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Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC) dated 15/04/2021 for the Assessment year (AY) 2012-13. The assessee has raised following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the assessing officer has erred in reopening the assessment u/s 147 after issuing notice u/s 148 of the Act and passing the re-assessment order.
2. On the facts and circumstances of the case as well as law on the subject the learned CIT(A) has erred in Dineshchandra Dudhwala Vs ITO confirming the action of assessing officer by sustaining the addition of Rs. 2,53,860/- being maturity amount received of life insurance policy being exempt u/s 10(10D).
3. It is therefore prayed that addition made by assessing officer and confirmed by CIT(A) may please be deleted.
4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
2. At the outset of hearing, the ld. Authorised Representative (AR) of the assessee submits that the he does not want to press ground No. 1 of appeal which relates to validity of reopening under Section 147 of the Income Tax Act, 1961 (in short, the Act). The ld. Sr. DR has raised no objection for not pressing the ground No. 1 of appeal by the ld. AR of the assessee. Considering the submission of the assessee, the ground No. 1 of appeal raised by the assessee is dismissed being not pressed.
3. Facts related to ground No. 2 are that the case of assessee was reopened under Section 147 of the Act on the basis of report from the DDIT (Inv.) that a survey was carried out in the business premises of assessee. During the course of survey, no books of account or documents were found and impounded. However, during the survey, bank accounts were found. Statement of assessee was recorded. In the bank account, the Assessing Officer noted that there are credit of Rs.2,53,860/-. On the basis of such Dineshchandra Dudhwala Vs ITO material, the Assessing Officer issued show cause notice as to why the credit in the City Bank of Rs. 2,53,860/- should not be treated as unexplained cash credit. The assessee filed his reply and in the reply, the stated that the amount of Rs. 2,53,860/- on account of surrender of two policies from Birla Sunlife Insurance of Rs. 1,26,774/- and Rs. 1,26,888 and the said amount is exempt income. The reply of assessee was not accepted by the Assessing officer. The Assessing Officer instead of making any addition under Section 68 held and treated them as unexplained.
4. On appeal before the ld. CIT(A), the action of Assessing Officer was upheld. The ld. CIT(A) while confirming the action of Assessing Officer held that during the assessment as well as in the appellate proceedings, the assessee failed to submit the details of investment made in the insurance policies. Further aggrieved, the assessee has filed the present appeal before the Tribunal.
We have heard the submissions of ld. authorised representative (AR) of the assessee and the ld. Senior Departmental representative (Sr. DR) for the revenue and have gone through the orders of the authorities below. The ld. AR of the assessee submits that the Assessing Officer in the show cause notice asked the assessee to substantiate the cash credit in the bank account of assessee. The assessee explained that the amount credited in Dineshchandra Dudhwala Vs ITO the bank account was on account of surrender of policies. The Assessing Officer instead of making addition of unexplained cash credit treated the same as unexplained investment. The ld. CIT(A) also affirmed the order of Assessing officer. The ld. AR of the assessee submits that the question was raised about the cash credit, however, the addition was made on account of unexplained investment which is contrary to the law.
On the other hand, the ld. Sr. DR for the revenue has supported the orders of the lower authorities.
We have considered the rival submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the Assessing Officer issued show cause notice against the cash credit in the City bank account. However, the Assessing Officer made addition on account of investment. The ld. CIT(A) also confirmed the action of Assessing officer without rectifying the same. In our view, the action of Assessing officer is not justified when the show cause notice was issued on account of cash credit and the addition was made on account of investment. Therefore, we direct the Assessing Officer to delete the entire addition. Thus, ground No. 2 of appeal is allowed.
The other grounds i.e. grounds No. 3 and 4 of the appeal are general in nature and do not require any adjudication.
In the result, this appeal of assessee is partly allowed. Order pronounced in the open court on 25th July, 2022 at the time of hearing of this appeal.