RAJANEE MAHAJAN,DELHI V. PCIT, GHAZIABAD

ITA 2753/DEL/2024

AI Insights

The case involves appeals by Rajanee Mahajan against the orders of the Principal Commissioner of Income-tax, Ghaziabad, which revised the assessments for the assessment years 2014-15 and 2015-16. The revisions were based on the finding that the Assessing Officer had erroneously accepted the assessee's explanations for large cash deposits in her bank accounts, claimed to be from her business in sports goods, without any supporting evidence or proper inquiry. The PCIT noted several discrepancies and lack of substantiation in the assessee's claims, leading to the conclusion that the original assessments were not only erroneous but also prejudicial to the interests of the revenue. The Tribunal, after reviewing the submissions and evidence, concurred with the PCIT's findings and dismissed the appeals.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 40554 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR YADAV
• Assessee Lawyers: SAURABH PAWAR
• Keywords: Assessment record
• Section: 147; 263; 40A(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCHES “F”, NEW DELHI BEFORE : SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA Nos. 2752 & 2753/Del/2024 Assessment Years: 2014-15 & 2015-16 Rajanee Mahajan, F-17, Meenakshi Puram, Mawana Road, Meerut-250001. Vs. Pr. CIT, Ghaziabad. PAN : CATPM2404F (Appellant) (Respondent) ORDER Per Annapurna Gupta, Accountant Member: Both the present appeals have been filed by the same assessee against the orders passed by the learned Principal Commissioner of Income-tax, Ghaziabad [in short “PCIT] u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). 2. As is evident from the bare perusal of the orders of learned PCIT, the impugned orders passed u/s. 263 of the Act has sought revision of the orders passed u/s. 147 of the Act in both the years in the case of the assessee on an identical issue. The order of the ld. PCIT reveals that he Assessee by Sh. Saurabh Pawar, CA Sh. Dinesh Kumar, CA Department by Sh. Sunil Kumar Yadav, CIT/DR Date of hearing 24.03.2025 Date of pronouncement 28-03-2025 ITA No.2752 & 2753/Del/2024 2 | P a g e found the assessment order passed u/s. 147 by the Assessing Officer to have been erroneously passed by blindly accepting of the contentions made by the assessee explaining the source of cash deposits in her bank account to the tune of Rs.1.16 crores in A.Y. 2015-16 and Rs.2.81 crores in A.Y. 2014-15 as arising from her business in dealing in sports goods without a shred of evidence being filed by the assessee in support of the same and the Assessing Officer conducting no enquiry, whatsoever before believing the contention of the assessee. Learned PCIT noted that the Assessing Officer accepted the assessee’s contention of the cash deposits arising from her business of dealing in sports goods and thereafter subjected to tax the net profit arising there from estimating it @ 2% of the cash deposited in her bank account. The learned PCIT, we have noted has passed a detailed order recording several facts pointing out the erroneous acceptance of the Assessing Officer of the explanation of the assessee of the cash deposits arising from her sports goods business. In para 3.1 of his order, he notes that the assessee had given two different stories on two occasions, which remained un-substantiated for explaining the source of cash deposits in her bank account. The order notes that in response to summons issued by the Dy. Director of Income-tax, Unit-II, Meerut on different occasions, the assessee submitted the banking transactions to relate to the ITA No.2752 & 2753/Del/2024 3 | P a g e partnership firm M/s. Misha Sports, in which her husband Shri Deepak Mahajan is a partner. But during the assessment proceedings, the assessee submitted the receipts to be in relation to her own business of trading in sports goods. Learned PCIT notes that despite these two different stories given by the assessee, the Assessing Officer made no efforts to seek explanation regarding the same from the assessee. Learned PCIT further notes that not a single evidence with respect to existence of the business was filed. No books of account were maintained by the assessee and even principal place of business, godown, trading expenses, opening and closing stocks, which are all basic ingredients of any business were missing in the case of the assessee and the AO made no enquiry with respect to the same. Learned PCIT further notes that against cash deposits of 3.27 crores in her bank account in A.Y. 2014-15, there were huge withdrawals of Rs.3.31 crores. The assessee is running voluminous business, but there was no expenses incurred on hiring of professionals and employees etc. which again was not looked into or enquired by the Assessing Officer . Learned PCIT notes that the assessee had submitted to have made all purchases from unregistered manufacturers and their handmade bills were provided to the AO, but the AO neither conducted any enquiry or verification of the same nor questioned the genuineness of these parties ITA No.2752 & 2753/Del/2024 4 | P a g e and merely accepted it as such. Learned PCIT notes all the purchases to have been made in cash in excess of the limits prescribed for cash purchases warranting disallowance u/s. 40A(3) of the Act and the AO to have completely ignored this aspect. PCIT further notes, the assessee to have made sales to various parties at different locations of India, but surprisingly, there were made no selling expenses, freight and cartage expenses and no query raised by the Assessing Officer in this regard. Noting all these facts, learned PCIT concluded that the AO has accepted the assessee’s explanation of the cash deposits in her bank account to be arising from her business or trading in sports goods without conducting any enquiry or investigation and without there being any evidence on record substantiating the claim of the assessee of running a sports goods business. The detailed findings of learned PCIT in this regard are contained at para 3 of his order as under : “3. From perusal of assessment records and replies of the assessee submitted during the revision proceedings, for the year under consideration, following discrepancies/errors have been noticed:- i) That in compliance to Summons issued by the Dy. Director of Income Tax(Unit-II), Meerut on different occasions, the assessee submitted vide her reply dated 07.06.2019 that the banking transactions actually relates to the partnership firm M/s. Misha Exports in which her husband namely Sh. Deepak Mahajan is a partner. The assessee also furnished some wild reasons for such transactions which could not be held justifiable and supported by any documentary evidences. But during the assessment proceedings before the JAO, the assessee submitted vide her reply dated 26.03.2022 that she is in the business of trading of sports goods having its principal place of business at Meerut Further, ITA No.2752 & 2753/Del/2024 5 | P a g e she also submitted that all the transactions in the bank account are related to sales proceeds of goods of her own business. The assessee presented two different stories at two different occasions which remain unsubstantiated. The assessee herself had put a big question mark on the existence of her business activities by presenting two different stories at two different occasions. But the Assessing Officer has blindly accepted the theory of banking transactions out of sale proceeds of business without examining and verifying the existence of a separate business of the assessee. ii) That throughout the assessment proceedings, the assessee could not provide a single documentary evidence with respect to existence of her business. No Books of account is being maintained by the assessee, which is mandate of the statute. Even the principal place of business, Godown, trading expenses, Opening and Closing stocks etc, which are basic ingredients of any business and the same are missing in the case of the assessee. iii) That nowhere during the course of assessment or revision proceedings, the assessee even tried to describe the business model on which she was conducting her business spread over the different cities of India. The Assessing Officer at no instance enquired and questioned the existence of business. The assessee belongs to a business family where her husband is also running a business in the capacity of a partner in partnership firm namely M/s. Misha Sports and the firm is complying with the mandate of the statute. Under these given circumstances, the plea of the assessee that she was not aware about the maintenance of Books and Audit requirement of Books of account, filling of ITR etc. are totally unacceptable. iv) That throughout the proceedings, the assessee tried to present fabricated story regarding deposition of cash out of sale proceeds of her purported business, which had been wrongly accepted by the Assessing Officers without applying his investigative and judicious mind while assessing the income of the assessee on presumptive basis. v) That out of total credit of Rs. 4.17 crore, there is cash deposits to the tune of Rs.3.27 crore from different locations across the country. Further, there is also substantial cash withdrawal to the tune of Rs. 3.31 crore. For running such a voluminous business, the assessee must had also incurred proportionate expenses. on hiring of professionals/employees etc but on perusal of P&L Account, it appears that the assessee was running this business on her own without any assistance which is again beyond human prudence. vi) That throughout the assessment, the AO never tried to enquire about the Bank accounts held by the assessee other than that of the ICICI bank account for which information was available. ITA No.2752 & 2753/Del/2024 6 | P a g e vii) That the assessee submitted that all the purchases were made from unregistered manufactures and their hand made bills were provided to substantiate her purchases but the genuineness of these parties were never questioned by the AO. Instead the AO just accepted these purchases without any verification or enquiry. Further, all these purchases were made in cash in excess of limits prescribed for the cash purchases. The AO completely ignored the applicability of Section 40 A(3) of the I.T. Act, 1961. viii) That the assessee submitted that sales were made to parties situated at different locations of India who were not her regular customers. But surprisingly, there is no selling expense, freight & cartage expense and other related expenses debited to P&L Account. To support her contention, the ITR of the family concern namely M/s Misha Sports for the relevant previous year was furnished, which fails to substantiate assessee's claim, ix) That as per the P&L Account submitted by assessee, gross sales has been shown at Rs. 3,38,94,328/-whereas the credit entries of the bank account is on much higher side. No effort has been made by the AO to arrive at true and accurate volume of transaction. No enquiry was made by the AO from concerned Bank and related parties(sale/purchase).” 3. Before us, learned counsel for the assessee was unable to controvert any of the factual findings of the ld. PCIT with regard to there being nothing on record substantiating assessee’s claim of running a sports equipments trading business. The assessee was also unable to controvert the findings of the ld. PCIT of there being several anomalies in the manner of conducting business noted by the ld. PCIT, which created doubt about the existence of any sports business carried out by the assessee at all. During the course of hearing, learned counsel for the assessee was asked whether the assessee had in the past ever filed return declaring income from sports trading activities, to which he replied ITA No.2752 & 2753/Del/2024 7 | P a g e in the negative. In the light of the same, we see no reason to interfere with the orders of learned PCIT holding the assessment orders passed in the case of the assessee for both the years, ie. 2014-15 and 2015-16 u/s. 147 of the Act to be erroneous so as to cause prejudice to the revenue since it is an undisputed fact that the Assessing Officer had accepted the assessee’s explanation of the huge cash deposited in her bank account to the tune of Rs.3.27 crores in different assessment years as arising from her business activities without a shred of evidence on record in this regard. We are in complete agreement with the ld. PCIT that the impugned assessment orders passed by the AO are without any enquiry and we concur with the ld. PCIT that the orders passed by the Assessing Officer u/s. 147 are erroneous causing prejudice to the interest of revenue. 4. Both the appeals of the assessee are, therefore, dismissed. Order pronounced in the open court on 28-03-2025. Sd/- Sd/- (SATBEER SINGH GODARA) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28-03-2025 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Delhi "