Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
The instant appeal has been filed by the assessee challenging the impugned order dated 26/07/2023, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2011–12.
2. In its appeal, the assessee has raised following grounds:–
“1. Whether the Ld. AO erred in re-opening the assessment under Sec. 147 of the Act without properly appreciating the facts of the case and law applicable thereto. 2. Whether the Ld. AO erred in computing income of the appellant at Rs.1,09,43,990/- as against returned income of Rs.7,24,100/-
Maheshkumar Hargovind Goyal ITA no.322/Nag./2023
3. Whether the Ld. AO erred in making an addition of Rs.1,00,00,000/- on account of unexplained cash credit under Sec. 68 of the Act.
4. Whether the Ld, AO erred in making an addition of Rs.2,19,894/- on FDR as undisclosed interest income. 5. Whether the Ld. AO erred in making additions in breach of principle of natural justice without giving proper opportunity of being heard and without proper appreciating the facts of the case and law applicable thereto. 6. Whether the Ld. AO erred in initiating a penalty proceedings under Sec 271(1)(C) of the Act without properly appreciating the facts of the case and law applicable thereto. 7. The appellant craves leave to add, alter, abandon, or amend any ground of appeal during the time of hearing or before.”
Facts in brief:- As stated by the Assessing Officer in his assessment order, the assessee was holding a saving bank account bearing no.4181, w.e.f. 15/07/2010 with Nagpur Nagrik Sahakari Bank. During the year under consideration, the assessee received ` 1 crore, through three different cheques dated 14/07/2010, of Bank of Baroda, and the said amount of ` 1 crore was kept in fixed deposit. Subsequently, with three months, the said amount of ` 1 crore was prematurely withdrawn from the Bank in the form of cash of ` 40 lakh and ` 61 lakh on 26/10/2010 and 27/10/2010 respectively. Thereafter, on 04/07/2011, the said Bank Account available with Nagpur Nagarik Sahakari Bank was closed on 04/07/2011. The assessee also received interest of ` 2,19,894, on such fixed deposit, however, the components of fixed deposit and interest receipt thereof were not reflected in the return of income filed for the year under consideration. The Assessing Officer reopened the assessment under section 147 of the Act after recording the reasons for re-opening of assessment. Thereafter, the Assessing Officer, obtaining the approval of the PCIT-3, Nagpur, notice dated 29/03/2018, under section 148
Maheshkumar Hargovind Goyal ITA no.322/Nag./2023 of the Act was issued which was served upon the assessee on 31/03/2018, and sought explanation from the assessee by as to why the deposit of ` 1 crore and interest of ` 2,19,894 thereof should not be treated as unexplained bank deposit and added to the total income. In response, the assessee filed his return of income for the year under consideration on 21/12/2018, declaring total income of ` 7,24,101. Therefore, the notice under section 143(2) and 142(1) of the Act were issued on ITBA. It is stated by the Assessing Officer that the assessee filed written reply on DAK Counter on 21/12/2018, the contents of which are reproduced below for better appreciation of facts:–
“I Maheshkumar Hargovind Goyal, holding PAN–AUDPG8193 with reference to the Show Cause Notice referred above wanted to bring certain facts to your notice as follows:– (1) As per the show cause notice you informed that I received Rs. 1 Crore through three cheques of Bank of Baroda dated 14.07.2010, however, as you know the saving a/c No. 4181 was opened on 15.07.2010 in NNSB Bank which was closed on 04.07.2011. Also 1 would like to declare that I had transferred the amount directly from the bank of Baroda Account to the NNSB account in the form of FD. (2) As per show cause notice, FDR was made of Rs. 1 Crore which was premature withdrawn within 3 months. We wish to inform you that the same was made out of the income of the previous years, Gift from my family members and my savings. (3) I would further like to inform that as per aur Income tax return for Assessment year 2011-12 we have disclosed the interest income for Rs. 9,09,079 for which we provide the bifurcation as under:–
Sr. PARTICULARS AMOUNT no. 1. Total Interest Income ` 9,09,079 2. Interest from Parties out of (1) ` 7,13,936 3. Interest from Bank out of (1) ` 1,95,143
(4) Also I would like to inform you that the Amount deducted by AK Gandhi for the amount 8531/- is not being shown in our 26AS for which we have Page | 3
Maheshkumar Hargovind Goyal ITA no.322/Nag./2023 requested them to revise the same and provide us with TDS Certificate. However I would like to tell you that we have already considered the same in our Interest income and also claimed the TDS amount; (5) As per the notice mentions that the bank interest income of Rs. 2,19,894/- as per 26AS has not been taken by us in our income but no Interest income is being reflected in our 26AS as on 21.12.2018 from bank. (6) Also the cash books are not available with us now it has been more than 6 years from the end of Assessment year 2011-12 and also we are not getting the bank statements from the bank since no data for the F.Y. 2010-11 is available due to change of versions of banking software and hence cash books cannot be prepared again also. So it is humble request from my side that if you require any further documents kindly let me know".
The Assessing Officer considering the reply of the was of the view that the assessee’s explanation on the source of receipt of ` 1 crore and interest received thereof on its fixed deposit are not satisfactory, as the assessee has also not submitted any documentary evidences in support of his reply. Hence, the Assessing Officer held that the source of bank deposit remain unexplained, therefore the amount of ` 1,00,00,000, is treated as unexplained bank credit from undisclosed sources. Penalty proceedings under section 271(1)(c) of the Act, were also initiated for concealment of income. The assessee being aggrieved carried the matter before the first appellate authority.
During the course of first appellate proceedings, the learned CIT(A) issued notices for hearing to the assessee to appear before him on 22/02/2021, 22/06/2023 and 06/07/2023, however, the assessee neither did give any response to such notices nor any written submissions were filed by the assessee. The only material on record before the learned CIT(A) was other than the grounds of appeal which is the statement of facts and the same are reproduced below:- Page | 4
Maheshkumar Hargovind Goyal ITA no.322/Nag./2023 “The appellant is an individual and filed his return of income for AY 2011-12 on 24.12.2011 declaring total income at Rs.7,24,100/-. The return was processed u/s 143(1) of the Act. The case was reopened and assessment was completed by the Income Tax Officer Ward 1(2) Nagpur (ld Assessing Officer) on 22.12.2018 at a total income of Rs 1,09,43,994/-, after making addition of Rs 1,00,00,000/- in respect of unexplained bank deposit and Rs.2,19,894/- in respect of undisclosed interest income.
A notice u/s 148 was issued on 29.03.2018 reopening the assessment. The case was reopened on the basis of information available on record that during F.Y.2010-11 relevant to A.Y.2011-12 the appellant had received Rs. 1 crore through three different cheques of Bank of Baroda dated 14.07.2010 and FDRs was made from the said amount of Rs.1 crore. Such FDRs was premature withdrawn and credited in Nagpur Nagarik Sahakari Bank Ltd. Further, the appellant had received interest on such FDRs of Rs.2,19,894/- which is not offered for tax.
3. Accordingly, during the course of assessment proceedings, the appellant was asked to show cause as to why the deposits in the bank should not be treated as unexplained cash credit u/s 68 of the Act. In response to the same, the appellant has made its submission. The Id. A.O. has issued notice u/s 143(2) and 142(1) on 22.12.2018 and passed the order on 22.12.2018 itself. Thus, the order was passed without giving proper opportunity of being heard.
4. The Assessing Officer has also initiated penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961.”
The learned CIT(A), however, dismissed the appeal filed by the assessee by observing as follows:-
“7.3 In the present case, it is seen that the assessee had received one crore and had made and FD which was prematurely withdrawn in cash. This raised questions about the genuineness of the transactions. Thus there was the belief that income had escaped assessment. The belief of the Assessing Officer, as per the judicial interpretation, is only supposed to be a prima facie belief which means cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it Is sufficient to satisfy the test of reason to believe. Reason to believe does not require that for forming this prima facie belief, the Assessing Officer should have finally ascertained the final fact by legal evidence or conclusion. 7.4 For the aforementioned reasons, it is held that there was no infirmity in the initiation of proceedings u/s 147 and issue of notice u/s 148 of the Act by the Assessing Officer and there was sufficient material on record for him to form a prima facie belief that income had escaped assessment. Accordingly the Ground of Appeal is Not Allowed.”
Maheshkumar Hargovind Goyal ITA no.322/Nag./2023
On being aggrieved by the order so passed by the learned CIT(A), the assessee is in further appeal before the Tribunal
Before us, the learned Authorised Representative (“the learned A.R.”) reiterating the submissions made before the authorities below, submitted that the Assessing Officer has not passed speaking order and prayed that the matter may be remanded back to the file of the learned CIT(A). Upon verification of records and perusal of the material placed before us, we find that under section 250(6) of the Act, the learned CIT(A) while disposing the appeal in writing shall state the points for determination. The decision thereon and reasons for the decision. The order passed by the learned CIT(A) do not fall within the requirement of the provisions. Accordingly, in the interest of justice and fair play, we deem it expedient to set aside the impugned order passed by the learned CIT(A) and restore the matter to the file of the learned CIT(A) for denovo adjudication. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 16/05/2024