SATPAL,FARIDABAD V. INCOME TAX OFFICER, DELHI

ITA 5698/DEL/2024

AI Insights

The case involves Satpal, the appellant, who contested the reopening of his income tax assessment for the Assessment Year 2015-16 by the Income Tax Officer (ITO), NFAC, Delhi. The reopening was based on unsubstantiated cash deposits in his bank account, which the AO treated as unexplained income. The assessee challenged the reopening and the subsequent additions made under sections 69A and 115BBE of the Income Tax Act. The Tribunal examined the validity of the reopening, the rejection of the income tax return, and the merits of the additions made. The Tribunal's decision highlighted the importance of substantiating cash deposits and the procedural correctness of reopening assessments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771966 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2015-2016
• Other Referred Cases: Pr.CIT vs Smt. Krishna Devi, Nilesh Agrawal HUF vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARPAT SINGH
• Assessee Lawyers: RAJENDRA AGGARWAL
• Keywords: Set aside; Reopening of assessment; Competent authority
• Section: 147; 148; 144; 143(3)

Judgement Text

"ITA No.5698/Del/2024 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “G” BENCH: NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.5698/Del/2024 [Assessment Year : 2015-16] Satpal, VPO Baroli, Sectior-80, Greater Faridabad, Vijay Nagar, Sagarpur, Faridabad, Haryana-121004. PAN-AWWPS5392K vs ITO, NFAC, Delhi APPELLANT RESPONDENT Appellant by Shri Rajendra Aggarwal, CA Respondent by Shri Narpat Singh, Sr.DR Date of Hearing 24.06.2025 Date of Pronouncement 28.08.2025 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the assessee against the order dated 12.11.2024 passed by Ld. Commissioner of Income Tax (A), National Faceless Appeal Centre (“NFAC”), Delhi [“Ld.CIT(A)”] in Appeal No. NFAC/2014-15/10165957 passed u/s 250 of the Income Tax Act, 1961 [“the Act”] arising from the assessment order dated 24.03.2022 passed u/s 147 r.w.s. 144 r.w.s 144B of the Act for Assessment Year 2015-16. Printed from counselvise.com ITA No.5698/Del/2024 Page | 2 2. The assessee has raised following grounds of appeal:- 1. “The Ld.CIT(A) erred in not deciding that 1. The Ld. Authority has erred in re-opening of the assessment, 2. not providing the reasons recorded u/s 148(2) and sanction of the competent authority, 3. Rejecting the ITR, 4. completing the assessment u/s 144, 5. Making huge additions of Rs.1,83,65,000/- u/s 69A and 6. Taxing u/s 115BBE.” 3. In Ground of appeal No.1, the assessee has challenged the re-opening of the assessment passed on the suspicion and in Ground of appeal No.2, the assessee has challenged the action of the AO in not supplying the copy of the reasons recorded and in Ground of appeal No.3, the assessee has challenged the action of the AO in rejecting the ITR in response to notice issued u/s 143(2) of the Act and observed that no return of income was filed therefore, notice u/s 143(2) of the Act was not issued however, the assessee has filed the return of income. In Ground of appeal No.4, the assessee has challenged the action of AO in completing the assessment u/s 143(3) of the Act. 4. Since all the grounds are inter-linked and related to each other, same are decided together for sake of convenience 5. Before us, Ld.AR for the assessee submitted that the assessment was re-opened solely for making verification of the fact Printed from counselvise.com ITA No.5698/Del/2024 Page | 3 that there was cash deposit in bank account which remained unsubstantiated as assessee has not filed the return of income for the year under consideration. According to Ld.AR, the reasons recorded were on mere suspicion and no satisfaction of escapement of income is recorded. It is further submitted by Ld.AR that re-opening of assessment was made only on whims and fancies. He placed reliance on the judgement of Hon’ble Jurisdictional High Court in the case of Pr.CIT vs Smt. Krishna Devi in ITA No.125/2020 dated 15.01.2021 and Co-ordinate Bench of Jaipur Tribunal in the case of Nilesh Agrawal HUF vs ITO in ITA No.222 to 223/JP/2020 dated 09.02.2021 in this regard. With regard to Ground of appeal No.2, the assessee submits that the return of income was filed in response to notice u/s 148 on 20.02.2022 and the AO has not treated it valid for the reasons that it was filed after 11 months of the issue of notice u/s 148 of the Act. AO further observed that the return was e-verified on 04.03.2022 thus, there remained very less time for the completion of assessment and therefore, the return filed was rejected. The necessary copy of acknowledgement of ITR is placed in Paper Book page 1 and submits that the return filed was well before the completion of assessment and therefore, the same deserves to be accepted. He further submits that there is no power under the Act to the AO to reject the income tax return filed through e-filing portal. With respect to Ground No.4, Ld.AR submits that the return was filed by the assessee in respect to notice u/s 148 of the Act on 20.02.2022. However, the AO has not treated the same as valid and no notice Printed from counselvise.com ITA No.5698/Del/2024 Page | 4 u/s 143(2) was issued. Ld.AR submits that the return was uploaded on 20.02.2022 was validated on 04.03.2022 by Aadhar OTP and therefore, before the completion of assessment, it is duty of the AO to issue notice u/s 143(2) of the Act. In the last, he submits that Ld.CIT(A) though had reproduced the submissions of the assessee in the appellate order however, has not decided these issues. 6. On the other hand, Ld. Sr. DR for the Revenue supports the orders of the lower authorities and requested for the confirmation of the same. 7. Heard the contentions of both the parties and perused the material available on record. Regarding first ground of appeal raised by the assessee wherein it is stated that the AO has issued notice u/s 148 of the Act on mere suspicion. We find that no return of income was filed by the assessee and therefore, the source of cash deposited in the bank accounts remained unsubstantiated. Once there was no material to suggest the source, we find no error in the order of AO in re-opening the case as the income to the extent of cash deposits in the bank account remained unexplained and is the escaped income. Thus, Ground of appeal No.1 raised by the assessee is dismissed. 8. With respect to Ground of appeal Nos. 2 , 3 & 4 regarding non-issue of notice and validity of the return of income filed, we Printed from counselvise.com ITA No.5698/Del/2024 Page | 5 find that the assessee has not filed the return of income within the time provided in the notice issued u/s 148 of the Act. Under these circumstances, the AO treated the return filed on 20.02.2022 and validated on 04.03.2022 as invalid return. Since the return was held as invalid, there is no requirement of issue of notice u/s 143(2) of the Act. In view of these facts, we find no substance in the arguments of Ld.AR. Therefore Ground of appeal Nos. 2, 3 & 4 raised by the assessee are dismissed. 9. Now, Ground of appeal No.5 raised by the assessee taken on the merits of the additions. 10. Before us, Ld.AR of the assessee submits that there were cash deposited in the bank account maintained by the assessee with Axis Bank bearing Account No.911010067263639 wherein total cash of INR 1,83,65,000/- was deposited. The immediate source of the same was explained as the withdrawals made from the said bank accounts for which the assessee has also filed cash flow statement containing date-wise chart of cash deposits and withdrawals according to which there was no deficit as and when the cash was deposited in the bank account. The assessee has prepared the cash flow statement from 18.08.2012 to 21.03.2015 wherein opening cash of the first day in the previous year i.e. 01.04.2014 was taken at INR 1,53,36,000/-. Ld.AR has further submits that Ld.CIT(A) has not appreciated the said fund flow statement and set aside the issue to the AO for fresh verification however, when the copy of the Printed from counselvise.com ITA No.5698/Del/2024 Page | 6 bank statement and the fund flow statement is submitted which are self-explanatory therefore, Ld.CIT(A) ought to have deleted the addition made by the AO in this regard. He prayed accordingly. 11. On the other hand, Ld. Sr. DR for the Revenue submits that Ld.CIT(A) has already set aside the issue to the file of the AO for necessary verification. Thus, the appeal of the assessee on this issue has no merits and this ground of appeal deserves to be dismissed. 12. Heard the contentions of both the parities and perused the material available on record. From the facts, we find that the assessee has not filed the return of income in time therefore, the AO has treated the same as nonest and the order was passed u/s 144 of the Act. It is further seen that the assessee has filed bank statement and the cash flow statement wherein the withdrawals made from time to time and the deposits in cash were date-wise arranged. According to the said fund flow statement, there was no deficit of funds as and when the cash was deposited in the bank accounts. These facts are self-explanatory with respect to the bank statement vis-a-vis fund flow statement and therefore, require no verification on the part of the AO. Once it is established that there are sufficient funds available with the assessee out of the cash withdrawals which were re-deposited in the bank account, no addition is required to be made for the same. Further, assessee claimed INR 1,53,36,000/- as brought forward from earlier years Printed from counselvise.com ITA No.5698/Del/2024 Page | 7 and shown as opening balance in fund flow statement thus, the same cannot be doubted in current year and no addition could be made for the said in the present year. In view of the above discussion, we hereby set aside the order of the lower authorities and direct the AO to delete the addition made on this account. Ground of appeal No.5 raised by the assessee is accordingly, allowed. 13. Ground of appeal No.6 raised by the assessee is with respect to the application of provision of section 115BBE of the Act. Since we have deleted the additions made by the AO thus, Ground of appeal No.6 raised by the assessee becomes infructuous and requires no adjudication. 14. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 28.08.2025. Sd/- Sd/- (ANUBHAV SHARMA) JUDICIAL MEMBER Date:- 28.08.2025 *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Printed from counselvise.com ITA No.5698/Del/2024 Page | 8 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "