TARU SAXENA,UTTAR PRADESH V. ITO WARD 52(1), NEW DELHI

ITA 3396/DEL/2024

AI Insights

The case involves Taru Saxena, who appealed against the order of the CIT(A)/NFAC, Delhi, which dismissed his appeal against the assessment order passed by the Income Tax Officer. The assessment was based on unexplained cash deposits in the assessee's bank accounts during the demonetization period, which were considered as unexplained income under Section 69A of the Income Tax Act, 1961. The Tribunal noted that the assessee did not adequately respond to the notices issued by the AO and failed to provide necessary documents to substantiate his claims, leading to the dismissal of his appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34423 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2017-2018
• Other Referred Cases: Vaishnavi Bullion Pvt. Ltd. Vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: P A G E
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Corroborative evidences; Unexplained cash credit; Principle of natural justice; Procedural lapse
• Section: 144; 143(3); 142(1); 143(2); 250; 68; 13; 69A

Judgement Text

"P a g e | 1 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, DELHI BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER & SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 3396/Del/2024 (Assessment Year: 2017-18) Taru Saxena G-1310, VVIP Address Rajnagar Extension, Ghaziabad -201017 Uttar Pradesh Vs. National Faceless Appeal Centre (NFAC) New Delhi - 110002 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: CVBPS7515N Appellant .. Respondent Appellant by : None Respondent by : Sh. Amit Katoch, Sr. (DR) Date of Hearing 19.12.2024 Date of Pronouncement 27.02.2025 ORDER PER MADHUMITA ROY, JM: This captioned appeal has been filed by the assessee against the order passed by the Ld. CIT(A)/NFAC, Delhi dated 06.05.2024 for the Assessment Year 2017-18 arising out of the order dated 15.12.2019 passed by the Income Tax Officer, Ward P a g e | 2 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) 52(1), Delhi under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as “Act”) on the following ground:- “The Ld. CIT(A) erred on facts and in law in ignoring the various judicial pronouncements of High Courts and Supreme Court submitted by the appellant which showed that the AO could not have invoked the provisions of section 68 considering the facts of the appellant’s case.” 2. Briefly stated, facts are that the assessee had filed his return of income on 31.3.2018 declaring total income of Rs. 4,93,580/-. Subsequently, the case of the assessee was selected under CASS scrutiny to examine the issues viz. a) abnormal increase in cash deposits during demonetization period as compared to pre-demonetization period; (b) Cass pushed to ITBA AIMS portal after online verification of cash deposit during demonetization but no response from assessee; (c) large cash deposits in bank accounts during the year; (d) large value cash deposit during demonetization period reported. AO issued notice under Section. 143(2) of the Act on 10.8.2018 and thereafter notices, under Section. 142(1) were issued on 4.9.2018, 17.10.2019 and 30.11.2019. In response, the assessee has submitted that “the assessee was engaged in the business of the bill discounting for various traders and has earned 1% P a g e | 3 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) commission of Rs. 12,66,989/- on amount financed through bill discounting. The assessee does not have any liabilities or assets as on 31.3.2017. There is no tax free income has been earned and no expenditure has been incurred for the same. AO noted that the reply of the assessee was incomplete and not acceptable. He observed that the assessee is an individual having income under the head of income from business and under the head of income from other sources, during the F.Y. 2016-17 relevant to A.Y. 2017-18. Furthermore, in the interest of justice, equity and fair play, a final opportunity of being heard is provided to the assessee vide show cause notice dated 09.12.2019 requiring furnishing the details/documents/justifications thereof by 12.12.2019, failing which the assessee was asked as to why the assessment should not be completed on best judgment as per provision of Section 144 of the Act on the basis of materials available on the record. However, in response also, the assessee did not submit the details. Since no reply to the show cause notice was received, having no other alternative but the Ld. AO considered the total amount of credit entries in his bank account in excess of sale proceeds shown in ITR as unexplained income. Accordingly, total credit entries in the bank account amounting P a g e | 4 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) to Rs 5,87,26,522/- during the Financial Year 2016-17 relevant to the Assessment Year 2017-18 is taken as unexplained income of the assessee under Section 69A of the Act. Further, as the assessee has not completely responded to the questionnaire issued by the Ld. Assessing Officer, therefore, the expenses claimed in the P&L account of the assessee, as per the ITR for AY 2017-18, remains unexplained. Accordingly, the total expenses, amounting to Rs. 7,61,821/- claimed in the ITR for AY 2017-18 has been disallowed. Based on the facts of the case, documents collected during the course of assessment proceedings and on the basis of issues, the total income of the assessee was computed at Rs.5,99,81,920/- under Section 143(3) of the Act. Against the said order passed by the Assessing Officer, assessee preferred an appeal before the CIT(A)/ NFAC, Delhi, who vide his impugned order dated 06.05.2024 has dismissed the appeal of the assessee by relying upon the decision of the ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Pvt. Ltd. Vs. ACIT decided in ITA 561/Hyd/2020 & Ors. Dated 28.11.2022. Aggrieved with, assessee is in appeal before us. P a g e | 5 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) 3. At the outset, it is noted that there is a delay of 60 days in filing the appeal, for which the assessee has filed an application for condonation of delay. After perusing the same, we are of the considered view that delay of 60 days is attributed due to reasonable cause of illness of his attorney, who was handling his case. Hence, we condone the delay of 60 days in filing the appeal before the tribunal. 4. At the time of hearing, none appeared on behalf of the assessee. Hence, we have decided to proceed with the matter exparte only upon hearing the ld. DR and perusing the records made available before us. However, it is noted that an application has been filed on record by the assessee, requesting therein for remanding the matter to the AO, the contents thereof are reproduced hereunder:- “Application for Remand to the Assessing Officer The Appellant respectfully submits as follows: 1. Brief Facts of the Case • The appellant filed their return of income for the Assessment Year 2017-18declaring an income of Rs. 4,93,580. P a g e | 6 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) • The Assessing Officer (AO) passed an order under Section 143(3) and 144 of the Income Tax Act, AY 2017-18, making certain additions. • The appellant preferred an appeal before the Commissioner of Income Tax (Appeals) and CIT(A) has passed order Under Section 250 2. Grounds of Appeal * The Assessing Officer (AO) erroneously treated total credits of Rs 5,87,26,522 in the appellant's bank accounts as unexplained income without appropriately considering the nature of the appellant's business and withdrawals. * Nature of Business: The Appellant is engaged in bill discounting, earning a commission of 1%. * Bank transactions : The credits in the bank account represent turnover of the business, not income. * Supporting evidence : the Appellant provides bank statements and explanations, which were not adequately considered by AO. P a g e | 7 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) * Claimed expenses : The appellant claimed total expenses of Rs. 7,61,821 in the profit and loss account. * Assessment order: The AO disallowed the entire amount without seeking proper explanations or supporting evidence. 3. Reason for seeking remand * Certain material facts and evidence were not properly considered by the AO during the original assessment. * The appellant wishes to present additional evidences/ documents, which is essential for the fair adjudication of the case. * The AO did not specifically request evidence or explanations for the expenses during the evidence of explanations for the expenses during the assessmentprocess, resulting in an arbitrary disallowance. * Nature of Expenses: The expenses claimed are legitimate and necessary foe conducting the appellant's business activities. These expenses administrative costs, salaries, and other operational costs essential for the business. Compliance: The appellant responded to all statutory notices and provided explanations to the best of their ability. P a g e | 8 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) However, the AO did not seek further clarification or supporting documents, which is a procedural lapse. The CIT (A) upheld the AO's assessment without fully considering the appellant's submissions, violating the principles of natural justice. Issue AO'S Findings Appellant's Contention Total Credits represent business treated as turnover; bill discounting unexplained business; 1% commission; income withdrawals not considered. • Final Opportunity: The appellant responded to the final notice reiterating the grounds of appeal and provided additional explanations. The CIT (A) did not provide adequate opportunity for the appellant to present their case and did not fully consider the explanations provided. * Insufficient Consideration: The CIT (A) summarily dismissed the appeal without a detailed examination of the submissions and evidence provided by the appellant. This approach violates the principles of natural justice, which mandate fair hearing and consideration of all relevant facts. 