SHRI RAJDEEP LAKHAA, HOSHIARPUR V. INCOME TAX OFFICEER , HOSHIARPUR

ITA 170/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9215 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 06-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Invalid notice; Peak credit
• Section: 147; 148; 144; 142(1); 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A. No. 170/Asr/2019 Assessment Year: 2009-10 Sh. Rajdeep Lakha, S/o Sh. Jagat Ram, Vill. Chitton & P.O., Jallowal Khanoor, Hoshiarpur [PAN: AGIPL 2052K] Vs. Income Tax Officer, Ward-3, Hoshiarpur (Appellant) (Respondent) Appellant by : Sh. Surinder Mahajan, CA Respondent by: Sh. S. M. Surendranath, Sr. DR Date of Hearing: 17.05.2022 Date of Pronouncement: 08.07.2022 ORDER Per Dr. M. L. Meena, AM: This appeal has been filed by the assessee against the impugned order dated 28.12.2018 passed by the Ld. Commissioner of Income Tax (Appeals)-1, Jalandhar in respect of the Assessment Year 2009-10. 2. The assessee has raised the following grounds of appeal: “1. That on the facts & circumstances of the case, Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] has grossly erred in law in ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 2 holding that Assessing Officer has rightly assumed jurisdiction u/s 148 of the Act. 2. That on the facts & circumstances of the case, Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] has grossly erred in law in dismissing contention of the assessee that notice u/s 143(2) of the Act issued at the time of filing of the return amounts to gross violation of the provisions of section 143(2) of the Act and notice u/s 143(2) of the Act is not a valid notice. Assessment framed on the basis of invalid notice is illegal and void ab-initio. 3. a) That on the facts & circumstances of the case, Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] has grossly erred in law in confirming addition of Rs. 32,47,300/- being credits in saving bank account No. 1256001000011015. Addition confirmed is illegal and bad in law. b) That learned CIT(A) has grossly erred in not allowing the benefit of cash in hand being available at the starting point of cash flow statement. c) That addition confirmed is illegal and bad in law since credit for withdrawals made and deposited subsequently has not been given. d) That addition confirmed is illegal and bad in law since theory of peak credit has not been applied. 4. a) That on the facts & circumstances of the case, Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] has grossly erred in law in rejecting contention of the assessee that no deposits have been made in the bank account of the assessee. b) That sworn affidavit filed by the assessee stating that cash deposits and withdrawals have been fraudulently made in the said account has been brushed aside by the Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] arbitrarily which makes the addition confirmed bad in law. 5. That the Appellant requests for leave to add or amend the grounds of appeal before the appeal is heard or disposed off.” ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 3 3. In the present case, the assessing officer (in short “the AO”,) has made an addition on account of cash deposit of Rs. 27,47,300/- in bank account no. 1256001000011015 with HDFC Bank, Tanda Road, Jalandhar during AY 2009-10, in the reassessment proceedings under section 143(3)/147, as being not satisfied with the submissions of the assessee that he has never deposited the said amount in the saving bank account with as deep Singh bank. 4. The grounds 1 & 2 are interlinked to each other whereby the assessee has challenged the assumption of Jurisdiction by the AO under section 148 of the act and the validity of the assessment on issue of the notice under section 1432 of the act in violation of provisions of the act. 4.1 The learned CIT appeal has rejected the contentions of the assessee and upheld the validity of the assumption of jurisdiction of the act by observing as under: “6. Ground of appeal no, 1. is that in the facts and circumstances of the case, the assumption of jurisdiction u/s 147/148 was not warranted. As such, the consequential assessment is void ab initio. 6.1 I have carefully considered the facts of the case and submissions of the appellant. It is observed that notice under section 148 of the I.T. Act 1961 was issued to the assessee after taking due approval of the Pr. Commissioner of Income Tax, Jalandhar. The assessee did not file return of income for A.Y 2009- 10. The assessee has made deposits of cash in his bank account with HDFC bank totaling Rs. 27,47,300/. The assessee has filed his return of income for A.Y. 2009-10 on 15.11.2016 declaring Nil income. The assessing officer has issued notices to the assessee U/s 143(2)/ 142(1) of the I.T. Act 1961. The assessee has complied with the notices issued during the assessment proceedings; the assessment has been completed U/s 143 r.w.s 147 of the I.T. Act 1961. ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 4 The assessee has stated that notice u/s 148 of the I.T. Act 1961 was not served upon him. It is also stated that the assessing officer issued notice u/s 143(2) of the I.T. Act 1961 without application of mind on the very same day, the return of income was filed by the assessee. In this regard reliance is made on the judgment of P&H High Court in the case CIT vs Rajbir Singh 243 CTR 0185 wherein referring to the provision of Sec 292 B of the I.T. Act 1961, where compliance is made by the assessee, the Hon’ ble P&H High Court has held that miner defects or irregularities in the circumstances as stated, would not negate the validity of the proceedings initiated by the assessing officer and the assessee would not be able to raise technical or venial defects in this regard. 12. In the present facts and circumstances, notice issued under s. 148 of the Act by the AO shall not render the proceedings invalid as the same are in substance and effect according to the intent and purpose of the Act falling under s. 292B of the Act and the proceedings cannot be held to be vitiated. In view of the aforesaid findings, the judgments on which reliance has been placed by. the assessee have no applicability and do not support the case of the assessee. In view of the above since, the assessee has complied with the notices issued u/s 148 and 142(1) of the I.T. Act 1961, and the assessee did not raise objections before the assessing officer, therefore, this ground of appeal is dismissed. 7. Ground of appeal no.2 is that reasons recorded by a non-jurisdictional AO also renders the assessment null and void. 7.1 I have carefully considered the facts of the case and submissions of the appellant. It is observed that no objection was raised by the assessee regarding issue of jurisdiction before the assessing office. In this regard reliance is placed on the judgement of Hon’ ble P&H High Court in the case of SUBHASH CHANDER vs. COMMISSIONER OF INCOME TAX, IT Appeal No. 129 of 2007, as under, “Having heard learned counsel for the parties at a considerable length, we find that the questions of law deserve to be answered against the appellant-assessee. It would be appropriate to make a reference to the provisions of s. 124 of the Act, which read as under: "124. Jurisdiction of AO—(1) Where by virtue of any direction or order issued under sub-s. (1) ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 5 or sub-s. (2) of s. 120, the AO has been vested with jurisdiction over any area, within the limits of such area, he shall have jurisdiction— (a) in respect of any person carrying on a business or profession, if the place at which he carries on his business or profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and (b) in respect of any other person residing within the area. (2) Where a question arises under this section as to whether an AO has jurisdiction to assess any person, the question shall be determined by the Director General or the Chief CIT or the CIT; or where the question is one relating to areas within the jurisdiction of different Directors General or Chief CITs or CITs, by the Directors General or Chief CITs or CITs concerned or, if they are not in agreement, by the Board or by such Director General or Chief CIT or CIT as the Board may, by notification in the Official Gazette, specify. (3) No person shall be entitled to call in question the jurisdiction of an AO— (a) where he has made a return under sub-s. (1) of s. 115WD or under sub-s. (I) of s. 139, after the expiry of one month from the date on which he was served with a notice under sub-s. (1) of s. 142 or sub-s. (2) of s. 115WE or sub-s. (2) of s. 143 or after the completion of the assessment, whichever is earlier; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-s. (1) of s. 142 or under s. 148 for the making of the return or by the notice under the first proviso to s. 144 to show cause why the assessment should not be completed to the best of the judgment of the AO, whichever is earlier. (4) Subject to the provisions of sub-s. (3), where an assessee calls in question the jurisdiction of an AO, then the AO shall, if not satisfied with the correctness of the claim, refer the matter for determination Under sub-s. (2) before the assessment is made. (5) Notwithstanding anything contained in this section or in any direction or order issued under s. 120, every AO shall have all the powers conferred by or under this Act on an AO in respect of the income accruing or arising or received within the area, if any, over which he has been vested with jurisdiction by virtue of the directions or orders issued under sub-s. (1) or sub-s. (2) of s. 120/' A perusal of sub-s. (3)(b) of s. 124 of the Act shows that the jurisdiction of an AO cannot be called in question by an assessee after the expiry of one month from the date on which he was served with a notice under sub-s. (1) of s. 142 of the Act or after completion of assessment, which was to be earlier. It is further evident that sub-s. (4) of s. 124 has been made subject to the provisions of sub-s. (3) in case an assessee has questioned the jurisdiction of an AO. It is only in those ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 6 jurisdiction that the AO is to refer the matter for determination to the Director General or the Chief CIT or the C1T as per the provisions of s. 124(2) of the Act. It is, thus, evident that before (sic-after) the expiry of the period of one month from the date of service of notice under sub-s. (1) of s. 142 of the Act, no right to question the jurisdiction of an AO would survive.” 4.2 The learned AR for the assessee submitted that on the facts & circumstances of the case, Learned Commissioner of Income Tax (Appeals) - Jalandhar [‘Ld. CIT(A)’] has grossly erred in law in holding that Assessing Officer has rightly assumed jurisdiction u/s 148 of the Act and that he has grossly erred in law in dismissing contention of the assessee that notice u/s 143(2) of the Act issued at the time of filing of the return amounts to gross violation of the provisions of section 143(2) of the Act and notice u/s 143(2) of the Act is not a valid notice. Assessment framed on the basis of invalid notice is illegal and void ab-initio. 4.3 Per contra, the learned DR supported the impugned order. He contended that the landed CIT appeal has followed the binding judgement of Jurisdictional High Court on the legal issue. 4.4 Having heard the rival contentions and perusal of the material on record, it is noted that notice under section 148 of the income tax act has been issued to the assessee after taking proper. The principal Commissioner of income tax, Jalandhar. Admittedly, assessee has not filed return of income for the assessment year 2009-10, under consideration for which the assessee had deposited cash of Rs. 2,747,300/– in his bank account with HDFC bank. It is also seen that the AO has issued notices under section 143(2)/142(1) of the act which has been duly complied with by the assessee during the assessment proceedings. The mandate as per ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 7 the provisions of the income tax act, nowhere put bar on issuing notice under section 143 (2) on the date of filing of return. We find no infirmity in the order of the CIT appeal, in upholding the validity of the proceedings initiated by the AO, and validity of the assessment following the judgement of the Hon’ble Jurisdictional High Court of Punjab and Haryana, in the case of “CIT versus Rajbir Singh”, (supra). Similarly, the judgement of the jurisdictional High Court in the case of “Subhash Chander versus Commissioner income tax (supra)”,. 4.5 In the above view, we hold that the legal issue raised by the assessee is without merit and substance and accordingly ground number one and two are dismissed. 5. In ground number 3 and 4, the appellant assessee has challenged the quantum of addition on facts and circumstances of the case. While deciding on merits, the learned CIT appeal is considered the facts and circumstances of the case and confirmed the addition by observing as under: “8.1 I have carefully considered the facts of the case and submissions of the appellant. The assessing officer has made an addition of Rs. 32,47,300 in the case of the assessee as the assessee has failed to satisfactorily explain the deposits in his bank account. The assessing officer has called for information from the bank and the account opening form of the said bank account by the assessee. It was noticed by the assessing officer that the bank has issued a cheque book containing 10 cheques which were utilized for transactions in the said bank. It was noticed that the assessee has received SMS alerts on his cell phone which is also being used presently by the assessee at the time of the assessment proceedings. However, the assessee completely denied having made the bank deposits into the bank account, it was stated that the assessee has opened the bank account to receive certain money from abroad. However, later on his bank account was misused. In this regard, the assessee has filed a ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 8 complaint with Punjab Police initially in 2012 when the first notice was issued by the Income Tax Department asking for explanation of the deposits. On 16.06.2016, the assessee has again written a letter to the Commissioner of Police, Jalandhar City that bank official have misused his bank account. In this regard affidavit filed by the assessee was rejected by the assessing officer holding that besides a complaint, the assessee has not filed any evidence. The complaint filed by the assessee was without any documentary evidences. Also the cheques issued to the assessee were used for transacting the bank accounts of the assessee. During the appeal proceedings, the assessee has reiterated the submissions and stated that no enquiries have been conducted by the assessing officer before making the assessment. It is also argued that peak credit principle is applicable in a case where several credit and debit entries are found in an account, it is stated that only highest or peak of the amount in that account should be taken as unexplained investment. 5.1 The learned AR submitted that Ld. CIT(A) confirmed the order of the Assessing Officer. It is argued that the Ld. CIT(A) has observed in her order at Para 3, Page 6 of the CIT(A) order that though the assessee has filed complaint with the Police regarding misuse of his bank account in 2012 and a reminder in 2016, till date no enquiry has been made by the Police. The counsel submitted that the assessee has been following up with the Police regarding the status of his complaint in case No. 1813, PTM, 20.06.2016. The assessee had filed an RTI application dated 08.01.2018 to get information on the enquiry. Furthermore, another RTI application dated 06.04.2022 has been filed to obtain copy of enquiry report including forensic report conducted by Sh. Rajesh Kumar, the then ASI, Anti Fraud Branch in respect of case No. 1813 — PTM dated 20.02.2016. Copy of the RTI application is enclosed herewith as Annexure 1. The reply to the same is still awaited. ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 9 5.2 Per contra, the learned DR supported the impugned order on merits. He submitted that assessee has filed a complaint with the police regarding issues of his bank account and 2012, with a reminder 2016 till date no enquiry has been made by the police. He argued that, we are in the year 2022 and a period of 10 years is passed to the issues of bank account of the assessee and no police enquiry or assessee’s explanation is being filed even during the present proceedings before the Hon’ble tribunal. He contended that it was the assessee’s bank account and it is he who has to explain the transactions made in the same bank account. He requested that the order of the CIT appeal, being a well reasoned order be sustained. 5.3 Having heard both the sides and on perusal of the facts on record on the issue of cash deposits in the bank account of the assessee, we find that the assessee has simply deny the cash deposits in his bank account. The assessee has failed to explain the nature and source of the cash deposits in his bank account, in which the assessee has received credits from VKC credits and forex, in urgency which provides money changing in foreign exchange service in India. Since, the assessee has failed to satisfactorily explained the deposits in his bank account before the authorities below and before us as well. The Ld AR for the assessee argued that no enquiries have been conducted by the assessing officer before making the assessment. The learned CIT appeal has noted that peak credit principle is applicable in a case where several credit and debit entries are found in an account and that only highest or peak of the amount in that account should be taken as unexplained investment. We concur with the observation of the CIT appeal that averments made in the affidavit were required to be supported with cogent evidence to prove that the assessee’s bank account ITA No. 170/Asr/2019 Rajdeep Lakhaa v. ITO 10 was used by someone else. In our view, the assessee has failed to discharge onus and explaining the cash deposits in his bank account as per provisions of section 69A of the income tax act 1961. Therefore, addition made by the AO, and confirmed by the learned CIT appeal is hereby sustained. Thus, ground numbers 3 & 4 are rejected. 6. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 08.07.2022. Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order