SH. JATINDER KUMAR S/O SH. INDER MAL, TALWANDI SABO V. INCOME TAX OFFICER WARD-1(2), BATHINDA

ITA 215/ASR/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 2224 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 02-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JYOTSNA GUPTA
• Keywords: Reason to believe
• Section: 148

Judgement Text

Sh. Jatinder Kumar vs. ITO ITA No-215/Asr/2019 1 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. 215/Asr/2019 Assessment Year: 2013-14 Sh. Jatinder Kumar S/o Sh. Inder Mal, Prop. Garg Commission Agents, Near Old Bus Stand, Talwandi Sabo [PAN: AYAPK 9224A] Vs. Income Tax Officer, Ward 1(2) Bhatinda. (Appellant) (Respondent) Appellant by : Sh. J. K. Gupta, Adv. & Ms Jyotsna Gupta, CA Respondent by: Sh. Chandrajit Singh. CIT-DR Date of Hearing: 28.06.2022 Date of Pronouncement: 28.07.2022 ORDER Per Anikesh Banerjee, JM: The instant appeal is directed against the order of Ld. Commissioner of Income Tax (Appeal), Bhatinda {in brevity CIT(A)} bearing appeal no. 249-IT/17- 18 dated of order 21.02.2019, order passed u/s. 250(6) of the Income Tax Act, 1961 (in brevity of the Act) for the Assessment year 2010-11. The impugned order was originated from the order of the ld. Income Tax Officer, Ward 1(2), Bhatinda (in brevity the A.O) order passed u/s.143(3)/147 of the Act, date of order 05.12.2017. Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 2. The assessee raised the following Grounds of Appeal, which is extracted as follows: GROUNDS OF APPEAL BEFORE THE ITAT 1. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the re-opening the caseo0f the assessee on vague information. 2. That the assessee has filed the return of income on 28.12.2010 on the new PAN obtained along with audit report obtained u/s. 44AB. So, the re-opening of the case on the old PAN AYFPK0489G is liable to be quashed. The old PAN was surrendered to the department for cancellation on 20.03.2017 before the assessment. 3. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of Rs.10,60,000/- ignoring the huge cash withdrawals from the three banks at Rs.18383876 and out of which cash was also available. 4. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of Rs.10,60,000/- as the order of the AO was not only non-speaking but has not pointed out the date on which the cash was short or in negative figure. 5. That on the facts and in circumstances of the case and in law, the learned CIT(A) erred in upholding the addition of Rs.1060000/- as the AO has not confronted the adverse material during the course of re-assessment proceedings. 6. That on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in relying upon the remand report of the AO obtained during the course of appellate proceedings which is a half-crooked story and not according to the facts on the file. So, the addition of Rs.1060000/- is liable to be deleted. Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 7. That any other relief may kindly be granted to the assesse to whom he is found entitled at the time of hearing of appeal. 2. Tersely we advert the fact of the case. The Revenue had re-opened the case u/s.148 for the deposit of cash in bank account of the assessee. In reason to believe the ld. AO observe that the cash was deposited amount to Rs. 16,80,500/- in HDFC Bank and 50,80,000/- deposited in Oriental Bank of Commerce in the financial year. After the investigation, the Revenue determined the total unexplained cash deposited amount to Rs.10,60,000/- and added back the amount with the total income of the assessee in assessment. Assessee challenged both the legal and factual grounds before the ld. CIT(A). Previously the assessee was allotted PAN:AYFPK0489G. Reasons to believe of the AO was annexed with the old PAN. The assessee grievance is that the ld. AO did not take cognizance of new PAN: AYAPK9224A during the recorded reasons. The old PAN was already surrendered before the department. The assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) had dealt both the legal and factual grounds of the assessee and upheld the order of the ld. AO. Being aggrieved assessee filed an appeal before us. Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 3. During the hearing, the ld. Counsel raised the legal ground first. The ld. Counsel had filed Paper Book and a Brief Synopsis which are kept in the record. The ld. Counsel first pointed out in PB page no.1 the recorded reasons of the ld. AO. The ld. Counsel argued that the PAN used by the ld. AO was already surrendered. The Revenue did not use new PAN for recorded the reasons. Copy of the recorded reasons of ld. AO is annexed herewith: OFFICE OF THE INCOME TAX OFFICER, WARD -1(2), BATHINDA Name & address of the assessee Sh. Jatinder Kumar S/O. Sh. Inder Mal Prop. M/s. Jagdembay Cycle, Near Old Bus Stand, Talwandi Sabo PAN AYFPK0489G Status Individual Reasons to issue notice u/s. 148 of the Income Tax Act, 1961 As per record of this office, the assessee has not filed return of income for the A.Y. 2010- 11. 2. As per information available with the department, the assessee has deposited cash of Rs.16,80,500/- in his bank account no. 13222020000028 maintained with HDFC Bank, Talwandi Sabo and Rs.50,80,000/-in his bank account No. 08011131000281 maintained with Oriental Bank of Commerce, Talwandi Sabo totaling to Rs.67,60,500/- during the F.Y. 2009-10 relevant to the A.Y. 2010-11. The assessee has not declared such transactions of cash deposited in the Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 bank to the department as the assessee has not filed return of income. In the interest of natural justice, an opportunity was afforded to the assessee vide this office letter dated 28.02.2017 duly served upon the assessee on 11.03.2017 but no satisfactory reply regarding source of cash deposits in the bank account(s) has been filed by the assessee. Hence, the assesseefailed to explain the source of investment of Rs.67,60,500/-. 3. Therefore, I have reason to believe that the assessee has invested Rs.67,60,500/- from the sources not disclosed to the department which has escaped assessment within the meaning within the meaning of section 147of the Income Tax Act, 1961. Therefore, to assessee this income and any other income chargeable to tax which may come to notice subsequently during assessment proceedings, notice u/s. 148 of the Income Tax Act, 1961 is being issued. Sd/- (Subash Chander) Income Tax Officer Ward-1(2), Bathinda Dated: 20.03.2017 3.1 The ld. Counsel agitated that ld. Pr. CIT had sanctioned the reopening in mechanical manner and without application of mind on the fact of the case, the document is annexed in APB page 3 to 5. So, the entire assessment is illegal. Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 4. The ld. CIT-DR vehemently argued and relied on the order of the Revenue Authorities. He further mentioned that approval was made with application of mind and reasonable observation was made by the ld. AO. Related to old and new PAN, he argued that it is a continuous process from forming old PAN to new PAN. All the legacy data was carried forward from old PAN to new PAN, so there is no question any error for using the old PAN by the ld. AO. This is not the error for recorded reason. 5. We heard the rival submission and considered the documents available in the record. The AO has observed and recorded the reasons the very reasonable way. During the assessment proceedings, the ld. AO calculated the unexplained cash of the assessee. In the observation of the ld. AO found that total cash deposit in bank account Rs.59,33,500/- whereas the cash sale amount to Rs.47,38,985/-. So, the balance amount of Rs.10,60,000/- is the unexplained cash deposit which was added back in the total income of the assessee. In the case of Hindusthan Leavers Ltd. V. R.B. Wadkar [2004] 268 ITR 332/137 Taxman 479 held that the reasons has to be examined only on the basis of reasons recorded. The most important point is that even though reasons, has recorded, may not necessarily proved escapement of income at the stage of recorded reasons, such reasons must point out to an income Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 escaping assessment and not merely meet of an enquiry which may result in detection of income escaping assessment. In this stage of recording the reasons in reopening the assessment although is necessary for formation of prima facie belief that an income is escaped the assessment and does not necessary that the fact of the income having escaped assessment is proved to the hilt. The respectful observation in the case ofRakesh Gupta vs CIT, Panchkula & Others CWP No-27068 of 2016 date of decision 27/04/2018, in the case of Experion Developers (P.) Ltd. v. ACIT[2020] 115 taxmann.com 338/ 422 ITR 355 (Delhi):- Held, where necessary sanction to issue notice under section 148 was obtained from Pr. Commissioner as per provision of section 151, Pr. Commissioner was not required to provide elaborate reasoning to arrive at a finding of approval when he was satisfied with reasons recorded by Assessing Officer. 5.1. The ld. Counsel also relied upon the judgements of: i. Admach Auto Ltd., vs. DCIT 85 ITR (Trib.) (SN) 4 (Delhi) ii. CIT vs. National Organic Chemical Industries Ltd. 115 taxmann.com 244 (Bom) iii. GTL Limited vs. ACIT (ITA No. 6416/Mum/2010 dated 02.01.2015 Assessment Year 2002-03) Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 But all the cases are not come in factual matrix of the assessee. 6. From the above discussion we decided that there is no lacuna in the recorded reasons of the assessee. Using of old PAN is nothing but procedural defect rectifiable. Mechanical approval by writing “Yes” by the Pr.CIT is not at all a reason for rejecting entire assessment proceedings. The ld. AO already discussed the issue about the approval. So, the approval made by the ld. Pr-CIT is not bad in law. Considering this, legal ground of the assessee is dismissed. 7. In case of adjudication in factual material, it is observed that assessee deposited a cash amounting to Rs.59,33,500/-. On the other hand, cash sale was amounting to Rs.47,38,985/- which was accepted by the ld. AO. The difference amount Rs.10,60,000/- was added back as unexplained cash deposit in bank account. Assessee has enclosed balance sheet and Trading and Profit & Loss account for F.Y. 2009-10 APB page no. 16 to 18. From the Trading and Profit & Loss account, it is observed that total sale is disclosed amount to Rs.39,05,400/- and as per the sundry debtors amount to Rs.6,34,652/-. The assessee had audited his books of account u/s. 44AB. Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 8. The ld. Counsel of the assessee further argued that the cash account of M/s. Garg Commission Agent, Proprietorship concern of the assessee is enclosed from the page no. 21 to 25 of APB. The Counsel further submitted the cash reconciliation statement which is extracted as follows: GARG COMMISSION AGENT CASH SALE DURING A.Y. (2010-11 Rs. 47,38,985.00 CASH RECEIVED FROM DEBTORS DUIRNG A.Y 2010-11 Rs, 11,29,951.00 TOTAL CASH RECEIVED DURING YEAR AY. 2010-11 Rs. 58,68,636.00 9. Considering the above fact, we are in conclusion that the turnover of business, calculated by the ld. AO and turn over declared by the assessee have some mismatch. The assessee submitted the cash account during the argument before ITAT. The assessee is a regular businessman and most of the business is in cash transaction. Reconciliation with the copy of cash book is duly accepted by the Bench. We are setting aside the issue to the CIT (A) for further adjudication. The assessee is also directed to produce the supporting documents before the Appellate Jatinder Kumar ITA NO. 215/ASR/2019 Asstt. Year 2010-11 Authority. The reasonable opportunity should be granted to the assessee for its case. 10. In the result ground no. 1 & 2 are dismissed. Ground no. 3 to 6 are allowed for statistical purposes. Ground no. 7 is general in nature. Order pronounced in the open court on 28.07.2022 Sd/- Sd/- (Dr. M. L. Meena) (Anikesh Banerjee) Accountant Member Judicial Member *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File True Copy By Order