RAJESH KUMAR DALMIA,SURAT V. I.T.O., WARD - 6(1), KOLKATA

ITA 1859/KOL/2024

AI Insights

The case involves Rajesh Kumar Dalmia, who appealed against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 6,50,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. This amount was deposited in Dalmia's bank account during the demonetization period. The primary contention was the validity of the notices issued under sections 143(2) and 142(1) of the Act, which the assessee argued were issued without jurisdiction. The Tribunal noted the assessee's failure to provide sufficient evidence during the initial proceedings and allowed a remand for a fresh assessment, emphasizing the need for a fair opportunity to be heard.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33490 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: Kale Khan Mohd. Hanif vs CIT, Roshan di Hatti vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAK DATTA
• Assessee Lawyers: P. M. JAGASHETH
• Keywords: Set aside; Opportunity of being heard; Unexplained cash credit; Principle of natural justice
• Section: 143(3); 142(1); 143(2); 68

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH KOLKATA BEFORE SHRI SONJOY SARMA, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No. 1859/KOL/2024 (Assessment Year 2017-18) Rajesh Kumar Dalmia, B-3, Flat No. 803, Nandni One, Vesu, Surat - 395007 (PAN: AMXPD1909Q) Vs Income Tax Officer, Ward 6(1), Kolkata, P-7, Chowringhee Square, Kolkata - 700069 (Appellant) (Respondent) Present for: Appellant by : P.M. Jagasheth, C.A. Respondent by : Rajak Datta, Sr. DR Date of Hearing : 02.12.2024 Date of Pronouncement : 01.01.2025 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), Addl./JCIT(A)-9, Mumbai [hereinafter referred to as “the Ld. Addl./JCIT(A)”], dated 27.05.2024 which has been passed against the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 16.12.2019. 2. The grounds of appeal raised by the assessee are reproduced as under: “1 On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.6,50,000/- on account of cash deposited in bank account during the demonetisation period treated as alleged unexplained cash credit u/s.68 of the Income tax Act, 1961. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in issuing notice u/s.143(2) of the Income Tax Act, 1961 on 24.09.2018 by the ITO, Ward-6(1), Kolkata without the Jurisdictional Authority, so the notice u/s.143(2) of the Income Tax Act, 1961 is 2 ITA No. 1859/Kol/2024 Rajesh Kumar Dalmia, AY: 2017-18 invalid and void ab initio. Hence the Assessment order u/s.143(3) of the 1.T. Act, 1961 is void ab initio. 3. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in issuing notices u/s.142(1) of the Income Tax Act, 1961 and passing Assessment Order u/s.143(3) of the I.T. Act, 1961 by the ITO, Ward- 6/11, Kolkata without the Jurisdictional Authority. Hence, the Assessment order u/s 143(3) of the I.T. Act, 1961 is invalid and void ab initio. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has not offered adequate opportunities to hear, hence, the case may please be set aside and restored back to the CIT(A) or AO for sake of the interest of natural justice. 5. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. Brief facts of the case are that the assessee, an individual had filed his return of income for A.Y. 2017-18 on 30/07/2017 declaring income of ₹6,08,660/-. The case was selected for Scrutiny under \"CASS\" with the reason - \"Abnormal increase in cash deposits during demonetization period i.e. the period 09/11/2016 to 30/12/216\". Accordingly, notice u/s 143(2) of the Act was issued on 24/09/2019 and duly served upon the appellant. As per the data analytics of Operation Clean Money available, the appellant had deposited Specified Bank Notes (SBNs) to the tune of Rs 6,50,000/- during the period of demonetization (09/11/2016 to 30/12/2016) in his bank account no. 01119878801 with Kotak Mahindra Bank, Ring Road Branch, Surat. Notices u/s 142(1) of the Act were issued on 10/10/2019, 26/08/2019, 30/10/2019, 201/11/2019 & 08/12/2019 calling for specific details. After analysing the reply of the appellant, a sum of Rs. 6.50,000/- was treated as unexplained cash credits u/s. 68 of the Act and taxed in the hands of the appellant. 5. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. Addl./JCIT(A)-9 Mumbai, who dismissed the appeal of the assessee. Aggrieved with the order of the Ld. Addl./JCIT(A), the assessee has challenged the appeal before us. 3 ITA No. 1859/Kol/2024 Rajesh Kumar Dalmia, AY: 2017-18 6. During the course of the appeal, the Ld. AR brought our attention to para 6.2.3 of the order of the Ld. Addl./Jt. CIT(A), which is extracted as under: “6.2.3. The appellant has contended that he is engaged in arranging loans for clients and agents. He has merely forwarded a list of 31 persons with their PANs and Mobile Nos. No cognizance of this can be taken as the appellant has failed to file any application u/r 46A of the IT Rules, 1962 (herein after referred to as the Rules) to justify the source of cash deposit in SBNs during demonetization period which has been added by the Ld. AO. During the stage of appellate proceedings, the appellant has not bothered to bring any documentary evidences in support of his claim to controvert the findings of the AO. I am therefore of the considered view that there is no infirmity in the action of the AO in treating the cash deposits in SBNs during demonetization period to the tune of Rs. 650,000/- as unexplained cash credits u/s. 68 of the Act and taxing the same in the hands of the appellant. I am further fortified by the following decisions: a. Kale Khan Mohd. Hanif vs CIT [1963] 50 ITR 1 (SC) dated 08/02/1963 where the Hon'ble Apex Court has held that \"It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the ITO is entitled to treat it as taxable income\". b. Roshan di Hatti vs. CIT [1977] 107 ITR 938 (SC) dated 08/03/1977 where the Hon'ble Apex Court has held that \"where nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by assessee, it is open to revenue to hold that it is income of assessee and no further burden lies on revenue to show that that income is from any particular source\" Respectfully following the decisions of the Hon'ble Apex Court supra, the addition is sustained and the ground of appeal is Dismissed. As a result, the appeal stands Dismissed.” 7. Rival contentions were heard and the record and the submissions made have been examined. The Ld. AR requested for sending back the matter to the Ld. Addl./Jt. CIT(A) for deciding afresh as the assessee has sufficient evidence which can be filed in case an opportunity of being heard is granted as proper representation could not be made earlier. Before the Ld. Addl./Jt. CIT(A), the assessee also submitted that he was engaged in getting loans from financial institutions for his clients and agents and the amounts received were not unsecured loans but advances from clients for purchase of stamp papers etc. It was contended that both section 269SS and 269T of the Act could not be invoked but this issue 4 ITA No. 1859/Kol/2024 Rajesh Kumar Dalmia, AY: 2017-18 was not adjudicated because the same was not the subject matter of appeal. The Ld. DR relied upon the order of the Ld. Addl./Jt. CIT(A) and requested that the same may be upheld. 8. We have considered the submissions made before the Ld. Addl./Jt. CIT(A) as well as well before us. Admittedly, the appeal has been dismissed by relying upon the decisions of the Hon’ble Supreme Court in the cases of Kale Khan Mohd. Hanif (supra) and Roshan di Hatti (supra) and the Ld. Addl./Jt. CIT(A) did not take cognizance of the list of 31 persons with their PANs and mobile nos. for justifying the source of cash deposit in SBN during demonetization period which had been added by the Ld. AO as the assessee failed to file any application under rule 46A of the Income Tax Rules, 1962. The assessee contends that he has documentary evidence which can be filed before the Ld. Addl./Jt. CIT(A). Therefore, in the interest of justice, we deem it appropriate that last opportunity may be provided by the Addl./Jt. CIT(A) and her order is set aside to be done afresh after giving an opportunity for being heard to the assessee. The assessee shall file all necessary documents in support of the relief claimed and shall not seek any unnecessary adjournment. Hence Ground No. 4 of the appeal is allowed while Ground Nos. 5 and 6 being general in nature do not require any separate adjudication. The Ld. Addl./Jt. CIT(A) shall decide the other grounds of appeal raised before us on which we are expressing no opinion. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 1st January, 2025. Sd/- Sd/- (Sonjoy Sarma) (Rakesh Mishra) Judicial Member Accountant Member Dated: 1st January, 2025 AK, PS 5 ITA No. 1859/Kol/2024 Rajesh Kumar Dalmia, AY: 2017-18 Copy to: 1. The Appellant: 2. The Respondent. 3. The Addl./Jt. CIT(A) 4. The CIT, 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata 1. Date of Dictation………………………………………. 2. Date on which the typed order is placed before the dictating Member and other Member…………………………………………….. 3. Date on which the order came back to Sr. PS…………………………………… 4. Date on which the file goes to the Bench Clerk………………………………… 5. Date on which the file goes to the O.S………………………………… 6. Date on dispatch of the order……………………………………… "