BHANWARI DEVI, ALWAR V. INCOME TAX OFFICER WARD 2(2), ALWAR, ALWAR

ITA 76/JPR/2023

AI Insights

The case involves Smt. Bhanwari Devi, who appealed against the order of the CIT (A), which confirmed the action of the Assessing Officer (AO) in issuing a notice under section 148 and making an addition of Rs. 20,00,000 as undisclosed income. The AO had reopened the assessment based on information from departmental software indicating that the assessee had made a time deposit of Rs. 20,00,000 in Punjab National Bank, which was not reported in her income tax returns. The assessee contended that the actual amount deposited was Rs. 10,00,000, derived from the compulsory acquisition of agricultural land, and not Rs. 20,00,000 as alleged by the AO. The CIT (A) dismissed the appeal without adequately addressing the assessee's submissions and evidence, leading to the current appeal before the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132286 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-03-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2023
• Other Referred Cases: Shri Mahavir Parsad (2017) ITAT-Delhi ITA No. 924/DEL/2015, Swati Verma (2018) ITAT-Delhi ITA 42/DEL/2018, DCIT vs. Shree G. Selva Kumar, Aarti Raman vs. DCIT, Calcutta Discount Co. Ltd. (1961) 41 ITR 191 (SC), Indian Oil Corpn. v ITO (1986) 159 ITR 956 (SC), Manikonda Venkata Narasimham v CIT (1960) 39 ITR 575 (AP), Adarsh Chemicals and Fertilizers v IAC (1995) 212 ITR 185 (Guj.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Income from undisclosed sources; Condonation of delay; Reason to believe; Set aside
• Section: 147; 148; 142(1); 250; 191

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Jh laanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;arHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 76/JP/2023 fu/kZkj.k o"kZ@Assessment Year : 2011-12. Smt. Bhanwari Devi, Rajiv Nagar, Shahjahanpur, Alwar. cuke Vs. The Income Tax Officer, Ward 2(2), Alwar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AZRPB 5567 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj l s@ Assessee by : Shri Rajesh Agarwal( CA) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@ Date of Hearing : 22/03/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/05/2023 vkns'k@ ORDER PER: SANDEEP GOSAIN, J.M. This appeal by the assessee is directed against the order dated 06.12.2022 of ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi passed under section 250 of the IT Act, 1961 for the assessment year 2011-12. The assessee has raised the following grounds :- 1. Under the facts and circumstances of the case, the ld. CIT (A) was not justified in confirming action of AO for issuing notice u/s 148. 2. Under the facts and circumstances of the case, the ld. CIT (A) erred in confirming the action of Assessing Officer even no notice u/s 148 and further notices fixing the date of hearing has been served to the assessee. 2 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. 3. Under the facts and circumstances of the case, the ld. CIT (A) erred in confirming the action of Assessing Officer as AO has erred in making addition of Rs. 20,00,000/- as undisclosed income without verifying the facts. 4. Under the facts and circumstances of the case, the ld. CIT (A) erred in passing order without considering the facts presented in appeal by the assessee. 5. Under the facts and circumstances of the case, the decision of ld. CIT (A) is quite illegal, arbitrary, without any basis and based on guess, conjecture and bad in law. 6. The appellant prays to leave to add, alter or amend foresaid grounds of appeals at or before the time of hearing of appeal. 2. The appeal filed by the assessee is delayed by 11 days. The assessee has explained the delay by filing an application dated 17 th February, 2023 for condonation of delay along with supporting affidavit of the assessee and requested for condonation of delay. The contents of the application for seeking condonation of delay are reproduced as under :- “ 1. The assessee is illiterate lady aged 63 years. She is housewife and has no source of earning. The assessee was not aware of the assessment order dated 06.12.2022. the assessee is neither having her personal email id nor having any person conversant with email. She has mentioned email id of her family member. 2. While checking ITD portal in the proceeding Tab, the assessee’s counsel came to know about the passing of order by the ld. CIT (A). 3. During the year under consideration, the rural agriculture land outside the municipal limits in which she was co-owner was compulsorily acquired by the Government of Rajasthan and the sale proceeds invested in term deposit with bank. The AO completed the assessment order u/s 147 r.w.s. 144 even any notice was never served to the assessee. Aggrieved this assessee filed appeal but learned CIT (A) passed the order without considering the facts of the assessee and confirm the action of the AO. 3 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. 4. There is no intention of Assessee to avoid the proceedings. Assessee being the old lady and not conversant with the technology, it is kindly requested to condone the delay in filing of appeal and oblige so that justice may be given to the assessee.” 3. Having considered the rival submissions as well as going through the contents of the application, we are satisfied that the assessee has explained a reasonable cause for not filing the appeal within the period of limitation. Accordingly, we condone the delay of 11 days in filing the present appeal. Ground nos. 1 to 5 are inter-linked relates to confirming the action of the AO for issuing notice under section 148 and also confirming addition of Rs. 20,00,000/- made by the AO. 4. The brief facts of the case are that the assessee is a lady aged 63 years. She is a housewife and has no source of earning. During the year under consideration, a rural agriculture land situated outside the municipal limits, co-owned by the assessee, was compulsorily acquired by the Government of Rajasthan and the sale proceeds were invested in term deposit for Rs. 10,00,000/- with bank. As she had no income exceeding maximum amount not chargeable to tax and therefore she is not required to file return as per the Income tax law. The AO received information from departmental software that assessee made time deposit of Rs. 20,00,000/- in the Punjab National Bank during the financial year 2010-11. Since, the assessee had not filed her return of income for A.Y. 2011-12, the AO presumed that investment was made out of income from undisclosed source which escaped assessment. The AO issued a notice u/s 148 asking the assessee to file return, however such notice was never served to the assessee. Thereafter, the AO completed the assessment under 4 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. section 144 as a best judgment assessment treating Rs. 20,00,000/- as Income from undisclosed sources. Being aggrieved by the order of the AO, the assessee preferred appeal before the ld. CIT (A). The Ld. CIT(A) did not accept the contention of assessee holding that, from the order it is seen that notice has been served on the appellant, but no compliance was made. Further he framed his own theory that the cash deposit in the bank has not been co-related with the sale proceeds received from the Government Account. Receipt from the Government account is always received in cheque and not in cash. Hence, the deposit of Rs. 20,00,000/- in PNB remains unexplained before the ld. CIT (A) in the appellate proceedings. The CIT(A) without considering the reply of the assessee, dismissed the appeal of the assessee. Now the assessee is in appeal before us. 5. Before us, the ld. Counsel for the assessee submitted his written submissions, which are reproduced hereunder :- “ 1. The LD. AO opened the assessee’s case u/s 147 on the ground that he had received information from departmental software that assessee had made time deposit of Rs. 20,00,000/-. Opening of a case on the basis of information received from AIR without verifying the authenticity of the facts therein is not justified. The Ld AO even didn’t verify that whether FDR’s are of Rs. 20,00,000/- or Rs. 10,00,000/-. Assessee invested in the term deposit with Punjab National Bank in two Fixed deposits of Rs. 5,00,000/- each by the assessee totalling Rs. 10,00,000/-. Bank had made two FDs with S. No. 356400PR00006491 and 356400PR00006507 on 06.07.2010. However due to technical error in bank servers these FDs were closed and new FDs with S. No 356400PR00006534 and 356400PR00006543 were created on 09.07.2010. 5 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. Confirmation of bank at PB 1. Even the bank passbook at PB 14-15shows that FDR of Rs. 10,00,000/- has been made by the assessee. The Ld. AO did not cross check the facts before issuing notice and he was in a hurry to issue notice merely on the basis of information available without verifying and analyzing the facts and without any independent findings. The case was reopened on mere suspicion rather than a reason to believe as envisaged u/s 148 of the Income Tax Act, 1961. Addition made solely on the basis of AIR information is not sustainable in law vide Shri Mahavir Parsad (2017) ITAT-Delhi ITA No. 924/DEL/2015. Date of Judgement/Order : 09/10/2017. The reasons recorded by the Assessing Officer for reopening the case are as under :- "As per AIR information for FY 2006-07 received in this office, the assessee has made cash deposits of Rs. 49,42,000/- in bank account with Canara Bank, Pulhawas, Rewari. A query notice was issued to the assessee on 