DCIT, In. Tax. Circle-2(2)(2), New Delhi V. Hotchand Teckchand Punjabi, New Delhi

ITA 1680/DEL/2021

AI Insights

The case involves an appeal by the Revenue against the order of the learned Commissioner of Income Tax (Appeals) which pertained to the assessment year 2012-13. The primary issue was the deletion of an addition of Rs.10,22,95,564 to the assessee's income, which was initially added by the Assessing Officer as unexplained investment under section 69B of the Income Tax Act, 1961. The assessee, a non-resident individual, had made time deposits in India, which the Assessing Officer suspected were not reported. The Commissioner of Income Tax (Appeals) found that the deposits were from overseas earnings and thus not taxable in India. The Tribunal agreed with the Commissioner, emphasizing the assessee's lack of fair opportunity to contest the initial assessment and the procedural correctness in admitting additional evidence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300549 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 14-11-2021
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 147; 148; 144; 142(1); 133(6); 69B; 250; 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘D’ NEW DELHI BEFORE SHRI G.S. PANNU, HON’BLE PRESIDENT AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.1680/Del/2021 Assessment Year: 2012-13 DCIT, International Taxation, Circle -2(2)(2), New Delhi Vs. Sh. Hotchand Techchand Punjabi, C/o- Nidhi Goyal, CA, A-3 Mod Apartment 61, Vasundhara Enclave, Delhi PAN :AQUPP2417I (Appellant) (Respondent) ORDER PER SAKTIJIT DEY, JM: This is an appeal by the Revenue arising out of order dated 17.08.2021 of learned Commissioner of Income Tax (Appeals)-43, New Delhi, pertaining to assessment year 2012-13. 2. The effective grounds raised by the Revenue are as under: 1. Whether the Ld. CIT(A) has inadvertently erred in deleting the alleged over-reporting of the value of time deposits to the tune of Rs.7,18,47,782/- (Assessed income 16,68,47,782/- minus 9,50,00,000/-) without Appellant by Ms. Tanya, Advocate Sh. Rohit Tiwari, Advocate Respondent by Sh. Munish Kumar Gupta, CIT (DR) Date of hearing 31.01.2023 Date of pronouncement 17.02.2023 ITA No.1680/Del/2021 AY: 2012-13 2 | P a g e conducting a third party verification and without calling for remand report from the assessing officer which is in clear violation of Section 295(2) (mm) of the Income Tax Act, 1961 read with Rule 46A of the Income Tax Rule, 1962. 2. Whether Ld. CIT(A) has inadventently erred in accepting the genuineness of the source of investments of Rs.9.50 crores based on admissibility of the additional evidence without calling for remand repot from the assessing officers which is in clear violation of Section 295(2) (mm) of the Income Tax Act, 1961 read with Rule 46A of the Income Tax Rules, 1962. 3. As could be seen from the grounds raised, the basic grievance of the Revenue is against admission of additional evidences in violation of Rule 46A of the Income-tax Rules, 1962. 4. Briefly the facts are, the assessee is a non-resident individual. From the information generated in the system of the department the Assessing Officer found that in the year under consideration the assessee had made time deposits with Banks aggregating to Rs.19,72,95,564/-. Whereas, the assessee has not filed any return of income. Based on such information, the Assessing Officer formed an opinion that the income chargeable to tax has escaped assessment. Accordingly, he reopened the assessment under section 147 of the Act by issuing of notice under section 148 of the Act. As alleged by the Assessing Officer, the assessee neither responded to notice issued under section ITA No.1680/Del/2021 AY: 2012-13 3 | P a g e 148 of the Act, nor to the notices issued under section 142(1) of the Act. Therefore, he proceeded to complete the assessment to the best of his judgment under section 144 of the Act. In course of assessment proceedings, the Assessing Officer issued notice under section 133(6) of the Act to Canara Bank. As per the information received from the Bank, he found that the assessee had made time deposits amounting to Rs.19,72,95,564/-. Subsequently, the Assessing Officer issued one more notice to the assessee electronically. In response to the said notice, the assessee sent mail to the Assessing Officer on 12.12.2019 stating that he never stayed in India for a period exceeding one month since last 35 years. It was further stated that the time deposits made with the bank are from NRI account and interest income has been earned. It is submitted, since, the assessee is a NRI and the entire funds, except the interest, was earned/generated outside India, it cannot be taxed in Indian. The Assessing Officer, however, did not accept the explanation of the assessee and proceeded to add an amount of Rs.16,86,47,782/- as unexplained investment under section 69B of the Act. The assessee contested the aforesaid addition before earned Commissioner (Appeals). ITA No.1680/Del/2021 AY: 2012-13 4 | P a g e 5. Before the first appellate authority, the assessee submitted that due to prevailing restrictions on account of Covid -19, the assessee was unable to participate in the assessment proceeding. Further, the assessee submitted the relevant bank statement and fixed deposit receipts to emphasize that time deposits were made out of NRI savings bank account. Further, the assessee pointed out discrepancy in the amount of fixed deposit as reflected in the system of the department by submitting that the actual fixed deposit amount as on 31.03.12 was Rs.9,50,00,000/- only and not Rs.19,72,95,564/-. Based on the submissions made, learned Commissioner (Appeals) called upon the assessee to seek further clarification from the bank in this regard, which was obtained by the assessee and furnished before learned Commissioner (Appeals). From the details submitted from bank, learned Commissioner (Appeals) found that actual amount of fixed deposit standing in the account of the assessee as on 31.03.2012 was 9,50,00,000/-. Thus, based on such information learned Commissioner (Appeals) deleted the differential amount of Rs.10,22,95,564/-. 6. As regards the balance amount of Rs.9,50,00,000/-, learned Commissioner (Appeals) noticed that the source of the aforesaid ITA No.1680/Del/2021 AY: 2012-13 5 | P a g e amount used in time deposit were remittances from assessee’s overseas bank accounts and were out of his overseas earnings. In this regard, the assessee had also furnished the source of credit entries appearing in the bank statements. Thus, considering the fact that the time deposits were made out of income earned overseas, learned Commissioner (Appeals) deleted the balance addition. 7. We have considered rival submissions and perused the materials on record. The basic grievance of the Revenue is, learned Commissioner (Appeals) should not have deleted the addition based on additional evidences furnished by the assessee without forwarding them to the Assessing Office for his examination and opinion. It is fairly well settled, powers of the first appellate authority is co-terminus with the Assessing Officer. On a reading of section 250 and 251 of the Act, it is very much clear that learned Commissioner (Appeals) while deciding an appeal can consider and decide any matter arising out of proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised by the appellant. In fact, sub-section (4) of section 250 of the Act empowers the first appellate authority to make further inquiry as ITA No.1680/Del/2021 AY: 2012-13 6 | P a g e he thinks fit for disposing of the appeal. Even, sub-rule (4) of Rule 46A empowers the first appellate authority to call for and examine evidences and make necessary inquiry. Thus, as could be seen, the statutory provisions empower the first appellate authority to make necessary inquiry and call for evidences to decide the appeal. 8. In the facts of the present appeal, undoubtedly, learned Commissioner (Appeals) exercising statutory power vested with him has called for and examined necessary evidences for deciding the issue. Such exercise of power by learned first appellate authority assumes importance in the present case considering the fact that the assessee did not get a fair opportunity to represent his case before the Assessing Officer. On a careful reading of the impugned order of learned Commissioner (Appeals) it is very much clear that considering the fact that the assessee did not get a fair opportunity to represent his case before the Assessing Officer, learned Commissioner (Appeals) took the responsibility upon himself to inquire into the matter and in the process has called for necessary evidences, not only from the assessee, but from the concerned bank through the assessee. After examining the evidences, learned Commissioner (Appeals) has factually ITA No.1680/Del/2021 AY: 2012-13 7 | P a g e found that the actual quantum of time deposits in Canara Bank was to the tune of Rs.9,50,00,000/-. He has further found that even Rs.9,50,00,000/- deposited in Canara Bank was out of overseas remittances from the income earned by the assessee as a resident in USA for past so many years. No contrary material has been brought on record by the Revenue to disturb the aforesaid factual findings of learned Commissioner (Appeals). Therefore, if, upon examining the material on record learned Commissioner (Appeals) has recorded a factual finding, without pointing out any deficiency or discrepancy in such finding, the decision of learned Commissioner (Appeals) cannot be reversed merely on the allegation of violation of Rule 46A. 9. In view of the aforesaid, we do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, we confirm the order of learned Commissioner (Appeals) by dismissing the grounds raised. 10. In the result, the appeal is dismissed. Order pronounced in the open court on 17 th February, 2023 Sd/- Sd/- (G.S. PANNU) (SAKTIJIT DEY) PRESIDENT JUDICIAL MEMBER Dated: 17 th February, 2023. RK/- ITA No.1680/Del/2021 AY: 2012-13 8 | P a g e Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi