RUCHI RAJ FIBRES PVT. LTD.,PANIPAT V. ITO WARD - 5, PANIPAT

ITA 3299/DEL/2024

AI Insights

Ruchi Raj Fibres Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC), which upheld the assessment made by the Income Tax Officer (ITO), Ward-5, Panipat. The ITO had assessed the income of the company at Rs. 34,49,900, significantly higher than the declared income of NIL, based on unexplained cash deposits and unsecured loans. The Tribunal noted that the assessee did not file a return of income for the relevant assessment year and failed to respond adequately to notices and showcause notices issued by the tax authorities. The Tribunal found no merit in the assessee's arguments against the validity of the assessment proceedings under section 147/143(3) of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34900 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: Jugal Kishore Paliwal VS. JCIT, Mehrunnisa Mohamed Fazal Maniar vs. ITO
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Keywords: Invalid notice; Reason to believe; Tangible material
• Section: 147; 148; 143(3); 142(1); 143(2); 131; 133(6); 69A; 234B

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No.3299/Del/2024 (Assessment Year: 2012-13) Ruchi Raj Fibres Pvt. Ltd, Anil Khurana Advocate, 1727, Sector-12, HUDA, Panipat-132103 Vs. ITO, Ward-5, Panipat, Haryana PAN: AABCR6917P Assessee by : NONE Revenue by: Shri Sanjay Kumar, Sr.DR Date of Hearing 11/02/2025 Date of pronouncement 07/03/2025 O R D E R 1. The appeal in ITA No.3299/Del/2024 for AY 2012-13 arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „ld. NFAC‟, in short] dated 18.05.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 dated 28.12.2019 (hereinafter referred to as „the Act‟) by ITO, Ward-5, Panipat (hereinafter referred to as „ld. AO‟). 2. The assessee has raised the following grounds of appeal:- “1. That the Ld. Assessing Officer has grossly erred both in law and on facts in determining income of the appellant at Rs. 34,49,900/- as against declared income of NIL. 2. That the Ld. Assessing Officer has erred both in law and on facts in initiating proceedings under section 147 of the Act and completing assessment under section 147/143(3) of the Act without satisfying the statutory pre-condition under the Act and as such, both the initiation of the proceedings and completion of assessment are without jurisdiction and thus, deserve to be quashed as such. 2.1 That the Ld. Assessing Officer has failed to appreciate that there was no specific relevant, reliable and tangible material on record to form a 'reason to ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 2 belief that income of the appellant had escaped assessment and in view thereof the proceedings initiated are illegal, untenable and therefore unsustainable. 2.2 That initiation of proceedings was mechanical and without any application of mind, therefore the notice issued under section 148 of the Act was an invalid notice and assumption under section 147 of the Act was without jurisdiction. 2.3 That approval granted is a mechanical approval and hence initiation of proceedings under section 147 of the Act on this ground also is invalid. 3. The Ld. Assessing Officer has erred in passing the order under section 147/143(3) without issuing the statutory notice under section 143(2) to the appellant company. As notice under section 143(2) was never served upon the appellant. So all proceedings initiated under section 147 of the Act are bad in law and need to be quashed. 4. The Ld. Assessing Officer has never provided the copy of reason recorded to the appellant company. Therefore, when no procedure for assessment under section 147/143(3) is followed by the Ld. Assessing Officer then all subsequent proceedings are invalid and bad in law. 5. That the Ld. Assessing Officer has erred in making an unjustified addition of Rs. 29,00,000/- under section 69A of the Act, hence not sustainable and liable to be deleted. 6. That the Ld. Assessing officer has erred in treating the cash deposited amounting to Rs. 29,00,000/- by the appellant company as taxable income without considering the reply submitted by the appellant. 7. That the Ld. Assessing Officer has erred in treating the unsecured loans amounting to Rs. 5,49,900/- as taxable income without considering the reply submitted by the appellant. 8. That the Ld. Assessing Officer has further erred in levying interest under section 234A, 2348 and 234C of the Act, which are not leviable on the facts of the instant case. 3. 3. None appeared on behalf of the assessee despite issuance of notice. Hence I proceed to dispose of this appeal on hearing the learned DR and based on materials available on record. The assessee is a company and had not filed its return of income for the Assessment Year 2012-13. There were some cash deposits made in the bank account. The learned AO had reason to ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 3 believe that income of the assessee had escaped assessment and accordingly issued notice under section 148 of the Act on 29-03-2019. No return was filed in response to notice issued under section 148 of the Act. The learned AO obtained the copy of bank account statement together with the KYC details directly from the bank by issuing notice under section 133(6) of the Act. Later a notice under section 142(1) of the Act dated 29-07-2019 was issued along with a detailed questionnaire to the assessee. No reply was received in response to the said notice from the assessee. Thereafter summons under section 131 of the Act was issued on 18-10-2019 to both the Directors of the assessee company. No compliance was made for the same. Another notice under section 142(1) of the Act dated 18-10-2019 was served on the assessee company. In response thereto, Shri Naresh Singla, authorised representative of the assessee appeared and sought an adjournment. Thereafter there was no compliance made by the assessee. The learned AO concluded that the assessee company is not doing any business activity, but had made huge cash deposits in its bank account for which proper explanation was not furnished by the assessee company. The learned AO gathered the balance sheet, audit report and profit and loss account of the assessee company from the ROC website and found that apart from the share capital of Rs 1 lakh, the assessee has shown unsecured loans received from four parties in the sum of Rs 5,49,900/- as on 31-03-2011. The learned AO showcaused the assessee to prove the identity, credit worthiness and genuineness of those unsecured loans. Further in respect of cash deposit of Rs 29 lakhs, a showcause notice was issued to the assessee as to why the same should not be treated as unexplained money in terms of section 69A of the Act. No response was made by the assessee to both the showcause notices and accordingly, the learned AO was forced to complete the assessment by determining the total income of the assessee at Rs 34,49,900/-. ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 4 4. Aggrieved, the assessee preferred an appeal before the learned CITA. Before the learned CITA, the assessee only sought adjournments and did not furnish any details. The learned CITA proceeded to uphold the assessment order by reiterating the findings of the ld. AO. 5. Aggrieved, the assessee had preferred an appeal before this Tribunal. Even before me, there was absolutely no compliance from the side of the assessee. I find that the learned CITA had adjudicated the issue raised in the grounds of appeal by observing as under :- “ANALYSIS: 7.1 I have carefully considered the issues under dispute and examined the same in the light of the facts and circumstances of the case as emanating from the impugned assessment order u/s.143(3) r.w.s.147 of the Act and relevant provisions of the statute. 8.0 In ground No. 2 to 7, the assessee challenged the initiation of proceedings u/s 147 and the validity of the order passed u/s 147/143(3). The assessee contended that the proceedings u/s 147 are not valid as the statutory preconditions are not satisfied, and that there is no tangible material of record to form a reason to believe. Further, the assessee argued that the re-opening was done without independent application of mind and that the approval granted is mechanical and that the AO did not provide the reasons recorded dispose off the objections find against reason to believe. The assessee, further, contended that the assessment order was not passed within the time limit prescribed and that the notice u/s 143(2) was not served. 8.1 As seen from the facts of the case, the assessee did not file the return of income for the year under consideration and the AO has received information that the assessee had made cash deposits during the year under consideration. The AO recorded the reasons and the addition was also made on the same reason for which it was re-opened. Therefore, the contention of the assessee that there was no tangible material to form reason to believe is not tenable. 8.2 Further, the AO has issued the notice u/s 147 after recording the reasons and after obtaining approval from the PCIT, Karnal. The assessee argued that the approval is mechanical. ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 5 8.3 In this regard, reliance is placed on the decision of the Hon'ble High Court of Chhattisgarh in the case of Jugal Kishore Paliwal VS. JCIT (2022) 140 taxmann.com 336 (Chhattisgarh), wherein the Hon'ble High Court has held that where the AO had elaborately recorded reasons to believe that income had escaped assessment on the basis of analysis of information collected/received and findings thereon and communicated the same to the sanctioning authority and the approving authority granted approval based on such reasons recorded and communicated thereon, there is no substance in the submissions filed by the assessee that sanction/approval granted u/s 151 of the Act is bad in law. Accordingly, the Hon'ble High Court has approved reopening of the assessment. 8.5 Also, reliance is placed on the decision of the High Court of Gujarat in the case of Mehrunnisa Mohamed Fazal Maniar vs. ITO [2021] 127 taxmann.com 547 (Gujarat). 8.6 In view of the above, I am of the considered opinion that in the instant case, the sanctioning authority had applied his mind to the reasons recorded by the AO based on information received, therefore, recorded his satisfaction based on the reasons recorded by the AO that the case of the assessee was fit for issuance of notice u/s.148 of the Act. Accordingly, I am of the considered opinion that there is no strength in the assessee's argument that the sanctioning authority did not comply with the provisions of section 151 of the Act. 8.7 With regard to the contentions of the assessee, that the AO did not provide the reasons recorded and did not dispose off the objections on re- opening, the procedure is to file the return of income in response to the notice u/s 148 and then seek reasons recorded. However, in the instant case, the assessee did not file the return of the income in response to notice u/s 148. Therefore, the question of providing the reasons recorded and disposing off the objections do not arise. Further, the assessee did not furnish any evidence to show that it had sought reasons/ filed objections. Therefore, the contentions of the assessee are not tenable. The assessee, further, contended that the assessment order was not passed within the time limit prescribed and that the notice u/s 143(2) was not served. The assessment order was passed on 28.12.2019 which was well within the time limit prescribed by the Act. Further, as the assessee did not file the return of income, the question of issuing notice u/s 143(2) does not arise. 8.8 In view of the above, the ground no. 2 to 7 raised by the assessee on the issue of re-opening and on the validity of the assessment order are dismissed. 9.0 Ground No. 8 and 9 are raised against the AO's action in making addition u/s.69A of Rs.29,00,000/-. ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 6 As seen from the facts of the case, the amount of Rs. 29,00,000 deposited in the Bank account number 11721131000832 in Oriental Bank of Commerce remained unexplained. As per the Balance Sheet gathered from the website of ROC the Assessee has not revealed this bank account because as on 31- 03-2011 the assessee has shown only cash in hand and the opening balance of the account at Rs. 88,402/- has not been shown in the Bank column. SCHEDULE-7 CASH AND BANK BALANCE 565950.06 CASH IN HAND 500249.06 9.1 As the assessee failed to furnish the source of the Cash deposit of Rs. 29,00,000/-, the AO treated the same as unexplained money u/s 69A of the Income Tax Act. \"69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of acquisition of the money, bullion jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the assessing officer satisfactory, the money and jewellery or other valuable articles may be deemed to be the income of the assessee for such financial year.\" 9.2 Further, even during the course of present appellate proceedings, the assessee has failed to rebut the findings of the AO. Under the circumstances, in the absence of any details or documentary evidence forthcoming from the assessee, I am of the considered opinion that the AO rightly made the impugned addition of Rs. 29,00,000/-warranting no interference of the appellate authority. Thus, the Ground No.8 to 9 raised by the assessee on this issue are dismissed. 10.0 Ground No.10 is raised against the AO's action in treating unsecured loans of Rs.5,49,900/- as unexplained The assessee has shown unsecured loan amounting to Rs. 5,49,900/- in the balance sheet of 31-03-2012. As the assessee failed to prove the identity, creditworthiness and genuineness of the loan creditors, the AO treated the same as unexplained and made an addition of Rs. 5,49,900/-. Further, even during the course of present appellate proceedings, the assessee failed to furnish any details/ documentary evidence to prove the identity, creditworthiness and genuineness of the loan creditors. Therefore, I am of the considered opinion that the AO rightly made the impugned addition of Rs. 5,49,900/- warranting no interference of the appellate authority. Thus, the Ground No.10 raised by the assessee on this issue is dismissed. ITA No.3299/Del/2024 Ruchi Raj Fibres Pvt. Ltd Page | 7 11.0 Ground No.11 is raised against the AO's action in charging interest u/s.234A, 234B and 234C of the Act.” 6. No arguments were advanced by the assessee to controvert the aforesaid findings of the learned CITA. Hence, we do not deem it fit to interfere in the order of the learned CITA in the instant case. Accordingly, the grounds raised by the assessee are dismissed. 7. The appeal of the assessee is dismissed. Order pronounced in the open court on 07/03/2025. -Sd/- (M. BALAGANESH) ACCOUNTANT MEMBER Dated:07/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "