Deepak Gupta & Sons (HUF), New Delhi V. ITO WARD - 46(2), New Delhi

ITA 8748/DEL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3727 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 08-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Peak credit
• Section: 143(1); 9(1); 9(1); 9(1); 13; 147; 148

Judgement Text

ITA NO. 8748/DEL/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-1, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCE) ITA NO. 8748/DEL/2019 A.Y. : 2011-12 DEEPAK GUPTA & SONS (HUF), 4526, DAL WARA, ROSHNA PURA, NAI SARAK, NEW DELHI 110 006 (PAN: AAFHS6836M) VS. ITO, WARD 46(2), NEW DELHI (APPELLANT) (RESPONDENT) ORDER PER H.S. SIDHU, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE IMPUGNED ORDER DATED 02.09.2019 PASSED BY THE LD. CIT(A)-16, NEW DELHI IN RELATION TO ASSESSMENT YEA R 2011-12 ON THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW. ASSESSEE BY SH. ROHIT TIWARI, ADVOCATE DEPARTMENT BY SH . R.K. GUPTA, SR. DR. ITA NO. 8748/DEL/2019 2 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF PASSING ORDER U/S. 147 INCOME TAX INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT'), 1961. THE SAID ORDER PASSED BY THE ASSESSING OFFICER IS VOID AB INITIO ON, INTER ALIA, THE GROUNDS THAT: A) ASSUMPTION OF JURISDICTION UNDER SECTION 148 IS BAD IN LAW AS THE ASSESSING OFFICER DID NOT APPLY HIS MIND ON THE INFORMATION RECEIVED BY HIM AND THE REASONS RECORDED BY HIM IS NOT VALID; AND B) IT IS BASED ON FACTUALLY ERRONEOUS PREMISES AND BUILT UPON SURMISES AND CONJECTURES. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF MAKING ADDITION OF INR 39,96,550/- BEING THE ENTIRE CREDIT IN THE BANK ACCOUNT WHICH WAS RELATING TO TRADING ACTIVITIES AND OTHER TRANSACTIONS RELATING TO THE EARNING OF COMMISSION INCOME. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER OF CONSIDERING THE CREDIT IN THE BANK ACCOUNT IN A HIGHLY ARBITRARY MANNER AND TOTALLY DISREGARDS THE CORRESPONDING ITA NO. 8748/DEL/2019 3 WITHDRAWALS WHICH CLEARLY ESTABLISH THE ACTIVITIES AND SCOPE OF INCOME. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ADDITION IF ANY CALLED FOR, SHOULD ONLY BE IN RESPECT OF PEAK CREDIT. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/ OR MODIFY ANY OF THE GROUND GROUND(S) DURING OR BEFORE THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF TH E ASSESSEE WAS REOPENED U/S. 147 OF THE I.T. INCOME TA X ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') ON 31.3.201 8 AFTER TAKING APPROVAL OF APPROPRIATE AUTHORITIES. ACCORDINGL Y, NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961 WAS ISSUED ON 31.3.2017. IN RESPONSE TO THE SAME, THE ASSESSEE FILED ITS RETURN OF INCOME ELECTRONICALLY FOR THE RELEVANT ASSESSM ENT YEAR IN DISPUTE ON 22.08.2018 AND DECLARED INCOME OF RS. 1,70,500/-. THE ASSESSING OFFICER ALSO ISSUED NOTICES U/S. 143(2)/142(1) OF THE INCOME TAX ACT, 1961 TO THE AS SESSEE ON 06.11.2018. IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEES APPEARED AND FILED DETAILS AS ASKED BY THE ASSESSING OFFICER. THE CASE WAS DISCUSSED WITH THE LD. AR FOR TH E ASSESSEE BY THE ASSESSING OFFICER. AFTER PERUSING THE DETAILS FILED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THA T THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 1,75,530/- ON TOTA L SALES OF RS. 16,18,223/-. APART FROM THE SAME, ASSESSEE HAS ALSO SHOWN COMMISSION OF RS. 70,732/- ON SALE OF RS. 35,36,5 77/-. IN THE REPLY DATED 12.11.2018 FILED BY THE ASSESSEE, IT WAS ITA NO. 8748/DEL/2019 4 STATED THAT ASSESSEE WAS ENGAGED IN RETAIL SALES OF TEXTILE ON CASH AND COMMISSION BASIS AND DURING THE FINANCIAL YEAR 2010 - 11 THE ASSESSEE ACHIEVED TURNOVER OF RS. 16,18,223/- A ND COMMISSION OF RS. 70,752/- GOODS OF OTHER MANUFACTURERS WERE SOLD ON CASH TO PHERI WALA AND SUPPLIERS WERE PAID BY C HEQUES. ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE DET AILS OF THE PERSON FROM WHOM PURCHASES WERE MADE AND ALSO ASKED TO FURNISH THE NAME AND ADDRESS OF THE PERSONS PHERI WALA F ROM WHOM THE SALES WERE MADE. IN RESPONSE TO THE SAME, ASSESSEE VIDE LETTER DATED 22.11.2018 FILED COPY OF PURCHASE BILLS OF M/S GANPTAI TEXTILE AND M/S SAI TEXTILES A MOUNTING TO RS. 5,74,180/- AND RS. 5,82,010/- RESPECTIVELY. APA RT FROM THE PURCHASE BILL THE ASSESSEE HAS ALSO FURNISHED THE COPIE S OF SALES BILLS FOR THE AMOUNT OF RS. 1 LAKH AND RS. 2,03 ,331/-. WITH REGARD TO THE NAME AND ADDRESS OF PHERI WALA THE ASSESSEE HAS NOT FILED ANY REPLY. 2.1 THE ASSESSING OFFICER EXAMINED THE DOCUMENTARY EVIDENCES FILED BY THE ASSESSEE ALONGWITH THE REPLY FI LED BY THE ASSESSEE AND WAS OF THE VIEW THAT ENTIRE TRANSACTION IS BOGUS AND CASH DEPOSIT IN THE BANK FROM UNDISCLOSED SOURCES AND THEREFORE, MADE THE ADDITION OF RS. 39,96,550/- BY CO MPLETING THE ASSESSMENT U/S. 147/143(3) OF THE I.T. INCOME TAX A CT, 1961 VIDE ORDER DATED 19.12.2018. AGGRIEVED BY THE A FORESAID ASSESSMENT ORDER, THE ASSESEE APPEALED BEFORE THE LD. CIT(A) WHO VIDE ITS IMPUGNED ORDER DATED 02.9.2019 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNE D ITA NO. 8748/DEL/2019 5 ORDER DATED 02.09.2019, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.2 AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESSEE NARRATED THE FACTS OF THE CASE AND ONLY ARGUED THE LEGA L ISSUE REGARDING THE ASSUMPTION OF JURISDICTION U/S. 147 OF THE I NCOME TAX ACT, 1961 BY THE ASSESSING OFFICER WHICH IS BAD IN LAW, BECAUSE THE ASSESSING OFFICER HAS NOT APPLIED HIS MIND B EFORE ISSUING THE NOTICE U/S. 148 OF THE INCOME TAX ACT, 196 1 BY STATING THAT ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR IN DISPUTE MEANING THEREBY BEFORE ISSUE OF NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961, THE ASSESS ING OFFICER HAS NOT APPLIED HIS MIND, THEREFORE, THE REASSE SSMENT FRAMED BY THE ASSESSING OFFICER IS WITHOUT JURISDICTION , BAD IN LAW AND WITHOUT APPLICATION OF MIND AND THEREFORE, IS LIAB LE TO BE QUASHED. 2.3 LD. COUNSEL FOR THE ASSESSEE FURTHER DRAW OUR ATTENTI ON TOWARDS PAPER BOOK FILED BY THE ASSESSEE CONTAINING PA GES 1- 98 IN WHICH HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCE S FOR SUBSTANTIATING THE CLAIM OF THE ASSESSEE. HE ESPECIAL LY DRAW OUR ATTENTION TOWARDS THE WRITTEN SUBMISSIONS FILED BY T HE ASSESSEE BEFORE THE LD. CIT(A) WHICH ARE AT PAGES 43-4 5 OF THE AFORESAID PAPER BOOK IN WHICH IT WAS CLEARLY STATED THAT ASSESSEE IS A SMALL CLOTH TRADER HAVING INCOME FROM TRA DING ACTIVITIES AND COMMISSION. IN THIS CASE, ORIGINAL RETURN WAS FILED ON 30.7.2011 IN ACCORDANCE WITH PROVISIONS OF SECTION 13 9(1) OF THE INCOME TAX ACT, 1961. DURING THE YEAR UNDER ITA NO. 8748/DEL/2019 6 REFERENCE, TOTAL DEPOSIT IN THE BANK ACCOUNT WAS RS. 39,96,550/- AS ADMITTED BY THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER U/S. 147/143(3) OF THE INCOME TA X ACT, 1961 DATED 19.12.2018. BUT AT THE TIME OF ISSUING THE NOTICE, THE ASSESSING OFFICER HAS DISREGARDED ALL THE FACTS WH ICH IS ALREADY ON RECORD AND WITHOUT ANY EVIDENCE OR MATERIAL, THE ASSESSING OFFICER ISSUED NOTICE FOR INITIATING THE REA SSESSMENT PROCEEDINGS U/S. 148 OF THE INCOME TAX ACT, 1961 ON THE ALLEGED GROUND THAT THE ASSESSEE DEPOSITED CASH IN HIS BANK ACCOUNT TO THE EXTENT OF RS. 1,76,65,999/- AS BORNE OUT FROM REASONS RECORDED BY ASSESSING OFFICER WHICH IS PLACED AT PAGE NO. 1 OF THE PAPER BOOK. LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THAT ASSESSEE HAS SOUGHT THE INTIMATION UNDER RTI INCOME TAX ACT, 1961 AND ESTABLISHED THAT SUCH ALLEGATIO NS WERE FALSE, MISLEADING AND CONTRARY TO THE FACTS. COMP LETE DETAILS OF BANK ACCOUNT HAS ALREADY BEEN PLACED IN THE PAP ER BOOK AT PAGE NO. 16-17 AND AS PER THE BANK STATEMENT, TOTAL CREDIT BALANCE AT THE END OF THE YEAR IS RS. 6451.03 W HICH HAS BEEN OVERLOOKED BY THE ASSESSING OFFICER AT THE TIME OF ISSUING THE NOTICE U/S. 148 OF THE INCOME TAX ACT, 1961. LD. COUNSEL FOR THE ASSESSEE FURTHER DRAW OUR ATTENTION TOWAR DS THE REASONS RECORDED BY THE ASSESSING OFFICER IN WHICH THE ASSESSING OFFICER HAS STATED THAT ASSESSEE HAS NOT FILED ANY VOLUNTARY RETURN WHEREAS AS STATED ABOVE, THE ASSESSE E HAS ALREADY FILED THE RETURN OF INCOME AS STATED BY THE ASS ESSING OFFICER IN THE ASSESSMENT ORDER ALSO AND LD. COUNSEL FO R THE ASSESSEE STATED THAT THE NOTICE ISSUED BY THE ASSESSING OFFICER ITA NO. 8748/DEL/2019 7 IS WITHOUT APPLICATION OF MIND AND WITHOUT GOING THROUGH THE MATERIAL ALREADY ON RECORD WITH THE ASSESSING OFFICER, THEREFORE, THE ASSESSMENT IN DISPUTE IS BAD IN LAW AND DES ERVE TO BE CANCELLED. HE FURTHER DRAW OUR ATTENTION TOWARDS THE PAPER BOOK PAGE NO. 94-98, WHICH IS A COPY OF DECISIO N OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. RM G POLYVINYL REPORTED IN (2017) 83 TAXMANN.COM 348 (DELHI )/ 396 ITR 5, ESPECIALLY THE PARA NO. 5 THEREOF AND STATED THAT IN VIEW OF THE AFORESAID DECISION OF THE HONBLE DELHI HIGH COU RT THE REASSESSMENT IN THE PRESENT CASE MAY BE DECLARED AS BA D IN LAW AND ACCORDINGLY MAY BE CANCELLED. 3. ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND STATED THAT ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THEREFORE, THE ASSESSING OFFICER AS WELL AS LD. CIT(A) HAS RIGHTLY PASSED THE ORDER AGAINST THE ASSESS EE. HENCE, HE REQUESTED THAT THE APPEAL FILED BY THE ASSESSE E MAY BE DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS, ESPECIALLY THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. RMG POLYVINYL REPORTED IN (2017) 83 TAXMANN.COM 348 (DELHI)/ 396 ITR 5, A COPY OF WHICH TH E ASSESSEE HAS PLACED AT PAGE NO. 94-98 OF THE PAPER BO OK. FOR THE SAKE OF CONVENIENCE, WE ARE REPRODUCING THE PARA NO. 5 OF THE SAID DECISION AS UNDER:- 5. AS IT TRANSPIRED SUBSEQUENTLY THERE WERE AT LEAST TWO GLARING ERRORS IN THE ABOVE ITA NO. 8748/DEL/2019 8 REASONS. THE FIRST ERROR WAS THAT THE ASSESSING OFFICER PROCEEDED ON THE BASIS THAT NO RETURN OF INCOME IS AVAILABLE IN THE AST DATABASE OF INCOME TAX DEPARTMENT. THEREFORE, IT IS CLEAR THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME FOR THE A.Y. 2004-05 AND CONSEQUENTLY HAS NOT OFFERED ANY INCOME FOR TAXATION. IN THE ASSESSMENT ORDER DATED 30 TH DECEMBER, 2011 PASSED CONSEQUENT UPON THE REOPENING OF THE ASSESSMENT, THE VERY FIRST LINE STATES THAT THE ASSESSEE HAD FILED RETURN DECLARING INCOME OF RS. 4,38,958/- ON 31.10.2004 WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 04.01.2005. 4.1 WE ARE OF THE CONSIDERED VIEW THAT THE REASONS RECO RDED BY THE ASSESSING OFFICER IS BASED ON PRESUMPTION AND WITHOUT APPLICATION OF MIND BY STATING THEREIN THAT ASSESSEE HAS NOT FILED ITS RETURN OF INCOME WHEREAS THE EVIDENCES PRODUC ED BY THE ASSESSEE IN THE SHAPE OF PAPER BOOK BEFORE THE LD. CIT(A) AS WELL AS BEFORE THE TRIBUNAL, ESTABLISH THAT THE ASSES SEE HAS FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR IN D ISPUTE, HENCE, THE AFORESAID DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. RMG POLYVINYL REPORTED IN ( 2017) 83 TAXMANN.COM 348 (DELHI)/ 396 ITR 5 IS SQUARELY APPLICA BLE HERE AND THEREFORE, APPLYING THE SAID RATIO, THE REASS ESSMENT IN ITA NO. 8748/DEL/2019 9 THE PRESENT CASE IS BAD IN LAW AND ACCORDINGLY QUASHED AN D APPEAL OF THE ASSESSEE IS ALLOWED. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. THE DECISION IS PRONOUNCED ON 09.11.2020. SD/- SD/- (PRASHANT MAHARISHI) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER SRB COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI