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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’ NEW DELHI
Before: SHRI SAKTIJIT DEY
This is an appeal by the assessee against order dated
21.08.2018 of learned Commissioner of Income Tax (Appeals)-21,
New Delhi, for the assessment year 2010-11.
The grounds raised in the memorandum of appeal are
argumentative and not in accordance with Rule 8 of the Income
Tax (Appellate Tribunal) Rules, 1963. When this was brought to
the notice of the assessee, the assessee through his Authorized
ITA No.7067/Del/2018 AY: 2010-11
Representative on 22.08.2022 has furnished the following concise
grounds:
Addition of Rs.1,46,2721- : 2. The Assessing Officer / ITO has disallowed set off of Rs.1,46,272/- ignoring the proviso clause to section 43(5)(d) of the Income Tax Act read with explanation. The record of transaction reproduced as Annexure A-7 clearly reflect that all transactions were through NSE and BSE. There is no finding that the transaction by the assesse were through some unrecognized stock exchange. 3. Addition of Rs.12,45,5001- 4. The assesse sustained loss in securities transactions and in order to meet liability arranged liquidity by selling off gold of his wife and mother and some amount having been arranged from his close relatives and deposited the sum of Rs.12,45,500/- in his bank account which was immediately transferred to the account of the stock broker. The Assessing Officer made addition of Rs.12,45,500/- on the basis of section 69A of Income Tax Act, thus that amount cannot be termed as income and is merely 'gross receipt' in cash duly recorded in the bank / books of account of the assesse. Income tax can be imposed only on profit / gain and not on mere gross receipts which is liable to be reduced from gross expenditures / loss. 5. Assessment Officer not entitled to seek production of books of accounts relating to period more than 3 years : 6. Under section 142(1)(iii)(a) read with section 151(2) of the Income Tax Act, the Assessing Officer is prohibited to seek production of any account relating to period more than 3 years prior to the previous year without the prior approval of Joint Commissioner. No such approval for the production of records / accounts has been sought by the Assessing Officer. Hence, the demand is not sustainable. The notice dated 30-03-2017 pertains to AY 2010-2011 (FY 2009- 2010). The demand of A.O. seeking record respecting disposal of gold jewellery / cash loan arranged is without jurisdiction being time barred. 7. Sanctioning against law :
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The sanctioning authority merely put the word "yes and satisfied" as against the column of his satisfaction on the ground that certain amount of income tax for the assessment year 2010-2011 has escaped assessment under section 147 of the Act followed by notice dated 30- 03-2017 issued under section 148 to the assesse. Such exercise has been held without application of mind and deprecated by the Apex Court in number of cases. 9. Non-speaking order : 10. The appellate authority committed irregularity by not only relying upon judgments which are neither relevant nor applicable to the facts of the case of the assesse but went on to state that there is no legal obligation on the statutory authority / tribunal to give reasons for its decision, which is wrong and deserve to be set aside. 11. Hence, on all counts, the additions / demands of the authorities below are not sustainable and thus deserves to be set aside.
Before we proceed to decide the grounds raised by the
assessee, it is necessary to deal with the relevant facts. Briefly
stated, the assessee is a resident individual. For the assessment
year under dispute, the assessee did not file any return of income
in terms of section 139(1) of the Act. Subsequently, the Assessing
Officer received information indicating that in the year under
consideration, the assessee had deposited cash amounting to
Rs.12,45,500/- in his savings account. Further, the assessee has
invested an amount of Rs.31,55,05,414/- in shares/derivatives/
Futures & Options/Intraday transactions. Since the assessee had
not filed any return of income, though, he has entered into such
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transaction. The Assessing Officer formed a belief that the income
chargeable to tax for the year under consideration has escaped
assessment. Accordingly, after recording reasons and obtaining
approval/sanction of the competent authority in terms of section
151 of the Act, the Assessing Officer reopened the assessment
under section 147 of the Act. In response to the notice issued
under section 148 of the Act, the assessee filed a return of income
declaring total income of Rs.65,780/-. In the return of income,
the assessee had computed profit from business at Rs.4,50,000/-
under section 44AF of the Act and against such income, the
assessee has claimed loss of Rs.3,84,498/-.
In course of assessment proceeding, the Assessing Officer
called upon the assessee to explain the source of cash deposit in
the savings bank account. In response, the assessee submitted
that the cash deposits were made out of cash received from
relatives/friends and also by selling gold jewellery of wife and
mother to offset the loss/liabilities incurred in course of share
transaction. However, the assessee did not furnish any
documentary evidence in support of such claim. When the
Assessing Officer called upon the assessee to furnish supporting
evidence to explain the source of cash deposit, the assessee 4 | P a g e
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referring to section 142(1)(iii)(a) of the Act submitted that the
Assessing Officer is precluded from seeking production of any
account/evidence relating to a period more than three years prior
to the previous year. Further, despite seeking some more time to
furnish the required details, the assessee did not furnish them.
Thus, ultimately, the Assessing Officer proceeded to complete the
assessment. While doing so, he added back the cash deposit of
Rs.12,45,500/- under section 69A of the Act.
Insofar as claim of business loss is concerned, the Assessing
Officer taking note of the fact that the assessee has derived loss of
Rs.1,46,272/- from intraday transaction, treated it as speculative
loss and disallowed. Thus, he computed the total income at
Rs.14,57,274/-. Against the assessment order so passed, the
assessee preferred appeal before learned Commissioner (Appeals).
However, the appeal was dismissed.
Before me, learned counsel appearing for the assessee
submitted that disallowance of loss of Rs.1,46,272/- is
unsustainable as such loss cannot be treated as speculative loss
in terms of proviso to section 14(3)(v)(d) of the Act. As regards the
addition of cash deposits in the bank account, learned counsel
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reiterated the stand taken before the departmental authorities. Further, he relied upon the following decisions: 1. CIT Vs. Karthik Construction Co. (ITA No.2292/Mum/2016) 2. CIT Vs. Willamson Financial Services & Ors. (AIR 2008 SCW 253)
Without prejudice, he submitted, in terms of section 142(1)(iii)(a) read with section 151(2) of the Act, the Assessing Officer is prohibited to seek production of any account relating to period of more than 3 years prior to the previous year without the prior approval of Joint Commissioner. Thus, he submitted, the Assessing Officer could not have asked the assessee to furnish supporting evidences for cash deposit after more than 3 years. Proceeding further, he submitted that while granting sanction for reopening of assessment, the competent authority has failed to apply his mind properly. In support of such contention, he relied upon the following decisions: 1. M/s. Chhugamal Rajpal Vs. S.P. Chaliha & Ors. (AIR 1971 SC 730) 2. Pr. CIT Vs. M/s. N.C. Cables Ltd. (ITA No.335 of 2015) 3. Phool Chand Vs. ITO (AIR 1993 SC 2390) 4. ITO Vs. Lakhmani Newal Das (AIR 1976 SC 1753) 5. STO Vs. Uttareshwari Rice Mills (AIR 1972 SC 2617)
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Finally, he submitted, learned first appellate authority has
passed a non-speaking order without proper recording of reasons.
Learned Departmental Representative strongly relied upon
the observations of the Assessing Officer and the first appellate
authority.
We have considered rival submissions and perused the
materials on record. Insofar as the legal grounds raised by the
assessee challenging the validity of reopening of assessment, it is
observed, though, the assessee has entered into substantial
financial transactions in the year under consideration and also
earned income, however, he has not filed any return of income
voluntarily in terms of section 139(1) of the Act. In fact, even after
issuance of notice under section 148 of the Act on 30.03.2017,
the assessee did not file any return of income and after much
dilly-dallying, the assessee filed return of income declaring profit
from business at Rs.4,50,000/- and after setoff of loss of share
transaction, offered income of Rs.65,780/-. It is further evident,
the assessee has mostly remained non-cooperative and has not
furnished the details called for by the Assessing Officer. Thus,
from the conduct of the assessee, it appears that, he was not
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prepared to comply with the obligations under the Act by filing
return of income and discharging his tax liability.
It is observed, the assessee in course of assessment
proceeding, has not furnished any supporting evidence, either to
explain the source of cash deposit in the saving bank account or
share transaction, for which loss was claimed. Even, at the time
of hearing before me, in response to query raised, learned counsel
for the assessee repeated the stand taken before the Assessing
Officer that after expiry of three years, the assessee cannot be
called upon to furnish any evidence or account.
The aforesaid facts clearly reveal that the assessee does not
have any case on merits and wants to take shelter behind
technical issue. On perusal of record, it is observed that the
Assessing Officer has reopened the assessment after complying
with all legal requirements. In fact, he has also obtained
approval/sanction of the competent authority before issuing
notice under section 148 of the Act. Further, on perusal of the
sanction granted under section 151 of the Act, I am of the view
that it cannot be said that sanction granted is without proper
application of mind. Therefore, the contention of learned counsel
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regarding improper sanction granted under section 151 of the Act
is rejected.
As regards assessee’s contention that after expiry of three
years from the end of the assessment year, the assessee cannot
called upon to furnish any accounts/evidences, in my view, such
contention is liable to be rejected at the threshold. Since, if such
contention is to be accepted, then reassessment proceedings
under section 147 of the Act will become redundant, as, the
Assessing Officer would be powerless to call for any
accounts/information/details from the assessee after expiry of
three years. In my view, the contention of learned counsel in this
regard is totally misconceived. Hence, are rejected.
As regards the submission of learned counsel that the first
appellate authority has passed a non-speaking order without
complying to the Rules of Natural Justice, I am of the view that
such contention is not acceptable, as, learned Commissioner
(Appeals) passed the impugned order not only after hearing the
assessee, but his conclusions are backed by proper reasoning.
Thus, the grounds raised by the assessee on legal issues, being
devoid of merit, are dismissed.
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As regards the merits of the addition made, the assessee has
not furnished any supporting evidence with regard to the source
of cash deposits in the bank account, neither before the
departmental authorities, nor before me. In fact, despite availing
sufficient opportunity, the assessee failed to furnish any
supporting evidence. On the contrary, he took a plea that the
Assessing Officer cannot call for such evidence after expiry of
three years. Since, the assessee failed to explain the source of
cash deposits in the bank account, in my view, the addition has
to be sustained.
As regards the disallowance of loss claimed in respect of
Intraday trading in shares, the assessee has not furnished any
documentary evidence to establish his claim coming within
exceptions provided under section 43(5)(d) of the Act. That being
the case, I reject assessee’s claim.
For the sake of completeness, I must observe, after analyzing
the judicial precedents produced before me by learned counsel for
the assessee, I am of the view, though, there cannot be any
quarrel with regard to the ratio laid down in the judicial
precedents, however, they cannot be considered de hors facts
involved. In my view, the decisions relied upon by the assessee 10 | P a g e
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are not applicable to the facts involved in assessee’s case.
Therefore, I do not deem it appropriate to deliberate in detail on
such decisions. Grounds are dismissed.
In the result, appeal is dismissed.
Order pronounced in the open court on 8th June, 2023
Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 8th June, 2023. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
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