Ashok Kumar Chopra, New Delhi V. ITO Ward 40(4), New Delhi

ITA 773/DEL/2019

AI Insights

The case involves Ashok Kumar Chopra, who appealed against the order of the CIT(A)-14, New Delhi, which confirmed and enhanced the addition made by the Assessing Officer (AO) regarding undisclosed income under Section 68 and Section 69A of the Income Tax Act, 1961. The AO initially added Rs. 3,48,89,516 as income from undisclosed sources, which was later enhanced by the CIT(A) to Rs. 65,92,97,926. The Tribunal found that the CIT(A) had enhanced the addition without issuing a show cause notice to the assessee, thus violating the principles of natural justice. Consequently, the Tribunal restored the matter to the CIT(A) for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121924 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-10-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2019
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Income from undisclosed sources; Accommodation entries; Set aside
• Section: 68; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A: NEW DELHI BEFORE SHRI G.S PANNU, HON’BLE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA No. 773/Del/2019 Assessment Year: 2008-09 Ashok Kumar Chopra, Shop No. 09/97, Ground Floor, Karan Wali Gali Main 60, Futer Road, Vishwas Nagar, Shahdara, New Delhi 110032 PAN ADEPC 4618 H vs. ITO, Ward 40(4), New Delhi (Appellant) (Respondent) For Assessee : None Revenue For : Ms. Anubhaa Tah, Sr. DR Date of Hearing : 03.10.2023 Date of Pronouncement : 06.10.2023 ORDER PER CHANDRA MOHAN GARG, J.M. This appeal has been filed against the order CIT(A)-14, New Delhi dated 10.12.2018 for A.Y. 2008-09. 2. The grounds of appeal raised by the assessee are as follows:- 1. That the Ld. CIT (Appeal) has erred in law and facts in deciding the appeal against the appellant without considering any evidences placed on record. The order of the Ld. CIT (Appeal) is illegal, arbitrary and unreasonable. 2. That the Ld. CIT (Appeal) failed to appreciate the grounds of appeal before him and has not only wrongly upheld the action of the Assessing Officer, but has further enhanced the addition. Addition is incorrect & illegal in circumstances. 3. That the AO has erred in Law and facts in making the addition of Rs.3,48,89,516/- on account of income from undisclosed sources, under Section 68 of IT Act 1961. Keeping in view the facts and circumstances no addition could be legally made. ITA No. 773/Del/2019 2 4. That the CIT (A) & AO has erred in law and facts in not appreciating that the money found credited does not belong to the Appellant as Appellant is an entry provider and money does not belongs to him. The Appellant was engaged in providing entries and earn commission which itself is a business. 5. That on the basis of the income earned by the appellant in circulation of the various deposits in his own name and in other names directly or indirectly the appellant has only earned the commission by providing entries. Therefore the appellant should have been assessed on the income disclosed on the commission of turnover which is the entries as appearing in the banks with different names. 6. That the CIT(A) has erred in law in enhancing the addition of Rs.65,92,97,926/- without affording due and proper opportunity to the appellant to rebut the presumption. 7. Because the AO has made addition of Rs.3,48,89,516/- under the head of income from undisclosed source u/s 68 of the Income Tax Act, 1961 and CIT(A) further enhanced the addition by invoking the provision of section 69A of the Income Tax Act, 1961. Actions of both are unjust and arbitrary. 8. That the Ld. CIT (Appeal) has erred in law and on facts in sustaining the addition of Rs. 3,48,89,516/- u/s 68 of the Income Tax Act, 1961 as an unexplained credits in the banks which does not belong to the Appellant as he is an entry provider. Moreover, the Ld. CIT (A) instead of allowing the appeal of the appellant enhanced the addition to Rs.65,92,97,926/- by invoking the provision if section 251(2) of the Income Tax Act, 1961 as unexplained money 69A. 9. That the Ld. CIT(A) erred in law and facts and failed to appreciate and understand the applicability of provisions of Section 68 and 69A of the Income Tax Act, 1961 in the facts and circumstances. That Ld. AO invoked the provision of Section 68 of the Act, 1961 and CIT (Appeal) has blindly upheld the action of the AO against the appellant and enhanced the demand of the appellant by adding the credited, amount in the bank. 3. When the case was called for hearing neither the assessee nor any authorised representative or counsel appeared nor any adjournment application has been filed despite due service of notice. Therefore we deem it just and proper to adjudicate the appeal ex-parte qua assessee after hearing the submissions of ld. Senior DR. Hence we proceed to adjudicate the appeal. 4. From the assessment order we note that the Assessing Officer has made one addition on account of income from undisclosed sources by taking out peak of credits in the accounts of different entities. The assessee carried the matter before ld. CIT(A) but remained empty handed. From first appellate order we note that the ld. CIT(A) has not only confirmed the addition of Rs. 3,53,67,530/- made by the Assessing Officer but has also enhanced the addition to Rs. 65,92,97,926/-. In the back drop above factual matrix ITA No. 773/Del/2019 3 discernable from the orders of the authorities below we proceed to adjudicate the appeal of assessee. 5. In ground no. 6 to 8 of assessee it has been alleged that the ld. CIT(A) has enhanced the addition without show causing the assessee and thus the enhancement has been made without allowing the assessee an opportunity of hearing. The ld. Senior DR did not controvert that the conclusion drawn by the ld. CIT(A) in the first appellate order enhancing the addition has been recorded by ld. CIT(A) without issuing any showcause notice to the assessee . For the sake of completeness of this order we find it appropriate to reproduce the relevant operative para 14 of order of ld. CIT(A) as follows:- 14. As regards, the quantum of addition the assessee was required to show cause for enhancement u/s 251(2) of the I.T. Act for addition of gross credits in the bank accounts. Before the AO, the assessee claimed that the deposits represent turnover but could not be established it. Before the CIT(A), the assessees claimed to be an accommodation entry provider but did not furnish any details of the people to whom accommodation entries were given and the purpose for which it was given. Therefore, the assessee has failed to establish both the claims. In such a case, the entire deposits in the bank account of the assessee are to be added u/s 69A of the I.T. Act as unexplained money in the hands of the assessee. On the other hand, since the assessee has claimed the corresponding credits in the books of account as sale proceeds but failed to establish the same, it is required to be added u/s 68 of the I.T. Act as well. Consequently, the addition made of Rs. 3,48,89,51ó/- is required to be enhanced. Since, the total credits in all the bank accounts including the bank account of Jupiter Trading Agencies comes to Rs. 65,92,97,926/-, the total income of the assessee is taken at Rs. 65,92,97.926/- instead of assessed total income of Rs. 3,53,67,530/-. Consequently, the appeal is dismissed and assessment is enhanced to Rs. 65,92,97,926/-. 6. From the above conclusion of ld. CIT(A) enhancing the addition recorded in para 14 it is vivid that the ld. CIT(A) has not issued any show cause notice to the assessee showing his intention to enhance the addition on merits either by way of any notice or order sheet entry. Therefore, we set aside the enhancement order passed by the ld. CIT(A). The matter is restored to the file of ld. CIT(A) for adjudication of grounds of assessee on merits after allowing due opportunity of hearing to the assessee on all the issues including enhancement of addition. Accordingly, matter is restored to the file of ld. CIT(A) for afresh adjudication of appeal of assessee. ITA No. 773/Del/2019 4 7. In the result, the appeal of assessee is allowed for statistical purposes. Order pronounced in the open court on 06.10.2023. Sd/- Sd/- (G.S PANNU) (CHANDRA MOHAN GARG) PRESIDENT JUDICIAL MEMBER Dated: 06 th October, 2023 NV/- Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR // By Order // Asstt. Registrar, ITAT, New Delhi