JAGDISH LAL,BHIWANI V. ITO , BHIWANI

ITA 1800/DEL/2023

AI Insights

The case involves Jagdish Lal, the proprietor of M/s Jagdish Cycle Store, who appealed against the order of the Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, which arose from an earlier order by the National Faceless Assessment Centre. The reassessment was initiated under Section 147 read with Section 144B of the Income Tax Act, 1961, for the assessment year 2015-16, based on allegations of unexplained cash credits amounting to Rs. 11,60,000 linked to a money laundering racket. The Tribunal's decision focused on the improper application of legal provisions for reassessment, leading to the quashing of the reassessment order.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 30470 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Unexplained cash credit; Accommodation entries
• Section: 147; 148; 139(1); 68; 69

Judgement Text

"1 ITA no. 1800/Del/2023 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI Ms. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 1800/DEL/2023 Assessment Year: 2015-16 Jagdish Lal, Prop. M/s Jagdish Cycle Store, Charkhi Dadri, Bhiwani-127306 PAN- AATPL 7671 B Vs Income-tax Officer, Charkhi Dadri. APPELLANT RESPONDENT Assessee represented by Shri Bharat CA Department represented by Sh. Sanjay Kumar, Sr. DR Date of hearing 25.02.2025 Date of pronouncement 27/03/2025 O R D E R PER Ms. MADHUMITA ROY, JM: The instant appeal, filed by the assessee, is directed against the order dated 10.04.2023 passed by the learned Commissioner of Income-tax (Appeals)/ National Face Less Appeal Centre (NFAC), Delhi, arising out of the order dated 25.03.2022 passed by the National Faceless Assessment Centre, Delhi under Section 147 read with section 144B of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), for assessment year 2015-16 2 ITA no. 1800/Del/2023 2. Facts of the case, in brief, are that the assessee filed his return on 8.9.2015 under Section 139(1) of the Act declaring total income at Rs. 8,19,360/-. Subsequently it was found that the assessee had taken accommodation entries of Rs. 11,60,000/- from one Shri Vipin Garg as a part of huge money laundering racket during F.Y. 2014-15. Though the total taxable income of the assessee was exceeding the maximum amount which is not chargeable to tax, the assessee had not filed the return of income and the Revenue opined that the assessee had escaped income to the tune of Rs. 11,60,000/- within the meaning of Section 147 of the Act. Upon recording reasons for reopening of the case under Section 147 of the Act and upon obtaining the necessary approval notice under Section 148 dated 28.2.2021 was issued and served upon the assessee, in compliance whereof the assessee filed his return on 01.4.2021 showing total income at Rs. 8,19,360/-. 3. The assessee is engaged in the business of sale of cycles as proprietorship concern and claimed to have sold 1056 units of electric fans by raising bills to the firm M/s S.N. Brothers. In support of the same the assessee duly submitted the ledger of Alok Distributor claiming the purchase of those fans. Since supporting bills and other documents were not produced in respect of the identity as well as genuineness of the person, that was not accepted by the Learned AO and finally the reassessment was completed upon making addition of Rs. Rs. 11,60,000/- treating 3 ITA no. 1800/Del/2023 the amount received by the assessee from M/s S.N. Brothers as unexplained cash credit under Section 68 of the Act, which was further confirmed by the First Appellate Authority. Hence, the instant appeal before this Tribunal. 4. I have heard rival submissions made by the respective parties. I have also considered the relevant materials available on record. The assessee joins the issue to the effect that the addition of Rs. 11,60,000/- is hypothetical figure to the returned income of the assessee and inspite of asking for the computation or calculation or the basis of which addition was determined to the tune of Rs. 11,60,000/- nothing was provided by the Learned AO to the assessee. Further, that the assessment made under Section 69 is only sustainable in the eyes of law when specific and identified credit entry is found in the account of the assessee which remains unexplained or not satisfactorily explained. Further, that though the Learned AO added the said amount in the hands of the assessee the same has been claimed to have been done without jurisdiction as the amount is already declared as turnover and the same is reflected in the books of account of the assessee the same will lead to double taxation on the same amount. It is relevant to mention that confirmation has also been issued by the said Alok distributor on 23.3.2022 certifying that the assessee before us is the authorized dealer for sale of Orient fans in Charkhi Dadri during the year 2012-13, 2013-14 and 2014-15, statement of 4 ITA no. 1800/Del/2023 account whereof were duly attached and copy of the same has also been annexed in the paper book filed by the assessee before us. It further appears from the reasons recorded by the AO that provision of sub-clause (1) of Explanation 2 to Section 147 of the Act has been invoked. It is trite law that such clause is applicable only in the case where the assessee has not filed the return of income whereas the assessee has duly filed the return of income for the year under consideration which is reflecting from the order of assessment dated 25.03.2022 itself. Hence, recording of reasons invoking the provisions of law which is not applicable to the case of the assessee renders the assessment invalid, void ab initio and thus liable to be set aside as the case made out by the assessee is found to be acceptable which is also not controverted by the learned DR at the time of hearing. 5. Thus, for the reasons as mentioned hereinabove, the reassessment proceeding itself is found to be not maintainable in the eyes of law and, thus, quashed. 7. Appeal of the assessee is thus allowed. Order pronounced in open court on 27/03/2025. Sd/- (Ms. MADHUMITA ROY) JUDICIAL MEMBER *MP* "