SOMDUTT SHARMA,GHAZIABAD V. ITO WARD 2(2)(1), GHAZIABAD

ITA 577/DEL/2024

AI Insights

The case involves Somdutt Sharma, an individual engaged in the business of trading mobile and its accessories, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi. The NFAC upheld the addition of Rs 71,77,800 as unexplained investment under section 69 of the Income-tax Act, 1961, which was initially added by the AO due to unexplained cash and credit entries in the assessee's bank accounts. The primary contention was the use of two different PANs for the same individual, which led to confusion in the assessment process. The Tribunal decided to restore the matter to the AO for a fresh assessment after the surrender of one PAN.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470169 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 22-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 09-02-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRITUNJAY PRASAD DWIVEDI
• Assessee Lawyers: SHANTANU KANUNGO
• Keywords: Opportunity of being heard; Unexplained investment
• Section: 144; 69

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 577/Del/2024 (Assessment Year: 2017-18) Somdutt Sharma, H. No. 429, Adarsh Nagar, Modingar, Ghaziabad Vs. ITO, Ward-2(2)(1), Ghaziabad (Appellant) (Respondent) PAN:GEIPS6647H Assessee by : Shri Shantanu Kanungo, Adv Revenue by: Shri Mritunjay Prasad Dwivedi, Sr. DR Date of Hearing 22/10/2024 Date of pronouncement 14/11/2024 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.577/Del/2024 for AY 2017-18, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/NFAC/S/250/2023-24/1058077489(1) darted 20.11.2023 against the order of assessment passed u/s 144 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 11.12.2019 by the Assessing Officer, ITO, Ward-2(2)(1), Ghaziabad (hereinafter referred to as ‘ld. AO’). 2. Though the assessee had raised several grounds of appeal before us, the only effective issue to be decided is as to whether the ld NFAC was justified in confirming the addition made in the sum of Rs 71,77,800/- as unexplained investment u/s 69 of the Act being the cash ITA No. 577/Del/2024 Somdutt Sharma Page | 2 and credit entries reflected in the bank accounts of the assessee, in the facts and circumstances of the instant case. 3. We have heard the rival submissions and perused the materials available on record. The Assessee is an individual engaged in the business of trading of mobile and its accessories under the name and style of Mrs. Vaishnavi Communication, Shop No. 78, near Ginni Modi College, Modi Nagar- 201204, Ghaziabad. The Assessee under the PAN AUGPS1055F had filed his income tax return on 31-10-2017 for the assessment year 2017-18 along with the audited financial statements having turnover of Rs.1,78,45,644/- declaring taxable income of Rs 4,70,981/-. The proprietorship concern M/s. Vaishnavi Communication is duly registered with VAT department Uttar Pradesh having TIN 09991002403. The products were sold to the customers which attracted tax under the UP VAT Act 2007. The Assessee had duly filed periodical VAT returns and annual returns under the UP VAT Act 2007 and CST Act 1956. 4. The Learned AO observed that there was a cash deposit of Rs. 11,92,000/- made in the bank account of the assessee and further there were credits of Rs. 59,85,800/- made in the bank account of the assessee. The Learned AO sought explanation for the source of those deposits made in the bank account. A show cost notice stood issued by the Learned AO to the assessee in the PAN GEIPS 6647H to explain the source of cash deposits and credit entries in the bank account totaling to Rs. 71,77,800. Since, no explanation was offered by the assessee, the Learned AO proceeded to make an addition of Rs. 71,77,800/- as unexplained investment under section 69 read with section 115BBE of the Act. Accordingly, an assessment order stood passed in the hands of the assessee for assessment year 2017-18 in PAN GEIPS6647H. This ITA No. 577/Del/2024 Somdutt Sharma Page | 3 action of the Learned AO was upheld by the Learned NFAC vide its order dated 20-11-23. Aggrieved, the assessee is in appeal before us. 5. It is not in dispute that assessee was allotted two PANs - i.e. AUGPS1055F which is used for filing income tax return by the assessee and carrying on his business and the other PAN namely GEIPS6647H is being used by the department for issuing notice to the assessee and framing the assessment and appellate orders thereon. In the instant case, the assessee was trying to explain before us through the authorized representative that the cash and credit entries made in the bank account of the assessee were already considered in the audited financial statements of the assessee of the proprietary concern M/s Vaishnavi Communication under the PAN AUGPS1055F and that the same need not be again considered in another PAN GEIPS6647H. This aspect was not appreciated by the learned assessing officer and accordingly an addition has been made unwarrantedly. Considering the totality of the facts and circumstances of the case, we deem it fit and appropriate to restore this appeal to the file of learned AO for de novo adjudication in accordance with law. The assessee is hereby directed to surrender one PAN before the department. The learned AO after having taken cognizance of the fact of cancellation of one PAN should make an assessment after duly considering all the evidences submitted by the assessee with regard to the source of cash and cheque deposits made in the bank account. Needless to mention that the assessee be given reasonable opportunity of being heard. The assessee is also given liberty to furnish fresh evidences, if any, in support of his contentions. With these directions, the grounds raised by the assessee are allowed for statistical purposes. ITA No. 577/Del/2024 Somdutt Sharma Page | 4 6. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 14/11/2024. -Sd/- -Sd/- (SAKTIJIT DEY) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 14/11/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "