ANIL HARI INAMDAR,WARDHA V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3, NAGPUR

ITA 82/NAG/2024

AI Insights

The case involves Anil Hari Inamdar, a senior citizen and an employee at Jawaharlal Nehru Medical College, who appealed against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2013-14. The primary contention was regarding the legality of the notice issued under section 148 of the Income Tax Act and the subsequent addition of Rs. 15.50 lakh as unexplained investment, which was later reduced to Rs. 13 lakh by the CIT(A). The assessee argued that the investment was lost due to fraud by the Wasankar Group and that all transactions were supported by bank statements and cash flow statements, which the Assessing Officer and CIT(A) had unjustly dismissed.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 24390 (ITAT-NAGPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Other Referred Cases: CIT vs. Smt. PK. Noorjahan, CIT vs. Bokaro Steel Ltd., CIT vs. Excel Industries Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY Y. MARATHE
• Assessee Lawyers: K.P. DEWANI
• Keywords: Unexplained investment; Salary income; Deemed to accrue or arise in india
• Section: 148; 69; 13; 139; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI K.M. ROY, ACCOUNTANT, MEMBER ITA no.82/Nag./2024 (Assessment Year : 2013–14) Anil Hari Inamdar Flat no.2, Jaswant Apartment Bhagat Singh Chowk Ramnagar, Wardha 442 001 PAN – AAAPI8073M ……………. Appellant v/s Dy. Commissioner of Income Tax Circle–3, Nagpur ……………. Respondent Assessee by : Shri K.P. Dewani Revenue by : Shri Abhay Y. Marathe Date of Hearing – 04/12/2024 Date of Order – 08/01/2025 O R D E R PER V. DURGA RAO, J.M. This appeal by the assessee is against the impugned order dated 03/01/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2013–14. 2. In its appeal, the assessee has raised following grounds:– “1) Notice issued u/s 148 is illegal, invalid and bad in law. Consequent assessment framed thereupon is liable to be cancelled. 2) The learned CIT(A) erred in holding that there is sufficient grounds for reopening and same is done following due process of law and consequently 2 Anil Hari Inamdar dismissing the grounds of appeal challenging validity of notice u/s 148 of I.T. Act 1961. 3) The learned CIT(A) erred in confirming the addition of Rs.13 lacs out of addition made by A.O, at Rs.15.50 lacs on account of unexplained investment. 4) The learned CIT(A) ought to have held that investment with Wasanker Group stands fully explained considering the cash flow statement and bank statement submitted by assessee. 5) Addition sustained at Rs.13 lacs is unjustified and unsustainable on the principles of absence of real income in the case of assessee as entire investment itself is lost. 6) The learned authorities ought to have held that cash withdrawals available from bank were available to explain the transaction with Wasankar Group and no addition for unexplained investment ought to have been made at the hands of assessee. 7) The assessee denies liability to pay interest u/s 234A and 234B of I.T. Act 1961. Without prejudice, levy of interest under section 234A and 234B of I.T. Act 1961 is unjustified, unwarranted and excessive. 8) Any other ground that shall be prayed at the time of hearing.” 3. Facts in Brief:– The assessee is a Senior Citizen. For the year under consideration, the assessee being an employee of Jawaharlal Nehru Medical College, derived income from salary as a Teacher and filed his return of income under section 139 of the Income Tax Act, 1961 (\"the Act\") declaring total income of ` 12,83,730. The assessee was a victim of fraud by Wasankar Group. Investment made by the assessee with the said Wasankar Group at ` 15,50,000, has been lost in its entirety. No amount in respect of such investment has been received till date even though more than a decade has elapsed. Shri Wasankar, was arrested and was jailed for long period. There is no ray of hope of recovery of amount till date. In assessee’s case, re– assessment was initiated on the basis of information that the assessee has made investment at ` 16.50 lakh with M/s Wasankar Group. Reasons recorded have been reproduced at Page–1 & 2 of the assessment order. The 3 Anil Hari Inamdar amount given was explained by submitting details of bank account to show that the amount has been withdrawn from bank in previous years as well as in the current year. The Assessing Officer, however, did not accept the explanation of the assessee stating that such explanation is not tenable in the eyes of the law. Thus, the Assessing Officer made addition of ` 15.50 lakh as unexplained investment within the mean of section 69 r/s section 115BBE of the Act. 4. On appeal, the learned CIT(A) partly allowed the assessee’s appeal by sustaining addition of ` 13 lakh on account of unexplained investment. The relevant decision of the learned CIT(A) at Para–8 of his order is reproduced below:– “8. Ground Nos. 2,3 and 4 The appellant has stated that the AO has not found that cash withdrawals from bank are utilized elsewhere and are not given to Shri Wasankar Group Company as claimed, but the appellant has not discharged onus cast upon him by the AO to satisfactorily explain the nature and source of money for investment in a private company and link the same with past withdrawals was documentary proof. Further, the appellant has submitted that in view of decision of CIT vs. Smt. PK. Noorjahan 237 ITR, 570 (SC) even if explanation of assessee is not found to be satisfactorily, it is not mandatory upon AO to make addition u/s 69 for any investment found remaining unexplained. The appellant also states that police complaint was filed and there is no ray of hope for recovery of money and they have not received any real income. The appellant further placed reliance of decision of CIT vs. Bokaro Steel Ltd. and Excel Industries Ltd. in 358 ITR 295 (SC) on deemed income However, the crux of the mater still remains that source of such investments could not be proved and withdrawals could not be satisfactorily linked by the appellant with any cogent evidence. Further, the payments have not made through cheque payments. Also, why would appellant withdraw heavily in F.Y. 2010-11 and 2011-12 to invest in F.Y. 2012-13 (previous year), For F.Y. 2012-13, it is seen that there was cash withdrawals of Rs 14,70,000/-, cash deposit of Rs.3,97,000/- and investment in Wasankar Group Company at Rs.15,50,000/-. 8 & 9 ………. 10. ……… However, in the given facts and circumstances of the case, keeping in view of past savings, it would be justified if relief of ` 2,50,000 is made and 4 Anil Hari Inamdar addition of unexplained investments is confirmed and restricted to ` 13,00,000, to be taxed w.r.t. section 115BBE.” 5. Before us, the learned Counsel, Shri Kishore Dewani, appearing for the assessee submitted that it is settled proposition of law that provisions of section 69 of the Act are not mandatory. Explanation adduced in the case of the assessee is reasonable. The assessee has no source of activity other than salary income from which the assessee could be said to have derived any undisclosed income. The Assessing Officer did not bring any evidence on record to prove that any other activity was being carried out by the assessee from which any undisclosed income could be derived. The learned Counsel, in support of his arguments, relied on the judgment of the Hon'ble Supreme Court in CIT v/s Smt P.K. Noorjahan, [1990] 237 ITR 570 (SC). The learned Counsel further argued that the deposit with M/s. Wasankar Group, has been lost and there remains no investment which could be considered as held by the assessee to make addition under deeming provisions of section 69 of the Act. It is settled proposition of law that the assessee is liable to be assessed only on real income. The amount given itself having been lost in its entirety, there remains no scope for any deemed income to be brought under section 69 of the Act. In support of these arguments, the learned Counsel relied on the judgments of the Hon'ble Supreme Court in CIT v/s Bokaro Steel Ltd. [1999] 236 ITR 315 (SC) and CIT v/s Excel Industries Ltd., [2013] 358 ITR 295 (SC). He thus prayed that the addition be deleted. 6. The learned Departmental Representative relied upon the order passed by the learned CIT(A). 5 Anil Hari Inamdar 7. We have heard the arguments of rival parties, perused the material available on record and gone through the orders of the authorities below. We find that the explanation furnished by the assessee before the Assessing Officer contained in Page–13 to 17 of the assessment order and the before the learned CIT(A) as contained in Page–7 to 12 of its order, has not been disputed as to the facts and evidence on record. We also find that no reason is indicated in the assessment order and/or in the impugned first appellate order as to why the explanation of the assessee is not being accepted. Mere investment with M/s Wasankar Group by itself is no reason to derive belief for escapement of income as has been concluded in the reasons recorded for issue of notice u/s 148 of I.T. Act 1961. The addition made in the assessment framed at ` 15.50 lakh and sustained by the learned CIT(A) at ` 13 lakh is unjustified and unsustainable considering the fact and evidence on record. The details of withdrawals and bank account for the past four years are placed on record at Page–16 & 17 of the Paper Book. Withdrawal during the year under consideration itself and earlier year is around ` 25 lakh. The assessee has given reasonable explanation along with documentary evidence to explain the cash given to M/s. Wasankar Group. Thus, keeping in view the overall facts and circumstances of the case and the case laws relied upon in support of the arguments made by the learned Counsel for the assessee, we are of the opinion that ` 15.50 lakh stands reasonably explained by the assessee considering withdrawals from the bank account and documentary evidences placed on record. Consequently, the addition of ` 13 lakh made by 6 Anil Hari Inamdar the learned CIT(A) is hereby directed to be deleted. Thus, grounds no.3 to 6, raised by the assessee are allowed. 8. Insofar as grounds no.1 & 2 are concerned, which relate to notice issued under section 148 of the Act, we find that the Assessing Officer had issued notice under section 148 of the Act on mere information of deposit of cash with M/s. Wasankar Group. No verification has been made by the Assessing Officer before issuance of such notice to derive belief of escapement of income. In our opinion, no valid notice under section 148 of the Act can be issued on the basis of mere information of amount given to M/s. Wasankar Group, without verification as to the assessee not having source to explain the cash deposit. Reasons recorded for issuance of notice under section 148 of the Act are not in accordance with law and consequent notice is held to be suspicion. In our opinion, no valid belief of escapement of income is derived in the assessee’s case to issue notice under section 148 of the Act. Accordingly, ground no.1 and 2, are allowed. 9. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on 08/01/2025 Sd/- K.M. ROY ACCOUNTANT MEMBER Sd/- V. DURGA RAO JUDICIAL MEMBER NAGPUR, DATED: 08/01/2025 7 Anil Hari Inamdar Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Nagpur; and (5) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Sr. Private Secretary ITAT, Nagpur "