Case Law Details
Avinash Chaudhary Vs ITO (ITAT Delhi)
Introduction: In a recent case, Avinash Chaudhary appealed against the Commissioner of Income Tax (Appeals)-2, Noida’s order dated 27.02.2018 for AY 2009-10. The appeal questioned the reassessment order initiated due to the non-filing of the Income Tax Return (ITR) and information about cash transactions in the bank account. The Income Tax Appellate Tribunal (ITAT) Delhi, in its detailed order, upheld the reassessment. Let’s delve into a comprehensive analysis of the case.
Background: The appellant, Avinash Chaudhary, contested the reassessment order under Section 147/144 of the Income Tax Act for AY 2009-10. Despite several notices, neither the assessee nor any representative appeared during the hearing. The ITAT proceeded with an ex parte decision after considering the submissions of the Ld. Sr. DR on behalf of the Department.
Grounds Raised by Assessee:
1. The CIT(A) erred in confirming the reassessment order, alleging the AO acted without valid jurisdiction and failed to comply with mandatory conditions under Sections 147 to 151.
2. The action of the CIT(A) in confirming the reassessment order was deemed bad in law and against the facts and circumstances of the case.
ITAT’s Evaluation:
1. The Ld.CIT(A) considered the legal contentions of the assessee and dismissed the grounds, stating that the case laws relied upon by the assessee were not applicable.
2. The reasons recorded by the AO for initiating reassessment proceedings were based on information about cash transactions in the bank account and the non-filing of the return for AY 2009-10.
Decision on Grounds 1 & 2: The ITAT upheld the action of the AO, emphasizing that the reasons to believe were valid and aligned with the provisions of the Income Tax Act. The grounds challenging the reassessment were dismissed.
Grounds 3 & 4 – Cash Deposit Issue: The appellant contended that the CIT(A) erred in confirming the addition of Rs.39,76,185/- based on unexplained cash deposits. The Ld. Sr. DR supported the AO’s decision.
ITAT’s Decision on Cash Deposit Issue: The ITAT, after a detailed examination of submissions and findings, upheld the CIT(A)’s decision, stating that the appellant’s claims lacked merit. The addition of Rs.39,76,185/- was deemed valid.
Grounds 5 & 6 – Capital Gain Issue: The appellant challenged the addition of Rs.1,58,117/- as long-term capital gain, asserting it was a short-term capital loss. The Ld. Sr. DR defended the AO’s decision.
ITAT’s Decision on Capital Gain Issue: The ITAT noted that the Ld.CIT(A) granted substantial relief, restricting the addition to Rs.1,58,117/- based on the appellant’s own submissions. The grounds were dismissed.
Conclusion: The ITAT Delhi’s decision to uphold the reassessment based on non-filing of the ITR and information about cash transactions reinforces the importance of compliance with tax regulations. The detailed analysis of each ground and the subsequent dismissal of the appellant’s claims highlight the need for accurate documentation and adherence to legal provisions. This case serves as a reminder for taxpayers to fulfill their filing obligations promptly to avoid potential reassessment challenges.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Noida dated 27.02.2018 for AY 2009-10.
2. When the case was called for hearing neither the assessee nor any Authorized Representative or Counsel appeared nor any adjournment application has been filed despite due service of notice several times. Therefore, we proceed to decide appea0 ex parte qua the assessee after hearing the submissions of Ld. Sr. DR on behalf of the Department.
3. Though the assessee has raised as many as seven grounds in this appeal but except ground no. 3 to 6 others are argumentative and supportive to the main grounds which are as follows: –
“3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.39,76, 185/- allegedly on the ground that the cash deposits are unexplained and that too by recording incorrect facts and findings and without observing the principles of natural justice.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of 39,76,185/- allegedly on the ground that assessee has failed to explain the cash deposit, received from his grandfather and out of cash withdrawals from the bank of assessee, is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 1,58,117/- allegedly on the ground that the assessee has earned long term capital gain on sale of land and too by recording incorrect facts and findings and without observing the principles of natural
6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs. 1,58,117/- as long term capital gain which in fact is a short term capital loss, is bad in law and against the facts and circumstances of the case.”
Ground No. 3 & 4 of assessee: –
4. From the orders of the authorities below as well as grounds, we note that the assessee has contended that the Ld.CIT(A) has erred in law and on facts in confirming the addition of 39,76,185/- alleged1y on the ground that the cash deposits are unexplained that and that too by recording incorrect facts and findings without observing the principles of natural justice. It has also been contended that the Ld.CIT(A) has grossly erred in confirming the addition on the ground that the assessee has failed to explain the cash deposits, received from his grandfather and out of cash withdrawals from the bank account of assessee. Therefore, the orders of the authorities below are bad in law and against the facts and circumstances of the case.
5. The Ld. Sr. DR supporting the orders of the authorities below submitted that since the assessee has failed to explain the source of cash deposits to his bank account, therefore, the addition made by the AO may kindly be upheld.
6. On careful consideration of above submissions, findings and observations recorded by the AO as well as Ld.CIT(A), we note that the AO made addition of Rs.43,54,000/- on account of cash deposits to the bank account of assessee. The assessee carried the matter before the Ld.CIT(A) and the part addition of Rs.6,13,330/- was deleted extracting the disallowance of Rs.39,76,185/- in the hands of the assessee. From the orders of the authorities below, we clearly note that the Ld. CIT(A) after considering the basis taken by the AO calling remand report on the additional evidence filed by the assessee during first appellate proceedings and rejoinder of the appellant. It was held that the appellant is not engaged in the business activity and entire credits found to the bank account of assessee remained unexplained, therefore, the Ld.CIT(A) after giving part re1ief to the assessee uphold the remaining part of addition. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings arrived by the Ld.CIT(A) and thus, be uphold the same. Accordingly, ground no. 3 & 4 of assessee are dismissed.
Ground No. 5 & 6:
7. From the orders of the authorities below as well as grounds, we note that the second grievance of assessee is that the Ld.CIT(A) has erred in law and on facts in confirming the addition of Rs.1,58,117/- on the ground that the assessee has earned long term capital gain on sale of land that is too by recording incorrect facts and findings and without observing principles of natural justice. It has also been alleged that the Ld.CIT(A) has erred in confirming the said addition as long term capital gain which in fact is a short term capital loss, therefore, the action of the AO being bad in law and against the facts and circumstances of the case may kindly be dismissed by allowing grounds of assessee.
8. Replying to the above, the Ld. Sr. DR supported the action of the AO and submitted that the AO made addition of Rs.9,81,020/- on account of capital gain arises on the sale of property. He further contented that the Ld.CIT(A) after considering the entire facts and circumstances of the issue while adjudicating the ground no. 4 of assessee as per Form 35 rightly held that the proportionate long term capital gain in the hands of the assessee come to 1,58,117/- granting major part of relief. The Ld. Sr. DR submitted that the calculation approved by the Ld.CIT(A) was given by the assessee himself, therefore, no interference is called for therein.
9. On careful consideration of above submission, we note that in para 4.27 of first appellate order the Ld.CIT(A) has restricted the addition of Rs.1,58,117/- granting major part of relief to the assessee and such amount was computed as per submissions and additional evidence filed by the assessee himself. Therefore, we are unable to see any valid reason to interfere with the findings returned by the Ld.CIT(A) on this issue. Accordingly, ground no. 5 & 6 of assessee are also dismissed.
Ground No. 1 & 2 of assessee:
10. Ground no. 1 & 2 of assessee are as follows:
1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A0 in framing the impugned reassessment order u/s 147/144 and that too without assuming jurisdiction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.
2. That in any case and in any view of the matter, action of Ld.CIT(A) in confirming the action of Ld. A0 in framing the impugned reassessment order u/s 147/144, is bad in law and against the facts and circumstances of the case.”
11. Apropos these grounds it has been alleged by the assessee that the Ld.CIT(A) has erred in law and on facts in confirming the reassessment order passed u/s 147/144 of the Act which was passed by the AO without assuming valid jurisdiction and complying with the mandatory conditions as per provisions of section 147 to 151 of the Act. It has also been contended that the Ld. First Appellate Authority has erred in confirming the action of the AO in framing the impugned reassessment order which is apparently bad in law and not sustainable.
12. Replying to the above, the Ld. Sr. DR drew our attention towards para 4.7 to 4.14 of first appellate order and submitted that the Ld.CIT(A) has categorically noted that the case 1aws relied upon the assessee was not applicab1e to the facts of the present case. He also submitted that after evaluation of legal contentions of assessee the Ld.CIT(A) rightly dismissed ground no. 1 & 2 of assessee.
13. On careful consideration of submissions, we note that the CIT(A) in para 4.10 has reproduced the relevant part of the reasons recorded by the AO for initiation of reassessment proceedings u/s 147 of the Act. From the reasons, it is clear that the reason to believe was on the basis of information regarding certain cash transactions in the bank account of assessee and the assessee did not file any return of income and for the reason assessee did not file return of income for AY 2009-10. We are unable to see any valid reason to interfere with the findings recorded by the Ld.CIT(A) while dismissing the ground no. 1 & 2 of assessee and upholding the action of the AO for initiation of reassessment proceedings. Accordingly, ground no. 1 & 2 of assessee are also dismissed.
14. In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 17.10.2023