24.1.2012. But no response has been received from the assessee. I, therefore have reason to believe that the assessee has deposited cash in his bank account out of his income from unexplained sources. Accordingly, income to the extent of Rs. 49,42,000/- and any other income which subsequently comes to the notice of the undersigned has escaped assessment within the meaning of section 147 of the I.T. Act, 1961. Issue notice u/s. 148 of the I.T. Act, 1961 for the assessment year 2007-08. Sd/- (O.P. Poonia) Income Tax Officer, Ward-2, Rewari" The Tribunal concluded that the basic requirement for reopening of assessment that the AO must apply his mind to the materials in order to have reasons to believe that the income of the assessee escaped assessment was found to be missing when the AO proceed to reopen the assessment which is in nature of a post mortem exercise after the event of reopening of the assessment. Therefore the reopening of the assessment was found to be invalid as it does not satisfy the requirement of law that prior to the 6 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. reopening of the assessment the AO has to apply his mind to the material and conclude that he has reason to believe that income of the assessee has escaped assessment. Applying the above proposition of law it leaves no doubt in the mind that in the case on hand the AO has reopened the assessment mechanically without application of mind. Swati Verma (2018) ITAT-Delhi ITA 42/DEL/2018 Briefly, the facts of the case are that as per AIR information, the assessee had purchased an immovable property. AO treated purchase of immovable property as unexplained investment. The Tribunal concluded that, it was duty of the A.O. to verify the facts property and then apply his mind to the information and material on record, thereafter, may record reasons for reopening of the assessment based on relevant and cogent material on record. Reliance is also placed on: ANS Law Associates, in ITA No. 5181/M/2012 dated 5.12.14 (Mum) DCIT vs. Shree G. Selva Kumar” in ITA No.868/Bang/2009 decided on 22.10.10 Aarti Raman vs. DCIT” in ITA No.245/Bang/2012 decided on 05.10.12. Calcutta Discount Co. Ltd. (1961) 41 ITR 191 (SC) analyzed the Phrase "reason to believe" and observed that "It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn.” Indian Oil Corpn. v ITO (1986) 159 ITR 956 (SC) Manikonda Venkata Narasimham v CIT (1960) 39 ITR 575 (AP) Adarsh Chemicals and Fertilizers v IAC (1995) 212 ITR 185 (Guj.) The provisions of section 147 empower the Assessing Officer, to reopen an assessment if he has “reason to believe” that income has escaped assessment. The important words under section 147 are ‘has reason to believe’ The words “reason to believe” suggests that the belief must be that of an honest and reasonable person based upon reasonable ground and that the Ld. AO may act on direct or circumstantial evidence but not without the 7 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. same. The “reason to believe” is different from “reason to suspect” or from “to have an opinion”. In view of the above, the proceedings initiated u/s 148 are bad in law and is liable to be quashed. 2. The Ld. AO has completed the assessment u/s 144 alleging that there is no compliance on part of assessee in response to notice issued by him from time to time. But none of notices were ever received by the assessee. Assessee received a penalty order u/s 271F dated 28.05.2019 first time for AY 2011-12 (Copy at PB 2-4). Assessee did not even receive notice for assessment or assessment order. A letter was also submitted on 12/06/2019 to the department requesting therein to provide the original assessment order/certified copy of assessment order. (Copy at PB 5) This is very strange that when the penalty order could be served at assessee’s premises, why the notice u/s Sec 148, notice u/s 142(1) and the assessment order could not be served properly. The address mentioned in the 271F penalty order and assessment order is same at which the assessee is residing. This shows that true and fair efforts were not made by the Ld. AO to serve the notice of sec. 148 upon the assessee. In real, the assessee was not provided any opportunity to defend herself at all. This implies that the notices were not real and the AO was in a hurry to complete the assessment u/s 144 without giving the assessee a fair chance to present his submission. As per AO, notices were issued as follows: Notice under Section Date Mode of service Remark 148 28/03/2018 By Registered Post Never Served to assessee 142(1) 16/08/2018 Not mentioned in order Never Served to assessee 142(1) 08/10/2018 Not mentioned in order Never Served to assessee Show Cause Notice 01/11/2018 Not mentioned in Never Served 8 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. for levy of penalty U/s 271(1)(b) and Show cause notice for ex-parte assessment U/s 144 and 22/11/2018 order to assessee The AO has not mentioned in the order about the efforts of serving the notice that: o Whether the assessee refused to accept the notice. o Whether the assessee was not found at the place. o Whether the assessee was not residing at that place. All these facts indicate that the service of notice only a formality and no true or genuine efforts were made to serve the notice. In reality no notice was ever served upon the assessee by post or affixture. What is a proper service of notice under the provisions of the Income-tax Act, 1961 (the Act). This issue is vital because an improper service may vitiate an entire assessment. The issue of service of notice generally is covered by section 282 of the Act. This says that a notice or requisition under the Act may be served on the person therein named either by post or as if it were a summons issued by a Court under the Code of Civil Procedure, 1908 (the CPC). In CIT vs. Ramendra Nath Ghosh, 82 ITR 888(SC), the hon’ble court has discussed the Rule 17 of Order V of CPC which read as under: " Where the defendant or his agent or such other person as aforesaid refuses to sign the acknowledgment, or where the serving officer, after using all due and reasonable diligence, cannot find the defendant, and there is no agent empowered to accept service of the summons on his behalf, nor any other person on whom service can be made, the serving officer shall affix a copy of the summons on the outer door or some other conspicuous part of the house in which the defendant ordinarily resides or carries on business or personally works for gain, 9 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. and shall then return the original to the court from which it was issued, with a report endorsed thereon or annexed thereto stating that he has so affixed the copy, the circumstances under which he did so, and the name and address of the person (if any) by whom the house was identified and in whose presence the copy was affixed " 3. The Ld. Assessing officer has completed the assessment by treating Rs. 20,00,000/- as income from unexplained investment, being value reported in AIR as term deposit as against the actual term deposit of Rs. 10,00,000/-. Assessee invested Rs. 10,00,000/- in the term deposit with Punjab National Bank in two Fixed deposits of Rs. 5,00,000/- each by the assessee. Bank had made two FDs with S. No. 356400PR00006491 and 356400PR00006507 on 06.07.2010. However due to technical error in bank servers these FDs were closed and new FDs with S. No 356400PR00006534 and 356400PR00006543 were created on 09.07.2010. (Letter from bank at PB 1) The source of investment of Rs. 10,00,000/- of the assessee is as below :- (i) The assessee become co-owner of rural agriculture land with Smt. Usha Meena & Others situated at Khasra No. 118, Gram Panchyat Shapura, Tehsil Behror. She acquired the property after death of her father-in-law Sh. Mahaveer Meena along with other heirs. Copy of certificate from Gram Panchyat Shahpura and Jamabandi at PB 6-10. This land was compulsorily acquired by the Government of Rajasthan, for which she received consideration of Rs. 2,55,210/-. Copy of Acquisition letter from Land Acquisition Officer Behror (Alwar) is enclosed at PB 11. Consideration can be verified from details of Acquisition letter at PB 12-13 and bank statement at PB 14-15. Rs. 2,55,210/- has been received on 26-05-2010 in bank. 10 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. (ii) Smt. Usha Meena, Sister-in-law of the assessee received consideration of Rs. 7,65,630/- for compulsory acquisition of same property(PB13). She transferred Rs. 7,64,000/- in the bank account of the assessee on 27.05.2010. Copy of bank pass book of Smt. Usha Meena is enclosed at PB 16-17. Smt. Usha Meena surrender her right in respect of this property in favour of assessee vide Shapath Patra dt. 25/8/2009. Copy at PB 18-21. Since Usha Meena was owner in the land records, the acquisition amount was received by her and she gifted the same to her sister-in-law after receipt of money. Bank passbook at PB 16-17. Thus the investment in FDR by the assessee is only of Rs. 10,00,000/- against Rs. 20,00,000/- claimed by AO and the source of investment is fully verifiable. Thus, it is clearly evident that AO was in hurry to pass the assessment order without analyzing the facts properly. So, the addition of Rs. 20,00,000/- is arbitrary and without analyzing the facts and deserves to be deleted. Further CIT (A) has held that “ the cash deposit in the bank has not been correlated with the sale proceeds received from the Government Account. Receipt from the Government account is always received in cheque and not in cash. Hence, the deposit of Rs. 20,00,000/- in PNB remains unexplained before me in the appellant proceedings.” 4. This observation of CIT (A) is not correct as no cash had been deposited by the assessee for the purpose of FD of Rs. 10 lakhs. The Learned CIT (A) has erred in passing the order without considering the reply filed and facts presented in the appeal by the assessee. We are hereby enclosing copy of letter from bank certifying that amount received in banks of Smt Usha Meena and Smt Bhanwari Devi is through clearing cheque and not in cash as PB 37-38.” 11 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. Thus, the ld. A/R of the assessee requested that the orders of the revenue authorities be set aside and the addition made be deleted. 6. On the other hand, the ld. D/R supported the orders of the lower authorities. 7. We have heard learned Counsels of both the sides, perused the material available on record and gone through the orders of the revenue authorities. As per facts of the present case, the assessee is an old illiterate lady and a housewife and has no source of income. However, during the year under consideration, a rural agricultural land situated outside the Municipal limits was compulsorily acquired by the Government of Rajasthan and the sale proceeds were invested in term deposit in Bank. According to ld. A/R, since the assessee had no income exceeding maximum amount chargeable to tax, therefore, she was not required to file return as per Income Tax Law. On the other hand, the AO received information from the departmental software that the assessee made term deposit of Rs. 20,00,000/- in Punjab National Bank in the year under consideration. Since the assessee had not filed her return, therefore, it was concluded by AO that investment was made out of Income from other sources, which escaped assessment and consequently notice under section 148 of the IT Act, 1961 was issued asking the assessee to file her return of income. Since according to records, assessee could not appear, therefore, the AO completed the assessment under section 144 of the IT Act, 1961 as a best judgment assessment treating Rs. 20,00,000/- as Income from undisclosed sources. Aggrieved by the said order, assessee preferred appeal before ld. CIT (A) and the ld. CIT (A) dismissed the appeal filed by the assessee by holding that assessee had deposited cash amount in her bank account. Whereas on the contrary, the ld. A/R 12 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. drawn our attention to the Paper Book pages 24 to 36 which contains the submissions filed by the ld. A/R before ld. CIT (A) during the appellate proceedings wherein it has categorically been submitted that assessee had invested in two term deposits of Rs. 5,00,000/- each totaling Rs. 10,00,000/- in Punjab National Bank and the Bank had made two FDRs on 06.07.2010. However, due to technical error in bank servers these FDRs were closed and two new FDRs of Rs. 5,00,000/- each of said amount were created on 09.07.2010. In this regard confirmation of the Bank is at paper book page 1 and pass book of the assessee is at paper book pages 14-15 which shows that FDR of Rs. 10,00,000/- has been made by the assessee being co-owner of the land in question. We find from the order of the ld. CIT (A) that the written submissions of the assessee were not even considered or dealt with by the ld. CIT (A) and now before us assessee has filed all those documents which were filed before ld. CIT (A) running in pages 1 to 36 and in this regard specific certification has been done by the ld. A/R of the assessee stating that all these documents were before the ld. CIT (A). Since assessee was ex parte before the AO and, therefore, assessment under section 144 of the IT Act, 1961 was passed and even during the appellate proceedings, the ld. CIT (A) could not dealt with the specific objections/submissions filed by the assessee along with the supporting and corroborative documents and has dismissed the appeal of the assessee. 7.1 In view of the above facts and circumstances of the case, we set aside the order of the ld. CIT (A) and restore the matter to his file to be decided afresh after affording an opportunity of being heard to the assessee and considering the documents to be submitted by the assessee. 13 ITA No. 76/JP/2023. Smt. Bhanwari Devi, Alwar. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 3/05/2023. Sd/- Sd/- ¼ jkBkSM+ deys'k t;arHkkbZ ½ ¼lanhi xkslkbZ½ (RATHOD KAMLESH JAYANTBHAI) (SANDEEP GOSAIN) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@ Dated:- 3/05/2023. Das/ vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Smt. Bhanwari Devi, Alwar. 2. izR;FkhZ@ The Respondent- The ITO Ward 2(2), Alwar. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File {ITA No. 76/JP/2023} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar