CIT Vs Sh. Hotchand Techchand Punjabi (Delhi High Court)
Delhi High Court has dismissed an appeal filed by the Income Tax Department (Revenue) against Sh. Hotchand Techchand Punjabi, affirming the Income Tax Appellate Tribunal’s (ITAT) decision to delete a substantial addition made to his income. The case, concerning Assessment Year (AY) 2012-13, revolved around alleged unexplained time deposits in Canara Bank and highlighted the significant powers vested in the Commissioner of Income Tax (Appeals) [CIT(A)] to conduct independent inquiries and admit additional evidence.
The High Court also condoned a delay of 82 days in filing and 7 days in re-filing the appeal by the Revenue, allowing the case to be heard on its merits.
Background of the Case: Best Judgment Assessment
The matter originated when the Assessing Officer (AO) issued a notice under Section 148 read with Section 147 of the Income Tax Act, 1961, based on information regarding time deposits made by Mr. Punjabi with Canara Bank. The AO initially obtained erroneous information, indicating deposits amounting to a staggering INR 19,72,95,564/-.
The AO issued a notice under Section 142(1) of the Act to Mr. Punjabi, but reportedly received no response. Consequently, the AO proceeded to complete the assessment under Section 144 of the Act, which allows for a “best judgment assessment” when a taxpayer fails to cooperate or provide requested information. Based on this, an addition of INR 16,86,47,780/- was made to Mr. Punjabi’s income under Section 69B of the Act, citing unexplained investment in time deposits. It was noted that the AO had already scaled down the initial figure by INR 2,86,47,782/- due to duplicate entries in the bank statement.
