INCOME TAX OFFICER, NEW DELHI V. MAHESH KUMAR SINDHWANI, NEW DELHI

ITA 2933/DEL/2023

AI Insights

The case involves an appeal by the Income Tax Officer against the order of the CIT(A), which had deleted the additions made to the assessee's income for the assessment year 2017-18. The assessee, Mahesh Kumar Sindhwani, had not filed a return of income as his income was below the taxable limit. However, substantial cash deposits were made in his bank accounts during the demonetization period, which raised suspicions. The AO made additions to the assessee's income, treating these deposits as unexplained. The CIT(A) later found that these deposits were related to the business of M/s Gyan Medicos, owned by the assessee's brother, and not the assessee himself. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 312246 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANKAR LAL
• Keywords: Set aside; Additional evidence
• Section: 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.2933/Del/2023 (ASSESSMENT YEAR 2017-18) Income Tax Officer, New Delhi. Vs. Mahesh Kumar Sindhwani, A-5/3 Miyawali Nagar, Paschim Vihar, New Delhi-110087 PAN-AQQPS1770B (Appellant) (Respondent) Assessee by None Department by Shri Shankar Lal, Sr. DR Date of Hearing 28/04/2025 Date of Pronouncement 28/04/2025 O R D E R PER MANISH AGARWAL, AM: This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi [Ld. CIT(A), in short], dated 20.09.2023 in appeal No. CIT (A), Delhi- 14/10246/2019-20, passed u/s 250 of the Income Tax Act, 1961 (the Act, in short) for Assessment Year 2017-18. 2. Brief facts of the case are that assessee is an individual and did not filed return of income as his income was below the maximum amount not chargeable to tax. The AO has information that the assessee had deposited cash of Rs. 28,27,000/- during demonetization period in Specified Bank Notes (SBN) in the bank accounts with State Bank of Mysore, Paschim Enclave, New Delhi A/c No. 54006787635 and Corporation Bank, Paschim Vihar, New Delhi A/c No. 4760020105260. Besides total sum of Rs. 1,47,93,784/- was credited into these two bank accounts. Since the assessee has not filed the return of income, a notice u/s 142(1) of the Act was issued on 08.12.2017 to file Return of Income 2 ITA No.2933/Del/2024 ITO vs. Mahesh Kumar Sindhwani for A.Y. 2017-18. However, the assessee has failed to file the Income Tax Return therefore, the AO proceed to complete the assessment based on material available on record as per section u/s 144(1) of the Act. During the assessment proceedings, assessee filed part reply wherein it was claimed that assessee made cash deposit in SBN of Rs. 2,02,500/- in his Saving Bank A/c with State Bank of Mysore out of his saving. Assessee further claimed that the current account maintained with Corporation Bank belongs to M/s Gian Medicos which is a proprietary concern of Sh. Surinder Kumar Sindhwani (Brother of the assessee) and in the Bank records the PAN of the assessee is registered instead of Sh. Surinder Kumar Sidhwani as he was the authorised signatory in that account. Thereafter, the AO issued show cause notice to the assessee and asked to explain the source of credits in both the account. Since no reply was filed by the assessee, the AO had completed the assessment u/s 144 wherein addition of Rs.1,47,93,784/- being the total credits in both the bank account as stated above. 3. Against such order, assessee preferred an appeal before ld. CIT (A) wherein it was contended that the current bank account with Corporation bank belong to M/s Gyan Medicaose, a proprietary firm of Shri Surinder Kumar Sindhwani, brother of the assessee. It was further claimed that all the deposits in both the bank accounts (except Rs. 2,02,500/-) pertained to M/s Gyan Medicose. Assessee further claimed that he was authorised signatory in the current account and in support, a copy of certificate issued by Corporation Bank was filed before the ld. CIT (A). The assessee also filed ITR, Financial statements and audit report of M/s Gyan Medicose to support his claim that the turnover of the firm was higher than the total credits in both the bank accounts. All these details were sent to the AO for his comments however, the AO has not made any comments thus the ld. CIT(A) after considering these facts and further considering all the credits in both the bank accounts were duly accounted for by the firm, had deleted the entire additions. Aggrieved by this order of Ld. CIT(A), 3 ITA No.2933/Del/2024 ITO vs. Mahesh Kumar Sindhwani the Revenue is in appeal before the Tribunal on the strength of following grounds of appeal: “1. The Ld. CIT(A) has erred in deleting the addition of Rs. 1,45,78,812/- made by the AO in the assessment order u/s 144 of the I.T. Act, 1961 dated: 21.12.2019 by admitting the fresh evidence submitted by the assessee. 2. The Ld. CIT(A) has erred in law by ignoring the Rule 46A of the Income Tax Rule for not asking the remand report from the jurisdictional assessing officer.” 4. Before us, ld. Sr. DR argued that the assessee neither filed the return of income nor explained the sources of deposits in the bank accounts. Ld. Sr. DR submitted that the assessee has not participated in the assessment proceedings and merely stated that both the bank accounts and the deposits therein pertained to the proprietary firm of his brother Shri Surinder Kumar Sindhwani. However, despite multiple opportunities given by AO, no evidence was filed to support the contention. He further stated that ld. CIT(A) while deleting the additions had admitted additional evidences without asking the remand report from the jurisdictional assessing officer which is gross violation of Rule 46A of the Income Tax Rules, 1962. He thus prayed that the matter may be set aside to the file of the AO for fresh adjudication. 5. Having considered the arguments of ld. Sr. DR and on perusal of the orders of the lower authorities, we find that the assessee since beginning of the proceedings had stated that the current account with Corporation bank belonged to the M/s Gyan Medicose, a proprietary firm of his brother Shir Surinder Kumar Sindhwani and his PAN is mistakenly attached in the bank account. Assessee further submitted that in the saving bank account with State Bank of Mysore, except cash deposit in SBN at Rs. 2,02,500/-, remaining deposits pertained to M/s Gyan Medicose. From the perusal of the appellate order, it is seen that the assessee has been able to establish that the deposit made in these bank accounts pertained to the firm M/s Gyan Medicocse and were duly recorded in its books of accounts. Assessee also filed the financial statements before the ld. CIT(A) in support of his claim. Revenue’s contention that no remand report is called for by the ld. CIT(A) is also incorrect. The ld. CIT(A) in para 10 of the order, observed 4 ITA No.2933/Del/2024 ITO vs. Mahesh Kumar Sindhwani that all the details filed by the assessee were sent to the AO for his comments but AO did not give his comments. The observation made by ld. CIT(A) while deleting the additions are as under: “8. The appellant also furnished copies of submissions made before CIT(A)-14, New Delhi on 18.02.2021 & 02.03.2021 wherein, it was reiterated that the bank accounts were belonging to his brother, who run a proprietary concern in the name of M/s. Gyan Medicos. Apart from this, the appellant also furnished copy of Return of Income filed by Mr. Surinder Kumar Sindhwani for the A.Y. 2017-18 on 25.10.2017. As per the Return, it was filed in ITR 3 as ‘Surinder Kumar Sindhwani, Prop. Gyan Medicos’. This Return is enclosed with Tax Audit Report dated 15.10.2017, wherein total turnover declared by Shri Surinder Kumar Sindhwani was Rs.1,55,94,365/- on his business of Gyan Medicos. Later, this appeal was transferred to National Faceless Appeal Centre. 9. The appellant was once again asked to furnish a copy of relevant bank statements referred to in the assessment order along with KYC documents vide notice dated 31.08.2023. This was provided by the appellant on 08.09.2023. As per bank details provided by the appellant, the SB a/c with account No.54006787635 was in the name of Shri Mahesh Kumar and the total cash deposited into that account during demonetization was Rs.2,02,500/-. The total credits into that bank account was Rs.2,14,972/-. The Corporation Bank account having account No.CA/01/052605 was in the name of Gyan Medicos and the appellant name was mentioned as joint holder. The total credits into that account were Rs.1,45,78,812/- and this amount was treated as unexplained money u/s 69A of the IT Act by the AO apart from Rs.2,14,972/-. 10. All these documents were forwarded to the AO with a request to offer his comment as the facts are undisputedly clear that the Corporation Bank account was not belonging to the appellant. The AO did not give his comments on those documents. Attention is drawn to Para 6 of the assessment order, where the AO referred that the Corporation Bank account belongs to M/s. Gyan Medicos, which is the proprietary concern of Mr. Surinder Kumar Sindhwani (Brother of the appellant). Though this fact was recorded in the assessment order, the AO was in doubt that why the PAN of the appellant was attached to that bank account. Except raising that doubt, no other verification was carried out. The appellant duly furnished the IT Return of his Brother, filed for the A.Y.2017-18 on 25.10.2017 reflecting the business of M/s. Gyan Medicos, wherein the entire turnover was offered in that Return and that was also audited u/s 44AB of the IT Act. The total turnover of that business was Rs.1,55,94,365/-. The net profit was already offered to tax. The Branch Manager of Corporation Bank confirmed that the said account was belonging to Mr. Surinder Kumar and the appellant was authorized signatory only. 11. In view of the factual details submitted by the appellant, the grounds of appeal filed by the appellant are allowed and the AO is directed to delete the addition of Rs.1,45,78,812/-.” 6. Before us, the revenue has failed to controvert the finding of ld. CIT(A) which are self-explanatory and based on the facts duly supported by the bank certificate in this regard. Therefore, we find no reason to interfere in 5 ITA No.2933/Del/2024 ITO vs. Mahesh Kumar Sindhwani the same. Accordingly, the order of the ld. CIT(A) is hereby upheld. Both the grounds of appeal of the revenue are dismissed. 7. In the result, the appeal of the revenue is dismissed. Order pronounced in open court on 28/04/2025. SSSd/- Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 07/05/2025 PK/Sr. Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "