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TMI Blog2018 (9) TMI 1466X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no enquiry whatsoever has been conducted by the Ld.AO even at the remand stage on the affidavit filed by the parties. When those two additional evidences are really germane to the issue involved in the matter and needed to be considered before making addition, the Ld.CIT(A) without taking into consideration of the conduct of the AO in ignoring to conduct enquiry on those affidavits, confirmed the addition in a routine manner. We, therefore, in the larger interest of justice find it proper to refer this issue to the file of Ld.AO to make an enquiry on this affidavits and also to examine the depositors of those affidavits. We therefore set aside the order passed by the authorities below and further direct the AO to consider the issue afresh - Assessee’s appeal is allowed for statistical purposes. - I.T.A. No.966/Ahd/2016 - - - Dated:- 19-9-2018 - SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER For The Appellant : Shri Y.K. Gaika, AR For The Respondent : Shri Anand Kumar, Sr.DR ORDER PER Ms. MADHUMITA ROY - JM: The instant appeal has been filed by the Assessee before us against the order dated 23.02.2016 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law Ld. C1T(A) erred in sustaining above addition by summarily rejecting the additional evidence, admitted by him, and explanation submitted by the appellant without necessary inquiry and investigation. 7. On the facts and circumstances of the case and in law Ld. C1T(A) erred in sustaining above addition made by the AO without specifying Section, whether Section 68 or 69, under which addition was sought to be made. 8. On the facts and circumstances of the case and in law Ld. CIT(A) erred in sustaining above addition when onus lying on the appellant was discharged by him. 9. Ld. CIT(A) has erred in confirming addition of ₹ 44,55,520 made by AO treating the same as unexplained cash deposit in bank a/c's. In as much as- ( i) The transaction in bank a/c's were not done by assessee. Cash belonged to investors in shares. ( ii) The cash deposited in bank a/c's is only in 13 days i.e. earning of ₹ 3,41,763 per day, which is not possible. Assessee did not sale any asset. ( iii) Cheque were issued from cash deposited in bank a/c to share brokers indicate purchase shares for investors. 3. In support of his applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied for non-compliance of notice u/s.142(1) of the Act and letters dated 16.09.2013 11.10.2013. Since you have repeatedly failed to comply with the said notices, the undersigned has no way except to finalize the assessment based on the details available on records. In view of the above 1 propose to made addition/disallowance on following line. 1. Addition of cash deposits as well as other credits in your bank accounts with HDFC Bank Ltd. (A/c.d No.01791000035238 01791000039574). 2. Addition of interest received from HDFC Bank Ltd. You are further requested to show-cause why penalty u/s.271F of the I.T.Act should not be levied for failure to file return of income. Your reply should reach this office on or before 12.12.2013. If you fail to furnish the reply along with documentary evidences in this matter, the assessment will be finalized on the available materials without giving any further opportunity. 4.1. Since nothing was forthcoming, the Ld. AO assessed ₹ 44,58,520/- as the total income of the assessee on account of unexplained cash deposit against which appeal was preferred before the Ld. CIT(A). 5. In appeal, the Ld. CIT(A) has deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient reasons for reopening of the assessment proceedings. He has relied upon the judgement of this Co-ordinate Bench passed in the matter of Bir Bahadur Singh Sijwali vs. ITO [2015] 53 taxmann.com 366 (Delhi Trib.). He further argued that without making enquiry u/s.131 of the Act on the basis of the information the Revenue has proceeded against assessee by reopening assessment adopting a shortcut method, which according to him wrong efforts on the part of the Revenue and vitiated the entire reassessment proceeding. 7. The Ld.DR however, on the contrary relies upon the orders passed by the authorities below. He contended before us that, the reopening was done on the basis of the cogent information made available to the AO. 7.1. We have gone through the judgement relied upon by the Ld. AR. We find that the facts of that particular case is different from that of the instant case in hand. The quantum is also fairly less being ₹ 1,02,400/- that that of the cash deposit made by the assessee here in the instant case to the tune of ₹ 44,42,920/-. It appears from the records that opportunity was given u/s.148 of the Act to the assessee but the same was not availed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,500/- to ₹ 5,000/- per month. Thereafter I started job with other share brokers and I was earning ₹ 8,500/- per month. Pragneshbhai Patel is sub broke in Unjha and my close friend since many years and he offered me to give me more salary of ₹ 15,000/- per month provided I allow him to open Bank Accounts in my name to be operated by him. Pragneshbhai was my intimate friend I had no doubts in him that he will ever defraud me. Further I was always in need of money because I belonged to economically weaker family and I had hard time to meet my ends. Therefore, I allowed Pragneshbhai to open Bank account in my name with HDFC bank Unjha Branch bearing A/c. No.1791000035238 and 01791000039574. I handed over the pre-signed cheque books to Pragneshbhai and he operated the accounts. I never inquired about the accounts operated by him. Thereafter, till 2013 i.e. for 7 year, 1 did not hear or received my inquiry either from Income Tax or SEBI, hence I was satisfied that Pragneshbhai had operated my Account lawfully. But in the end of the year 2013, I received notice from Income Tax Department inquiring about cash transactions and bank account with HDFC bank for the year 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Notice, since l did not have taxable income. The advocate had further explained me that notice u/s 148 is time barred as it is received after 6 years i.e. 6 years from F.Y. 2005-06 (Notice received on 29/03/2013). Therefore, I did not file return u/s 148 as well replied to other notices of A.O. Further my friend Pragneshbhai also explained me that the transactions in above bank a/c do not belong to you and therefore, you need not worry and the notice is time barred. Therefore, I did not reply to the notice u/s 148 and subsequent notices. AO passed the order ex parte u/s 144 of the Act by adding ₹ 44,58,520/- on the basis of AIR information. AO s failure The A.O. had passed the order in absence of my replies as well information from me. AO has too assess the income after verification and satisfaction that the assessee had really earned income or not. In my case A.O. had not done any surrounding inquires to make best judgment whether I had earned income of ₹ 45 lacs or not. Only on the basis of AIR information which is dead information or dead data (past data) A.O. concluded that it is my income. If I had this much income 1 would have submitted income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha as well as from the surrounding vicinity or villages of Unjha. Unjha is big market place known for grains, spices, particularly Jeera, varyali and Isabagul. The people of Unjha and of surrounding vicinity and farmers of villages earn handsome income and therefore, they are always interested in investing high yield equity/securities. In the year 2005 to 2008 the equity market was bullish i.e. rising whereby every day the index of share market was increasing which attracted the investor to invest in share market. The investors mostly have money in the form of Cash whereas the brokers did not accept cash as per the provisions of income Tax Act as well SEBI (Security Exchange Board of India) Rules. To earn commission from brokers I planned to open bank accounts in name of my friend Rajesh Babulal Patel and other relatives to deposit cash of investors and then to transfer the funds by a/c payee cheques to brokers. Accordingly I opened the saving bank A/c. with HDFC Bank, station road Unjha Branch in the name of my friends and relatives as under: Sr. No. Name of the friend/relative A/c. No. 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date :21.9.2015 (Pragnesh Patel ) 7.5. The Ld.representative of the assessee submitted before us those two the affidavits, one filed by the assessee on whose account the amount was deposited and the affidavit filed by Shri Pragneshbhai K.Patel of whose money as claimed to be deposited in the assessee s account which were admittedly not considered by the Ld. CIT(A) though the same were before him before coming into a conclusion against the assessee and making addition thereof. 8. The Ld.DR on the contrary had taken us to the observation made by the Ld. CIT(A) in support of the affidavits filed by the parties. The observation made by the Ld.AO on his remand report is mentioned in the appellate order at 6.2. is as follows: 4. As regards, the affidavit filed by the assessee with regard to the cash transactions carried out by the assessee and his employer Sh. Pragnesh B Patel are arising from an after thought and it is a concocted story. If this was the real fact, the assessee could have submitted the same before the A.O. itself during the course of assessment proceedings. Since the assessee failed to represent his case either per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings. 6. Therefore, it is respectfully submitted that as no material evidence is there on record to verify the claim of the assessee that additional evidences submitted by the assessee should be disregarded and the addition made by the AO kindly be upheld. 8.1. Further that, the AO has objected the affidavit of the assessee whereby the explanation of cash deposit in his bank account has been said to be an afterthought. 8.2. We have perused those affidavits on records. We find those parties were not examined. It is an admitted fact that no enquiry whatsoever has been conducted by the Ld.AO even at the remand stage on the affidavit filed by the parties. When those two additional evidences are really germane to the issue involved in the matter and needed to be considered before making addition, the Ld.CIT(A) without taking into consideration of the conduct of the AO in ignoring to conduct enquiry on those affidavits, confirmed the addition in a routine manner. We, therefore, in the larger interest of justice find it proper to refer this issue to the file of Ld.AO to make an enquiry on this affidavits and also to examine the depositors of those affidavits. We t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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