1 ITA Nos. 7849 & 7850/Del/2018

IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCH: ‘SMC–1’ NEW DELHI ]

BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER
A N D

MS. SUCHITRA KAMBLE, JUDICIAL MEMBER

I.T.A. No. 7849/Del/2018 (A.Y. 2009-10)
A N D

I.T.A. No. 7850/Del/2018 (A.Y. 2009-10)

(THROUGH VIDEO CONFERENCING)

Shri Sukhdev Singh, Income Tax Officer,
Village Kayampur, Vs.
Tehsil Nakur,
Distt. Saharanpur Ward : 1,

PAN: HGVPS3714M Saharanpur.
(RESPONDENT)
(APPELLANT)

Assessee by : Shri Ankit Gupta, Advocate
Department by: Sh.Sanjeev Mahajan, Sr.DR

Date of Hearing 13.05.2021

Date of Pronouncement 28.05.2021

O R D E R

PER SUCHITRA KAMBLE, JM :

These two appeals are filed by the assessee against order dated
24.09.2018 passed by CIT (Appeals), Muzaffarnagar, for assessment year
2009-10.
2. The grounds of appeal are as under:-
I.T.A. No. 7849/Del/2018 :

“ 1. That, the notice issued U/s !48r.w,s 148 of the Act and initiated the re-
assessment proceedings is illegal, bad in law and without jurisdiction;

2. That, CIT(A) has failed to appreciate that no notice U/s 148 of the Act and
other statutory notice during the re- assessment proceedings was never
properly served on the assessee and the same were sent on the wrong
2 ITA Nos. 7849 & 7850/Del/2018

addresses, even after knowing the correct address of the appellant, hence the
proceedings initiated is illegal, bad in law and without jurisdiction.

3. That, CTT(A) has failed to appreciate that no proper and valid satisfaction/
reasons were recorded by the assessing officer before assumption the
jurisdiction U/s 147 and issuing the notice U/s 148 of the Act.

4. That, The CIT(A) erred in validate the action of the assessing officer of
initiating the proceeding on the basis of AIR information, which is vague,
incorrect and baseless, without application of independent mind on the said
information, whether the same constitute the tangible material and having live
nexus, which leads to income escaping assessment, therefore, the alleged
reason recorded are highly arbitrary, bad in law and purely based on surmises
and conjecture;

5. That, no proper approval was obtained on the alleged reason recorded by the
assessing officer as per section 151 of the Act, before issuing the notice U/s
148 of the Act, hence the proceeding initiated is illegal, bad in law and without
jurisdiction;

6. That, no proper approval was obtained before issuing the notice U/s 131 of
the Act, which is the basis of the initiating the proceeding U/s 147 of the Act,
therefore, the notice and proceedings is illegal, bad in law and without
jurisdiction;

7. That assessment order passed 144/147 and the addition made are illegal,
bad in law and without jurisdiction. The CIT(A) erred in upholding the same.

8. That, the assessing officer has erred in making the addition to the income of
Rs.36,90,000.00 on account of unexplained CASH transaction U/s 69 A of the
Act, against the Nil Income of the assessee. The CIT(A) erred in restricting the
same at Rs.26,20,000.00, which is illegal, unjust, highly excessive and are not
based on any material on record.

9. That, CIT (A) has failed to appreciate in confirming the addition, that the
assessee is an agriculturist and having no other source of income and The
CASH was deposited out of the sale proceeds of the agriculture land as well as
the sale proceeds of the agriculture proceeds, hence the addition made is highly
arbitrary and unjust;

10. That, CIT(A) has failed to appreciate that the provision of section 69A per se
not applicable on the CASH deposit in the bank account of the assessee, hence
the addition made U/s 69A is highly arbitrary and unjust.
3 ITA Nos. 7849 & 7850/Del/2018

11. The addition confirmed and the observations made by CIT (A) are unjust,
unlawful and based on mere surmises and conjunctures. The addition made
cannot be justified by any material available on record.

12. That the explanation given evidence produced, material placed and
available on record has not been properly considered and judicially interpreted
and the same do not justify the additions/ allowances made.

13. That the impugned Assessment Order passed by the Assessing Officer and
order passed by CIT(A) are against the principles of natural justice and the
same has been passed without affording reasonable and adequate opportunity
of being heard.

14. That the interest U/s 234A & 234B has been wrongly and illegally charged
as the appellant could not have foreseen the disallowances/additions made and
could not have included the same in current income for payment of Advance
tax. The interest charged under various sections is also wronglv worked out.

15. The appellant craves leave to add, amend, alter and or modify the grounds
of appeal of the said appeal.

All of the above grounds of appeal are without prejudice and are mutually
exclusive to each other. “

I.T.A. No. 7850/Del/2018 :

“ 1. That, the notice issued 271(1)(c) of the Act and order passed is illegal, bad
in law and without jurisdiction.

2. That, C1T(A) has failed to appreciate that no proper satisfaction was recorded
in assessment order as well as notice issued U/s 271(1)(c) of the Act, hence ihe
proceedings initiated is illegal, bad in law and without jurisdiction.

3. That, CIT(A) has failed to appreciate that no proper and specific charge was
mentioned in assessment order as well as in notice issued U/s 271(1)(c) of the
Act, hence the penalty imposed is bad in law and without jurisdiction

4. That, the assessing officer has erred in imposing the penalty of
Rs.l 1,46,596.00. The CIT(A) erred in confirming the same, which is illegal, bad
in law and unjust.

5. That, CIT (A) has failed to appreciate before confirming the penalty, that the
assessee is an agriculturist and having no other source of income and The
4 ITA Nos. 7849 & 7850/Del/2018

CASH was Deposited out of the sale proceed of the agriculture land as well as
the sale proceeds of the agriculture proceeds, hence the penalty imposed is
highly arbitrary' and unjust.

6. That, CIT(A) failed to appreciate that no material was available on record to
the fact which proves that the explanation given by the assessee appellant was
found false or incorrect, hence the penalty imposed is highly arbitrary and
unjustified.

7. The observations made by CIT (A) are unjust, unlawful and based on mere
surmises and conjunctures. The addition made cannot be justified by any
material available on record.

8. That the explanation given evidence produced, material placed and available
on record has not been properly considered and judicially interpreted and the
same do not justify the additions/ allowances made and penalty imposed.

9. That the impugned penalty Order passed by the Assessing Officer and order
passed by CIT(A) are against the principles of natural justice and the same has
been passed without affording reasonable and adequate opportunity of being
heard.

10. The appellant craves leave to add, amend, alter and or modify the grounds
of appeal of the said appeal.

All of the above grounds of appeal are without prejudice and are mutually
exclusive to each other. “

3. The case was selected on the basis of AIR information of cash deposited
in the bank account of the assessee. Assessee deposited Rs.36,90,000/- in the
savings bank account which was received by the assessee from sale of
agricultural land and other agricultural income as well as sale proceeds. The
Assessing Officer issued notice to the assessee vide notice under Section 147
and 148 of the Income Tax Act, 1961 (the Act) dated 16.05.2011. As per the
assessment order the notice was returned back with the postal remark that the
same was not accepted. Therefore, the Assessing Officer passed assessment
order under Section 144 of the Act treating the cash transaction amounting to
Rs.36,90,000/- as unexplained deposit and treated the same as income under
Section 69A and made addition accordingly.

4. Being aggrieved by the assessment order the assessee filed appeal before
5 ITA Nos. 7849 & 7850/Del/2018

the CIT (Appeals). The CIT (Appeals) partially allowed the appeal of the
assessee.

5. The ld. AR submitted that assessee is an Individual–agriculturist and the
only source of income is agricultural income. The ld. AR further submitted
that for the year under consideration the assessee has not filed any return of
income for the reason that the assessee has only agricultural income and the
same is exempt under the Income Tax Act. For the year under consideration
the assessee sold the agricultural land of Rs.36,90,000/- in cash which has
been deposited by the assessee in his bank account. The assessee received
Rs.5,90,000/- on 22.07.2008 and Rs.31,00,000/- on 24.01.2009 whereas the
assessee after registering the sale deed at Rs.26,20,000/- on 24.01.2009. The
ld. AR further submitted that on the basis of AIR information the Assessing
Officer issued the verification notice dated 31.01.2011 and 8.04.2011 on the
wrong address. The assessee could not make compliance as the same letter
was never served on him. Therefore, the Assessing Officer has initiated the
re-assessment proceedings under Section 147 and 148 of the Act on
16.05.2011. The ld. AR further submitted that notice issued under Section
148 of the Act on the wrong address i.e. Shri Sukhdev Singh, S/o. Shri
Sarshan Singh, Village Mazir Kalan, Post Office Sarsawa, Distt. Saharanpur.
The assessing Officer accepted that before completion of the re-assessment
proceedings the Assessing Officer was of the knowledge of correct address of
the assessee. Thus, the ld. AR submitted that notice issued under Sectgion
148 of the Act was not properly served and hence the whole proceeding is
illegal, without jurisdiction and against the principles of natural justice. The
ld. AR further submitted that the re-opening on the basis of the illegal, bad in
law and defective verification notice makes the re-assessment proceedings
illegal and void ab initio. The ld. AR further submitted that the re-assessment
cannot be made to verify the cash deposited with the bank account by itself
does not lead to income in the hands of the assessee, in the absence of any
material, cannot be held as sufficient reason for re-opening assessment. The
6 ITA Nos. 7849 & 7850/Del/2018

ld. AR relied upon the decision of Delhi Bench of the Tribunal in the case of Bir
Bahadur Sijwali Vs. ITO (ITA 68 SOT 197) and Pramod Kumar Shai Vs. ITO
(ITA 5758/Del/2013 dated 23.12.2019. On merits, the ld. AR submitted that
the CIT (Appeals) erred in upholding the addition of cash deposit of
Rs.26,20,000/- as un-explained cash deposit in the bank account as the cash
deposited on the date mentioned in the sale deed itself proves that the cash is
deposited out of sale of agricultural land which was partially agreed by the CIT
(Appeals). The CIT (Appeals) and the Assessing Officer has not brought on
record any contrary evidence in respect of the explanation given by the
assessee relating to cash deposit of the sale proceeds of agricultural land.

6. As regards the penalty appeal, the ld. AR submitted that notice issued
under Section 274 of the Act is illegal, bad in law and without jurisdiction as
there is no proper limb mentioned in the penalty order whether there is
concealment of income or furnishing of inaccurate particulars of income. The
Assessing Officer has also not given any proper satisfaction.

7. The ld. DR submitted that the Assessing Officer has made addition ex-
parte as the assessee has received the notice but refuse the same. The CIT
(Appeals) has given substantial relief to the assessee as the assessee could not
establish the reasoning about cash deposit to the extent of Rs.26,20,000/-. As
regards penalty order, the Ld. DR submitted that the Assessing Officer has
rightly imposed penalty and notice under Section 274 read with Section
271(1)(c) of the Income Tax Act is valid.

8. We have heard both the parties and perused all the relevant material
available on record. As regards the contention of notice not properly served by
the Assessing Officer, the explanation of the postal authorities is that the
assessee has refused to take notice is a good service and hence ground Nos. 1
to 7 are dismissed. As regards ground Nos. 8 to 13, the CIT (Appeals) do have
taken cognizance of the provision produced before him, if given a partial relief
7 ITA Nos. 7849 & 7850/Del/2018

despite the details given by the assessee for the entire amount of
Rs.36,90,000/-. From the perusal of the record presented before the CIT (A), it
can be found that the explanation given by the assessee relating to sale of land
for Rs.36,90,000/- was duly reflected in his bank account. The CIT (A)’s stand
that no explanation was offered relating to the remaining cash deposit to the
extent of Rs.26,20,000/- is not correct. The cash deposits were made according
to the sale deed dated 22.07.2008 and the amount was received on 22.07.2008
and 24.01.2009 which was properly reflected in assessee’s bank account.
Therefore, the CIT (Appeals) was not right in sustaining the remaining amount
of cash deposit to the extent of Rs.26,20,000/-. Therefore, on merits the
assessee succeeds and ground Nos. 8 to 13 are allowed. As regards to Ground
No. 14, the same is consequential and hence not adjudicated upon. Therefore,
ITA No. 7849/Del/2018 is partly allowed.

11. As regards penalty appeal, the same is consequential, hence it will not
sustain in the light of the addition which is deleted as per the findings given
hereinabove. Thus, penalty does not survive. Hence ITA No. 7850/Del/2018 is
allowed.

12. In result, appeal being ITA No. 7849/Del/2018 filed by the assessee is
partly allowed and appeal being ITA No. 7850/Del/2018 filed by the assessee is
allowed.

Order pronounced in the Open Court on this 28th Day of May, 2021

Sd/- Sd/-
( ANIL CHATURVEDI ) ( SUCHITRA KAMBLE )
ACCOUNTANT MEMBER
JUDICIAL MEMBER
Dated : 28/05/2021.

*MEHTA*
Copy forwarded to:
8 ITA Nos. 7849 & 7850/Del/2018

1. Appellant
2. Respondent
3. CIT
4. CIT (Appeals)
5. DR: ITAT

ASSISTANT REGISTRAR
ITAT NEW DELHI

Date of dictation 24.05.2021
Date on which the typed draft is placed before 25.05.2021
the dictating Member 28.05.2021
Date on which the typed draft is placed before 28.05.2021
the Other Member 28.05.2021
Date on which the approved draft comes to the 28.05.2021
Sr. PS/PS 28.05.2021
Date on which the fair order is placed before 28.05.2021
the Dictating Member for pronouncement
Date on which the fair order comes back to the
Sr. PS/PS
Date on which the final order is uploaded on
the website of ITAT
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the Order