Dinesh Dahiya, New Delhi V. ITO WARD - 61(1), New Delhi

ITA 711/DEL/2020

AI Insights

The case involves Dinesh Dahiya, the appellant, contesting the orders of the Income-tax Officer and the Commissioner of Income-tax (Appeals) regarding the assessment year 2011-12. The primary issues revolved around the reopening of the assessment, jurisdictional authority, and the additions made to the income based on unexplained cash deposits and profits from share transactions. The Tribunal examined the procedural and substantive aspects of the case, including the adequacy of the opportunity provided to the assessee, the material facts disclosed, and the legal interpretations of the relevant sections of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112544 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-12-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2020
• Other Referred Cases: Oracle India Pvt. Ltd. v. ACIT, Unitech Limited v. DCIT, BDR Builders and Developers Pvt. Ltd. v. ACIT, Swarovski India Pvt. Ltd. v. Deputy Commissioner of Income Tax, M/s EIH Associated Hotels Ltd. vs The Assistant Commission of Income Tax, Bhavani Gems Pvt. Ltd. vs Assistant Commissioner of Income Tax, M/s Sri Jagannath Promoters & Builders vs Deputy Commission of Income Tax, NTPC vs CIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Gift; Transactions in derivatives; Difference of opinion; Change of opinion; Set aside
• Section: 147; 133(6); 139(1)

Judgement Text

1 ITA No. 711/Del/2020 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.711/DEL/2020____ [Assessment Year: 2011-12 Dinesh Dahiya, 952, BS House to Main Chouraha, Brijwasan, New Delhi-110061 PAN- AIUPD1994L Vs Income-tax Officer, Ward-61(1), New Delhi APPELLANT RESPONDENT Assessee represented by Shri Dinesh Dahiya, Advocate Department represented by Shri Om Parkash, Sr. DR Date of hearing 22.02.2023 Date of pronouncement 28.02.2023 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-20, Delhi, dated 29.11.2019, pertaining to the assessment year 2011-12. The assessee has raised following grounds of appeal: “On the facts and in the circumstances of the case and in law the Id. CIT (Appeals) erred in: (i) deciding the appeal without providing reasonable proper and due opportunity of hearing rendering the appellate order opposed to norms of natural justice; 2 ITA No. 711/Del/2020 (ii) deciding the appeal without considering the records which were available for adjudication (iii) Directing the Assessing Officer to verify the loss of Rs. 3,39, 373.75/- during the assessment year 2011-12. (iv) Ld. CIT (A) has grievously erred in law and on facts in confirming the addition of Rs. 5,82,385/- fowards cash deposits in bank account which is properly explained by the assessee. All the above actions being erroneous, unlawful and untenable must be quashed with directions for appropriate relief.” 2. Subsequently, the assessee also filed following revised grounds of appeal: “1. The proceedings initiated by the AO were barred by limitation 2. The AO has initiated the proceedings without having jurisdiction. 3. The assessment order passed by the AO is based merely on the change of opinion. 4. Failed to provide the reasonable attention and proper opportunity of hearing which is rendering the appellate order opposed to norms of natural justice. 5. Failed to consider the records which were available for adjudication i.e. lose in commodity, cash deposit in 29 different transactions, 21 cash withdrawals etc. 6. Failed to consider the records pertaining to the Assessment order and adjudicate the order which has already been decided by the AO after examining the documents provided by the assesse. The rectification is still pending for the same. 7. Failed to appreciate the settled position of law that the cash withdrawal is one of the source of the cash deposit. 8. Failed to consider the settled law that cash deposits in saving account does not constitute the income which has escaped assessment. However, the 3 ITA No. 711/Del/2020 appellant has explained the Rs. 9,10,200/- as per Date-wise cash flow chart of the appellant and same is enclosed which shows a peak negative balance of Rs. 1,41,685/-. At best, this amount remains unexplained, which is below Rs. 1,60,000/- being the threshold of taxable limits for A.Y. 2011-12. All the above actions being erroneous, unlawful and untenable must be quashed with directions for appropriate relief.” 3. Briefly stated facts are that for the assessment year in question the case of the assessee was reopened on the basis that the assessee had deposited cash of Rs. 10,51,885/- in his savings bank account and had entered into share transactions to the tune of Rs. 1,28,01,92,568/- during F.Y. 2010-11 relevant to the assessment year under consideration. The AO issued statutory notices in response whereof the assessee filed submissions. After considering the submissions of the assessee the AO made addition of Rs. 5,82,385/- u/s 68 of the Act, thus assessed at an income of Rs. 5,86,360/-. The Assessing Officer qua transactions in shares adopted net profit @ 8% on presumptive basis, which he computed at Rs. 1,59,127/-.Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who after considering the submissions partly allowed the assessee’s appeal by adopting net profit rate at 5% as against 8% applied by the AO. Still aggrieved the assessee is in appeal before this Tribunal. 4. In support of its grounds of appeal, the assessee has filed written submissions. For the sake of clarity the same are reproduced as below: 4 ITA No. 711/Del/2020 “Limitation:- The law on this subject is well settled, the powers under Section 147 of the Act have to be exercised after a period of four years only if there is a failure to disclose fully and truly all material facts and information, by the Assessee. This legal position has been reiterated recently by this Court in Oracle India Pvt. Ltd. v. ACIT 2017 SCC OnLine Del 9360, Unitech Limited v. DCIT 2017 SCC OnLine Del 9408, BDR Builders and Developers Pvt. Ltd. v. ACIT 2017 SCC OnLine Del 9425 and in judgment dated 30th August, 2017 in W.P.(C) 5807/2014 (Swarovski India Pvt. Ltd. v. Deputy Commissioner of Income Tax). In this case the reopening was set aside and all further proceedings were also declared as null & void. The first communication between the assesse and the AO of the ward no. 61(1) has been stalled on 07.03.2018 onwards as per assessment order for the AY 2011-12 after passing around the seven year which is cleared barred by limitation. The Assesse has raised the oral objection regards limitation and raised the objection on the reopening of the assessment however same were not recorded in the assessment order. Relied on:- M/s EIH Associated Hotels Ltd. vs The Assistant Commission of Income Tax in W.P. No. 25229 of 2019 dated 19.07.2022 by Madras High Court Bhavani Gems Pvt. Ltd. vs Assistant Commissioner of Income Tax in WP No. 804 of 2022 of dated 27.04.2022 by High Court of Judicature at Bombay Jurisdiction:- The ward no.27(3) has originally issued a notice u/s 139(1) of the Income Tax Act 1961 on 12.07.2012 & 12.06.2013 therefore the present ward no. 61(1) has no jurisdiction to neither issue a notice nor pass any order. The ward no. 61(1) is belonged and dealt to the professions only. Therefore, the ward no 61(1) has passed the assessment order without having jurisdiction. Change of opinion:- The ward no. 27(3) has issued two notices on 12.07.2012 & 12.06.2013 to the assesse for seeking reason for not filing the ITR of AY 211-12 and source of transaction with nature of business. The assesse has filed reply on 23.07.2012 & 14 November 2013 of the both the notices and same were 5 ITA No. 711/Del/2020 taken on records. The AO of the ward no. 27(3) has accepted the reply of the assesse and informed that the proceeding has been dropped. Thereafter, the Ward no. 27(3) has not issued further notice to the assesse. The ward no 61(1) has the different opinion therefore the AO of the ward no. 61(1) has issued a notice. The ward no.61(1) has the change of opinion therefore AO has reopen the assessment for the AY 2011-12 which the ward no.27(3) has dropped the proceedings and satisfied by the reply filed by the assesse. Bhavani Gems Pvt. Ltd. vs Assistant Commissioner of Income Tax in WP No. 804 of 2022 of dated 27.04.2022 passed by High Court of Judicature at Bombay M/s Sri Jagannath Promoters & Builders vs Deputy Commission of Income Tax in WP(Civil) No. 14603 of 2014 of dated 26.10.2021 passed by Orissa High Court The AO assumption based on the third party information and the imagination which are contrary to the law. That the AO has assumption that the assesse has escaped his income and did not file his ITR for the said year however the AO has failed to lead a single evidence to prove the statement of the assesse incorrect and produced records were fake. It is submitted that the AO has acceded all the records including the loss in the share transaction and received the gift from the family member. However, after knowing the all facts of the case, AO has passed the assessment order which is based on the fiction and imagination of the AO. Objection on the reopening the Assessment The AO has no valid ground for reopening the assessment. The AO has mentioned in the assessment order that no objection were filed by the assesse however the assesse has raised oral objection which were not recorded by the AO that why the AO has tiying to cover up the question law which are against the AO. It is evident that the both the issues were in favour of the assesse i.e. objection on the reopening the assessment, jurisdiction etc. Assessment order is based on imagination and fallacious assumption of the AO without making any allegation on the assessee. 6 ITA No. 711/Del/2020 The AO has passed the order assessment order against the assesse however in the assessment order there is allegation that the assesse did not make full and true disclosure of all the material facts therefore the reason recorded is vague and based on the imagination on the AO. Relied on:- JSRS Udyog Ltd vs ITO Reported in 313 ITR 321 of Delhi High Court CIT vs Viniyas Finance & Investment (P) Ltd. Reported in 357 ITR 646 Both Judgments are quoted in Ranjana Aggarwal vs ITO (2022) 04 ITAT CK 0020 (Delhi SMC Bench) in ITA No. 17/DeI/2020 dated 06.04.2022 NTPC vs CIT (1998) 383 (SC) The Hon’ble Supreme NTPC vs CIT (1998) 229 ITR 383(SC) The Hon’ble Supreme Court while dealing with ground raised before the ITAT for the first time relating to legal issue has held that Tribunal should not be prevented from considering questions of law arising in assessment proceedings although not raised earlier. Mere Cash Deposit in the Bank Account would not disclose escapement of Income It is settled law that the mere cash deposit in the bank account would not disclose escapement of income. Relied on:- Bir Bahadur Singh Sijwali vs ITO in ITA No. 3814/Del/2011 of 20.01.2015 Gurpal Singh vs ITO in ITA No. 631/ASR/2015 of 27.05.2016 Both Orders quoted in Shri Baba Yadav alias Anita Yadav vs ITO in ITA No. 5394/Del/2016 of dated 27.04.2017 7 ITA No. 711/Del/2020 Ashish Natvarlal Vashi vs ITO in ITA No. 3522/AHD/2016 Without verifying the available records The AO has issued a notice u/s 133(6) to file the ITR however assesse was unable to compliance due to technical reason but the assesse has reiterated his statement that he has no taxable income in the AY 2011-12 and the assesse got the loss in the commodity transactions. Furthermore, the broker has been declared defaulter by the SEBI therefore assesse was unable to provide the P&L statement, therefore as per the direction of the AO therefore assesse has filed the ITR of profit of Rs.4,000/- of that duration however the AO has accepted the loss of Rs.3,39,000/- after examining the transactions statement. But, the AO has warned the assesse that I he will file a loss ITR then he will refuse the ITR and ask the P&L statement which is not possible to arrange by the assesse. Ld. Cash deposit was made out of cash withdrawal It is held by the present SMC bench that the AO has to assign the reason for not accepting the contention of the assesse that deposit was made out of cash withdrawal however in present cash also the AO has failed to record such reason. Relied on Vikramjit Singh vs Assistant Commissioner of Income Tax ITA No. 6688/Del/2019 of 12.01.2022 Merit of the Case Ld. CIT has failed to verify the available records and oral & written submission and given the findings on the issue which has already been dropped by the AO after verifying the records. Therefore the rectification is still pending. The AO has failed to appreciate that cash deposit in 29 different transactions, 21 cash withdrawals which has been annexed on page no.43 of the present appeal whereas 9,10,200/- as per Date-wise cash flow chart of the appellant and same is enclosed which shows a peak negative balance of Rs. 1,41,685/-. At best, this amount remains unexplained, which is below Rs. 8 ITA No. 711/Del/2020 1,60,000/- being the threshold of taxable limits for A.Y. 2011-12. 5. On the other hand learned DR opposed the submissions and relied upon the order of the learned CIT(Appeals). 6. I have heard rival submissions and perused the material available on record. The objections of the assessee against reopening of assessment are multifold. It is stated that in this case the assessment was reopened after expiry of four years. It is further contended that reopening of assessment is without authority of law as there is no failure on the part of the assessee to disclose the material information. The assessment is barred by time and the lower authorities failed to consider facts and material on record. It is further contended that authorities below failed to provide adequate opportunity. On merit it is stated that cash deposits of Rs. 10,51,885/- was made out of cash withdrawals. The authorities below failed to give set off of such withdrawals. Considering the fact that there was cash withdrawals during the year under consideration, the addition is restricted to a sum of Rs. 2,50,000/-, as the probability of utilization of withdrawals cannot be ruled out.The grounds raised against legality of reopening on the basis that there was no failure on the part of assessee, it is recorded by the AO that no return was filed by the assessee and there was huge transaction in shares. The grounds raised by the assessee are dismissed. 9 ITA No. 711/Del/2020 Thus, addition made in respect of cash deposits is sustained to the extent of Rs. 2,50,000/- and in respect of share transactions, the addition made by the Revenue is hereby confirmed. The grounds of appeal are partly allowed. 7. Appeal of the assessee is partly allowed. Order pronounced in open court on 28 th February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI