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This is an appeal filed by the Assesee who is an individual assesssee with residential status as that of a person resident in India.
The present second appeal is filed by the assessee before this Hon’ble Tribunal under section 253 of the Income Tax Act, 1961.
The assessee is aggrieved by DIN & Order No. ITBA/NFAC/S/250/2022- 23/1048105767(1) DT. 20/12/2022 which was passed by the Ld. CIT(A) NFAC, Delhi under section 250 of the Income Tax Act, 1961. The said first appeal was dismissed by the Ld. CIT(A). Therefore assessee is before us. The said order of the Ld. CIT(A) is hereinafter referred to as the “impugned order”.
In Form No. 36 the assessee interalia has take up following grounds of appeal against the impugned order which are reproduced below:
That the prejudicial observations made in the appellate order and the assessment order are either unfounded or the same are not susceptible of giving rise to any adverse conclusion.
2. That the Learned Commissioner of Income Tax (Appeals) has grossly erred in confirming the addition of Rs. 7,35,000/- on account of cash deposited in bank on the basis of conjectures, surmises and without appreciating the facts of the case and the provisions of the Act as applicable during the financial year relevant to the assessment year and on date of filing of Income Tax Return. The addition merits deletion. 3. That the action of the Learned Commissioner of Income Tax (Appeals) in confirming the addition of Rs. 7,35,000/- on account of cash deposited in bank is arbitrary, unwarranted and uncalled for. The addition merits deletion. 4. That the appellant reserves the right to add, alter or amend grounds of appeal. Brief facts
As per AIR (Annual Information Report) which was available with the Department of Income Tax, it was noticed that the assessee has made cash deposit of Rs. 2,35,000/- Rs. 2,50,000/- and Rs. 2,50,000/- on 08/06/2010, 16/10/2010 and 18/10/2010 in ICICI Bank Ltd. respectively during the F.Y. 2010-11 relevant to the A.Y. 2011-12.
That since status of the filing of return of income by the assessee was not available with the Income Tax Department a letter was issued to the assessee, wherein it was mentioned that the Income Tax Department has received information on the financial activities relating to the assessee and the list of information was also provided to the assessee and the request was made to furnish the response on the financial activities as noticed by the Department.
That in response to the said letter the assessee neither attended the office nor filed any reply / explanation regarding the financial transactions.
That since there was no response / explanation from the assessee regarding the source of financial transactions, the case was reopened under section 147 of the Act, after obtaining prior approval of the PCIT-3, Ludhiana.
That in view of above, a notice dt. 28/03/2018 was issued to the assessee under section 148 of the Act, and sent through speed post. Furthermore, notice under section 142 (1) of the Act were issued and served through e-assessment Portal and also sent through email at caabhishekgoyal@gmail.com.
That since no reply / response was received from the assesse in respect of financial transactions / activities as listed above, notice under section 133(6) of the Act, for purpose of calling of information in respect of assessee was issued to ICICI Bank. 11. After examining the financial transactions carried out by the assessee in AIR/ CIB information, notice under section 142(1) was issued to the assessee and was asked to furnish 1) Copies of Income Tax Return, 2) Detailed note on the nature of your business from the beginning to the end, highlighting its each aspect and technicalities from the start to end, 3) Provide the details of cash deposit of Rs. 2,35,000/-, Rs. 2,50,000/- and Rs. 2,50,000/- on 08/06/2010, 16/10/2010, 18/10/2010 in ICICI Bank Ltd. respectively along with documentary evidence for the period 01.04.2010 to 31.03.2011 and 4) Produce copy of all the bank accounts maintained by you. In response to the above assessee did not furnish any reply / response. Therefore a show cause notice under section 144 was issued but again non appeared. 12. In view of the foregoing the AO was left with no other option but to complete the assessment proceedings by applying best judgment methodology, as provided for in the Income Tax Act. 13. Section 144 is reproduced below: 144. (1) If any person - (a) fails make the return required under sub-section (1) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) or an updated return under sub-section (8A) of that section, or (b) fails to comply with all the terms of a notice issued under sub-section (1) of section 142 or fails to comply with a direction issued under sub- section (2A) of that section, or (c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the Assessing Officer, after taking into account all relevant material which the Assessing Officer has gathered, shall, after giving the assessee an opportunity of being heard, make the assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment: Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the assessee to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment: Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (1) of section 142 has been issued prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year.
The Ld. AR in his order has held as under:
“ 4. As per AIR information available with the department, it was noticed that assessee had cash deposit of Rs. 2,35,000/-, Rs. 2,50,000/- and Rs. 2,50,000/- on 08.06.2010, 16.10.2010, 18.10.2010 in ICICI Bank Ltd. respectively during the financial year 2010-11 relevant to assessment year 2011-12. The assessee has not explained the nature and source of all these cash deposit and accordingly in the absence of any explanation the same is being considered as unexplained cash credit. Therefore, the amount of cash deposit of Rs. 2,35,000/-, Rs. 2,50,000/- and Rs. 2,50,000/- on 08.06.2010, 16.10.2010, 18.10.2010 in ICICI Bank Ld. respectively aggregating of Rs. 7,35,000/- has been considered as unexplained cash credit u/s 68. The provision of section reads as under:- “ Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.”
I am satisfied that the assessee has concealed true particulars of Income, Hence penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 for concealment of particulars of income are being initiated separately. Penalty proceedings u/s 271F for non filing of Income Tax Return are being initiated separately. Based upon above, the total income of the assessee is computed as under:- Addition on account of unexplained cash credit u/s 68 Rs. 7,35,000/- Assessed Income Rs. 7,35,000/- Assessed u/s 147 r.w.s 144 of the IT Act, 1961. Charge Interest u/s 234A, 234B and 234C of the IT Act, 1961 accordingly.
The copy of order of AO passed under section 147 r.w.s. 144 of the Act, 1961 is dt. 24/12/2018, the same is perused by us minutely.
That on 03/04/2019 the assessee made an application under section 154 of the Act before ITO ward 6(4) Ludhiana wherein she interalia contended as follows:
Order with assessment of total income of the assessee to Rs. 7,35,000/- on account of unexplained cash credit u/s 68 has been passed by your office vide order dt. 24/12/2018. The assessment order was delivered to the assessee on 05/03/2019 by the department after tracing the latest available address of the assessee on the basis of mobile/phone number fo the assessee / her husband. Notices issued u/s 148/142(1) of the Income Tax Act were not served to the assessee as the assessee has left the address mentioned in the notices long time back had mobile/phone call made at the time of delivering the assessment order been made earlier to the assessee, notices u/s 148/142(1) would have been served on her and she would have appeared / filed reply during assessment proceedings. Hence though efforts for finding the present address were made by the department at the time of delivery of assessment order, such efforts were not made at the time of serving / delivery of notices u/s 148/142(1). Hence the assessee has been deprived of her right of representation as none of the notices issued u/s 148 / 142(1) were served / delivered to her. Hence the assessee is hereby applying for rectification of order passed by your office [ u/s 147 r.w.s 144] u/s 154 and is also filing detailed reply / submission regarding her income for the relevant assessment year (with documentary evidences) as hereunder: a) During the financial year 2010-11 relevant to assessment year 2011-12, the assessee was maintaining following two bank accounts and total cash deposits in these two banks during the financial year 2010-11 is also reported hereunder: Bank Name Saving A/c No. Cash /Cheques deposit during 2010-11 ICICI Bank Ltd. 041305500102 4229466 Oriental Bank of Commerce 06862150006090 457800 Total 4687266 Complete copies of bank statements for the financial year are enclosed herewith. Summary of deposits / withdrawals is also enclosed herewith. No major cash balance was maintained by the assessee in any of these bank accounts and cash deposits were normally withdrawn as cash pertained to different clients of the assessee on whose behalf the assessee was engaged in trading of cloth/agicultural items etc. with no Sales tax/ Vat registration as these items were exempt from Sales Tax/ Vat. Copies of bank statements of both the above accounts are enclosed herewith wherein cash entries asked for by the department are also appearing with immediate withdrawal of cash and no major bank balance maintained by the assessee. Apart from this no investment / term deposit was made by the assessee as is evident from the bak statements enclosed herewith. b) Income of the assessee for the assessment year is computed as hereunder: i) Gross receipts (being total deposits in bank accounts) 4687266 ii) Income declared u/s 44AD(@8% of Gross receipts) 375000 iii) Saving Interest Income 477 iv) Gross Total Income (ii + iii) 375477 Further the assessee has deposited a sum of Rs.500/- (Rupees five hundred only) as advance tax during the year (as per copy of form 26AS enclosed herewith). Kindly adjust this amount against tax liability of the assessee. Keeping in view the above submission and facts of the case, you are requested please to rectify the order passed u/s 147 r.w.s. 144 (dt. 24.12.2018) u/s 154 of Income Tax Act, 1961 and assess the income of the assessee as computed above after due verifications as assessment made by the department is otherwise also based in part information whereas now the assessee is providing complete information (after receipt of order of assessment) on the basis of which assessment order should be rectified by the department which in the interest of justice to the assessee as assessee is fully co- operating and has come up with complete information available with her regarding her bank statements and income for the relevant assessment year. This is for your kind information and further necessary action please.
That by an DIN and Letter No. ITBA/COM/F/17/2019-20/1024738019(1) dt. 05/02/2020 the aforesaid application under section 154 of the Income Tax Act, 1961 was rejected by the Income Tax Authorities. We have perused the same.
That being aggrieved by the order of the Ld. AO dated 24/12/2018 the assessee preferred first appeal before the Ld. CIT(A) who by the impugned order dt. 20/12/2022 has observed and held as below:
5.2.1 I have considered the submission of the assessee. The solitary issue under dispute is regarding cash deposit of Rs. 7,35,000/- in bank account, the source of which was not proved by the assessee. As a result, the AO added to the total income in terms of section 68 of I.T. Act. During the appeal proceeding, the assessee merely explained that the said deposit represents sale receipt of clothes as the assessee has been engaged in cloth trading during the year. However, no details viz. Copy of sale bills/purchase bills, ledger account of purchase and sale etc. are submitted to substantiate the claim. The said explanation cannot be accepted only on the basis of written explanations unless it is backed by some documentary evidence. Further, the assessee has explained that said cash deposited amount was withdrawn in order to show it as explained. The sudden withdrawal of cash amount does not explain the source of its receipt etc. Accordingly, the cash deposit of Rs. 7,35,000/- is treated to be unexplained and I find no infirmity in the order of AO, hence, the same is confirmed.
We have perused the impugned order which is now challenged before us in second appeal minutely. We have also perused the grounds of appeal as listed above including the paper book filed on the records of the Tribunal.
During the course of physical personal hearing held on 02/05/2024 the Ld. AR repeated and reiterated the contents of memo of appeal but could not produce any supporting against cash deposit of Rs. 7,35,000/- despite earlier opportunities given by this Hon’ble Tribunal save and except total three invoices amounting to Rs. 28,537/- Rs. 24,386/- and Rs. 8,390/- vide their application no. 26th March 2024 in support of cash deposit of Rs. 7,35,000/-. We thus observe that total value of these three invoices are just Rs. 61,313/-. It is issued by one Yerik Apparels, Ludhiana. On careful examination we notice that cash sales of apparels were effected to the assessee vide invoice no. 611 dt. 30/10/2010 of Rs. 28,537/-, vide invoice no. 828 dt. 22/01/2011 of Rs. 24,386/- aggregating to Rs. 61,313/- only against unexplained deposit of Rs. 7,35,000/-. These evidences of the year 2010 & 2011 furnished for the first time in entire history of the case and that too when matter was listed for final hearing are not accepted and we hold that it is a clever technique employed by the assessee to perhaps anticipate that this Hon’ble Tribunal may remand the matter on denovo basis either to CIT(A) or to AO. This Tribunal is therefore of the considered view that such belated attempts on part of assessee is totally uncalled for.
We have examined all the papers and proceedings of the case including the oral submissions made by Ld. DR who has defended the orders of both the authorities below. We are therefore of the considered view that plea of denial of natural justice and lack of opportunity to defend the case are all afterthought particularly when department had left no stone unturned to being assessee to their table. Under these circumstances we upheld the order of the Ld. CIT(A). We also hold that assessee has made a vain attempt of bringing three invoices aggregating to Rs. 61,313/- solely with a view to further delay and defeat the due process of law and to buy time so that matter is further delayed. We expect assessee to be both diligent and vigilant as law helps those who are diligent and vigilant and not those who sleep over the matter and for days, months and years. We have also noticed that first appeal filed by the assessee was having delay of 327 days which too was condoned by the Ld. CIT(A) in a hope that at least at first appellate stage case would be decided on merits as he held a legitimate expectation at the material time and place that the assessee would bring reliable and cogent material evidence to justify source of cash deposit of Rs. 7,35,000/- but his legitimate expectation in trusting the assessee too failed as there was a complete failure even at that stage to bring reliable material on record in support of assessee’s case. The ld. CIT rightly has held that- “ During the appeal proceeding, the assessee merely explained that the said deposit represents sale receipt of clothes as the assessee has been engaged in cloth trading during the year. However, no details viz. Copy of sale bills/purchase bills, ledger account of purchase and sale etc. are submitted to substantiate the claim. The said explanation cannot be accepted only on the basis of written explanations unless it is backed by some documentary evidence. Further, the assessee has explained that said cash deposited amount was withdrawn in order to show it as explained. The sudden withdrawal of cash amount does not explain the source of its receipt etc. Accordingly, the cash deposit of Rs. 7,35,000/- is treated to be unexplained and I find no infirmity in the order of AO, hence, the same is confirmed.” Thus an opportunity was too given by the Ld. CIT(A) which could not be availed off by the assessee to prove the case. We accordingly upheld the order of Ld. CIT(A).
In the result, appeal of the Assessee is dismissed.