ITO, New Delhi V. Shri Rajeev Boobna, New Delhi

ITA 2851/DEL/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1674 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 26-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANJULA JAIN
• Assessee Lawyers: ADESH JAIN; AKSHAT JAIN CAS
• Keywords: Peak credit; Additional evidence
• Section: 142(1); 144

Judgement Text

1 ITA NO. 285 1/DEL/11 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOU NTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 2851/DEL/2011 (ASSESSMENT YEA R-2005-06) ITO WARD 33(3), ROOM NO. 205B, C. R. BUILDING NEW DELHI (APPELLANT) VS RAJEEV BOOBNA 8/23, 3 RD FLOOR WEST PATEL NAGAR NEW DELHI ACFPB8140F (RESPONDENT) APPELLANT BY SMT. ANJULA JAIN, SR. DR RESPONDENT BY SH. ADESH JAIN & SH. AKSHAT JAIN, CAS ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER D ATED 01.03.2011 PASSED BY CIT(A)-XXVII, NEW DELHI FOR THE ASSESSMEN T YEAR 2005-06. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION MADE TO THE EXTENT OF RS.3 7,10,343/- OUT OF RS.38,64,940/- ON ACCOUNT OF CASH DEPOSITED IN BANK . DATE OF HEARING 26.10.2015 DATE OF PRONOUNCEMENT 06.11.2015 2 ITA NO. 285 1/DEL/11 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED IN DELETING THE ADDITION BY IGNORING AND OVERLOOKIN G THE FACTS AS MENTIONED IN THE REMAND REPORT SUBMITTED BY THE A.O /BEFORE THE LD. CIT(A). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DECISION OF THE LD. CIT(A) REGARDING ADDITIONAL EVIDENCE/PLEA FURNISHED BY THE ASSESSEE WITHOUT GIVING OPPORTUNITY TO THE A.O TO MAKE FURTH ER ENQUIRY WAS NOT ACCEPTABLE. THE THEORY OF PEAK CREDIT IS NOT A CCEPTABLE. (JHAMATMAL TAKHATMAL KIRANA MERCHANTS VS. CIT (MP) 152 CTR 311). 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAD ERRED THAT THE NOTICE U/S 142(1) SENT BY A.O WAS UNSERVED AND ASSESSMENT COMPLETED U/S 144 WITHOUT VALID SERVICE OF NOTICE U/S 142(1) OF THE I.T ACT 1961 HENCE THE ASSESSMENT IS BAD IN LAW AND VOID AB INITIO WHICH IS LIABLE TO BE QUASHED. 3. THE FACTS OF THE CASE ARE THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF SALE/PURCHASE OF MOBILE PHONES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 ON 31/10/2005 DECLARING INC OME OF RS.93,749/-. THE ASSESSEE IN HIS RETURN SHOWED HIS ADDRESS AS 8/ 23, 3 RD FLOOR, WEST PATEL NAGAR, NEW DELHI 110008. ON THE BASIS OF INFORMATIO N RECEIVED FROM THE OFFICE OF CHIEF COMMISSIONER OF INCOME TAX, DELHI THAT THE ASSESSEE DEPOSITED CASH AMOUNTING TO RS.38,64,940/- INTO HIS SAVING BANK AC COUNT WITH UTI BANK LTD. ASSESSING OFFICER I.E. ITO, WARD 41(4)/DAO/58, NEW DELHI ISSUED NOTICE U/S 142(1) DATED 5/11/2007 TO THE ASSESSEE CALLING UPON THE ASSESSEE TO FILE TRUE AND CORRECT RETURN OF INCOME FOR THE ASSESSMENT YEA R 2005-06. THE SAID NOTICE WAS ADDRESSED AT SHRI RAJ KUMAR, G-7 REGENT MALL, H ARDHIYAN SINGH ROAD, KAROL BAGH, NEW DELHI 11005. THE ASSESSEE STATED TO HAVE NOT RECEIVED THE NOTICE U/S 142(1) DATED 5/11/2007 AND SHOW CAUSE NO TICE DATED 7/12/2007. THE ASSESSING OFFICER ASSESSED THE INCOME OF THE A SSESSEE U/S 144 OF THE INCOME TAX ACT 1961 VIDE ASSESSMENT ORDER DATED 31/ 12/2007 AND ADDED UNDISCLOSED INVESTMENT/EXPENDITURE OF THE ASSESSEE AT RS.38,64,940/- BEING CASH DEPOSITED WITH UTI BANK, VASANT KUNJ, NEW DELH I. THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A) ON TWO GROUNDS:- 3 ITA NO. 285 1/DEL/11 (I) FIRSTLY THE LD. ITO ERRED IN LAW TO COMPLETING ASSESSMENT U/S 144C VALID SERVICE OF NOTICE U/S 142(1) OF THE INCOME TA X ACT 1961 AS PRESCRIBED U/S 282 OF THE INCOME TAX ACT 1961 IS THE ASSESSMEN T WAS BAD IN LAW AND VOID AB INITIO. (II) THE SECOND GROUND WAS THAT THE LD. ITO ERRED I N TREATING AGGREGATE SUM OF RS.38,64,940/- DEPOSITED INTO THE BANK ACCOU NT AS UNDISCLOSED INCOME OF THE ASSESSEE FROM OTHER SOURCES U/S 144 O F THE INCOME TAX ACT 1961. THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASS ESSEE. 4. BEFORE THE APPELLATE PROCEEDINGS, ASSESSEE MADE AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULE 1962. THE ASSESSING OFFICER VIDE ITS LETTER DATED 12/7/2 010 SUBMITTED THAT THE CASE OF THE ABOVEMENTIONED ASSESSEE HAS ALREADY BEEN TRA NSFERRED TO WARD 31(4), NEW DELHI VIDE OFFICE LETTER DATED 23/8/2010 ISSUED TO A.O WARD 31(4), NEW DELHI. THE LD. CIT(A) ASKED ASSESSING OFFICERS CO MMENTS ON THE MATTER. THE REPORT OF THE ASSESSING OFFICER WAS RECEIVED ON 15/ 2/2011, THE SAME WAS TAKEN ON RECORD BY THE LD. CIT(A). THE ASSESSEE FURNISHE D ITS REJOINDER VIDE HIS LETTER ON 1/3/2011 PLACED ON RECORD. IT WAS OBSERVED BY T HE LD. CIT(A) THAT IN THE REPORT THE ASSESSING OFFICER BASICALLY REITERATED T HE OBSERVATION MADE IN THE ASSESSMENT ORDER. THE LD. CIT(A) FURTHER OBSERVED THAT THE DOCUMENTS FILED BY THE ASSESSEE WERE RELEVANT TO THE GROUNDS OF APPEAL AND GOES TO THE ROOT OF THE MATTER. IN VIEW OF THE ABOVE, THE LD. CIT(A) ADMIT TED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE UNDER RULE 46A (1)(C) OF THE INCOME TAX RULES, 1962. 5. THE LD. CIT(A) FURTHER HELD THAT ASSESSING OFFIC ER FAILED TO ADDUCE ANY COGENT EVIDENCE OF SERVICE OF NOTICE ISSUED U/S 142 OF THE INCOME TAX ACT 1961 TO THE ASSESSEE BEFORE FRAMING ASSESSMENT U/S 142 O F THE INCOME TAX ACT, 1961. HENCE, THE LD. CIT(A) QUASHED ASSESSMENT ORD ER U/S 144. AS RELATES TO 4 ITA NO. 285 1/DEL/11 TREATING AGGREGATE SUM OF RS.38,64,94/- DEPOSITED I NTO THE BANK ACCOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE FROM OTHER SOURC ES. THE LD. CIT(A) HELD THAT THE ASSESSING OFFICER HAS NOT MADE ANY ADVERSE COMMENTS ON THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE CHALLENG ING THE ADDITION OF RS.38,64,940/- AND ONLY REQUESTED THAT SPECIFIC DIR ECTION TO CONDUCT PROPER ENQUIRY AND EXAMINE THE BOOKS OF ACCOUNTS INCLUDING INTER ALIA CASH BOOK OF THE ASSESSEE AND FRESH OPPORTUNITY THERE MAY KINDLY BE GIVEN TO THE A.O BEFORE TAKING A VIEW IN THE MATTER. AS THE ASSESSEE WAS G RANTED RELIEF OF QUASHING OF ASSESSMENT ORDER U/S 144 OF THE INCOME TAX ACT, 196 1, THE ADDITIONAL EVIDENCE OF THE ASSESSEE WAS ALLOWED BY THE LD. CIT(A). 6. THE DR SUBMITTED THAT AS PER THE REMAND REPORT W HICH WAS ANNEXED AT PAGE NO. 37 TO 43 OF THE PAPER BOOK, THE NOTICES WE RE ADDRESSED TO THE ASSESSEE AT KAROL BAGH AND ASSESSEE DID NOT DENY THAT THE AD DRESS WAS THAT OF THE ASSESSEE. THE INFORMATION RECEIVED FROM THE OFFICE OF CHIEF COMMISSIONER OF INCOME TAX, DELHI TO THE OFFICE OF THE ADDITIONAL C OMMISSIONER OF INCOME TAX (CO-ORDINATION) THAT AS PER THE INFORMATION COLLECT ED BY THE CIT (CIB), THE ASSESSEE MADE CASH DEPOSIT OF RS. 38,64,940/- IN UT I BANK LTD. WHILE MAKING THE CASH DEPOSITS, ASSESSEE HAD NOT FURNISHED ITS P AN, THEREFORE, IT WAS NOT KNOWN AS TO WHETHER THE ASSESSEE FURNISHED HIS RETU RN OF INCOME OR NOT. SINCE THE AMOUNT OF DEPOSITS MADE DURING THE FINANCIAL YE AR 2004-05 RELEVANT TO ASSESSMENT YEAR 2005-06 EXCESS THE MAXIMUM AMOUNT N OT CHARGEABLE TO TAX, THEREFORE, NOTICE U/S 142 (1) DATED 5/11/2007 WAS I SSUED TO THE ASSESSEE VIDE SPEED POST TO DIRECT THE ASSESSEE TO FURNISH HIS RE TURN OF INCOME FOR A. Y 2005- 06. THE SAME NOTICE WAS NEITHER RECEIVED BACK UNDE LIVERED NOR COMPLIED WITH. NOBODY ATTENDED NOR ANY WRITTEN SUBMISSION WAS FILE D ON THAT DATE. ANOTHER SHOW CAUSE NOTICE U/S 142(1) DATED 7/12/2007 WAS IS SUED TO THE ASSESSEE EXPRESSLY CONVEYED TO HIM THAT HE HAD MADE CASH DEP OSITS AMOUNTING TO RS.38,64,940/-. THE DR SUBMITTED THAT THE NOTICES WERE VALIDLY SERVED AND, THEREFORE, THE ASSESSING OFFICERS ORDER WAS PROPER AS PER SECTION 144 OF THE 5 ITA NO. 285 1/DEL/11 INCOME TAX ACT, 1961. THE DR FURTHER SUBMITTED THA T THE LD. CIT(A) PROCEEDED SOLELY ON THE BASIS THAT THE ASSESSING OFFICER FAIL ED TO ADVISE ANY COGENT EVIDENCE TO CHALLENGE THE VALIDITY OF THE AFFIDAVIT OF THE ASSESSEE EXCEPT SIMPLY STATING THAT THE ASSESSEE DID NOT ATTEND THE PROCEE DINGS EVEN THOUGH HE RECEIVED ALL THE STATUTORY NOTICES ISSUED TO HIM F ROM TIME TO TIME. THE DR FURTHER SUBMITTED THAT NO NOTICE WAS RETURN BACK UN DELIVERED. 7. THE AR SUBMITTED THAT THE LD. CIT(A) HAS RIGHTLY QUASHED THE ASSESSMENT ORDER U/S 144 AND RIGHTLY ALLOWED THE AP PEAL OF THE ASSESSEE BEFORE THE CIT(A). 8. WE HAVE PERUSED ALL THE DOCUMENTS AND HEARD BOTH THE PARTIES. THE NOTICE U/S. 142(1) DATED 05.11.2007 WAS ISSUED BY I TO WARD 41(4), NEW DELHI TO THE ASSESSEE THROUGH SPEED POST TO DIRECT THE AS SESSEE TO FURNISH HIS RETURN OF INCOME FOR A.Y. 2005-06. THE SAID NOTICE WAS NOT RECEIVED BACK UNDELIVERED. THE SECOND SHOW CAUSE NOTICE UNDER SECTION 142(1) D ATED 07.12.2007 WAS ISSUED AND THE SAME WAS ALSO NOT RECEIVED BACK UNDE LIVERED. SINCE THE NOTICES WERE NOT RECEIVED BACK UNSERVED WITHIN THIRTY DAY S OF ITS ISSUANCE, THERE WOULD BE PRESUMPTION UNDER THE LAW THAT NOTICE HAD BEEN DULY SERVED UPON THE ASSESSEE. THE ASSESSEE RECEIVED THE SHOW CAUSE NOTICE U/S. 271(1)(B) OF THE INCOME TAX ACT, 1961 DATED 18.06.2008 AND THE S AME IS ANNEXED AT PAGE 35 OF THE PAPER BOOK FILED BY THE ASSESSEE. THUS, T HE ASSESSMENT ORDER UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 IS PROPER. AS RELATES TO ADDITION MADE TO THE EXTENT OF 37,10,343/- ON ACCOUNT OF CASH DEP OSITED IN BANK, ADDITIONAL EVIDENCE SHOULD HAVE BEEN ALLOWED BY THE LD. CIT(A) AFTER GIVING OPPORTUNITY TO THE ASSESSING OFFICER UNDER RULE 46A(3) OF THE INCO ME TAX RULES, 1962. THOUGH THE AR SUBMITTED THAT THERE WAS MORE THAN 8 MONTHS GIVEN TO THE ASSESSING OFFICER TO SEND HIS REMAND REPORT, IN THE INTEREST OF JUSTICE IT WILL BE PROPER TO GIVE TIME TO LOOK INTO THE SPECIFIC BOOKS OF ACCOUNTS INCLUDING INTER 6 ITA NO. 285 1/DEL/11 ALIA CASH BOOK OF THE ASSESSEE AND FRESH OPPORTUNIT Y SHOULD HAVE BEEN GIVEN TO THE ASSESSING OFFICER WHILE COMING TO THE CONCLUSIO N. IN THIS RESPECT THE MATTER IS REMITTED BACK TO THE ASSESSING OFFICER TO LOOK UPON THE ADDITIONS MADE ON ACCOUNT OF CASH DEPOSITS IN BANK. 9. IN RESULT, THE APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSE. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 6 TH OF NOVEMBER, 2015. SD/- SD/- (INTURI RAMA RAO) (SU CHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 06/11/2015 R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 26.10.2015 PS 7 ITA NO. 285 1/DEL/11 2. DRAFT PLACED BEFORE AUTHOR 27.10.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .1 1 ..2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS .11.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 06.11.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.