4. Legal Basis P a g e | 9 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) * As per Rule 46A of the Income Tax Rules, 1962, the appellant seeks to adduce additional evidence for consideration. * In the interest of justice and fair play, it is prayed that the matter may be remanded to the AO for fresh examination of facts and evidence. Prayer In view of the above, the appellant prays that the Hon'ble Tribunal may: a) Remand the matter back to the Assessing Officer for fresh consideration in light of the additional evidence; and b) Pass such further orders as deemed fit and proper in the interest of justice.” 5. Ld. DR relied upon the order passed by the Ld. CIT(A) and the case law cited therein and requested that since the Ld. CIT(A) has passed a well reasoned order, which does not need any interference on our part, thus requested to uphold the same and dismiss the appeal of the Assessee and reject the contention of the assessee for remanding the matter, which is not sustainable in the eyes of law. P a g e | 10 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) 6. After hearing the Ld. DR and perusing the records available with us, we find that in the instant case , the assessee is an individual having income under the head of income from business and under the head of income from other sources, during the F.Y. 2016-17 relevant to A.Y. 2017-18. Furthermore, in the interest of justice, equity and fair play, a final opportunity of being heard is provided to the assessee vide show cause notice dated 09.12.2019 requiring furnishing the details/documents/justifications thereof by 12.12.2019, failing which show cause was issued as to why the assessment should not be completed on best judgment as per provision of section 144 of the Act on the basis of materials available on the record. However, in response also, the assessee did not submit the details. Since no reply of the show cause notice was received, the AO has no other alternative but to consider the total amount of credit entries in his bank account in excess of sale proceeds shown in ITR as unexplained income. Accordingly, total credit entries in the bank account amounting to Rs 5,87,26,522/- during the Financial Year 2016-17 relevant to the assessment year 2017-18 was taken as unexplained income of the assessee under section 69A of the Act. Further, as the assessee has not P a g e | 11 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) completely responded to the questionnaire issued by the Ld. AO, therefore, the expenses claimed in the P&L account of the assessee, as per the ITR for AY 2017-18, remains unexplained. Accordingly, the total expenses, amounting to Rs.7,61,821/- claimed in the ITR for AY 2017-18 was disallowed. Based on the facts of the case, documents collected during the course of assessment proceedings and on the basis of issues discussed as above, the total income of the assessee was computed at Rs. 5,99,81,920/- under Section. 143(3) of the Act. We note that in the instant case, the assessee has not furnished any evidence/documents of proof/ source of income/ clarification of transaction as regards the cash deposit. Hence, grounds of appeal raised by the assessee are accordingly dismissed and the addition made by the AO and sustained by the Ld. CIT(A) are confirmed. Our aforesaid view is supported by the decision of the ITAT, Hyderabad Bench in the case of Vaishnavi Bullion Pvt. Ltd. Vs. ACIT decided in ITA 561/Hyd/2020 & Ors. Dated 28.11.2022, which has been referred by the Ld. CIT(A) in his order, wherein on identical facts the Hyderabad bench has upheld the addition in dispute as unexplained credit in the hands of the assessee by dismissing the appeal of the assessee by P a g e | 12 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) observing that since the assessee has failed to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors, thereby, the assessee failed to discharge his onus under Section 68 of the Act. 7. Under this particular facts and circumstances of the matter the order passed by the Ld. CIT(A) is found to be just and proper in upholding the order of addition so as not to warrant interference. The appeal preferred by the assessee is found to be devoid of any merit and thus, dismissed. 8. In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on 27.02.2025 Sd/- (Naveen Chandra) Sd/- (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 27.02.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT P a g e | 13 ITA No.3396/Del/2024 Taru Saxena (AY: 2017-18) ASSISTANT REGISTRAR ITAT NEW DELHI "