and same amount of Rs. Rs. 14,92,000/- is added to the total income of the assessee.
In first appeal, the ld.CIT(A) has dismissed the appeal of the assessee by 2.2 observing as under:-
4 SARVAN GUPTA VS ITO, WARD-SIKAR ‘’3. The only addition made in the assessment order and against which this appeal has been filed is of Rs. 14,92,000/- on account of unexplained cash deposit in her bank account. AO has written that notices were issued u/s 143(2) and 142(1) on multiple occasions. But assessee could not produce any satisfactory evidence ever to prove that the cash was from a source which is disclosed to Income tax and which has been fully taken into consideration for computation of total income. Appellant claimed that the cash of Rs. 14,92,000/- deposited on 30.11.2016 and 23.12.2016 was out of Rs. 20,00,000/- (twenty lakh) withdrawn from bank on 3.4.2015 for personal use and for gift to her daughter. AO wrote that assessee could not explain when asked why she did not gift to daughters and also did not utilize for personal expenses for so many months as planned and, ultimately, deposited in cash on 30.11.2016 and 23.12.2016, l.e., after keeping this huge sum in cash at home about 20 months. AO also wrote that finding no other way to explain, assessee lastly challenged jurisdiction of AO over the case.
I think that this is indeed a relevant issue. No reasonable man will keep such huge amount in cash particularly when she had easy access to bank and she could deposit back to bank if she did not gift to her daughter or use for personal expenses. She has not furnished any proof or explanation in support of claim that she did not utilize it as planned immediately after withdrawal. In this context, the principle of law laid down by hon'ble Supreme Court in Sumati Dayal vs. CIT (1995) 214 ITR 801 (SC)that human probability is a very big factor which can negate even direct evidence like cheque book, bank statement etc also. Therefore, such withdrawal of Rs. 20 lakh on 3.4.2015 cannot be accepted as source of cash deposits in November and December, 2016. She was found to be owner of this amount of money and this was not disclosed in her books of accounts. Therefore, it is liable for addition as special income u/s 69A of the Act as done by the AO. Consequently. I do not find any merit in the appeal filed by the appellant. Addition is confirmed.
In the result, the appeal is dismissed.’’ 2.3 During the course of hearing before us the ld. AR of the assessee has filed the written submissions with the prayer that the ld. CIT(A) is not justified in confirming the addition of Rs.14,92,000/- 2.4 On the other hand, the ld. DR strongly supported the order of the lower authorities and also refuted the submissions of the assessee advanced during the course of hearing. 2.5 We have heard both the parties and perused the materials available on record. From the arguments of the ld. AR of the assessee, it is observed that ld. CIT, (Appeals) erred in not considering the facts that the notice issued u/s 143(2) by the A.O. Sikar was invalid as he was not a jurisdictional A.O. The assessee raised this objection before the AO. Hence, the assessment was completed thereafter based on this notice is invalid in the eyes of law and therefore illegal and deserves to be quashed. Further, it is also noted that that the assessee is living in Jaipur from so many years and since then the address mentioned in ITR from the A.Y. 2008-09 is of Jaipur. The notice issued u/s 143(2) by the A.O. is not in accordance with law as he was not the jurisdictional A.O. and the assessee objected the same during the assessment proceedings.
The copy of ITRs from the A.Y. 2008-09 to 2017-18 reflecting the address of the assessee as filled in ITR form is filed as Annexure- 1.
A bare perusal of the ITRs submitted by the assessee clearly shows that the ITRs are regularly filed with the updated address of Jaipur and the AO, Sikar was not the jurisdictional A.O. of the assessee in the assessment proceedings and even the notices issued by the AO, Sikar to the assessee were at the address of Jaipur and therefore, it is amply clear that the AO was well aware about the updated address of the assessee and the assessment proceedings and order passed by the AO. Sikar was against the law. The copy of notices issued by AO at the address of Jaipur is filed as Annexure-2. It is also noted that previously also assessment against the assessee had held vide Assessment Order dated 30.01.2015 for the A.Y. 2012-13 and in the same order the address 7 SARVAN GUPTA VS ITO, WARD-SIKAR mentioned of the assessee is of Jaipur only. The copy of Assessment Order dated 30.1.2015 is filed as Annexure-3. We also noticed that the A.O. rejected the assessee’s submission for the jurisdictional issue by referring to the decision of the Hon’ble Apex Court in the case of PCIT, Mumbai Vs. I-Ven Interactive Limited, Mumbai. The facts of the case were totally different and not applicable in the case of the assessee. In that case the notice was issued on address which was mentioned in PAN database but in the present case, all the notices were issued to the assessee at Jaipur address only. We also rely on following decisions in connection with jurisdictional issue.
1. The Hon’ble ITAT, Kolkata the case of Jigna Chetan Mehta v. Assistant Commissioner of Income Tax, Circle-33, Kolkata decided on 23.06.2023 concluded that “We thus, unhesitatingly hold that ACIT, Circle-31, Kolkata had no valid jurisdiction over the assessee on the date of issuing notice u/s. 143(2) of the Act. Revenue has not controverted this fact by placing any other contrary material on record to indicate otherwise. Since a valid notice u/s. 143(2) has not been issued, the assessment proceedings carried thereafter deserve to be quashed. We, therefore, respectfully following the ratio laid down by 7 ITA No.616/Kol/2022 Jigna Chetan Mehta, AY: 2012-13 Hon’ble jurisdictional High Court in the case of PCIT Vs. Shree Shoppers Ltd. (supra), allow the additional grounds raised by the assessee and quash the assessment proceedings completed u/s. 143(3) r.w.s 147 of the Act. Since we have quashed the assessment proceedings, the grounds relating to the merits of the case are rendered mere academic in nature and are, therefore, not adjudicated upon. Accordingly, the appeal of the assessee is allowed.”
In the order passed by Hon’ble New Delhi, ITAT decided on 02.09.2019 titled as Nishi Kapoor V. ITO, Ward-2(1), Faridabad concluded that- In view of the above discussion, I am of “the view that the assumption of jurisdiction u/s 147/148 of the Act is illegal and bad in law and, as such, liable to be quashed. I, accordingly, set aside the orders of the authorities below and quash the reopening of the assessment u/s 147/148 of the Act. Resultantly the entire addition stands deleted.”
8 SARVAN GUPTA VS ITO, WARD-SIKAR Thus, considering the aforesaid judgments and facts of the case that the AO, Sikar was informed about the new address of the assessee and even then, issuance of notice u/s 143(2) of the Act by non-jurisdictional AO, Sikar is not in accordance with law. Therefore, the Assessment order dated 26.11.2019 is without jurisdiction and illegal therefore the same deserves to be quashed and set aside. It is further noted from the submissions of the assessee that without prejudice to GOA-1, On the fact and circumstances of the case the ld CIT, (Appeals) has erred in not considering the facts and circumstances of case and completed the assessment. Therefore, the assessment made by AO is illegal and deserves to be quashed and for which assessee submits that for the year under consideration, the assessee derives the income from family pension, interest income & agriculture income. The assessee during the demonetization period deposited an amount of Rs. 14,92,000/- in cash (Rs. 14,43,000/- on 30.11.2016 & Rs. 49,000/- on 23.12.2016) in her bank account. It is pertinent to mention here that the assessee also submitted the information of her cash deposits in “Cash Transactions 2016” form as sought by the Income Tax Department Transaction Number : 3632334793. The copy of the same is filed as Annexure- 4. It is pertinent to mention here that the assessee had withdrawn an amount of Rs. 20,00,000/- on 03.04.2015 for her personal use and to gift her daughter/children. For your ready reference, the copy of Statement of bank 9 ITA NO. 674/JP/2023 SARVAN GUPTA VS ITO, WARD-SIKAR account is filed as Annexure-5. We also noted that the assessee’s husband Late Sh. Bharat Ram Meena served the Government of India as an IAS officer. After his sad demise, the assessee was getting a family pension from the Government of India. The copy of bank statement reflecting the pension income received by the assessee is filed as Annexure-6. The assessee is filing ITR regularly and previously her case was selected for scrutiny in the A.Y. 2012-13 and income was assessed as such. Being an old lady, her health did not remain very good and she remained dependent on others even for banking transactions. Therefore, the amount of Rs. 20,00,000 was withdrawn from the bank account on 03/04/2015. This withdrawal was made by her as she wants to keep this amount separately for family functions, expenditure so as to pay gifts to daughter /children, to give some offerings to her daughter in law etc.The details of cash deposit and cash withdrawal during the F.Y. 2015-16 & F.Y.2016-17 as under:
Date Particulars Amount Remarks 03.04.2015 Cash 20,00,000 F.Y. 2015-16 Withdrawal To clear Insurance premium Payment 18.11.2015 Cash Deposited 2,00,000 30.11.2016 Cash deposited 14,43,000 F.Y.2016-17 During the Demonetization period-08.11.2016 to 23.12.2016 Cash deposited 49,000 31.12.2016 Hence, considering the facts, it is amply clear that the assessee had deposited the cash out of previous withdrawal done by her and there was no other source of income for the assessee except family pension, interest income & agriculture income which only received through banking channels and shown in ITR. We feel that the AO completed the assessment without referring to the facts and assumes the amount of cash deposit from unexplained source. It is also noted that the ld CIT (A) vide his order dated 20.09.2023 dismissed the appeal filed by the assessee by considering the judgment of Hon’ble Supreme Court in the case of Sumati Dayal v. CIT (1995) 214 ITR 801 (SC) whereby it was stated that human probability is a very big factor which can negate even direct evidence like cheque book, bank statement etc also. Therefore, such withdrawal of Rs. 20 lakh on 3.4.2015 cannot be accepted as source of cash deposits in November and December, 2016. She was found to be the owner of this amount of money and this was not disclosed in her books of accounts. Therefore, it is liable for addition as special income u/s 69A of the Act as done by the AO. Consequently, he did do not find any merit in the appeal filed by the appellants and confirmed