Chandra Prakash, Ghaziabad V. ITO, Ward-6(4), New Delhi

ITA 3378/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9680 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 68; 148

Judgement Text

1 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER I.T.A. No. 3377/DEL/2019 (A.Y 2005-06) Chandra Prakash 201 Gold Royal Legacy, Sector- 18, Vasundhra, Ghaziabad, Uttar Pradesh PAN: AAIPP6433A (APPELLANT) Vs. ITO Ward-6(4) Room No. 376-A, C. R. Building, New Delhi (RESPONDENT) I.T.A. No. 3378/DEL/2019 (A.Y 2006-07) Chandra Prakash 201 Gold Royal Legacy, Sector- 18, Vasundhra, Ghaziabad, Uttar Pradesh PAN: AAIPP6433A (APPELLANT) Vs. ITO Ward-6(4) Room No. 376-A, C. R. Building, New Delhi (RESPONDENT) I.T.A. No. 3379/DEL/2019 (A.Y 2007-08) Chandra Prakash 201 Gold Royal Legacy, Sector- 18, Vasundhra, Ghaziabad, Uttar Pradesh PAN: AAIPP6433A (APPELLANT) Vs. ITO Ward-6(4) Room No. 376-A, C. R. Building, New Delhi (RESPONDENT) 2 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash ORDER PER YOGESH KUMAR U.S., JM These three appeals are filed by the assessee against the common order dated 19/02/2019 of the ld. Commissioner of Income Tax (Appeals)-2, New Delhi [hereinafter referred to CIT (Appeals)] for the Assessment Years 2005- 06, 2006-07 & 2007-08 respectively. 2. The grounds of appeal are as under:- I.T.A. No. 3377/DEL/2019 (A.Y 2005-06) 1. The Learned CIT(A) erred in law and on facts in dismissing the appeal without allowing proper opportunity of hearing to the appellant. Thus, the appellate order of appeal dismissal in summary manner must be quashed. 2. The Learned CIT(A) erred in law and on facts in confirming an addition of Rs. 1,07,64,950/- u/s 68 of the Act for cash deposits made in a bank account of the appellant a) by ignoring that the appellant was just a broker / facilitator for other investors whose money was given through his bank account to the companies and the shares were given to the actual investors by the companies and not the appellant, Assessee by : Shri V. K. Bindal, CA & Ms. Rinky Sharma, ITP Department by: Shri S. L. Anuragi, Sr. D. R.; Date of Hearing 26.09.2022 Date of Pronouncement 29.09.2022 3 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash b) by ignoring that no personal benefit of any nature whatsoever was ever received by the assessee from this channelization of money of the investor as even the due commission was also not received by him, c) by ignoring the recommendation of his predecessor to the CIT(A) that the appellant is a facilitator and only some percentage of cash deposits should be assessed as his income, d) by refusing to accept the confirmations of the intermediary companies explaining the modus operandi and reasons of receipt of the money from the appellant and which were filed through speed post and received by the assessing officer before completion of the impugned assessment, e) by ignoring the evidences placed on record vide submissions dated 27/12/2017 of the assessing officer even though the assessment order was passed on 31/12/2017 and he ought to have considered the same in the assessment order, Thus, above addition so made on surmises and conjectures should be deleted. I.T.A. No. 3378/DEL/2019 (A.Y 2006-07) 1. The Learned CIT(A) erred in law and on facts in dismissing the appeal without allowing proper opportunity of hearing to the appellant. Thus, the appellate order of appeal dismissal in summary manner must be quashed. 2. The Learned CIT(A) erred in law and on facts in confirming an 4 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash addition of Rs. 3,86,90,400/- u/s 68 of the Act for cash deposits made in a bank account of the appellant a) by ignoring that the appellant was just a broker / facilitator for other investors whose money was given through his bank account to the companies and the shares were given to the actual investors by the companies and not the appellant, b) by ignoring that no personal benefit of any nature whatsoever was ever received by the assessee from this channelization of money of the investor as even the due commission was also not received by him, c) by ignoring the recommendation of his predecessor to the CIT(A) that the appellant is a facilitator and only some percentage of cash deposits should be assessed as his income, d) by refusing to accept the confirmations of the intermediary companies explaining the modus operandi and reasons of receipt of the money from the appellant and which were filed through speed post and received by the assessing officer before completion of the impugned assessment, e) by ignoring the evidences placed on record vide submissions dated 27/12/2017 of the assessing officer even though the assessment order was passed on 31/12/2017 and he ought to have considered the same in the assessment order, Thus, above addition so made on surmises and conjectures should be deleted. 5 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash ITA No. 3379/Del/2019( A.Y 2007-08) 1. The Learned CIT(A) erred in law and on facts in dismissing the appeal without allowing proper opportunity of hearing to the appellant. Thus, the appellate order of appeal dismissal in summary manner must be quashed. 2. The Learned CIT(A) erred in law and on facts in confirming an addition of Rs. 18,50,000/-/- u/s 68 of the Act for cash deposits made in a bank account of the appellant a) by ignoring that the appellant was just a broker / facilitator for other investors whose money was given through his bank account to the companies and the shares were given to the actual investors by the companies and not the appellant, b) by ignoring that no personal benefit of any nature whatsoever was ever received by the assessee from this channelization of money of the investor as even the due commission was also not received by him, c) by ignoring the recommendation of his predecessor to the CIT(A) that the appellant is a facilitator and only some percentage of cash deposits should be assessed as his income, d) by refusing to accept the confirmations of the intermediary companies explaining the modus operandi and reasons of receipt of the money from the appellant and which were filed through speed post and received by the assessing officer before completion of the impugned assessment, 6 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash e) by ignoring the evidences placed on record vide submissions dated 27/12/2017 of the assessing officer even though the assessment order was passed on 31/12/2017 and he ought to have considered the same in the assessment order, Thus, above addition so made on surmises and conjectures should be deleted. 3. The above three appeals directed against a common order passed by the CIT(A) for the Assessment years 2005-06, 2006-07 & 2007-08 respectively, having similar issues and the assessee has raised identical grounds of appeal (except differences in the amounts of addition) therefore, the above appeals are heard together. ITA No. 3377/Del/2019 (2005-06) 4. Brief facts of the case are that the assessee had filed return of income for the Assessment Year 2005-06 declaring an income of Rs.2,73,220/-. The Department, based on the information that there were huge cash deposit in the bank account of assessee. The A.O has recorded the reasons that an income of Rs. 1,07,64,950/- chargeable to tax had escaped assessment for Assessment Year 2005-06. Based on the reasons recoded, a notice u/s 148 of the Act has been issued. In response, the assessee has submitted that the return filed by the assessee may be treated as return u/s 148 of the Act. 5. The Ld. Assessing Officer found that the assessee has failed to prove the identity, genuineness and creditworthiness of the investors and an amount of Rs. 1,07,64,950/- remained unexplained and the same has been treated as income of the assessee earned from other sources which has been assessed to tax as unexplained cash credit. The assessment order came to be by computing the total income of the assessee at Rs. 1,07,64,950/- as against 7 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash returned income of Rs.2,73,220/-. As against the assessment order, the assessee has filed an appeal before the CIT(A) and the Ld.CIT(A) vide order dated 15/12/2014 dismissed the Appeal by confirming addition made by the A.O u/s 68 of the Act. 6. Aggrieved by the order of the CIT(A) dated 15/12/2014, the assessee has preferred an Appeal before the Tribunal in ITA No. 1505/Del/2015. The Coordinate Bench of the Tribunal vide order dated 11/03/2016 set aside the assessment order and remanded the issue to the file of A.O to make de-novo assessment for verification of details filed by the assessee and also to enquire from beneficiaries of the sum received from the bank account of the assessee. In compliance with the order of the Tribunal the Ld. A.O has passed an assessment order on 31/12/2017 by making an addition of Rs. 1,07,64,950/-. 7. As against the assessment order dated 31/12/2017, the assessee has preferred an appeal before the CIT(A) and the Ld.CIT(A) vide order dated 19/02/2019 confirmed the addition of Rs. 1,07,64,950/- made u/s 68 of the Act. 8. Aggrieved by the order of the Ld.CIT (A) dated 19/02/2019, the assessee has preferred the present appeal on the grounds mentioned above. The Ld. Counsel for the assessee vehemently submitted that the assessee is only acting on behalf of his brother in law who used to collect money from various persons and in return the money was handed over to the assessee who in turn use to deposit the said sum in his bank account and from the Assessee’s bank the amount have been given to various Companies. Further contend that, the assessee is not the real owner of the sum deposited. The Ld. Counsel for the assessee has also drawn our attention on the various judicial pronouncements and submitted that the assessee is liable to be taxed only on 1% of the entire amount deposited to his bank account, therefore, submitted that the order passed by the Ld.CIT(A) is erroneous. 8 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash 9. Per contra, the Ld. DR relied on the orders of the A.O and CIT(A) and submitted that the assessee has not produced any document to substantiate the claim of the assessee before the A.O or before the CIT(A). Therefore, the order of the Ld.CIT(A) may be upheld. 10. We have heard the parties perused the material on record and gave our thoughtful consideration. 11. There is no dispute that the amount of Rs. 1,07,64,950/- by way of cash has been deposited to the bank account of the assessee in the year under consideration. It is the claim of the Ld. AR that the assessee used to get commission who is only acting on behalf of his brother-in-law who used to collect money from various persons and in return the said money was handed over to the assessee. The assessee is only an entry operator who used to get 1% commission on the amount deposited. Therefore, submitted that, the addition made by the A.O is illegal. 12. It is found from the record that the assessee either in his return of income filed originally or the return deemed to have been filed in response to notice u/Section 148 of the Act, has not disclosed/included 1% of such cash deposited in the assessee’s bank account (claimed by the assessee himself to be his commission for providing entries) as part of the income. The assessee has offered 1% of the cash deposits in his bank account as his income only when the assessment was reopened by issuing notice u/s 148 of the Act and after the Assessing Officer issued the questionnaires, which is nothing but an afterthought. 13. It is the specific case of the assessee before the Ld.CIT(A) that the assessee had received the cash which was deposited in his bank account from his brother-in-law Sh. Dinesh Prasad who used to collect the money from different people for the purpose of making investment in equity shares of Companies and who use to utilize the services of the assessee since the 9 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash assessee is stationed in Delhi and as per the arrangement between the assessee and his brother-in-law, the assessee use to get 1% commission of such cash deposits as entry operator, but due to death of Sh. Dinesh Prasad even the said amount is also not received by the assessee. On the contrary, the Assessing Officer has concluded in the remand report that the assessee has not able to explain the nature and source of the cash deposited in the bank account of the assessee. 14. As per Section 68 of the Income Tax Act, it is incumbent upon the person in whose books of account there are cash credits, during the given year, to explain the nature and source of such cash credits failing which the said cash credit will be treated as income of that person for the year. Section 68 is being deeming provision providing for bringing tax unexplained cash credit of assessee for a given year and the Revenue does not have to prove from where the said income was earned. 15. In the case of Sreelekha Banerjee Vs. CIT (1963) 49 ITR 112, the Hon'ble High Court held that when high denominations notes found to have been tendered by the assessee for conversion for which the assessee should offer satisfactory explanation, the disclosure must come from the assessee and not from the Department. The relevant portions are hereunder:- “ " ................... ... Where the assesses was unable to prove that in his normal business or otherwise, he was possessed of so much cash, it was held that the assesses, started under a cloud and must dispel that cloud to the reasonable! satisfaction of t he assessing authorities and that if he did not, then, the department was free to reject his explanation, and to hold that - the amount represented Income from some undisclosed source, If there is receipt of an amount. In the accounting year, it. is incumbent in the first instance, upon the assessee to show that it does not bear the character of income. If he fails to do this, the ITO may hold that it represents income of the assessee either from the sources he has disclosed or from some undisclosed source. ............................If, however, the explanation is unconvincing and one which deserves to be rejected, the department can reject it and draw the inference that the 10 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash amount represents income either from the sources already disclosed by the assessee or from some undisclosed source. The department does not then proceed on no evidence, because the fact that there was receipt of money is itself evidence against the assessee. There is thus, prima facie, evidence against the assessee which he fails to rebut, and being unrebutted, that evidence against him by holding that it was a receipt of an income nature. The very words “an undisclosed source” show that the disclosure must come from the assessee and not from the department.” 16. In the present case, the assessee has admitted that a cash totaling to Rs. 1,07,64,950/- was deposited to his bank account during the year under consideration, but the assessee could not explain the nature and source of the cash deposited in the bank account. Further, as per the list of the investors provided by the assessee, out of 280 persons as many as 89 persons to whom enquiry letters were issued by the A.O have denied having any transaction with the assessee and the remaining persons have either not replied to the letters issued to them or returned unserved to the A.O. Even in the second round after the remand, the assessee has provided the very same details and old addresses of the parties but the assessee has not able to provide the identity, creditworthiness and genuineness of the transaction. Since the assessee has miserably fail to prove the case of the assessee even after providing the opportunity by the Tribunal. 17. In so far as judgments relied by the assessee are concerned, in the present case, there is no material to show that the assessee is a merely an entry operator and the amount has been later transferred to the actual owners and in view of the fact that assessee could not prove the transaction by getting confirmation from the respective investors and in the absence of proving the subsequent cash flow, the judgments relied by the Ld. AR are not applicable to the present case. 18. In view of the above discussions and for the reasons mentioned (supra), we do not find merits in the assessee’s Grounds of Appeal No. 1 to 3, accordingly the ground No. 1 to 3 are dismissed. 19. In the result, appeal in ITA No. 3377/Del/2019 is dismissed. 11 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash ITA No. 3378 & 3379/Del/2019 20. In view of deciding the Appeal in ITA No. 3377/Del/2019, since the present appeals emerging out of common impugned order are having the similar issues for consideration, and the above Appeals are decided in terms of the order in ITA No. 3377/Del/2019. Accordingly, the appeals in ITA Nos. 3378 & 3379/Del/2019 are dismissed. Order pronounced in the open court on : 29/09/2022 . Sd/- Sd/- ( SHAMIM YAHYA ) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 29/09/2022 *R.N* Sr PS Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA Nos. 3377, 3378 & 3379/Del/2019 Chandra Prakash