SH. RAJESH KAKKAR,KARNAL V. PR. CIT, KARNAL

ITA 823/DEL/2016

AI Insights

The case involves Shri Rajesh Kakkar, a property dealer, who appealed against the orders of the Principal Commissioner of Income Tax (Pr. CIT), Karnal, which were passed under sections 263 and 250(6) of the Income-tax Act, 1961. The appeals were related to the assessment year 2011-12 and concerned the scrutiny of cash deposits in the assessee's bank accounts and unassessed interest income. The Pr. CIT had found that the original assessment did not adequately investigate the sources of these deposits and income, leading to the setting aside of the assessment order. The Tribunal's decision addressed the adequacy of the investigation and the opportunities provided to the assessee during the assessment and revision proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 112070 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMISHA GUPTA
• Assessee Lawyers: NEERAJ JAIN
• Keywords: Opportunity of being heard; Unexplained investment; Principle of natural justice; Assessment record; Revision of order
• Section: 143(3); 142(1); 143(2); 250; 263

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘F’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT and SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.823/DEL/2016 (Assessment Year: 2011-12) Shri Rajesh Kakkar, vs. Pr. CIT, House No.463, HIG, Sector 4, Karnal. Housing Board Colony, Karnal. (PAN : AJYPK0525H) ITA No.914/DEL/2019 (Assessment Year: 2011-12) Shri Rajesh Kakkar, vs. ITO, Ward 5, House No.463, HIG, Sector 4, Karnal. Housing Board Colony, Karnal. (PAN : AJYPK0525H) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Neeraj Jain, CA Shri P.K. Mishra, CA REVENUE BY : Smt. Amisha Gupta, CIT DR Date of Hearing : 27.02.2025 Date of Order : 16.04.2025 O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : 2 ITA No.823/DEL/2016 ITA No.914/DEL/2019 1. These appeals, ITA No.823/Del/2016 & 914/Del/2019 are filed by the assessee against the order of ld. Pr.CIT, Karnal dated 09.12.2015 passed u/s 263 of the Income-tax Act, 1961 (for short ‘the Act’) and order dated 20.11.2018 passed u/s 250 (6) of the Act respectively for Assessment Year 2011-12. 2. Since the issues are common and the appeals are connected, therefore, the same are heard together and being disposed off by this common order. First we take up ITA No.823/Del/2016 for AY 2011-12 as the lead case. 3. Brief facts of the case are, assessee filed its return of income for Assessment Year 2011-12 on 13.09.2011 declaring an income of Rs.1,68,580/-. The assessee is dealing in the business of property dealing on commission basis. The case was selected through CASS. Accordingly, notices under section 143(2) and 142(1) of the Act were issued and served on the assessee. In response, ld. AR of the assessee appeared and submitted relevant information. The case was selected for the reason that assessee has made bank deposits in its bank account on different dates. The assessment order u/s 143(3) was passed on 25.02.2014 accepting the submissions of the assessee and a mere disallowance of Rs.2 lakhs was made to cover up the possible leakage in the revenue and accordingly, the assessment was completed. 4. The case records were verified by the Pr.CIT, Karnal and during the 3 ITA No.823/DEL/2016 ITA No.914/DEL/2019 inspection, it was noticed that the case of the assessee was selected for scrutiny mainly to examine source of cash deposits appearing in the same bank accounts maintained by the assessee in HDFC and ICICI Bank, Karnal. He observed that on perusal of the assessment records, source of cash deposits has not been properly explained by the assessee and AO has not made requisite enquiry/verifications about the source of these cash deposits. He observed that during assessment proceedings, assessee has submitted that he derived income from property dealing on commission basis and the source of cash deposits was explained that assessee has received an advance of Rs.45.71 lakhs from Mr. Rohit Dhawan. It was also submitted that the assessee received Rs.7 lakhs as advance from Mr. Nand Lal Khurana for purchase of property. The statement of Mr. Nand Lal Khurana was recorded on 23.12.2013 in which he categorically stated that during the relevant period, he did not give any advance or loan to the assessee. Further the statement of Mr. Rohit Dhawan was also recorded on 26.12.2013 in which he also categorically denied of having given any advance or loan to the assessee during the relevant period. Thereafter, assessee vide his submission dated 21.02.2014 submitted that he received Rs.7 lakhs from Mr. Nand Lal Khurana on behalf of Raj Kumar (purchaser) for making the payment to Randeep Singh regarding SCO-34, Sector 17, Jagadhari. The assessee also submitted that accordingly he 4 ITA No.823/DEL/2016 ITA No.914/DEL/2019 paid Rs.7,09,235/- vide DO dated 18.08.2010 in HUDA on behalf of Shri Randeep Singh which was outstanding due balance against the said plot in this respect. The assessee also submitted an affidavit of Sh. Randeep Singh which states that the assessee paid Rs.7,09,235/- on his behalf. The assessee also submitted that in respect of Plot No.471 Sector-18, Kaithal, Sh. Manish Kumar was the seller and Sh. Rohit Dhawan was the purchaser. For this purpose, Sh. Rohit Dhawan paid of Rs.27.90 lakhs to the assessee and said amount was paid by him to Sh. Manish Kumar' for completion of the deal and the said amount was received by the assessee from Sh. Rohit Dhawan on different dates. In this connection, the assessee has also submitted an affidavit/ indemnity bond of Sh. Manish Kumar which showed that Sh. Rohit Dhawan was the intended purchaser of the said plot. The assessee also submitted that in respect of Plot No.463, Sector-18, Kaithal, Sh.Rohit Dhawan paid him Rs.17.54 lakhs on different dates for purchase of the said plot on behalf of Sh.Krishan Lalit (intended purchaser). In this respect the assessee also submitted his own affidavit confirming these facts. 5. Based on the above information available in the assessment records, PCIT observed that despite having strong evidence in the form of statements of Mr. Rohit Dhawan and Mr. Nand Lal Khurana, the AO passed the assessment order accepting the submissions of the assessee 5 ITA No.823/DEL/2016 ITA No.914/DEL/2019 without making requisite enquiry in this case. Accordingly, notice u/s 263 of the Act was issued to the assessee directing assessee to explain source of cash deposits appearing in HDFC and ICICI, Karnal on different dates. 6. In response, assessee submitted his details of capital account for different years. Further with regard to cash deposit of Rs.45.71 lakhs and Rs.7 lakhs, it was stated that the requisite explanation was already furnished before the AO and AO had accepted the same. Assessee also submitted photocopies of different affidavits which were submitted during assessment proceedings. It was also submitted that Mr. Rohit Dhawan has denied of giving any advance or loan yet the assessee submitted that it is not true because Mr. Rohit Dhawan has filed suit against the assessee accepting that he has given advance/loan for purchase of the property. Further PCIT observed that assessee has not disclosed the interest income earned during the year. After considering the submissions of the assessee, PCIT observed as under :- “i) As far as interest income of Rs.25,975/- is concerned, the assessee did not show this income in his return of income ( in the appropriate column for showing interest income). He simply disclosed Rs.92,000/- as income from other sources arid during assessment proceedings he submitted that this is interest income from other parties. During proceedings u/s 263 of the I.T. Act, he again shifted his stand and submitted that the interest income was clubbed with other miscellaneous income. Thus it is apparent that 6 ITA No.823/DEL/2016 ITA No.914/DEL/2019 the interest income from saving bank account was not shown by the assessee in his Return of income. ii) During assessment proceedings, the. assessee submitted that Rs.92,000/- had been received as interest from other parties. On the other hand no corresponding sundry debtors have been shown by the assessee in the capital account. The AO was required to ask the specific details of loans advanced and interest earned by the assessee. iii) Initially the assessee had admitted only one bank account in ICICI Bank, Karnal, he admitted about the other bank accounts at a later stage. iv) The statement of Sh.Rohit Dhawan was recorded on 26.12.2013, wherein he denied of having given I advanced any sum to the assessee in the relevant period. During proceedings u/s 263 of the I.T. Act on 19.11.2015, his statement was again recorded. He confirmed that Rs. 15 Lacs was not advanced to the assessee during FY 2010-11. Even as per complaint filed in the Court, after cancellation of the deal, the amount (15 Lacs) was returned to Sh.Dhawan by way of cheque dated 17.12.2012. Sh. Dhawan stated that for Plot No.471, deal was made directly with Mr. Manish (Seller), there was no involvement of Sh. Rajesh Kakkar, so there is no question of making any payment to him. Sh. Dhawan further stated that regarding Plot No.463 (sold by Sh.Pankaj to Sh.Krishan Lalit) he is not at all aware, so there is no question of making the payment of Rs.17.54 Lacs on behalf of anybody (Sh.Krishan Lalit). On being asked the assessee declined to avail the facility of cross examining Sh. Rohit Dhawan. v) The statement of Sh.Nand Khurana was recorded on 23.12.2013 by the AO, wherein he categorically denied of giving any loan / advance to the assessee in the relevant period (FY 2010- 11). During proceedings u/s 263 of the I.T.Act, the statement of Sh.Nand Khurana was again recorded on 14.10.2015, wherein he 7 ITA No.823/DEL/2016 ITA No.914/DEL/2019 confirmed his earlier statement dated 23.12.2013 and denied of giving that statement under some threat or coercion. Otherwise. also it is highly improbable that Sh.Nand Khurana would pay Rs.7 Lacs to the assessee for the purchase of a plot which was sold by Sh.Randeep Rana and purchased by Sh.Raj Kumar as the available evidence do not support this submission. vi) As far as the affidavit of the assessee .in respect of Plot No.463 is concerned. it simply says that Rs.17.54 Lacs in cash was paid by Sh.Rohit Dhawan to him in cash on different dates for purchasing the plot on behalf of Sh.Krishan Lalit. Considering the statement of Sh.Rohit Dhawan and in the absence of any other evidence, the affidavit of the assessee cannot be accepted at its face value. 7. With the above observation, PCIT observed that cash deposits appearing in the saving bank account in HDFC and ICICI, Karnal are unaccounted investment of the assessee, which needs in depth scrutiny/investigation. Similarly, interest income of Rs.25,975/- also remained to be taxed in the hands of the assessee. Further details of Rs.92,000/- interest income from different parties and corresponding loan amounts also need to be enquired by the AO, accordingly the same was remitted back to the AO to redo the assessment afresh. 8. Aggrieved assessee is in appeal before us raising following grounds of appeal :- “1. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in assuming jurisdiction u/s 263 and has further erred in setting aside the assessment order to be made afresh on the issue of cash deposits in bank account and interest income and has further erred in holding the amount as 8 ITA No.823/DEL/2016 ITA No.914/DEL/2019 unexplained investment and has further erred in holding that the assessment order passed in erroneous and prejudicial to the interest of revenue. 2. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in passing the impugned order u/s 263 which is bad in law in as much as no adequate opportunity of hearing was granted and framing the impugned order without considering the principles of natural justice. 3. That having regard to facts & circumstances of the case, Ld. CIT has erred in law and on facts in passing the impugned order u/s 263 which is barred by limitation, illegal, without jurisdiction and contrary to law and facts and deserves to be quashed.” 9. At the time of hearing, ld. AR of the assessee submitted a chart showing cash received from Rohit Dhawan and deposited in the bank as under :- Date Particulars HDFC Bank 4495 HDFC Bank 0951 ICICI Bank 4692 Total 22.07.2010 Advance received from Rohit Dhawan 2,00,000 04.08.2010 Advance received from Rohit Dhawan 1,50,000 25.08.2010 Advance received from Rohit Dhawan 1,74,000 27.08.2010 Advance received from Rohit Dhawan 2,47,000 27.08.2010 Advance received from Rohit Dhawan 2,50,000 07.09.2010 Advance received from Rohit Dhawan 50,000 16.09.2010 Advance received from Rohit Dhawan 1,10,000 22.09.2010 Advance received from Rohit Dhawan 1,00,000 08.10.2010 Advance received from Rohit Dhawan 51,000 21.10.2010 Advance received from Rohit Dhawan 1,00,000 21.10.2010 Advance received from Rohit Dhawan 50,000 29.10.2010 Advance received from Rohit Dhawan 1,00,000 30.10.2010 Advance received from Rohit Dhawan 1,00,000 01.11.2010 Advance received from Rohit Dhawan 2,70,000 11.11.2010 Advance received from Rohit Dhawan 2,00,000 26.11.2010 Advance received from Rohit Dhawan 2,00,000 10.12.2010 Advance received from Rohit Dhawan 2,83,000 30.12.2010 Advance received from Rohit Dhawan 2,24,000 05.01.2011 Advance received from Rohit Dhawan 2,00,000 12.01.2011 Advance received from Rohit Dhawan 2,50,000 25.01.2011 Advance received from Rohit Dhawan 2,60,000 04.02.2011 Advance received from Rohit Dhawan 2,00,000 05.02.2011 Advance received from Rohit Dhawan 1,25,000 05.02.2011 Advance received from Rohit Dhawan 2,00,000 08.03.2011 Advance received from Rohit Dhawan 2,50,000 29.03.2011 Advance received from Rohit Dhawan 2,00,000 Total 45,44,000 9 ITA No.823/DEL/2016 ITA No.914/DEL/2019 10. He submitted that assessee is a property broker and facilitated the allottees to buy the properties and assessee has taken money from the buyers and deposited the same in his bank account. He reiterated that the assessee has received money from Rohit Dhawan and deposited the same in his bank account. He brought to our notice page 23 of the paper book wherein assessee has submitted the details before PCIT and also brought to our notice page 24 of paper book which is the case filed by Rohit Dhawan against the assessee for recovery of Rs.15 lakhs given to the assessee and relevant dispute. Further he brought to our notice page 1 of the paper book that assessee has declared Rs.90,000/- as interest income and the interest income referred by the PCIT is already included in the above said income declared by the assessee. With regard to assessment order passed u/s 143(3) read with section 263 on which assessee has filed an appeal before us in ITA No.914/Del/2019, he submitted that AO has passed the order giving effect to order passed u/s 263 ex-parte. He brought to our notice page 4 of the assessment order and submitted that AO has made the addition as recommended by ld. PCIT in order passed u/s 263 of the Act and he agreed that assessment order passed by the AO is ex-parte and also several opportunities were given by AO and assessee has not utilized the same. Based on that, appeal of the assessee was 10 ITA No.823/DEL/2016 ITA No.914/DEL/2019 dismissed. He prayed that one more opportunity may be granted to the assessee. 11. On the other hand, ld. DR of the Revenue submitted that the purchaser of the property as well as seller of the property has denied the payment to the assessee and both parties denied the same, therefore, the cash deposit by the assessee in his bank account is unexplained deposits. He submitted that further assessee has not declared the interest income which also cannot be traced and the relevant affidavits filed by the assessee cannot be relied upon. He submitted that all the amounts were deposited in cash only and also payment by cash. Therefore, the claim of the assessee cannot be accepted and he also agreed that the order giving effect to order passed u/s 263 was ex-parte and several opportunities were granted to the assessee by the lower authorities and assessee has not utilized the same. Accordingly, he prayed that additions made in the assessment order may be sustained. 12. Considered the rival submissions and material available on record. We observed that the assessment order passed by the AO is cryptic and there is no record to show that he has carried on the requisite investigation. During revision proceedings, PCIT observed that the parties involved, Mr. Nand Lal Khuran and Mr. Rohit Dhawan, have denied specifically the relevant cash payments made to the assessee for the relevant 11 ITA No.823/DEL/2016 ITA No.914/DEL/2019 transactions. However, before PCIT, assessee has submitted that Mr. Rohit Dhawan has filed a case against the assessee for recovery of Rs.15 lakhs. All the information available on assessment record clearly shows that AO has not carried out requisite investigation before completing the assessment and he has merely relied on the affidavits filed by the assessee without corroborating the relevant evidences available on record. Therefore, we are inclined to agree with the findings of PCIT and hold that order passed u/s 263 is proper. Accordingly, the appeal filed by the assessee in ITA No.823/Del/2016 is dismissed. 13. Coming to the appeal filed by the assessee in ITA No.914/Del/2019, we observed that the AO has given several opportunities to the assessee to file the relevant information considering the fact that in revision proceedings, PCIT has remanded the issue back to the file of AO to redo the assessment de novo after giving opportunity to the assessee. However, the order passed was ex-parte. Further we observed that ld. CIT (A) has given several opportunities to the assessee to submit the relevant information in support of assessee’s claim. However, ld. CIT (A) has passed the order based on the material available on record. Therefore, considering the additions made by the tax authorities, in our considered view, assessee should be given one more opportunity or being heard for the sake of overall justice. We are inclined to remit the file to 12 ITA No.823/DEL/2016 ITA No.914/DEL/2019 AO to redo the assessment after giving proper opportunity of being heard to the assessee. Accordingly, the appeal filed by the assessee being ITA No.914/Del/2019 is allowed for statistical purposes. 14. To sum up, appeal being ITA No.823/Del/2016 filed by the assessee is dismissed and the appeal filed by the assessee being ITA No.914/Del/2019 is allowed for statistical purposes. Order pronounced in the open court on this 16th day of April, 2025. Sd/- sd/- (MAHAVIR SINGH) (S.RIFAUR RAHMAN) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 16.04.2025 TS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "