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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI RAVISH SOOD
आदेश / ORDER
PER RAVISH SOOD, JM
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 15.03.2022, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 14.03.2013 for the assessment year 2010-11. The assessee has assailed the impugned order on the following grounds of appeal:
“1. On the facts and circumstances of the case and in law, since no notice u/s.143(2) has been served upon the assessee up to 30-09-2011; in absence of a valid notice u/s.143(2) served within the time stipulated therein, impugned assessment made u/s.143(3)/144 i.e. ex-part is liable to be quashed.
2. On the facts and circumstances of the case and in law, ld. CIT(A) has erred in sustaining the addition of Rs.15,61,705/- on account of cash deposits into bank while it is from known & disclosed sources of sale of house building at Rs.31,00,000/- dated 22-4-10 shown in the ROI filed for A.Y.11-12 & explained before the ld. CIT(A) in remand proceedings; impugned addition is liable to be deleted.”
Succinctly stated, the assessee who is a government employee had filed his return of income for A.Y.2010-11 on 21.06.2010, declaring an income of Rs.4,96,250/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.
3 Om Prakash Verma Vs. ITO, Jagdalpur
During the course of the assessment proceedings, it was observed by the A.O that as per AIR information the assessee during the year under consideration had made cash deposits of Rs.15,61,705/- in his bank account. The A.O considering the fact that the cash deposits had no nexus with the sources of income disclosed by the assessee in his return of income, thus, called upon him to explain the nature and source of the same. As the assessee despite sufficient opportunities failed to comply with the aforesaid directions, therefore, the A.O held the entire amount of Rs.15,61,705/- as the unexplained money of the assessee and made an addition of the same to his returned income. Accordingly, the A.O vide his order passed u/s.143(3) dated 14.03.2013 determined the income of the assessee at Rs.20,57,955/-.
Aggrieved the assessee carried the matter in appeal before the CIT(Appeals). It was the claim of the assessee that the A.O had framed the impugned assessment without validly putting him to notice. Elaborating on his aforesaid claim, it was stated by the assessee that as he was transferred on 14.11.2011 from Jagdalpur Office (i.e. Indravati Project Circle, Jagdalpur) to Raipur Office (i.e. Water Resources Department, Raipur), therefore, he was unaware about the assessment proceeding which had culminated in an order
4 Om Prakash Verma Vs. ITO, Jagdalpur passed u/s.143(3) dated 14.03.2013, wherein his income had been assessed at a high pitched amount of Rs.20,57,955/-. It was claimed by the assessee that he had become aware about the assessment order only on receipt of a demand notice u/s.156 dated 14.03.2013, wherein a demand of Rs.6,64,050/- was raised against him.
4.1 Adverting to the impugned addition as regards the cash deposits of Rs.15,61,705/- (supra) made by the A.O, it was the claim of the assessee that the same was sourced out of the sale proceeds of his residential house, viz. “Ward No.14, Khasra No.775/27, Bilaspur” which was sold by him for a consideration of Rs.31 lac. It was stated by the assessee that the aforesaid cash deposits in his bank account during the year under consideration were primarily sourced out of the advance money of Rs.15 lac that was received by him from the purchaser of the property, viz. Smt. Rekha Sharma, Bilaspur. It was stated by the assessee that the balance sale consideration of Rs.16 lacs was initially received by him vide two cheques dated 30.04.2010 of Rs.7,40,000/- and Rs.8,00,000/-, respectively a/w. cash of Rs.60,000/-. It was the claim of the assessee that as per mutual consent between the parties both the said cheques were thereafter returned by him to the purchaser and the sale consideration of Rs.15,40,000/- was finally received by him as under:
5 Om Prakash Verma Vs. ITO, Jagdalpur
Sr. No. Particulars Amount i. Cash Rs.12,40,000/- ii. Cheque No.900048 Rs.3,00,000/- Total Rs.15,40,000/- On the basis of his claim that he had remained unaware of the assessment proceedings and had no occasion to substantiate the source of cash deposits in his bank account, the assessee had filed with the CIT(Appeals) an application under Rule 46A of the Income Tax Rules, 1962 for admission of certain additional evidence, viz. copy of sale agreement, copy of registered sale deed and copy of savings bank passbook. The CIT(Appeals) in the backdrop of the aforesaid additional evidence called for a remand report from the A.O. Rebutting the claim of the assessee that he was not validly put to notice about the assessment proceedings, it was stated by the A.O in his remand report that the notices were issued at the address that was provided by the assessee in his PAN database. It was stated by the A.O that no infirmity could be related to the service of the notices as the assessee had failed to intimate about any change of his address for future correspondence. Apart from that it was stated by 6 Om Prakash Verma Vs. ITO, Jagdalpur the A.O that the assessee had not filed any application for changing his address in the PAN database. It was also stated by the A.O that notice u/s. 143(2) dated 05.09.2010 that was issued to the assessee at the address provided by him in his PAN database through speed post was not received back. Also, it was stated by the A.O that pursuant to the change in incumbent once again notice u/s.143(2) dated 22.08.2012 was issued to the assessee vide speed post at his address viz. “365, G-1, Prasad Apartment, Trilochan Nagar, Bhopal” which was duly served on him on 27.08.2012. On the basis of the aforesaid facts, it was stated by the A.O that the assessee despite having been validly put to notice had chosen not to participate in the assessment proceedings.
Adverting to the merits of the addition of Rs.15,61,705/- (supra) qua the cash deposits made by the assessee in his bank account, the A.O rebutted the claim of the assessee that the same was sourced out of the sale consideration of his residential house by observing as under: “ix) In his written submission dated 30.04.2014 before the Hon'ble CIT(A), Raipur, the assessee's counsel stated that " the assessee had made a sale agreement with sent. Rekha Sharma, Bilaspur on 08.02.2010 for house at Ward No.14, Khasra No.775/27 Bilaspur at sale consideration of Rs.31,00,000/-" The possibility of capital gain out of sale consideration is to be verified from the assessee's record whether the assessee has declared capital gain on the said sale consideration or not. On verification of photocopy of bank
7 Om Prakash Verma Vs. ITO, Jagdalpur statement furnished alongwith written submission dated 30.04.2014, it is noticed that the assessee has deposited Rs.14,00,000/- on 10.02.2010 whereas in the same line, the cheque date has mentioned as 03.06.2010. How, a cheque issued on 03.06.2010 can deposit in the bank on 10.02.2010 i.e. before 4 months. The photocopy bank statement produced by the assessee is not authentic and accordingly, the same needs cross verification from original documents. Further; in the photocopy of sale agreement both the seller and purchaser i.e. the assessee and Smt. Rekha Sharma has signed in each page. However, in the registration deed, the signature of assessee (seller) has done in each page whereas, the signature of Smt. Rekha Sharma (purchaser) has not found in any page. Commonly during registration of any documents, both the parties will sign (seller as well as purchaser) in each page of documents. In this case that has not happened. x) The date of issue of non judicial stamp paper alongwith other details of purchaser is must in the back side of the said paper. In the case, the same can be clearly ascertained from the back side of photocopy of agreement whereas in the photocopy of registration deed, the same has deliberately deleted, which can be seen from the back side of stamp paper. Therefore, the same also needs thorough verification from original registration deed.”
Rebutting the aforesaid observation of the A.O in his remand report, the assessee in his rejoinder submitted that the cash deposits of Rs.15.60 lacs (supra) made in his savings bank account were sourced out of, viz. (i) advance money received on 08.02.2010 with respect to sale of residential house : Rs.15 lacs ; and (ii) out of his past savings as a government employee for the last 20 years : Rs.60,000/-. The assessee rebutted the adverse inferences which were drawn by the A.O in his remand report as regards the authenticity of his claim of 8 Om Prakash Verma Vs. ITO, Jagdalpur having made the cash deposits in his bank account out of sale proceeds of his residential house by stating as under: “Actually, cash amounting to Rs.14,00,000 was deposited on 10-2-10 in the saving bank account (i.e., SBI, Bilaspur SB- 10597689368) by the assessee, the Id AO wrongly interpreted that it is a cheque deposit and not cash deposit and also undertaken the date of entry in the pass book as the date of cheque (i.e., 3-6-10). This interpretation for 'date of cheque' by the Id AO is totally wrong, as for this reason of cash deposit of Rs.14,00,000 in the saving bank account only, the case of the assessee was taken/ selected for scrutiny assessment and the same was also recorded in the AIR information. This fact can also be verified from the next page of the bank statement in which interest is credited at Rs.6,116 on 30-6-10 but just above this line, there is another date, which is the date of making entry in the passbook (i.e. 4-7-10) and it doesn't mean that interest on 4-7-10 was credited on 30-6-10. Against the contention of the Id AO and to support the contention of the assessee, original bank statement, duly certified, is enclosed for your kind verification (as enclosed vide Pg. No. 9 to 29). 1.3 In Para (x), Page No.4 of the remand report, the AO has commented that, the assessee has deliberately deleted from the photocopy of the registered deed, the date of issue of non judicial stamp paper along with other details of purchaser, which is printed on the backside of the stamp paper. Against this, it is submitted that the assessee has not done it intentionally but it was accidental, and now the photocopy of the registered sale deed along with the details printed on the backside of the stamp paper is enclosed for your kind verification and judicious consideration. Further, the Id AO commented and questioned the genuineness and authenticity of the photocopy of the registered sale deed dt.22-4-10, made between the seller (i.e., assessee) and the alleged purchaser (i.e., Smt.Rekha Sharma), which was submitted before your honor in earlier submission. In this regard, the Id. AO questioned by saying that, in this registered sale deed, the signature of the seller (i.e., assessee) has done in each page of the sale deed, whereas, there is no signature of the purchaser in each page of the sale deed and the purchaser has signed the sale deed in the last page only. This contention of the Id AO is not correct and totally
9 Om Prakash Verma Vs. ITO, Jagdalpur misconceived from the real facts of the case, as it is not important and necessary also to take sign of the purchaser in each page of the registered sale deed but more important is that the purchaser has signed the registered sale deed on the last page which were duly witnessed by the two persons and before the Sub-Registrar of the Registering Authority of Bilaspur. As the original registered sale deed is with the alleged purchaser (i.e., Smt.Rekha Sharma) and it is not possible for the assessee to produce the original sale deed for verification. Hence, it is requested that the authenticity of the document may very kindly be verified from the office of the Sub-Registrar of the Registering Authority of Bilaspur or from the alleged purchaser (i.e., Smt.Rekha Sharma), if required, your Honor. 1.4 As per Para (xi), Page No.4 of the remand report, the AO commented to counter the submission dt.30-4-14 made by the assessee, that if cash deposit in the saving account of the assessee is from the sale proceeds received from the purchaser, then he was required to disclose this transfer of property through sale in his 1TR with intention to avail exemption of capital gain but failed to disclose the same in his 1TR. This contention of the AO is not correct as the assessee had received Rs.15,00,000 as advance money in cash against the sale agreement dt 8-2-10 for house at Ward no. 14, Khasra No.775/27, Bilaspur. This same amount has deposited in the bank account of the assessee but possession of the house was only given on the date of registry (i.e., on 22-4-10). Due to the date of registry and possession given on that date, the transfer of property will be liable for capital gains tax in the AY 11-12 and not in the AY 10-11. The assessee has disclosed the capital gain on the sale of above property in his return of income filed on 30-7-11 for the AY 11-12 in which he has also claimed exemption u/s 54 (i.e., for investment in new house situated at Bhopal), for this copy of IT return and computation of income, is enclosed for your kind perusal. From the above facts, it is very clear that, contention of assessee was not of concealing any income or unaccounted money but this all happened due to non-receipt of notices. All the evidences related to the facts of the case, has already been submitted before your honor. Therefore, considering the above submission,, the 2ggeasee has duly and satisfactorily explained the source of the cash deposit of Ps. 95,60.000 and cheque deposit of Rs.1,705 in the 10 Om Prakash Verma Vs. ITO, Jagdalpur alleged saving bank account and by satisfactorily explaining the source through the submission made and evidence produced before your honor, it cannot be said that the cash deposited in the alleged bank account are unexplained money of the assessee. Therefore, the addition on count of unexplained money, is unsubstantiated, unjustified in the absence of any corroborative evidence brought on record against the assessee, may very kindly be deleted. For the above contention of the assessee…..”
The CIT(Appeals) considering the aforesaid claim of the assessee once again remanded the matter to the file of the A.O for carrying out further verification. The A.O vide his remand report dated 23.06.2016 submitted before the CIT(Appeals) that pursuant to certain infirmities discernible from records the claim of the assessee of having made cash deposits of Rs.15.60 lacs in his savings bank account A/c No.10597689368 with State Bank of India, Branch Gulmohor Colony, Bhopal did not merit acceptance. In rebuttal, the assessee vide his reply dated 10.01.2017 tried to dispel the doubts that were raised by the A.O in his remand report. It was claimed by the assessee that the sale consideration of his residential house that was initially received by him vide two cheques of Rs.7,40,000/- and Rs.8,00,000/- dated 30.04.2010 as was mentioned in the sale deed, was, thereafter, as per the mutual consent amongst the parties substituted/exchanged with, viz. (i) cash receipt of Rs. 12,40,000/-; and (ii) cheque of Rs.3 lac. In sum and substance, the assessee tried
11 Om Prakash Verma Vs. ITO, Jagdalpur to substantiate his claim that the cash deposits in his savings bank account were made out of the sale proceeds of his property.
The CIT(Appeals) after deliberating at length on the contentions advanced by the assessee, both as regards the validity of the assessment framed in the absence of a valid service of notice u/s.143(2) of the Act as well as those advanced qua the merits of the addition made in his hands, however, did not find favour with the same and dismissed the appeal.
The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me. As the assessee appellant despite having been intimated about the hearing of appeal had failed to put up an appearance, therefore, I am constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities.
I have heard the Ld. Departmental Representative (for short ‘DR’) and perused the orders of the lower authorities as well as considered the material available on record.
I shall first deal with the grievance of the assessee appellant that the impugned assessment u/s.143(3) dated 14.03.2013 had 12 Om Prakash Verma Vs. ITO, Jagdalpur been framed in absence of a valid service of notice u/s.143(2) of the Act. As is discernible from the assessment order notice u/s.143(2) dated 05.09.2011 was issued to the assessee. As the Ld. AR had denied of having been served with any notice u/s.143(2) of the Act, therefore, during the course of last hearing of the appeal the Ld. DR was directed to produce the case records. In compliance, the Ld. DR had produced before me the dispatch register wherein it was clearly stated at Sr.No.922 dated 06.09.2011 that a notice u/s.143(2) of the Act was issued to the assessee, viz. Shri Om Prakash Verma at his address, viz. “365, G-1, Prasad Apartment, Trilochan Nagar, Bhopal (M.P)”. As the aforesaid notice u/s.143(2) dated 05.09.2011 was forwarded to the assessee vide registered post (A.D) at the address that was provided in his PAN database, therefore, I am unable to concur with him that no valid service of notice was carried out on him. As the assessee had neither intimated about the change of his address for further correspondence to the Income Tax Department nor filed any application for changing his address in the PAN database, therefore, I am unable to persuade myself to subscribe to his claim that service of the notice at his old address, viz. “365, G-1, Prasad Apartment, Trilochan Nagar, Bhopal” suffered from an infirmity. My aforesaid view is supported by the judgment of the Hon’ble Apex Court in the case of PCIT Vs. I-ven Interactive Ltd
13 Om Prakash Verma Vs. ITO, Jagdalpur (2019) 418 ITR 662 (SC). It was observed by the Hon’ble Apex Court that once a notice is sent within the period prescribed in the proviso to Section 143(2) of the Act, then, the actual service of the notice upon the assessee thereafter would be immaterial. Also, it was observed by the Hon’ble Apex Court that in absence of specific intimation by the assessee to the A.O with respect to change in his address, the A.O would be justified in sending the notice at the address available in the PAN database of the assessee. It was further observed by the Hon’ble Apex Court that a mere mentioning by the assessee of his new address in the return of income without specifically intimating to the AO the change of his address and without getting the address provided in the PAN database amended would not be sufficient. In my considered view the case of the present assesee falls squarely within the four corners of the aforesaid judgment of the Hon’ble Apex Court. I, say so, for the reason that as in the case before the Hon’ble Apex Court, the present assessee had also though filed his return of income for the year under consideration mentioning his new address, viz. “House No.4, Irrigation colony, Nirmal care, Jagdalpur, Dist. Baster, Chhatisgarh-494001”, but he had neither intimated the A.O of the change of his address nor got his address changed in the PAN database. Considering the aforesaid judgment of the Hon’ble Apex Court, I am of the considered
14 Om Prakash Verma Vs. ITO, Jagdalpur view that now when the notice u/s.143(2) of the Act was validly issued by the A.O on 05.09.2011 vide registered post, i.e., within the prescribed time period, then, the claim of the assessee that the said notice had not been served upon him does not merit acceptance. Thus, the Ground of appeal No.1 raised by the assessee is dismissed in terms of my aforesaid observations.
11. I shall now take up the grievance of the assessee that both the lower authorities had grossly erred in law and facts of the case in rejecting his duly substantiated explanation as regards the source of the cash deposits of Rs.15,61,705/- in his bank account.
12. Although it is the claim of the assessee that the cash deposits of Rs.15,61,705/- were primarily sourced out of the sale proceeds of the residential house, viz. “Ward No.14, Khasra No.775/27, Bilaspur” that was sold by him to one Smt. Rekha Sharma, Bilaspur for a consideration of Rs.31 lacs, but I find that he had failed to substantiate his said claim on the basis of clinching documentary evidence before the lower authorities. On a perusal of the records, it transpires that as per the registered sale deed of the aforesaid residential house the assessee is though stated to have received the sale consideration vide two cheques dated 30.04.2010 of Rs.7,40,000/- and Rs.8,00,000/-, but he had thereafter come up
15 Om Prakash Verma Vs. ITO, Jagdalpur with new claim and stated that the aforesaid sale consideration of Rs.15.40 lac (supra) as per mutual consent of the parties was returned back to the purchaser, viz. Smt. Rekha Sharma (supra) and was exchanged /substituted with afresh sale consideration which comprised of, viz. (i) cash : Rs.12,40,000/-; and (ii) cheque No.900048 : Rs.3 lac. Ostensibly, the assessee had purposively come forward with the aforesaid new claim in order to explain the source of cash deposits of Rs.12 lacs made in his savings bank account No.19597689368 with State Bank of India, Branch: Gulmohor Colony, Bhopal on 30.04.2010, i.e., in the immediately succeeding year. Also, I may herein observe that the assessee in order to substantiate his claim that cash deposits under consideration, viz. (i) on 09.02.2010 : Rs.1,60,000/-; and (ii) on 11.02.2010 : Rs.14 lac were sourced out of sale proceeds of his residential house had pressed into service an unregistered “agreement to sell” dated 08.02.2010, as per which an advance of Rs.15 lacs was stated to have been received by him from the purchaser on the date of execution of the same. At this stage, I may herein observe that the registered sale deed dated 22.04.2010 does not make any reference about the “agreement to sell” dated 08.02.2010. All that the registered sale deed dated 22.04.2010 states about the sale consideration of Rs.31 lac (supra) is that the same was paid to the 16 Om Prakash Verma Vs. ITO, Jagdalpur assessee vide (i) cheque dated 30.04.2010 : Rs.7,40,000/-; (ii) cheque dated 30.04.2010 : Rs.8 lacs; and (iii) balance amount in cash : Rs.15,60,000/-. There is neither anything discernible from the copy of the sale deed which would reveal that the cash sale proceeds of Rs.15.60 lac (supra) was received prior to execution of the sale deed and was available with the assessee on the respective dates on which cash deposits were made by him in his savings bank account; nor there is any mention in the said sale deed of the unregistered “agreement to sell” dated 08.01.2010 as had been pressed into service by the assessee to support his aforesaid claim. In sum and substance, though it is stated in the registered sale deed dated 22.04.2010 that the balance sale consideration of Rs.15.60 lac (supra) was received by the assessee in cash from the purchaser of the property but there is nothing which would prove to the hilt that the said amount was available with the assessee for explaining the cash deposits made by him in his aforesaid savings bank account No.19597689368 with State Bank of India, Branch : Gulmohor Colony, Bhopal, viz. (i) on 09.02.2010 : Rs.1,60,000/-; and (ii) on 11.02.2010 : Rs.14 lac. In absence of clinching documentary evidence which would substantiate the assessee’s claim that the cash sale proceeds of Rs.15.60 lac (as mentioned in the registered sale deed) were available with him at the time of making cash deposits in his
17 Om Prakash Verma Vs. ITO, Jagdalpur aforesaid savings bank account No.19597689368 with State Bank of India, Branch: Gulmohor Colony, Bhopal; and also his unsubstantiated claim as regards the exchange/substitution of the sale consideration, which, I would not hesitate to observe prima facie appears to have been crafted with a specific purpose of explaining the cash deposit of Rs.12 lacs on 30.04.2010 i.e. in the immediately succeeding year, therefore, I am not inspired as regards the authenticity of the explanation advanced by the assessee as regards the source of cash deposits made in his bank account during the year under consideration.
Considering the aforesaid facts, I am of the view that the matter had not been properly addressed by either of the lower authorities. In order to verify the authenticity of the claim of the assessee that the cash deposits of Rs.15.60 lac (supra) were sourced out of the cash sale proceeds of his residential house that were received by him, the A.O ought to have carried out necessary verifications from the purchaser of the property, viz. Smt. Rekha Sharma, W/o. Shri Natwarlal Sharma, R/o. Vyaper Bihar, Zone-2, Bilaspur, PAN : BEPPS7507N (Mob.9827114599) (as per details discernible from the copy of registered sale deed). Also, as the assessee is a government employee, therefore, the details as regards
18 Om Prakash Verma Vs. ITO, Jagdalpur the sale consideration received by him on sale of the property can also be gathered from the government department where he is employed, as the said requisite details would have been provided by him to his employer as per the service rules. On the basis of the aforesaid facts, I am of the considered view that the matter requires to be restored to the file of the A.O who shall after carrying out necessary verifications re-adjudicate the matter in terms of the aforesaid observations. Needless to say, the A.O shall in the course of set-aside proceeding afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim on the basis of supporting documentary evidence. Thus, the Ground of appeal No.2 raised by the assesee is allowed for statistical purposes in terms of my aforesaid observations.