Income Tax Appellate Tribunal - Chandigarh
Shri Balwinder Singh, Raikot vs Ito, W-2, Jagraon on 26 April, 2022
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़
I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL
D I V I S I O N BE NC H , " A" , CH A ND I G A R H
BEFORE SHRI N.K. SAINI, VICE PRE SIDENT &
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
आयकर अपील सं./ ITA No. 921/C H D / 2 0 1 9
नधारण वष / Assessment Year : 2011-12
Sh. Balwinder Singh, बनाम The ITO,
S/o Sh. Ajit Singh , Ward-2,
Village and Post Jagraon
Office Sudhar, Tehsil Raikot,
Distt. Ludhiana
थायी लेखा सं./PAN NO: CHNPS5591N
अपीलाथ /Appellant यथ /Respondent
Hearing though video Conferencing
नधा रती क ओर से/Assessee by : Sh. Sudhir Sehgal, Advocate
राज व क ओर से/ Revenue by : Smt. Priyanka Dhar, Sr.DR
सुनवाई क तार$ख/Date of Hearing : 31.01.2022
उदघोषणा क तार$ख/Date of Pronouncement : 26.04.2022
आदे श/Order
Per Sudhanshu Srivastava, Judicial Member:
This appeal is preferred by the assessee against the order dated 19.03.2019 passed by the Ld. Commissioner of Income Tax(Appeals)-3, Ludhiana [hereinafter referred to as 'CIT(A)'] for assessment year 2011-12.
2. Brief facts of the case are that there was Non-PAN AIR information of cash deposit of Rs. 70,01,000/- in the Saving Bank account of the assessee maintained with Punjab National Bank, Raikot.
ITA No. 921-C-2019 Balwinder Singh, Ludhiana 2 On the basis of such information, verification letter was issued u/s 133(6) of the Income Tax Act, 1961 (hereinafter called 'the Act') to the assessee but there was no response to the said letter and neither did anybody attend the proceedings. Subsequently, notice u/s 148 of the Act was issued and served through registered post. No compliance was made in response to this notice as well. Subsequently, after issuance of notice u/s 142(1) of the Act, there was a response from the side of the assessee who furnished his reply through registered post supplying the copy of the sale deed of the agricultural land for Rs. 5,00,000/-, copy of bank account and pension certificate. The assessee was further asked to attend the assessment proceedings and justify the cash deposit in the savings bank account. As per the assessment order, numerous opportunities were given to the assessee to justify the cash deposit, but no further response was forthcoming from the assessee. In such a situation, the Assessing officer, after allowing benefit of sale consideration of Rs. 5,00,000/, proceeded to add amount of Rs. 65.01,000/-, credited in the saving bank account of the assessee, as income from undisclosed sources. The Assessing officer also made an addition of Rs. 25,372/- being interest from the said saving account. The assessment was completed at an income of Rs. 65,26,372/-. 2.1 The assessee preferred an appeal before the Ld. First Appellate Authority, wherein, the assessee was allowed a further relief of Rs. 6,20,000/- pertaining to sale of another land after admitting additional ITA No. 921-C-2019 Balwinder Singh, Ludhiana 3 evidence. However, the assessee's challenge to initiation of proceeding u/s 148 of the Act was dismissed by the Ld. CIT(A).
2.2 Aggrieved, the assessee has now challenged the action of the Ld. CIT(A) by raising following grounds of appeal:-
1. That the Ld. CIT(A)-3, Ludhiana has erred in upholding the validity of the action of the AO in re-opening the case of the appellant u/s 148 of the Income Tax Act, 1961. Which was based on conjectures & surmises.
2. Notwithstanding the above grounds of appeal, the Ld. CIT(A)-3, Ldh has erred in confirming the addition of Rs. 58,81,000/- out of the total addition of Rs. 65,01,000/- as made by the AO as alleged unexplained cash deposits and treating the same as "Income from other sources."
3. That the Ld. CIT(A)-3, Ludhiana has failed to appreciate that the source of cash deposits was only on account of sale of agricultural lands by the appellant who is a senior citizen and an ex-serviceman and an agriculturist & does not have any other source of Income.
4. That the detailed submissions & evidences as filed by the appellant have not been considered properly.
5. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
2.3 The assessee has also filed an additional ground of appeal vide his application dated 20 t h May, 2020 and the same reads as under;-
1. That the reopening of the case u/s 148 is bad in law since no statutory permission for reopening of the case have been taken from Pr. CIT and, therefore, the reopening is bad in law.
3.0 At the outset, the Ld. Authorised Representative (AR) submitted that the additional ground raised by the assessee was not being pressed. Accordingly, the same is dismissed as not pressed.
ITA No. 921-C-2019 Balwinder Singh, Ludhiana 4 4.0 With respect to the ground No.1 of the assessee's appeal challenging the validity of re-assessment proceedings, the Ld. AR drew our attention to the copy of the reasons recorded in this case. The same are being reproduced herein under for a ready reference.
"Reason for issue of notice under section 148 of the I.T. Act, 1961 During the year under reference, the assessee has deposited cash of Rs. 70,01,000/- in saving bank account. The assessee is not a regular Income Tax assessee and it is also noticed that the assessee does not have PAN and the assessee had deposited the above amount from undisclosed sources of income.
I have, therefore, reasons to relieve that a sum of Rs. 70,01,000/- has escaped assessment within the meaning of section 147/148 of the I.T. Act, 1961 for the period relevant to the assessment year 2011-12.
Issue notice u/s 148 of the I.T. Act, 1961 for the assessment year 2011-
12."
4.1 The Ld. AR submitted that from the perusal of the reasons and the assessment order it was apparent that the Assessing officer had reopened the case merely on the basis of AIR information of cash deposit and that there was no cogent reason to believe that any income of the assessee had escaped assessment. It was submitted that merely because the assessee had deposited the cash in his bank account would not mean that the income of the assessee had escaped assessment. It was argued that a perusal of the reasons would show that the Assessing officer had simply recorded his satisfaction but had not real reasons to believe that any income had escaped assessment. It was submitted that ITA No. 921-C-2019 Balwinder Singh, Ludhiana 5 the Assessing officer had proceeded on a fallacious assumption that the deposit in the bank account would tantamount to escapement of income. 4.2 The Ld. AR also drew our attention to the letter written to the CIT(A) (placed at page 9 of the paper book), wherein, the assessee had requested for admission of additional evidences. The same is being reproduced herein under for a ready reference.
"Sub: Request for admission of Additional Evidence.
Kindly refer the above noted appeal. In this regard the appellant may kindly be allowed to file the following additional evidences as the same could not be produced at the time of assessment proceedings before the ld. AO.
i) Copies of Sale deeds registered vide Vasika No. 822 dated 25.02.2010 and Vasika No. 823 dated 25.05.2010 with the sub Registrar, Raikot in respect of the land sold by the assessee.
ii) Affidavit of the assessee stating that he sold his agricultural land situated at Village Sudhar at Rs. 70 lacs, though in the sale deed the value was shown on lower side.
iii) Affidavit of Sh. Sukhjinder Singh, Lamberdar, who was witness to the land sale deed. In this affidavit Sh. Sukhjinder Singh Lambardar has clearly stated that he was witness to the above sale transaction and that the assessee received cash amount of Rs. 7000000/-, in his presence, whereas the sale deeds were registered at Rs. 620000/- and Rs. 5,00,000/- .
iv) Google Map showing that land of the assessee which was sold by him is situated at the distance of 16.2 Municipal limits of Raikot and at a distance of 8.3 Kms from the Municipal limits of Mullanpur, the two closest towns, showing that no capital gain is involved in the sale of land by the appellant.
In this regard it is submitted that the appellant is an ex service man. He lives in a village. He is an agriculturist having three acres of agriculture land. He is having education qualification of just Middle standard only. He is not aware of Tax laws. He does not ITA No. 921-C-2019 Balwinder Singh, Ludhiana 6 have any other income except small pension income and agriculture income. He has never filed Income tax return. He was not aware of any proceedings regarding assessment of income and gravity of not so strict compliance of income tax notices. Being an agriculturist and having no taxable income, except a small pension income, he was of the belief that he had no liability to file the return. The source of deposit in his bank account is out the sale proceeds of his agriculture land. The addition was made as he could not properly present his case before the Ld AO and produce evidences to his satisfaction. There is nothing to suggest that the assessee could generate any unaccounted income. The lack of proper compliance was not intentional or willful but due to lack of awareness. The appellant is a law abiding person. He has retired from armed forces. He is innocent and disciplined citizen. He has not evaded any tax.
3.3 The appellant does not have any educated person in the family. His one son expired, in his youth, a few years ago after a prolonged illness. After the death of his some the family is under enormous grief, dire mental stress and deep mental agony. His wife and the widow daughter in law are under deep mental pressure. The assessee, who is of 67-78 years age, suffers from various chronic ailments. He has no assistance of an advocate. The assessee is not in good health, illiterate, having no awareness of Tax laws and consequences and having no assistance of any family member for complying with his legal obligations and obtaining the legal remedies. As such the assessee could not produce complete evidence to the satisfaction of the Ld AO.
In view of the above stated facts and circumstances of the case the assessee was prevented by sufficient cause in producing these evidences at the time of assessment.
It is humbly prayed that in the interest of justice to the appellant, the additional evidences may kindly be admitted.
Sd/-
Date 25.05.2018 Appellant"
4.3 The Ld. AR also drew our attention to the English translation of affidavit of the assessee filed before the Ld. CIT(A), wherein, it has been deposed by the assessee that he had sold agricultural land at ITA No. 921-C-2019 Balwinder Singh, Ludhiana 7 Vasika No. 822 and Vasika No.823 dated 22.5.2010 and 25.05.2010 respectively by receiving Rs. 70,00,000/- in cash, which was the market value at that point of time. He further drew our attention to the English translation of affidavit by one Shri Sukhjinder Singh, Numbardar who was a witness to the sale deed, wherein it has been deposed that the sale consideration for Vasika No. 822 was Rs. 39,00,000/- whereas only Rs. 6,20,000/- had been shown in the sale deed and the sale consideration amount of Vasika No. 823 was Rs. 31,00,000/- as against the sale consideration of Rs. 5 lacs shown in the sale deed. Our attention was also drawn to cash deposit receipt dated 25.05.2010 for Rs. 70,00,000/- and the Ld. AR submitted that date of deposit in the bank account was the same as the date of sale deed. It was submitted that, thus, the assessee had suitably demonstrated that the impugned amount was from known sources of the assessee and that the re-assessment proceedings were initiated on a wrong appreciation of law.
4.4 The Ld. AR further argued that the assessee had no other sources of income and the deposits had been made only out of sale proceeds of the land and, therefore, there was no reason to reject the claim of the assessee in this regard.
4.5 The Ld. AR also argued that there was a complete non application of mind by the Assessing officer while reopening the assessee's case as he only had AIR information in his possession and no other ITA No. 921-C-2019 Balwinder Singh, Ludhiana 8 corroborative evidence to justify the reopening. The Ld. AR also placed reliance on numerous judicial precedents (which have been placed in the paper book filed by the assessee) and argued that on the facts and circumstances of the case there was a complete failure on the part of the Assessing officer to apply his mind before recording reasons for initiation of proceedings u/s 148 of the Act,.
5.0 In response, the Ld. Sr. Departmental Representative (Sr. DR) supported the findings and observations of the Authorities below and submitted that it was apparent from a plain reading of the assessment order that the Assessing officer had applied his mind after receiving information through the AIR but prior to recording of satisfaction for issuance of notice u/s 148 of the Act. The Ld. Sr. DR harped on the undisputed fact that the Assessing officer's initial inquiry u/s 133(6) of the Act had gone un-responded by the assessee and that even after numerous opportunities having been offered to the assessee, the assessee did not respond to the query letter issued by the Assessing officer. The Ld. Sr. DR supported the reopening on the ground that the Assessing officer had tangible material with him which was based for reopening of the assessment. She also argued that the assessee did not raise any objection to the initiation of re-assessment proceeding during the course of assessment proceedings. On merits, it was submitted by the Ld. Sr. DR, relief had already been given by the Ld. CIT(A) on the basis of sale deed filed by the assessee in this regard. The Ld. Sr. DR ITA No. 921-C-2019 Balwinder Singh, Ludhiana 9 submitted that the re-assessment proceedings in this case were perfectly justified.
6.0 We have heard the rival submissions and have also perused the material on record. The facts of the case are not in dispute. As per the information available from record, the assessee is an individual and the Assessing officer was in possession of an AIR information as per which the assessee had deposited cash of Rs. 70,01,000/- in his saving bank account. The Assessing officer issued verification letter u/s 133(6) of the Act requiring the assessee to explain the deposit as the assessee did not have any Permanent Account Number nor had any return of income filed. There was no response to this verification letter from the side of the assessee. Thereafter, after recording of reasons, the Assessing officer proceeded to reopen the case u/s 147 of the Act requiring the assessee to file his return of income. In response to notice u/s 148 of the Act, the assessee again did not file any return. However, subsequent to the issuance of notice u/s 142(1) of the Act, the assessee submitted copy of a sale deed claiming sale of agricultural land vide Vasika No. 823 dated 25.5.2010 amounting to Rs. 5,00,000/- alongwith copy of the bank account and pension certificate. Thus, the assessee could explain only deposit of Rs. 5,00,000/-. The Assessing officer, thereafter, afforded numerous opportunities to explain the remaining deposit in the bank account but no explanation was forthcoming from the side of the assessee and in such a situation, apparently, the Assessing officer had ITA No. 921-C-2019 Balwinder Singh, Ludhiana 10 no option but to complete the assessment u/s 144 of the Act. However, the Assessing officer, in spite of non-cooperation from the side of the assessee, gave benefit of sale deed of Rs. 5,00,000/- while framing the assessment and made addition of only Rs. 65,01,000/- being the remaining amount after giving benefit or Rs. 5,00,000/-. It is to be noted that during the course of assessment proceedings, not only did the assessee not cooperate and respond to the queries raised by the Assessing officer but also did not challenge the initiation of re- assessment proceedings.
6.1 The challenge to re-assessment proceedings was made for the first time before the Ld. CIT(A) and the main thrust of the argument of the assessee was that no notice u/s 148 of the Act could have been issued based on AIR information. However, the Ld. CIT(A) did not accept the assessee's challenge to the validity of assumption of jurisdiction u/s 148 of the Act on the ground that information received from agencies like Investigation Wing, CIB, Enforcement Directorate or from other Assessing officer is information for the purpose of initiation of re- assessment proceedings. The Ld. CIT(A), while dismissing the assessee's challenge to the reopening on the legal ground, placed reliance on the numerous judicial precedents which have been incorporated in the body of the impugned order. The Ld. CIT(A), however, admitted additional evidence in the form of another sale deed of Rs. 6,20,000/- against the Viska No. 822 and directed the Assessing ITA No. 921-C-2019 Balwinder Singh, Ludhiana 11 officer to delete the addition of Rs. 6,20,000/- but confirmed the remaining amount. Before us also, the Ld. AR has argued vehemently against the assumption of jurisdiction u/s 148 of the Act and the main thrust of his arguments have been that the Assessing officer could not have proceeded to initiate the impugned proceedings simply based on AIR information. The Ld. AR has also relied on the numerous judicial precedents, wherein, it has been held that it would be incorrect to assume jurisdiction u/s 148 of the Act by reaching a conclusion that bank deposits would be constituting income which has escaped assessment.
6.2 We have gone through the judicial precedents which have been cited by the Ld. CIT(A) while dismissing the assessee's challenge to the assumption of jurisdiction u/s 147 / 148 of the Act. As we have stated earlier also, there was no co-operation from the end of the assessee regarding explanation for deposit of cash of Rs. 70,01,000/- and the assessee had also failed to respond to the verification letter issued u/s 133(6) of the Act, in our view, the Assessing officer cannot be faulted for issuing notice u/s 148 of the Act. It is to be noted that at that point of time the Assessing officer was in possession of AIR information and the Assessing officer also proceeded to obtain the bank statement along with the account opening form from the concerned branch of the bank account in terms of section 133(6) of the Income Tax Act, 1961.
ITA No. 921-C-2019 Balwinder Singh, Ludhiana 12 Therefore, it cannot be said that the Assessing officer did not apply his mind to the facts of the case.
6.3 In our considered view, the presence of information, non- compliance by the assessee and the obtaining of cogent material from the bank confirming the contents of the Annual Information Report, at that juncture, were sufficient for the Assessing officer to record reasons to believe that the income has escaped assessment. The assessee tried to escape the rigours to the Income Tax Law by resorting to challenging the action of the Assessing officer on mere technicalities, although, it was the assessee who had miserably failed to cooperate during the assessment proceedings. It is also to be noted that this is a case where the assessee did not have a PAN and the assessee also did not file any return of income in response to the notice u/s 148 of the Act. Thus, from the very beginning, there was a gross negligence or carelessness on the part of the assessee and we are of the considered view that the failure of the assessee should not be protected by us by holding that the re-assessment proceedings had been wrongly initiated. We are guided by the judgement of the Hon'ble Punjab & Haryana High Court in the case of Gurera Gas Cylinders Pvt. Ltd. Vs. CIT and Another reported in 258 ITR 170 (P&H) wherein the assessee's writ challenging the re- assessment notice was dismissed as there was a failure to disclose the material facts necessary for the purpose of assessment. Similarly, the Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. Vs. ITO ITA No. 921-C-2019 Balwinder Singh, Ludhiana 13 reported in 236 ITR 34(SC), their Lordshisp rejected the challenge to the notice issued for reassessment by observing that at this stage, the Court can only consider whether there is a prima facie case for reassessment and reopening of the proceedings cannot be struck down by going into the sufficiency or correctness of the material relied upon by the assessing authority for that purpose.
6.4 In the present case, the onus was initially on the assessee to explain before the Assessing officer, the source of bank deposits but his non- compliance left no option with the Assessing officer but to issue notice u/s 148 of the Act. The law as laid down by the Hon'ble Apex Court and the Hon'ble Punjab & Haryana High Court as stated above, still holds good. Similarly, the Chandigarh Bench of the ITAT in the case of ACIT Vs. Kisco Castings Pvt Ltd reported in 152 TTJ 629 (Chandigarh Tribunal) has held that where the information is factual and not false and the same has merely been communicated to the Assessing officer, he would be within his statutory right to invoke the provisions of section 147 read with 148 of the Act. The Coordinate Bench of the Tribunal went on to hold that the information being factually correct and the assessee failing to respond to the proceedings under the Act, the Assessing officer had rightly assumed jurisdiction u/s 147 read with section 148 of the Act. We also note that the Ld. CIT(A) has also cited and relied on the judicial precedents which we have quoted in the above mentioned paragraphs and we are in complete agreement with the ITA No. 921-C-2019 Balwinder Singh, Ludhiana 14 reliance so placed by the Ld. CIT(A). Therefore, on an overall facts of the case, we uphold the action of the Ld. CIT(A) in upholding the initiation of re-assessment proceedings. Accordingly, ground No.1 of the assessee's appeals stands dismissed.
