Navinchandra Amaidas Bhikha, Bardoli V. Income Tax Officer, Ward-2, Bardoli, Bardoli

ITA 50/SRT/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3083 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 20-03-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 17-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAYANK A. OGRIWALA
• Keywords: Reopening of assessment; Peak credit; Tangible material; Onus to prove; Reason to believe
• Section: 144; 133(6); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.50/SRT/2024 Assessment Year: (2012-13) (Physical Hearing) Navinchandra Amaidas Bhikha, Patel Faliyu, Vadhvani, Bardoli, Surat – 395335. Vs. The ITO, Ward – 2 Bardoli èथायीलेखासं./जीआइआरसं./PAN/GIR No: AONPB5405M (Appellant) (Respondent) Appellant by Shri Mayank A. Ogriwala, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 21/03/2024 Date of Pronouncement 08/04/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2012-13, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], Surat, National Faceless Appeal Centre (in short ‘the NFAC’), dated 28.11.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 15.11.2019. 2. The grounds of appeal raised by the assessee are as follows: “1) On the facts and in the circumstances of the case, as well as law on the subject, The learned Commissioner of Income Tax(Appeals), NFAC has erred in validating reopening of assessment u/s. 147 even if the notice issued u/s. 148 of the Act is bad in law and without jurisdiction. 2) On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals), NFAC has erred in confirming total addition of Rs.14,50,659/- out of which the addition of Rs.10,59,000/- was on account of cash deposit in bank & Rs.3,91,659/- 2 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha was on account of other credit entry in the bank account as alleged unexplained money u/s. 69A of the Act. 3) On the facts and circumstances of the case, as well as law on subject, the learned commissioner of the Income Tax (Appeals), NFAC has erred in sustaining total addition of Rs.14,50,659/- without considering the maximum peak credit in bank which is against the well settled law on the subject. Your appellant further reserves his right to add, alter or to amend any of the aforesaid grounds at the time of hearing of an appeal and all the above grounds are without prejudice to each other.” 3. Succinctly, the factual panorama of the case is that assessee before us is an Individual. During the assessment proceedings, the assessing officer noted that assessee had deposited cash amounting to Rs.11,02,500/- into bank account held with Dena bank and had earned interest income of Rs.77,536/- from Dena Bank. The assessee had not filed return of income for assessment year (AY). 2012-13, therefore, the assessing officer had reason to believe that the income to the tune of Rs.11,80,036/- has escaped the assessment within the meaning of section 147 of the Income Tax Act. Accordingly, notice u/s 148 of the I.T. Act was issued on 29.03.2019 after recording the reasons. The assessee was required to file return of income for AY.2012-13 in response to notice u/s 148 of the Income Tax Act within 30 days from the date of receiving of the said notice. However, the assessee has not filed return of income in response to notice under section 148 within the time limit prescribed in the said notice. Thereafter, assessing officer has issued five notices of hearing, however, the assessee did not make the compliance.Therefore, assessing officer noted that the assessee has failed to furnish any details relating to business activities undertaken by the assessee, nature of Income earned, details of bank accounts, details of cash deposits made in the bank accounts, sources of cash deposits and details of interest earned with Dena bank. In absence of requisite details/explanation the Assessing Officer is left with no option but to complete the best 3 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha judgment assessment on the basis of material evidences gathered during the assessment proceedings. 4. During the course of assessment proceedings, on the basis of available AIR and 26AS information, notice u/s 133(6) of Act, 1961 was issued to Dena Bank, calling for Account opening form, bank account statement and KYC etc. In response thereto, the concerned bank provided details as called for. The data analysis of bank statement with Dena Bank reveals that various credit entries, including cash deposits made during the F.Y. 2011-12. It is evident from the bank transactions that the Assessee received credit entries, made cash deposits, but has not filed Income Tax Return, not offered income from his activities and not paid taxes due thereon. The details of cash deposited and Credit entries appearing in Dena Bank account of the Assessee, which remained unexplained is given hereunder: Name of Bank Account No. Cash deposits during the F.Y. 2011-12 Other credits (excluding cash) Total credits (Cash + cheques /transfer in) Dena Bank 012010003015 0 25 25 Dena Bank 012010003916 11,02,500 6,84,621 17,87,121 TOTAL; 11,02,500 6,84,646 17,87,146 5. The Assessing Officer noted, as evident from the above table, that assessee had made cash deposits amounting to Rs.11,02,500/- and other credit entries appearing in bank account of Rs.6,84,646/- thereby total amounting to Rs.17,87,146/- (Rs.11,02,500+ Rs.6,84,646 ), appearing in the Bank Accounts of the Assessee in the F.Y.2011-12 relevant to A.Y.2012-13 remained unexplained. The Assessee has not filed Income Tax Return (ITR), not declared his true income and has not paid taxes due thereon. The Assessee has not responded to notices issued u/s 148/142(1) of the Act and show cause notice issued during assessment 4 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha proceedings. The Assessee also failed to give any explanation about the nature and source of all credit entries (Including cash deposits), hence the value of credit entries Rs.17,87,146/-, appearing in the Bank Account, were treated by the assessing officer as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the total income of the assessee. 6. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has dismissed the appeal of the assessee on technical issue of reopening of assessment under section 147/148 of the Act. 7. However, the ld. CIT(A), on merit has allowed the appeal of the assessee partly observing as follows: "Ground of appeal 3: Averment has been presented that the addition made under section 69A was illogical and arbitrary, unjust, without application of mind and should be deleted. Statutory notices were issued however, there was-not compliance as detailed in the assessment order. SCN was issued for best judgment assessment. Further, information was collected from concerned bank branch. It was revealed that there were total of Rs.17,87,146 worth of cash and cheque entries in the bank account of the appellant. As no compliance was made under section 148 or various scrutiny notices, Ld.assessing officer resorted to best judgment assessment and made addition of above amount and interest earned from such bank account under section 69A of the I.T. Act, 1961. This being best judgment assessment appellant was provided further opportunity to submit to remand report preparation before the Ld. assessing officer and satisfy all the queries qua deposits in bank account. The source of funds as discussed below have remained unexplained till date. Appellant had deposited cash in bank account and assessment for year under appeal was taken up for scrutiny following reopening of assessment. In the rejoinder, it has been submitted by the appellant that an amount of Rs.10,59,000 represents withdrawal of cash which has been redeposited in the bank account and hence it is explained. However, the same is not convincing argument, as it is not clear what was the purpose for withdrawal and why withdrawals were not utilized for any other purpose but were kept with him. Why there was delayed redeposit, were part withdrawals utilized eg. for specific purpose such as construction/ renovation of property, then evidence of such construction/ renovation having been carried out, if after 5 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha withdrawal it was given to somebody else as loan or deposit, or advance, then complete evidence regarding identity of the person, his confirmation of accepting and returning money; if given on interest, then offering interest income for taxation. Nothing is available on record to prove that the deposits were made from the withdrawals only. In such a case, the contention of appellant is rejected. The primary conditions for invoking section 69A are (1) assessee should be found owner of bullion, jewellery or other valuable articles, which is not recorded in the books (i) the assessee offers no explanation of these assets/ investment, or the explanation is not found satisfactory. Therefore, initial burden is on the Revenue to show that (1) assessee is owner of certain bullion, jewellery etc. (i) such bullion, jewellery is not recorded in the books. Thereafter, burden will shift on the assessee to furnish explanation of such investment/assets. The burden of proof was on appellant after it was established by the revenue that cash deposits were made in bank account of the appellant. The same remains undischarged as of today. Thus, in view of absence of any plausible explanation from the side of the appellant, submission in rejected. As regards the deposit made by Bhavin N. Bhikha of Rs.43,500, no evidence is bought on record to suggest that the ownership of the said cash/amounts belonged to him. Hence, this explanation is rejected. Qua agricultural labour contract income of Rs.3,48,159, no evidence like agreement etc. have been bought on record and hence it is rejected. As regards Agricultural Income of Rs.3,20,999 interest in Savings Bank account of Rs.5,455 and the interest of FDT of Rs.10,009, the appellant has been able to explain and presented proof on record which has not been controverted in any manner in remand report also. In view of the same, addition will reduce by that amount.” 8. Therefore, the ld CIT(A) sustained the addition to Rs.14,50,683/- (Rs.17,87,146- Rs.3,20,999- Rs.5,455- Rs.10,009). 9. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before us. 10. Learned Counsel for the assessee has argued that notice issued under section 147/148 and the reasons recorded by the Assessing Officer were bad in law. The Ld. Counsel submitted that Assessing Officer, although mentioned in the assessment order that notice under section 148 was issued, however no any notice under section 148 was 6 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha issued to the assessee, therefore appeal of the assessee should be allowed on this score only. The Ld. Counsel also stated that reasons recorded by the Assessing Officer for reopening of assessment is bad in law, as the assessee has deposited the cash in the bank account, out of business receipts. The Assessing Officer should have conducted the enquiry whether the amount deposited in the bank account is the income of the assessee or not, however, the assessing officer did not conduct enquiry. For that, Ld. Counsel for the assessee relied on the order of Co- ordinate Bench of ITAT, Surat in ITA No.355/SRT/2016, dated 19.04.2021 in the case of Ashish Natvarlal Vashi vs ITO. In addition to this, the Ld. Counsel also relied others judgments which are mentioned in the legal compilations submitted by the assessee. 11. On merit, the Ld. Counsel for the assessee submitted that assessee has agricultural land and therefore cash deposit was out of agricultural land. The Ld. Counsel also stated that the assessee has withdrawn the amount from the bank account which is redeposited in the account, therefore addition should not have been made in the hands of the assessee, as the assessee has explained the sources of cash deposit. 12. In alternative argument, the Ld. Counsel for the assessee stated that either at peak credit in the bank account may be added or 10% addition may be made on the cash deposited in bank account, in the interest of justice. 13. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We have gone through the assessment order 7 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha and noted that the reason recorded in the assessment order clearly shows that income has escaped assessment. The Assessing Officer, having gone through the information and the bank statement concluded that the income has escaped assessment and therefore the reasons were recorded by the Assessing Officer based on tangible material, which are valid reasons for reopening the assessment. We note that the case laws relied by the Ld. Counsel for the assessee, are not squarely applicable to the facts of the assessee’s case. The Ld. Counsel also stated that notice under section 148 of the Act, was not issued to the assessee. However, we do not agree with the Ld. Counsel for the assessee because the Assessing Officer has clearly mentioned in his assessment order that the notice under section 148 of the Act was issued to the assessee on dated 29.03.2019, hence, we reject this technical plea raised by the assessee. Moreover, we note that the assessee has not contested the issue of reopening of assessment, under section 147/148 of the Act during the assessment stage, therefore, in our view, the reopening of assessment under section 147/ 148 of the Act is valid, thus, ground No.1 raised by the assessee is dismissed. 14. In the result, ground No.1 raised by the assessee is dismissed. 15. So far merit is concerned, we note that assessee has not explained the cash deposited in the bank account with cogent evidences, however we note that assessee has some agricultural income and cash withdrawn from the bank. The ld Counsel stated that the assessee has redeposited the cash withdrawn from the bank and partly amount deposited from the agricultural income. Therefore, we note that there is a little merit in the arguments advanced by the learned Counsel for the assessee, hence considering the above facts we are of the view that end of the justice would be meet if some percentage of the total addition may be added in 8 50/SRT/2024/AY.2012-13 Navinchandra Amaidas Bhikha the hands of the assessee. We note that the entire cash deposit in the bank account is not income of the assessee. Therefore considering the facts and circumstances, we direct the assessing officer to disallow 10% of the balance amount of Rs.14,50,683/- which comes to Rs. 1,45,068/-. 16. In the result, appeal filed by the assessee is partly allowed in above terms. Order is pronounced on 08/04/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 08/04/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat