Premjit Kumar, Patiala V. ITO-Ward-4, Patiala

ITA 1595/CHANDI/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7174 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Transactions in derivatives
• Section: 147; 131; 148; 271D

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल” च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC” CHANDIGARH ी संजय गग , या यक सद य BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER आयकर अपील सं./ ITA No.1595/CHD/2019 नधा रण वष / Assessment Year : 2010-11 Shri Premjit Kumar, C/o M/s Goyal Paint & Hardware Store, Village Kheri Gujjran Road, Patiala. बनाम The ITO, Ward-4, Patiala. थायी लेखा सं./PAN NO: EPLPK5423R अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Rakesh Cajla, Advocate राज व क! ओर से/ Revenue by : Shri Ashok Khanna, Addl.CIT स ु नवाई क! तार&ख/Date of Hearing : 01.12.2021 उदघोषणा क! तार&ख/Date of Pronouncement : 01.12.2021 Hearing through Video Conferencing आदेश/ORDER The present appeal has been preferred by the assessee against the order dated 09.09.2019 of the Commissioner of Income Tax (Appeals), Patiala (hereinafter referred to as ‘CIT(A)’ ) pertaining to 2010-11 assessment year. The assessee in this appeal has taken following grounds of appeal: 1. That the order of the Ld. CIT (Appeal) Patiala is bad in law and against facts of the case. 2. That the Ld. CIT (Appeal) Patiala is not justified in upholding2446750/-the assessment order where the assessment has been framed without service of the notice u/s 148. 3. That the Ld. CIT (Appeal) Patiala is erred in upholding the assessment order without adjudicated upon all the grounds of appeal raised before him ITA-1595/CHD/2019 A.Y. 2010-11 Page 2 of 8 4. That the Ld. CIT (Appeal) Patiala is not justified in dismissing the appeal, wherein he himself was doubtful about addition u/s 68 of the Income Tax Act and suggested for addition u/s 269SS of the Act. 5. That the Ld. CIT (Appeal) Patiala is erred in not considering the counter comments of the Income Tax Officer and the assessment order for the next assessment year 2011-12. 6. The appellant craves leave to add, amend or delete any of ground (s) of appeal before it is finally heard. 2. The brief facts of the case are that the assessee had not filed his return of income for the assessment year 2010-11. As per the information available with the AO, there was a cash deposit of Rs. 42.59 lacs in the bank account of the assessee. The AO, therefore, reopened the assessment u/s 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ ). Thereafter, summons u/s 131 of the Act were issued to the assessee upon which the assessee appeared before the Assessing Officer ( hereinafter referred to as ‘AO’). His statement was recorded ‘on oath’ on 13.11.2017, wherein, the assessee stated that he was an auto rickshaw driver. He did not have any bank account axcept the one with State Bank of India, Patiala which was opened by his employer Shri Sonu and Shri Goyal who had been running a paint shop at Kheri Gujran, Patiala. However, the AO noticed that the assessee could not produce the source of the deposit in the said bank account. He, therefore, treated the aforesaid amount as unexplained income of the assessee. ITA-1595/CHD/2019 A.Y. 2010-11 Page 3 of 8 3. Being aggrieved by the said order, the assessee preferred appeal before the CIT(A) and explained that the aforesaid bank account was neither opened by the assessee nor run by the assessee. In fact, the said account was opened by one Mr. Sonu (since deceased) as well as by one Mr. Goyal and Mr. Singla of Singla Cements for doing commodity derivative transaction. The assessee worked for one Mr. Sonu (since deceased) and that the bank account in question was used by the above persons for depositing margin money for doing commodity derivative transactions at MCX. Mr. Sonu committed suicide due to heavy losses in the commodity trade. That the transactions were done by them through the broker M/s Prasar Commodity (P) Ltd. Delhi. That the assessee was a person of meager resources and was getting salary of Rs. 4000/- to 5,000/- per month from Mr. Sonu. The assessee moved an application for additional evidence before the ld. CIT(A) to prove the above contention. The matter was remanded by the ld. CIT(A) to the file of AO. 4. In the remand proceedings before AO, the assessee produced the concerned persons who made statement before the AO that they used to deposit margin money in the account of the assessee for the purpose of carrying out transaction in the commodity derivatives. ITA-1595/CHD/2019 A.Y. 2010-11 Page 4 of 8 5. After considering the submissions of the assessee, relevant evidences and the statements and affidavits of 14 persons, the ld. AO was satisfied that the deposits did not belong to the assessee and forwarded the remand report to the ld. CIT(A). 6. The ld. CIT(A) considered the remand report of the AO and examined the evidences and statement and affidavits of the concerned persons and agreed that the amount in question cannot be said to be unexplained income of the assessee u/s 68 of the Income Tax Act. However, the ld. CIT(A) proceeded further to conclude that the aforesaid commodity transactions were done through the account of the assessee without any broker licence etc. and therefore, the said transactions were not legal and under the circumstances, money could be treated as advance in cash by the said persons to the assessee. He, accordingly, directed that the amount of deposit be taxed u/s 269SS of the Act. 7. Being aggrieved by the above order of the ld. CIT(A), the assessee has come in appeal before this Tribunal. 8. I have heard the rival contentions and gone through the record. The first and foremost contention of the ld. counsel for the assessee has been that no notice u/s 148 of the Act was served upon the assessee. He, in this respect has invited ITA-1595/CHD/2019 A.Y. 2010-11 Page 5 of 8 my attention to Paper Book page 12 which showed that the notice was dispatch by the Income Tax Officer on 29.03.2017 and there was a report dated 31.03.2015 that as per the statement of the owner of the shop that there was no such person at that address. The ld. counsel has further invited my attention to Paper Book page 14 which is a copy of the affixture order vide which the service was affected through affixation on 29.03.2017. As per the said notice, the AO had noticed that he was satisfied that notice u/s 148 of the Act could not be served upon the assessee in ordinary way. He, therefore, ordered Shri Gunit Sandhu, Inspector and Shri Vijay Kumar, Notice Server to effect the notice through affixture on the conspicuous part of the place where the assessee was known to have last resided or carried on business/or personally worked for gain. 9. I find force on the above submissions of the ld. counsel for the assessee. It has not been explained that when the notice was sent through post on 29.03.2017, how come the AO was satisfied on the same day that the notice would not be served through the post/ordinary way. Even the address was mentioned of a shop i.e. M/s Singla Cement Agency, Kheri Gujran, Patiala. However, there was no mention by the concerned Mr. Gunit Sandhu, Inspector and Shri Vijay Kumar, Notice Server as to whether they had affixed the notice on the ITA-1595/CHD/2019 A.Y. 2010-11 Page 6 of 8 conspicuous part of the shop and whether at that time the shop was opened or closed or whether they had enquired from the shopkeeper about the whereabouts of the assessee. There is no mention on the notice that where the notice was affixed and in whose presence it was affixed. Under the circumstances, it is evident that infact no notice u/s 148 was ever served upon the assessee. The aforesaid affixture notice seemed to have been prepared post dated for self serving purpose. As per Section 148 of the Act, the service of notice on the assessee is a sine qua non before making the assessment, re-assessment or re-computation u/s 147 of the Act. Therefore, the assessment framed by the AO without service of notice u/s 148 of the Act was bad in law and as such is liable to be quashed. 10. Now coming to the merits of the case, the assessee in the remand proceedings duly explained the source of deposits and also produced the concerned persons and furnished their affidavits who confirmed that the account of the assessee was used by them for deposit of margin money for carrying out commodity derivative transactions. The AO was satisfied with the evidences and statements of witnesses and reported accordingly to the ld. CIT(A). ITA-1595/CHD/2019 A.Y. 2010-11 Page 7 of 8 11. Even the ld. CIT(A) did not point out any discrepancy in the evidences furnished by the assessee. However, he proceeded on a wrong footing that since the transactions carried out by those persons through bank account of the assessee were not done in a legal way, therefore, the said amount was to be treated as advance in cash by those persons to the assessee. However, I find that both the lower authorities were satisfied with the contention of the assessee that he was a person of meager resources and that the bank account was not opened by him, rather by one Mr. Sonu and other persons and that they had used the account for carrying out their commodity derivative transactions. Under the circumstances, in my view, the ld. CIT(A) wrongly held that the amount could be treated as advance by those persons to the assessee. 12. Even the ld. CIT(A) has ordered the AO to make the addition u/s 269SS of the Act. Whereas Section 269SS is not a charging section and there is no provision u/s 269SS of the Act to make any such addition of advance received in cash. Section 269SS of the Act simply provides that no person shall take or accept from any other person any loan or deposit exceeding Rs. 20,000/-, otherwise than through banking channel. It does not provide for any addition to the income of the assessee in this respect. Section 271D of the Income Tax ITA-1595/CHD/2019 A.Y. 2010-11 Page 8 of 8 Act provides for levy of penalty in case of violation of provisions of Section 269SS of the Income Tax Act, 1961. The penalty can be levied imposed by the Joint Commissioner. In a case for levy of penalty u/s 271D, a proper opportunity/notice is required to be given to the assessee and further the said penalty can be levied by the competent officer as mentioned in the provisions of Section 271D of the Act. In this case, the ld. CIT(A) has directed for addition into the income of the assessee u/s 269SS of the Act which cannot be done as per the relevant provisions of Section 269SS of the Act. The addition made by the ld. CIT(A) is not sustainable even on merits. In view of my observations given above, the impugned assessment order is quashed. The additions are, accordingly, ordered to be deleted. 12. The appeal of the assessee stands allowed. Order pronounced on 01.12.2021. Sd/- ( संजय गग ) (SANJAY GARG ) या यक सद य/ Judicial Member “Poonam” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकर आय ु /त/ CIT 4. आयकर आय ु /त (अपील)/ The CIT(A) 5. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File