6.5 Coming to the merit of the case, we would again like to bring to highlight the peculiar facts in this case. The assessee initially did not respond to the information sought by the Assessing officer with respect to the cash deposits. Later on, the assessee submitted a sale deed showing sale of agricultural land to the tune of Rs. 5,00,000/- and the Assessing officer allowed the benefit of this amount of Rs. 5,00,000/- and made an addition of only Rs. 65,01,000/- on this account. Subsequently, before the Ld. CIT(A), the assessee again produced another sale deed for Rs. 6,20,000/- and also claimed that the total sale consideration received in cash was Rs. 70,00,000/- but the same had been shown at a lesser amount. To support this contention, the assessee filed affidavit on his own behalf and also by one Sh. Sukhjinder Singh, Numbardar stating that actual sale consideration was of Rs. 70,00,000/.- The Ld. CIT(A) gave benefit of Rs. 6,20,000/- and upheld the addition of the remaining amount on the ground that the remaining amount remained unsubstantiated. From the factual matrix of the case, it is very much apparent that the assessee has not been forthcoming at all in giving proper explanation about the source of bank deposits. He has consistently been changing his stand and, apparently, the correct ITA No. 921-C-2019 Balwinder Singh, Ludhiana 15 information has been withheld, for the reasons best known to him, both during the course of assessment proceedings as well as proceedings before the Ld. First Appellate Authority. Thus, prima facie looking into facts and the conduct of the assessee, we would be inclined to dismiss the assessee's appeal on the merits of the case also. However, we also note that the assessee is an Army Veteran who retired from the Army in 1984. As per his own admission, he had income only from agricultural activity as well as from pension. We also note that in the paper book which has been filed by the assessee, the assessee has filed copy of letters as obtained by commission agent that assessee had received an amount of Rs. 50,00,000/- during the year from sale of agricultural receipts. The assessee has also filed affidavit on his own behalf as well as of Shri Sukhjinder Singh, Numberdar, wherein, it has been stated that the actual value of the land sold by the assessee was Rs. 70,00,000/-. Although, these evidences were filed as additional evidences before the Ld. CIT(A), the Ld. CIT(A) did not accept them as there was no further corroborative evidence in support of the same. However, ignoring the past conduct of the assessee and on the peculiar facts of this case, duly noting that the assessee is a retired Army veteran, we would like to afford one more opportunity to him to explain the source of deposits before the Ld. First Appellate Authority and to come out with clean hand once of all. Therefore, in the interest of substantial justice, we restore this appeal to the file of the CIT(A) to be decided on merits of the addition after affording due opportunity to ITA No. 921-C-2019 Balwinder Singh, Ludhiana 16 assessee to present its case. We also direct the assessee to submit all documentary evidences and submissions which the assessee wishes to rely upon in support of its claim without any delay and whenever the Ld. CIT(A) directs him to do so, failing which, the Ld. First Appellate Authority shall be at liberty to proceed ex-parte qua the assessee and decide the case on merits in accordance with law.
7.0 In the final result, the appeal of the assessee stands allowed partly for statistical purposes.
Order pronounced on 26.04.2022.
Sd/- Sd/- ( N. K. SAINI) (SUDHANSHU SRIVASTAVA) Vice President Judicial Member Dated : 26.04.2022 "आर.के."
आदे शक त+ल,पअ-े,षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकरआयु.त/ CIT
4. आयकरआयु.त (अपील)/ The CIT(A)
5. ,वभागीय त न1ध, आयकरअपील$यआ1धकरण, च3डीगढ़/ DR, ITAT, CHANDIGARH
6. गाडफाईल/ Guard File आदे शानस ु ार/ By order, सहायकपंजीकार/ Assistant Registrar