ALFALAH EDUCATIONAL & WELFARE SOCIETY ,FAIZABAD V. .ASSESSMENT UNIT ITD, DELHI

ITA 144/ALLD/2024

AI Insights

The case involves Alfalah Educational & Welfare Society, which appealed against the order of the CIT(A), NFAC, concerning an assessment made under sections 147 and 144 of the Income Tax Act, 1961. The assessment included unexplained investments and interest income, totaling Rs. 2,45,71,147 for the assessment year 2015-16. The AO had issued notices to the assessee, who failed to comply, leading to an ex-parte assessment. The CIT(A) also noted non-compliance and dismissed the appeal. The Tribunal found that the explanations provided during the appeal were not presented to the AO initially and thus restored the matter for a fresh assessment, emphasizing the need for the assessee to substantiate the source of the deposits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472033 (ITAT-ALLAHABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: A.K. SINGH
• Assessee Lawyers: PRAVEEN GODBOLE
• Keywords: Unexplained investment
• Section: 147; 148; 144; 250; 271(1)(c); 69

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA No.144/ALLD/2024 A.Y. 2015-16 Alfalah Educational & Welfare Society Qusba Bhadarsa Bharatkund, Faizabad, U.P. vs. Assessment Unit, Income Tax Department PAN:AADFI7669A (Appellant) (Respondent) Assessee by: Sh. Praveen Godbole, C.A. Revenue by: Sh. A.K. Singh, Sr. DR Date of hearing: 22.10.2024 Date of pronouncement: 27.12.2024 O R D E R PER NIKHIL CHOUDHARY, A.M.: This appeal has been filed against the order of the ld. CIT(A), NFAC, passed under section 250 of the Income Tax Act, 1961 dated 13.09.2014. The grounds of appeal preferred by the assessee are as under:- “1. The 1. That in any view of the matter assessment made on income of Rs.2,45,71,147/- u/s 147 r.w.s. 144 of the Act vide order dated 02.03.2023 is bad both on the facts and in law. 2. That in any view of the matter appeal decided ex-parte by CIT Appeal NFAC by order dated 13.09.2024 without providing reasonable opportunity to the assessee is highly unjustified. 3. That in any view of the matter proceedings as initiated u/s 147 of the Act is an illegal proceedings and there is no concealment of income and moreover there was no proper satisfaction was recorded by the department for initiation of proceedings hence entire proceedings liable to be annulled. ITA No.144/ALLD/2024 A.Y. 2015-16 Alfalah Educational & Welfare Society 2 4. That in any view of the matter notice u/s 147 of the Act was issued on 31.03.2022 (last date of expiry of Limitation) and said notice was not received by the assessee nor assessee was aware about such notice hence proper procedure under the Act was not followed and therefore entire assessment is bad in law. 5. That in any view of the matter addition of Rs.2,43,75,000/- as added by the assessing officer on account of unexplained investment u/s 69 of the Act is incorrect as no investment was made by the assessee society in time deposit in Punjab National Bank as alleged and the chart as reproduced in the assessment order at Para 3.3 Pg. 4-8 by alleging investment made in time deposit is nothing but amount transferred to autosweep account out of reversal credited from autosweep account. In this way, the amount as transferred to autosweep account on different dates was out of closure proceed of earlier autosweep and is nothing but the amount rotated from time to time and not fresh investment hence the entire finding in the assessment order which was ex- parte order and his action as confirm by CIT Appeal his highly unjustified. 6. That in any view of the matter the assessee was having current account in Punjab National Bank from where amount was transferred to autosweep only to get interest from such autosweep account is credited in current account which is transferred to autsweep account on different dates and different accounts is that the amount transferred out of earlier maturity but the fact was altogether ignored by the assessing officer and arbitrary addition was made which action is highly unjustified. 7. That in any view of the matter finding and observation of both the two lower authorities with regard to addition of Rs.2,43,75,000/- & 1,96,147/- under section 69 of the act is totally incorrect and contrary to the actual facts of the case. 8. That in any view of the matter the assessee reserves his right to take any fresh ground of appeal before hearing of the appeal.” 2. The facts of the case are that the assessee society did not file a return of income for the assessment year 2015-16. The Department received information that the assessee had made a time deposit of 2,43,75,000/- with Punjab National Bank and also received interest on securities of Rs. 49,823/-. Therefore, after following the necessary procedure, the ld. AO issued a notice to the assessee on 31.03.2022. Thereafter, the ld. AO records that seven notices /communications were issued to the assessee but the assessee did not make compliance to any of those notices therefore, the ld. AO listed out the details of fixed deposits made by the assessee in ITA No.144/ALLD/2024 A.Y. 2015-16 Alfalah Educational & Welfare Society 3 his assessment order and also the interest received during the year and thereafter made a total addition of Rs.2,43,75,000/-, on account of unexplained investment and Rs.1,97,147/- on account of interest received to the income of the assessee. The total income of the assessee was determined at Rs.2,45,71,147/- and the assessment proceedings were completed under section 144 r.w.s. 147/144B of the Income Tax Act. Penalty proceedings were initiated under section 271(1)(c) for concealment of income. Aggrieved with this addition, the assessee went in appeal before the NFAC. The ld. CIT(A), NFAC records that he issued three notices to the assessee for compliance, but did not receive any compliance to the same. Therefore, he concluded that the assessee was not interested in pursuing the appeal. Accordingly, the ld. CIT(A) chose to disregard the submissions filed by the assessee in the statement of facts which is said that all the investments had been transferred to current account to FDR through auto sweep account and the amounts credited to the current account were on account of maturity of earlier time deposits that had been closed or matured. The ld. CIT(A) concluded from the non-compliance of the assessee, that the assessee was not aggrieved with the assessment order and not interested in pursuing the same. Accordingly, the appeal of the assessee was dismissed. 3. The assessee is aggrieved at this summary disposal of the matter and has come before us in appeal. Shri. Praveen Godbole, C.A. (hereinafter referred to as the ‘ld. AR’) submitted that the entire finding and observation made in the assessment order was totally incorrect since no such investment was made in time deposit of the said amounts. Rather, it was submitted that the amounts had been transferred from current account to fix deposits on account of auto sweep mechanism from balances transferred to the current account out of maturity of earlier time deposits / closure of such time deposits. It was submitted that auto sweep was being rotated a number of times because every time any money was transferred from the said ITA No.144/ALLD/2024 A.Y. 2015-16 Alfalah Educational & Welfare Society 4 current account, the fixed deposits were broken and then re-created as per this facility. Therefore, the entire proceedings under section 148 were without basis. It was further submitted that the assessee had not been provided with due opportunity and therefore, the assessee may kindly be granted relief in the matter. 4. On the other hand, Shri. A.K. Singh, Sr. DR (hereinafter referred to as the ‘ld. Sr. DR’) appearing on behalf of the Revenue submitted that the assessee had not filed a return, not made compliance before the ld. AO and not made compliance before the ld. CIT(A). Therefore, the authorities below could not be faulted for making the additions in view of the total non-compliance on the part of the assessee. It was submitted that it was for the assessee to come before the assessing authorities and explain how the fixed deposits were made out of explained sources which the assessee had not done. Therefore, it was submitted that the additions should be confirmed or, if the Tribunal in its wisdom, decided to send the matter back for verification, directions issued to the assessee to make proper compliance before the ld. AO. 5. We have duly considered the facts and circumstances of the case. We are in agreement with the ld. Sr. DR that the assessee has not made proper compliance to the notices issued by the ld. AO and the consequent additions have only been made on this account. We observe that the explanations that are being furnished before us today, ought to have been furnished before the ld. AO in the first instance, so as to enable him to verify the authenticity thereof. Accordingly, we believe that it is in the interest of justice that the matter is restored to the file of the ld. AO for a de novo assessment, after considering the submissions of the assessee that the time deposits were not new, but were made out of maturity proceeds of previous fixed deposits that had been credited to the current account and subsequently to the fixed deposits by means of auto sweep facility. Needless to say, the assessee is required to produce ITA No.144/ALLD/2024 A.Y. 2015-16 Alfalah Educational & Welfare Society 5 the necessary evidences in respect thereof, so that the ld. AO may make a true and correct determination of whether any income of the assessee has escaped assessment. As the matter has been restored to the file of the ld. AO for a de novo assessment, the appeal of the assessee is held to be allowed for statistical purposes. 8. In the result, the appeal is allowed for statistical purposes. Orders pronounced on 27.12.2024 at Lucknow, U.P. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27/12/2024 Sh Copy forwarded to: 1. Appellant – 2. Respondent – ,3. CIT DR , ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. "