NASIMBANU MIRZA,AHMEDABAD V. THE ITO, WARD-3(2)(8)- CURRENTLY THE ITO, WARD-3(2)(1), AHMEDABAD

ITA 376/AHD/2024

AI Insights

This case involves an appeal by Nasimbanu Mirza against the order of the National Faceless Appeal Centre (NFAC), which confirmed the additions made by the AO for the Assessment Year 2011-12. The AO had initiated proceedings under section 147 of the Income Tax Act, 1961, after discovering unexplained cash deposits totaling Rs. 49,18,500 in the assessee's bank account. The assessee failed to file a return of income for the relevant assessment year and did not comply with notices under sections 142(1) and 148 of the Act. The Tribunal dismissed the appeal, agreeing with the lower authorities that the cash deposits were unexplained and constituted income from an unexplained source.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25184 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Other Referred Cases: Vasantkumar Prahladbhai Kanudawala ITA No. 462/Ahd/2019, Smt. Mariyam Ismail Rajwani in ITA No. 676/Ahd/2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAVAN LIMBASIYA
• Assessee Lawyers: FOZIYA SAIYED
• Keywords: Set aside; Opportunity of being heard; Reason to believe
• Section: 147; 148; 144; 142(1); 271(1)(c); 133(6); 274

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. Nos. 376/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year: 2011-12) NASIMBANU MIRZA B/67, Mayurpark Society, Opp. Bibi Talab, Vatva, Daskroi, Ahmedabad, Gujarat - 382440 बनाम/ Vs. ITO Ward-3(2)(1), Ahmedabad èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : BFKPM6262E (Appellant / Cross Objector) .. (Respondent) Assessee by : Ms. Foziya Saiyed, A.R. Revenue by : Shri Kavan Limbasiya, Sr. DR Date of Hearing 25/03/2025 Date of Pronouncement 27/03/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi (in short ‘the CIT(A)’) dated 03.01.2024 for the Assessment Year 2011-12. 2. The brief facts of the case are that the assessee didn’t file her return of income for A.Y. 2011-12. The AO had received an information that the assessee had deposited cash of Rs.49,18,500/- in her saving bank account with Bank of India, Vatva Branch, Ahmedabad during the F.Y. 2010-11. As no return ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 2 – of income was filed by the assessee the AO had reason to believe that income of the assessee chargeable to tax had escaped assessment. Therefore, proceeding u/s 147 of Income tax Act, 1961 (in short ‘the Act’) was initiated by the AO after recording the reason and a notice u/s 148 of the Act issued on 28.03.2018. There was no compliance by the assessee to the said notice as well as to the subsequent notices issued u/s 142(1) of the Act. The AO, therefore, completed the assessment ex-parte u/s 144 r.w.s 147 of the Act on 21.12.2018 at total income of Rs.50,13,790/-. Apart from addition of Rs.49,18,500/- on account of unexplained cash deposit in the bank account; addition of Rs.95,289/- was also made in respect of interest income. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which has been decided vide the impugned order and the appeal of the assessee was dismissed. 4. Now, the assessee is in second appeal before us. The following grounds of appeal have been taken in this appeal: 1). On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in passing the order, without granting sufficient opportunity of being heard to the appellant. 2). On the facts and in the circumstances of the case as well as in law, the Ld. CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of income of Rs.50,13,790/- without considering the facts and circumstances of the case. 3). The Appellant requests that the appeal may be admitted and addition of Rs.50,13,790/- made in respect of cash deposit of Rs.49,18,500/- and 95,294/- of other income be deleted. Also, ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 3 – consequent penalties / late fees / fine under section 274 read with section 271(1)(c) or any other section and interest under section 234A,234B, 234C, 234D or any other section should be deleted. 4). The appellant craves leave to add, amend, alter or delete the said ground of appeal. 4.1 The assessee has also raised an additional ground as under: 5). On the facts and in the circumstances of the case as well as in law on the subject the Learned Assessing Officer has heard in reopening assessment under section 147 by issuing notice under section 148 of the Income Tax Act 1961, 5. Ms. Foziya Saiyed, the ld. A.R. of the assessee submitted that the assessee being a lady was not conversant with the procedure of Income-tax proceedings, hence, no compliance could be made by her before the AO in the course of assessment proceeding. However, proper compliance was made before the ld. CIT(A) and the source of cash deposits in the bank account was duly explained. It was explained that the assessee was having a proprietary business of trading in clothes and that the cash deposits in the bank account represented her cash sales. It was further submitted that a copy of the cashbook was also filed before the ld. CIT(A) and a request was made that only the profit arising out of the cash sales deposited in the bank account should be subjected to tax. However, the ld. CIT(A) did not correctly appreciate the submissions of the assessee and confirmed the addition. Taking a u-turn from the submissions as made before the CIT(A), the ld. AR submitted that the cash depolits in the bank account of the assessee represented the sale proceeds of land made by assessee’s father. She, therefore, requested that the matter may be set aside to the AO with a direction to examine the ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 4 – source of the cash deposits afresh. The ld. AR further submitted that the assessee had taken a legal ground on the reopening of the case and contended that the reopening of the case only on the basis of cash deposit in the bank account was not proper as such information could not have led to formation of belief of escapement of income. In this regard, she relied upon the decisions of Coordinate Bench of this Tribunal in the case of Vasantkumar Prahladbhai Kanudawala ITA No. 462/Ahd/2019 dated 29/03/2023 and Smt. Mariyam Ismail Rajwani in ITA No. 676/Ahd/2016 as well as other decisions. 6. Per contra, Shri Kavan Limbasiya, the Ld. Sr. DR supported the orders of the AO & Ld. CIT(A). He submitted that the ld. CIT(A) had rightly rejected the explanation of the assessee as no evidence was brought on record in respect of trading activity. No bills and vouchers and any other documentary evidences were brought on record in respect of the purchases and the sales as made by the assessee. The ld. Sr. DR submitted that the assessee had now taken a totally different stand to explain the cash deposits without bringing on record any documentary evidence. He also supported the reopening the case of the case and submitted that the AO had made inquiry from the assessee before reopening the case but no compliance was made by the assessee. 7. We have considered the rival submissions. The Ground No.-1 pertains to not allowing sufficient opportunity of being heard by the ld. CIT(A). We do not find any merit in this ground as the CIT(A) had not only allowed sufficient opportunity to the ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 5 – assessee but also considered the explanation of the assessee in respect of cash deposits. Therefore, this ground is dismissed. 8. Ground Nos.- 2 & 3 pertain to addition of Rs. 50,13,790/-. It is found that no compliance was made by the assessee in the course of assessment proceeding and the source of cash deposit of Rs.49,18,500/- in the bank account of the assessee was not explained. The AO had conducted inquiry from the bank u/s 133(6) of the Act and obtained a copy of the bank statement. From the extract of the bank statement reproduced in the assessment order, it is found that total cash deposit of Rs.49,18,500/- was made in the bank account on eighteen different occasions during the period from 05/04/2010 to 13/08/2010. It also transpired that the assessee had made investment in FD of Rs.30,00,000/- during the year. Further interest on savings bank account and on FD was also received by the assessee during the year. In the absence of any explanation by the assessee, the AO had considered the entire cash deposit of Rs.49,18,500/- as income of the assessee from unexplained source and addition of Rs.95,289/- was also made on account of interest income. Before the ld. CIT(A) the assessee had contended that she was having a proprietary business of trading in clothes and that the cash deposits in the bank account represented her sale proceeds. However, no bills, vouchers and any other documentary evidence were brought on the record in support of the trading activity carried on by the assessee. The ld. CIT(A) had examined the cash book of the assessee and found that all the sale proceeds were in round figures and no details of purchases, indirect expense and administrating expenses were ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 6 – appearing in the cash book. He, therefore, rejected the explanation of the assessee and confirmed the addition as made by the AO. Before us also no evidence has been brought on record in support of the trading activity carried on by the assessee. A copy of the cash book filed before the CIT(A) is appearing in the paper book filed by the assessee and it is found that the cashbook contains entries for sales only and no transaction in respect of purchases or any other expense is recorded therein. Further, the assessee has not explained as to why this cash book was only for the period from 2nd April, 2010 to 29th October 2010. We, therefore, don’t find anything wrong with the conclusion of ld. CIT(A) that the evidence produced by the assessee before him was an afterthought and concocted evidence. 9. Before us, the assessee has now submitted that the source of cash deposits in the bank account was the sale proceeds of certain immovable property made by her father. By making this submission, the assessee has admitted that the evidence filed before the ld. CIT(A) was incorrect. Further, no evidence has been brought on record before us in support of the fresh contention that the cash deposits in the bank account represented sale proceeds of the property made by the father of the assessee. No documentary evidence for sale of any property by the father of the assessee has been produced nor the reason for cash deposit in the bank account in 18 tranches during the period from 05/04/2010 to 13/08/2010 has been explained. In the absence of any evidence in support of the fresh explanation as made before us, the request of the assessee to set aside the matter to the file ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 7 – of the AO cannot be acceded. Further, due to failure of the assessee to provide any cogent explanation for the source of cash deposits in the bank account, the additions as made by the AO is confirmed and the order of the ld. CIT(A) is upheld. The grounds taken by the assessee are dismissed. 10. The assessee has taken an additional legal ground on the issue of reopening u/s 147 of the Act. The contention of the assessee is that the AO could not have derived the satisfaction that the income had escaped assessment only on the basis of information in respect of cash deposits in the bank accounts of the assessee. A copy of the reason recorded by the AO has been brought on record in the paper book. It is found therefrom that after getting the information regarding cash deposits in the bank account the AO had sent a query letter to the assessee to which no response was made. Further, the AO had also considered the fact that no return of income for AY 2011-12 was filed by the assessee. Considering the information as received as well as these facts the AO had recorded a proper reason u/s 147 of the Act and initiated proceeding u/s 148 of the Act after obtaining approval of the PCIT. We do not find anything wrong with the reason as recorded by the AO. It is a settled position that the Court cannot go into sufficiency or adequacy of the material and cannot substitute its own opinion as to whether action should be initiated for reopening the assessment. At the stage of initiation of reassessment proceeding, all that is required to be seen, is the existence rather than adequacy of the material, to come to the conclusion that income had escaped assessment. We are of the ITA Nos. 376/Ahd/2024 [Nasimbanu Mirza] A.Y. 2011-12 - 8 – considered opinion that materials were in existence before the AO to initiate proceeding u/s 147 of the Act. The facts of the decisions relied upon by the assessee are found to be different and not applicable to the facts of the present case. Therefore, the additional legal ground as taken by the assessee is dismissed. 11. In the result, the appeal of the assessee is dismissed. This Order pronounced on 27/03/2025 Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 27/03/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "