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2024 (4) TMI 1133 - AT - Income TaxValidity of invoking provisions u/s 147 - unexplained cash deposits / other credits in the bank account - HELD THAT - On the basis of facts placed on record, we observe that the assessee has not disputed that all the necessary approvals / legal steps for initiating proceedings u/s 147 / 148 were duly taken by the AO prior to initiation of reassessment proceedings. Secondly, on facts which are on record before us, the assessee had not filed it s return of income for the impugned assessment year. From the information available on record, the AO came to know that there were cash deposits / other credits in the bank account held by the assessee with Renuka Mata amounting to Rs. 28.70 crores approximately during the impugned year under consideration. Despite such substantial deposits / credits in the bank account of the assessee, the assessee had not filed any return of income for the impugned assessment year. Accordingly, we are of the considered view that there is no infirmity in the order of CIT(A) while holding that it is a fit case for reopening the assessment of the assessee u/s 147 / 148 looking into the assessee s set of facts. Unaccounted cash deposits / credits in his bank account with Renukamata Society - On going through the above report by the Investigation Wing and the order passed in the case of Renukamat Multi State Cooperative Union Credit Society Ltd. 2023 (3) TMI 86 - ITAT MUMBAI we are of the considered view that the assessee was not the real beneficiary of substantial cash deposits / credits which were made in his bank account held with Renukamata Society. From the above facts placed on record, it is observed that these bank accounts were being operated in the name of the assessee by the real beneficiaries / depositors, in collusion with Renukamata Society and the assessee, cannot be saddled with the ownership of the entire income deposited / credited in his bank account with Renukamata Society. Reasonable amount which could be held to be taxable in the hands of the assessee, for allowing the Renukamata Society / real beneficiaries to operate the bank accounts, held in the name of the assessee - In the case of Chintan Niketan Bhandari 2023 (6) TMI 603 - ITAT AHMEDABAD held that since the assessee failed to provide complete details regarding the commission income, the commission income may be computed @ 0.25% in the hands of the assessee. Accordingly, in the interest of the justice, looking into the instant facts it is held that 0.25% of the deposits / credits made in the bank accounts held by the assessee with Renukamata Society would be the income of the assessee, so as to serve the ends of justice. Levied penalty u/s 271(1)(b) - non-appearance by the assessee in response to notices issued u/s 142(1) of the Act - assessee submitted that for the impugned assessment years under consideration before us, looking into the entire scheme of things, any non-compliance / nonappearance in response to notices issued by the AO was not with any mala fide intention and the assessee was not responsible for the noncompliance to the notices issued in respect to the aforesaid tax proceedings - HELD THAT - It is a fit case for non-levy of penalty u/s 271(1)(b) of the Act looking into the instant facts, since the assessee had been assured by the Renukamata Society that it s tax professional would be taking care of the entire tax proceedings. Accordingly, looking into the instant facts, the assessee had a reasonable cause for not responding / making due compliance in response to notices issued by the Department from time to time. Accordingly, looking into the instant facts, we are of the considered view that it is a fit case for deleting levy of penalty under Section 271(1)(b) of the Act.
Issues Involved:
1. Dismissal of appeal ex parte by CIT(A). 2. Validity of invoking provisions of Section 147 of the Income Tax Act. 3. Confirmation of addition of Rs. 28,67,73,656/- as unexplained cash credit and investment. 4. Levy of penalty under Section 271(1)(b) of the Income Tax Act. Summary: Issue 1: Dismissal of appeal ex parte by CIT(A) The assessee argued that the dismissal of the appeal ex parte by the learned CIT(A) was violative of the principles of natural justice and unconstitutional. The Tribunal did not specifically address this issue separately but proceeded with the other grounds of appeal. Issue 2: Validity of invoking provisions of Section 147 of the Income Tax Act The assessee challenged the action of the Assessing Officer (AO) in invoking the provisions of Section 147 of the Act. The Tribunal observed that the assessee did not dispute that all necessary approvals and legal steps for initiating proceedings under Sections 147/148 were duly taken by the AO. Given the substantial cash deposits and credits in the assessee's bank account without filing a return of income, the Tribunal found no infirmity in the CIT(A)'s order for reopening the assessment under Sections 147/148. Consequently, Ground Nos. 2 and 3 of the assessee's appeal were dismissed. Issue 3: Confirmation of addition of Rs. 28,67,73,656/- as unexplained cash credit and investment The AO added the amount of Rs. 28,67,73,656/- as unexplained cash credit and investment under Sections 69A and 69 due to the assessee's failure to provide any explanation or details. The CIT(A) confirmed the additions, noting that the assessee failed to offer any explanation despite multiple opportunities. The Tribunal examined the facts, including the investigation report which indicated that the Renukamata Society operated accounts in the names of individuals of meagre means, used for money laundering and other activities. The Tribunal concluded that the assessee was not the real beneficiary of the deposits and credits in his bank account and held that only 0.25% of the deposits/credits should be considered as the assessee's income. Thus, Ground No. 4 of the assessee's appeal was partly allowed. Issue 4: Levy of penalty under Section 271(1)(b) of the Income Tax Act The assessee contended that the non-appearance in response to notices was due to reliance on the tax professional engaged by the Renukamata Society, who assured to handle the proceedings. The Tribunal found that the assessee had a reasonable cause for non-compliance and deleted the penalty under Section 271(1)(b) for the assessment years 2015-16 and 2016-17. Conclusion: - The appeals related to the validity of invoking Section 147 and the ex parte dismissal by CIT(A) were dismissed. - The addition of Rs. 28,67,73,656/- was partly allowed, restricting the taxable amount to 0.25% of the deposits/credits. - The penalty under Section 271(1)(b) was deleted for the assessment years 2015-16 and 2016-17. Outcome: - Appeals for A.Y. 2015-16, 2016-17 & 2017-18 (ITA Nos. 690, 692 & 694/Ahd/2023) were partly allowed. - Appeals for A.Y. 2015-16 & 2016-17 (ITA Nos. 691 & 693/Ahd/2023) regarding penalty were allowed.
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