2021 (7) TMI 799 - AT - Income Tax

Validity of the reopening of the assessment u/s 147 - validity of the assessment on the grounds of the service of notice u/s 148 - HELD THAT - AO has stated in the assessment order that the notice u/s 148 of the Act issued on 08.08.2014 was received by assessee on 22.08.2014 - the assessee has not disputed the correctness of the address to which the notice was sent by AO as well as in the absence of any contrary fact or material to despite the fact recorded by Assessing Officer we do not find any merits or substance in the objection of the assessee raised in the ground nos. 1 to 3. The assessee has just raised the objection against reopening of the assessment without specifying as to how the reopening is invalid. Therefore, the objection of the assessee or devoid of any merits or substance and the same are dismissed. Addition on account of cash deposit made in the bank account by assessee as well as the estimation of income on the transactions carried out with the Multi Commodity Exchange (MCX) - HELD THAT - The details of the cash deposit made on various dates has been given by Assessing Officer of the assessment order. The assessee has not disputed the dates and amount of deposits extracted in the table reproduced by AO in the assessment order. In the absence of any explanation regarding source of these deposits, the Assessing Officer has rightly made the addition of the said amount while completing exparte assessment. Even before the CIT(A) as well as before this Tribunal, the assessee has not furnished any details or explanation regarding the source of these deposits. Hence, no error or irregularity in the orders of the authorities below on the issue of addition made on account of cash deposit in the bank account. As regards the addition made by Assessing Officer on account of income from transactions carried out on Multi Commodity Exchange (MCX) it is noted that the CIT(A) has restricted the said addition by applying profit rate @ 1% as against 8% applied by Assessing Office. The CIT(A) has sustained the addition on this account only to the extent of ₹ 19,667/- as against ₹ 1,57,335/- estimated by Assessing Officer. The assessee has not filed any details or record to controvert the fact that he has carried out the transactions on Multi Commodity Exchange (MCX). The estimation of income by CIT(A) by applying net profit at 1% is just and proper. Accordingly, find no reason to interfere with the order of the CIT(A) on this issue. Appeal filed by the assessee is dismissed.

Summary

Issues:
Validity of reopening of assessment
Addition made on account of cash deposit in bank account
Estimation of income from transactions on 'Multi Commodity Exchange' (MCX)

Validity of Reopening of Assessment:
The assessee raised objections against the reopening of assessment under section 147, citing lack of validity in the initiation and conduct of proceedings. However, the Assessing Officer stated that the notice issued under section 148 of the Income Tax Act was duly received by the assessee. The assessee did not dispute the receipt of the notice. The objection raised by the assessee lacked substance as it did not specify any invalidity in the reopening process. Therefore, the objection was dismissed for lacking merit.

Addition on Account of Cash Deposit in Bank Account:
The Assessing Officer made an addition of ?42,29,985 on account of unexplained cash deposits in the bank account of the assessee. The assessee did not participate in the assessment proceedings, and the assessment was completed ex parte. The Assessing Officer issued multiple notices under section 142(1) for information, which the assessee did not comply with. Subsequently, information was obtained from M/s. Karvy Commtrade Ltd. regarding the transactions on MCX. The bank account statement from HDFC Bank revealed the cash deposits made by the assessee. The assessee did not provide any explanation for the source of these deposits. As a result, the addition made by the Assessing Officer was deemed appropriate, and the objection was dismissed for lack of explanation or dispute from the assessee.

Estimation of Income from Transactions on MCX:
The CIT(A) restricted the addition on account of income from transactions on MCX by applying a profit rate of 1%, contrary to the 8% applied by the Assessing Officer. The addition was sustained to the extent of ?19,667 as opposed to the ?1,57,335 estimated by the Assessing Officer. The assessee failed to provide any details or records to challenge the transactions on MCX. The CIT(A)'s estimation of income at 1% was considered fair and appropriate. Consequently, there was no reason found to interfere with the CIT(A)'s order on this issue.

In conclusion, the appeal filed by the assessee was dismissed, and the judgment was pronounced on 15/07/2021 at Allahabad through Video Conferencing.