Pradeep, New Delhi V. ITO ward-30(2), New Delhi

ITA 9045/DEL/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0741 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-07-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RISHABH OSTWAL
• Keywords: Reopening of assessment; Unexplained cash credit; Business income; Tangible material
• Section: 147; 68; 133(6); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.9045/Del/2019 Assessment Year: 2011-12 Sh. Pradeep, D Ostwal & Associates, 310, F-14, Competent House, Connaught Place, New Delhi Vs. Income Tax Officer, Ward-30(2), New Delhi PAN :AMXPP0266E (Appellant) (Respondent) ORDER This is an appeal by the assessee against order dated 02.08.2019 of learned Commissioner of Income Tax (Appeals), New Delhi, for the assessment year 2011-12. 2. The assessee has raised grounds challenging the validity of reopening of assessment under section 147 of the Income-tax Act, 1961 (in short ‘the Act’) as well as merits of the addition made of Rs.12,60,800/- under section 68 of the Act. Appellant by Sh. Rishabh Ostwal, Advocate Sh. Deepak Ostwal, CA Respondent by Sh. Om Parkash, Sr. DR Date of hearing 18.07.2022 Date of pronouncement 14.10.2022 ITA No.9045/Del/2019 AY: 2011-12 2 | Page 3. Briefly the facts are, the assessee is a resident individual engaged in the business of trading in sugar through his proprietary concern M/s. Maa Chandi Traders. On the basis of information available on record, the Assessing Officer noticed that in the year under consideration, the assessee had deposited cash amounting to Rs.12,60,000/- in his savings bank account. Whereas, the assessee had not filed any return of income for the impugned assessment year, the Assessing Officer reopened the assessment under section 147 of the Act. In course of assessment proceeding, the Assessing Officer called upon the assessee to explain the source of cash deposits in the bank account. In response, the assessee submitted that the cash deposits were actually made in current account held in the name of proprietary concern, M/s. Maa Chandi Traders and were made out of business receipts. The Assessing Officer, however, was not convinced with the submissions of the assessee. He observed that the documentary evidences furnished by the assessee to demonstrate that he has effected purchases of sugar from M/s. S.B.M. & Company Pvt. Ltd. are not believable, as, the notice issue under section 133(6) of the Act to the concerned party returned back unserved. Thus, he ultimately concluded that the ITA No.9045/Del/2019 AY: 2011-12 3 | Page claim of the assessee that he is carrying out business activity is bogus. Accordingly, he treated the amount of Rs.12,60,800/- as unexplained cash credit under section 68 of the Act and added back to the income of the assessee. Against the assessment order so passed, though, the assessee preferred an appeal before the learned Commissioner (Appeals), however, the appeal was dismissed. 4. I have considered rival submissions and perused the materials on record. As regards the issue relating to reopening of assessment under section 147 of the Act, admittedly, for the year under consideration, the assessee did not file any return of income under section 139(1) of the Act. Whereas, the Assessing Officer received information indicating that in the year under consideration, the assessee had deposited cash in the account held with the bank. Since, the assessee did not file any return of income for the impugned assessment year, the Assessing Officer was entitled to entertain the belief that cash deposits made in the bank account represents the escaped income of the assessee. Therefore, in my view, the Assessing Officer had tangible material available with him to reopen the assessment. Merely because in the reasons recorded the Assessing Officer referred to the account ITA No.9045/Del/2019 AY: 2011-12 4 | Page held with the bank as savings bank account, would not invalidate the reopening of assessment. Therefore, I decline to entertain the grounds raised by the assessee challenging the validity of reopening of assessment under section 147 of the Act. 5. As regards merits of the issue, materials on record clearly reveal that the assessee was in the business of trading in sugar through his proprietary concern M/s. Maa Chand Traders. For the purpose of his business activity, the assessee had opened a current account in the National Cooperative Bank Ltd., wherein, the cash deposits noted by the Assessing Officer were found. From the certificate issued by the concerned bank dated 22 nd February, 2019, it is observed that the assessee has maintained the current account since 03.08.2009 in the name of M/s. Maa Chandi Traders. Further, sample purchase invoices available on record clearly indicate that the assessee had purchased sugar from various entities, which were supported by transport bills. In fact, before the Assessing Officer, the assessee had also furnished confirmation from one of the selling dealers. However, the Assessing Officer has disbelieved the claim of the assessee for the reason that the notice issued under section 133(6) of the Act to the concern parties returned back unserved. This, in my view, ITA No.9045/Del/2019 AY: 2011-12 5 | Page cannot be the sole reason to disbelieve assessee’s claim of carrying out business of trading in sugar. As it appears, the Assessing Officer has not conducted necessary inquiry to establish the fact that the claim of business activity being carried out by the assessee is bogus. 6. On the contrary, the materials indicate that the assessee was in trading activity. That being the case, the contention of the assessee that the deposits in the current account are out of business receipts is believable. More so, when current accounts are general operated for the purpose of business and profession. 7. In view of the aforesaid, I delete the addition of Rs.12,60,800/-. 8. In the result, the appeal is partly allowed. Order pronounced in the open court on 14 th October, 2022 Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 14 th October, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi