INDER MOHAN SINGH SALUJA,NEW DELHI V. ITO WARD 62(1), NEW DELHI

ITA 300/DEL/2024

AI Insights

The case involves Inder Mohan Singh Saluja, the appellant, who contested the order of the Commissioner of Income Tax (Appeals)-20, which confirmed various additions to his income for the Assessment Year 2017-18 under different sections of the Income Tax Act, 1961. The primary issues included the addition of Rs. 1,00,00,000 as unexplained income from undisclosed sources and Rs. 24,28,704 as unexplained expenditure. The appellant argued that these amounts were part of his business income and not undisclosed income. The Tribunal noted procedural lapses by the Assessing Officer in handling the case and decided to remand the matter for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471787 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Other Referred Cases: Collector, Land Acquisition vs. Mst. Katiji
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DAYAINDER SINGH SIDHU
• Assessee Lawyers: SHIKHA BHARDWAJ; NUPUR; STATING
• Keywords: Condonation of delay; Set aside; Business income; Opportunity of being heard; Unexplained expenditure; Income from undisclosed sources
• Section: 142(1); 64; 69C; 69A; 133A; 80C; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘C’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 300/Del/2024 (Assessment Year: 2017-18) Inder Mohan Singh Saluja, D- 76, Chhaterpur Enclave, Delhi. Vs. ITO, Ward 62(1), Delhi. APPELLANT RESPONDENT PAN No: AKHPS5736N Assessee By : Ms. Shikha Bhardwaj, Adv. & Ms. Nupur, CA Revenue By : Shri Dayainder Singh Sidhu, CIT(DR) Date of hearing : 30.12.2024 Date of Pronouncement : 28.03.2025 PER SUDHIR PAREEK, JM : This appeal is filed by the Assessee against the order dated 27.02.2020 of Commissioner of Income Tax (Appeals)-20, New Delhi, [hereinafter referred to as Ld. CIT(A)] pertaining to Assessment Year 2017-18, on the following grounds: ITA No.-300/Del/2024 Inder Mohan Singh Saluja 2 “ Ground No.1 On the facts and circumstances of the case, the CIT (Appeals)-20, New Delhi (hereinafter referred to as \"CIT(A)\") erred in law and in the fact & circumstances of the case by partly allowing the appeal by passing the order dated 27.02.2024 Ground No. 2 On the facts and circumstances of the case, the CIT(A) has erred in law and in the facts of the case by confirming the addition under Section 69A of the Income Tax Act, 1961 (the Act) of Rs.1,00,00,000/- as unexplained income from undisclosed sources. Ground No. 3 On the facts and circumstances of the case, the CIT(A) has erred in law and in the facts of the case by confirming the rate of tax under Section 115BBE of the Act as 60%. Ground No.4 On the facts and circumstances of the case, the CIT(A) has erred in law and in the facts of the case by confirming the addition under Section 69C of the Act of Rs. 24,28,704/- as unexplained expenditure. Ground No.5 On the facts and circumstances of the case, the Ld. AO has erred in law and in the facts of the case by not allowing the relief of INR 43,20,000 for the amount disclosed by the appellant under the Pradhan Mantri Garib Kalyan Yojna, 2016 (\"PMGKY\"). The tax on the said amount have been duly paid by the appellant. Ground No.6 On the facts and circumstances of the case, the Ld. AO has erred in law and in the facts of the case by not allowing the relief of INR 41,268 for the amount paid by the appellant under Section 80C of the Act. Ground No. 7 The appellant craves leave to add, amend, alter or omit any of the above grounds of appeal as the circumstances may warrant.” ITA No.-300/Del/2024 Inder Mohan Singh Saluja 3 2. brief facts of the case are that the assessee has e-filed return of income for the A.Y. 2017-18 on 07.11.2017, declaring net taxable income of Rs. 13,02,480/-. In this case, a survey operation u/s 133A of the Act, was carried out at the business premises of the assessee. Subsequently, notices u/s 142(1) of the Act, were issued and served upon the assessee. In response to the notices issued, Sh. Vishal Sood, Advocate & Authorized Representative (AR) of the assessee has provided the copy of ITR, computation of income, P&L Account, Balance Sheet, Audit Report and other relevant details/documents alongwith bank statements of the assessee through e-mail. During the survey operation, a diary and other loose bills/documents were impounded. On the basis of the entries shown in the Diary found at the above said premise, the assessee had accepted that he had given cash loans to the different entities/parties amounting to Rs.1,00,00,000/- is the income out of books earned from undisclosed sources during the F.Y. 2016-17. The assessee had surrendered the said amount and offered the same for taxation. Accordingly, a sum of Rs.30,00,000/-as self-assessment tax against the income of Rs.1,00,00,000/- was paid by the assessee. But on perusal of ITR filed for the A.Y. 2017-18 and the reply/submission of the AR of the ITA No.-300/Del/2024 Inder Mohan Singh Saluja 4 assessee, it is found that the assesee has not offered the income of Rs.1,00,00,000/-, which was surrendered by the assessee during survey operation, the AR of the assessee has stated in his reply that the amount of Rs. 1,00,00,000/- disbursed to the party as loan was business income and accepted the amount as part of total business income and it should not be treated as income from undisclosed sources. As the assessee has offered the surrendered amount only after issuance of the notice u/s 142(1) of the Act on various dates and show cause notice dated 09.11.2019. 3. The Assessee / Appellant presented an application for condonation of delay in filing appeal, by stating that the delay of in filing the present appeal is due to a lack of awareness regarding the specific deadline and due to infection of COVID-19 occurred to assessee twice. In this regard, the Ld. AR submitted as under: “ 8. That, in the instant case of the Appellant, the Hon'ble CIT(A)-20 vide its appellate order dated February 27, 2020 (placed at Paper Book Page No. 158-164) had granted part relief to the Appellant. However, the Learned Assessing Officer (Ld. AO') did not give the desired appeal effect to the Appellant while passing his appeal effect order dated March 16, 2020 (placed at Paper Book Page No. 165-166) and the said appeal effect order was issued online on the Income Tax Portal of the Appellant without granting any opportunity of being heard to the Appellant. 9. Subsequently, a nation-wide lockdown was put in place in India, with effect from midnight of March 24, 2020, as a preventive measure to control the spread of the pandemic, Coronavirus (COVID - 19). ITA No.-300/Del/2024 Inder Mohan Singh Saluja 5 10. That due to the oversight made by the counsel advocate who was representing the case of the Appellant before the Hon'ble CIT(A)20, the Appellant never came to know about the fact the no appeal effect has been given by the Ld. AO. 11. Thereafter, the Appellant (when being 61 years of age) got diagnosed with COVID -19 on April 20, 2020 (medical report annexed as Annexure No. 1), severely deteriorating his physical and mental health, which ultimately disabled him to being vigilant enough to check with his counsel about the pending status of litigation. 12. That the Appellant (when being 64 years of age) again got diagnosed with COVID -19 on January 22, 2022 (medical report annexed as Annexure No. 2) whichimmensely affected his already deteriorating health and in turn impeded his ability to keep a check on all the ongoing litigation with the Income Tax Authorities (ITA). 13. That the aforesaid narrative can also be verified from the fact that the Ld. AO had passed an ex-parte penalty order dated March 25, 2022 (placed at Paper Book Page No. 167-170) under section 271AAC of the Act wherein the Ld. AO, at Para 7, has stated that 'Assessee was non-responsive throughout the penalty proceedings'. 14. That the Appellant came to know about the status of pending litigation with the ITA only when he enquired from his chartered accountant about the status of refund of earlier years at the time of filing of return of income for the Assessment Year ('AY') 2023-24 as he was apprised that refund of earlier years has been adjusted against the demand of AY 2017-18. The copy of Intimation under section 245 of the Act for AY 2020-21 as well as AY 2023-24 is placed at Paper Book Page No. 171-177. 15. That the Appellant took desperate measures to file the appeal against both the penalty order passed under section 271AAC of the Act by the Ld. AO as well as the appellate order passed by the Hon'ble CIT(A) 20 (instant captioned appeal) for the AY 2017-18 in the month of January 2024. 16. That the deteriorating health of the Appellant due to COVID-19 which disabled him to be vigilant enough and also impeded his ability to keep a check with his counsel advocate/ chartered accountant about the pending litigation with the ITA coupled with the fact that the counsel advocate/ chartered accountant did not advise the Appellant properly with respect to the timelines pertaining to filing of appeal before the higher appellate authorities has resulted in this delay in filing the instant appeal before your ITA No.-300/Del/2024 Inder Mohan Singh Saluja 6 Honours.” and also submitted that such a delay is neither intentional nor deliberate deserves to be condoned.” 4. The Ld. DR resisted the prayer of assessee / appellant by stating that there was no any sufficient cause not filing appeal in time. The Ld. AR relied upon the judgment (1987) taxmann.com 1072 (SC) Collector, Land Acquisition vs. Mst. Katiji in which Hon’ble Supreme Court held that expression “sufficient cause” law should be applied in a meaningful manner which subserve the ends of justice and approach by which scuttles a decision on merits is, deprecated. 5. Ensuring the object of justice, we are inclined to condone the delay occurred in filing appeal as stated above, in filing the appeal and adjudicate the matter on its merits. 6. Heard rival submissions and perused the material available on record. 7. Per contra, Learned Senior Departmental Representative (hereinafter referred to as ‘Ld. Sr. DR’), relied upon the order passed by lower authorities. ITA No.-300/Del/2024 Inder Mohan Singh Saluja 7 8. Mere perusal of the order passed by the Ld. AO, regarding addition of Rs. 1,00,00,000/- as unexplained income from undisclosed sources, it reveals that while deciding this issue, the Ld. AO simply reproduced the contents of notice which was served to assessee / appellant which is not sustainable in the eyes of law and not even dismissed the documents furnished by the assessee / appellant. Relevant para 3 and 4 are reproduced as under: “3. During the survey operation, a diary and other loose bills/documents were impounded. On the basis of the entries shown in the Diary found at the above said premise, the assessee had accepted that he had given cash loans to the different entities/parties amounting to Rs.1,00,00,000/- is the income out of books earned from undisclosed sources during the F.Y. 2016-17. The assessee had surrendered the said amount and offered the same for taxation. Accordingly, a sum of Rs. 30,00,000/-as self assessment tax against the income of Rs.1,00,00,000/- was paid by the assessee. 4. Subsequently, the assessee has e-filed return of income for the A.Y. 2017-18 on 07.11.2017. But on perusal of ITR filed for the A.Y. 2017-18 and the reply/submission of the AR of the assessee, it is found that the assesee has not offered the income of Rs.1,00,00,000/-, which was surrendered by the assessee during survey operation, while computing/filing the ITR for the A.Y. 2017-18. The assessee was asked to explain the same through notice u/s 142(1) dated 07.11.2019 and was show caused vide notice dated 09.11.2019 alongwith attached copy of statement, Annexure A-1 and Annexure A-2. Thereafter, during the assessment proceedings, the AR of the assessee has submitted revised computation of income by taking into account the said income of Rs.1,00,00,000/- during the year under consideration. In response to the show cause notice, the AR of the assessee has stated in his reply that the amount of Rs. 1,00,00,000/- disbursed to the party as loan was business income and accepted the amount as part of total business income and it should not be treated as income from undisclosed sources. As the assessee has offered the surrendered amount only after issuance of the notice u/s 142(1) of the Act on various dates and show cause notice dated 09.11.2019, wherein it is stated that during the course of the ITA No.-300/Del/2024 Inder Mohan Singh Saluja 8 survey proceedings, the statement was recorded by the Authorized Officer u/s 133A (3) (iii) of the Act on 10.03.2017 In reply to query no. 8 you had admitted that the dairy impounded as Annexure A-1 belonged to you and the details of the cash loans given by you to the named acquaintances during the financial year 2016-17 were recorded in it by you. In reply to query No. 9 you had explained the source of this money to be out of income earned by you by carrying out certain construction works in collaboration. In reply to query no. 10 you had admitted that neither the amount of Rs.1,00,00,000/- (rupees one crore) nor any related documents were recorded in the books of accounts maintained. You had also admitted that as this amount of Rs.1,00,00,000/- was earned from undisclosed sources hence, it was not recorded in your books of account. You had also clarifiedthat this undisclosed income was not recorded in your books of account as it was earned from work other than your normal business. Therefore, it can not be ruled out any malafide intention of the assessee on this issue. Hence, an amount of Rs.1,00,00,000/- as unexplained income from undisclosed sources and treating the income other than of books of account u/s 69A of the Income Tax Act, 1961 is being added to the taxable income of the assessee for the year under consideration. As the unexplained income from undisclosed sources u/s 69A of the Act has been added to the retuned income of the assessee and I am satisfied, therefore, penalty proceedings u/s 271AACof the Income Tax Act, 1961 is being initiated separately.” 9. The Ld. AO in which may dealt with the issue, is quite hyper technical. Regarding addition of Rs. 24,28,704/- as unexplained expenditure and Rs. 43,20,000/-. The Ld. AO expressed that assessee / appellant has not provided sufficient evidences and additions made is want of evidence. 10. So, looking to the overall facts and circumstances, requirement of proper verification and in the interest of justice, we find it appropriate to provide one more opportunity to defend the case by ITA No.-300/Del/2024 Inder Mohan Singh Saluja 9 assessee / appellant, inclined to restore the matter to the file of the Ld. Assessing Officer with the direction to pass order after affording reasonable, adequate and effective opportunity of being heard and hence the appeal of the assessee deserves to be allowed. 11. Consequently, we set aside the order of the Learned CIT(A) and remitted the matter back to the AO with the direction to decide the matter afresh after giving proper, effective and reasonable opportunity of being heard. The appeal is allowed as indicated above. 12. In the result, the appeal filed by the assessee is accordingly allowed for statistical purpose. Order pronounced in the Open Court on 28.03.2025 SD/- SD/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 28.03.2025 Pooja/- ITA No.-300/Del/2024 Inder Mohan Singh Saluja 10 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI. ITA No.-300/Del/2024 Inder Mohan Singh Saluja 11 1. Date of dictaƟon of Tribunal order 27.3.25 2. Date on which the typed draŌ Tribunal Order is placed before the DictaƟng Member 27.3.25 3. Date on which the typed draŌ Tribunal order is placed before the other Member 4. Date on which the approved draŌ Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the DictaƟng Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Dispatch of the order "