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Judgment
PER AVDHESH KUMAR MISHRA, AM
This appeal of the assessee for Assessment Year (‘AY’) 2011-12 is directed against the order dated 27.10.2022 of the Commissioner of Income Tax (Appeals), NFAC, New Delhi [‘CIT(A)’].
The assessee has raised following grounds of appeal: -
“1.That on the facts and circumstances of the case and provisions of law, the order passed by the Ld. CIT(A) under section 250 of the Act is bad both in the eyes of law and on facts.
2.That on the facts and circumstances of the case and the provisions of the law, the Ld. CIT(A) has failed to appreciate that the assessment order passed u/s 147 is illegal, bad in law and without jurisdiction.
3.That on the facts and circumstances of the case and the provisions of the law, the Ld. CIT(A) has failed to appreciate that the approval u/s 151 is illegal, bad in law and without application of mind and consequently the assessment order passed requires to be quashed.
4.On the facts and circumstances of the case, the learned Ld. CIT (A) New Delhi has erred, both on facts and in law, in sustaining the assessment of the appellant at income of Rs.58,32,140/- as against the income of (Rs.2,43,190/-) declared by the appellant.
5.That the Ld. CIT(A) has erred, both on facts and in law, in sustaining the addition of Rs.56,38,950/- u/s 147 on account of undisclosed business income without appreciating the facts of the case.
6.That the provisions of sections 234A, 234B and 234C of the Act are not at all applicable.
7.That the impugned appeal order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
8.That the appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal before or at the time of hearing of the appeal.”
The relevant facts giving rise to this appeal are that the assessee’s case was reopened under section 147 of the Income Tax Act, 1961 (‘Act’). The reason to belief for reopening the case was based on information that the assessee has deposited cash of Rs.4,65,94,334/- in his various bank accounts during the relevant year whose source of deposit along with genuineness of such deposits were not explained in response to the notice issued to the assessee under section 133(6) of the Act by Ld. the Assessing Officer (‘AO’). Thereafter, the case was reopened on the reasoning that the said income of Rs.4,65,94,334/- had escaped assessment. During the reopened assessment proceedings, the Ld. AO show-caused the assessee to explain the said cash deposits along with the genuineness of transactions in accordance with the provisions of Section 68 of the Act. But the same was not properly complied with. During the course of reopened assessment proceedings, the AO noticed that the assessee infact had deposited cash aggregating to Rs.8,21,04,242/- in his various bank accounts in the relevant year as detailed hereunder:
Dissatisfied with partial compliance/explanation made so far by the assessee, the AO taxed the entire cash deposits of Rs.8,21,04,242/- as under: -
“08.The assessee has filed his ITR on dated 21.11.2011 of the A.Y. 2011-12 and declaring income of Rs. 2,43,186/-. Further, it is found that neither he had maintained any books of accounts nor he had got audited these from a prescribed auditor as per Income Tax Act, 1961. During the course of assessment proceedings, the assessee has failed to produce any bill voucher, register or any other documentary evidences in respect of his business. Further, during the course of assessment proceedings, the assessee has furnished a list of pottery products seller of Khurja and has claimed that transactions regarding cash deposits have been done by him during the F.Y.2010-11. Despite the fact that the onus is on the assessee to justify the financial transactions with the pottery manufacturers/sellers of Khurja from whom he has committed any transactions in the financial year 2010-11, but is failed to discharge his duties. Neither could he furnish a single confirmation letter duly signed & issued by the above so called parties, nor has he furnished their PAN, contract number or any useful information regarding them.
09.However, to verify the genuineness of transactions from the pottery products sellers of Khurja, notice u/s 133(6) of the Income Tax Act,1961 was issued on 27.11.2018 through speed post to the sellers for whom name and addresses has been provided by the assessee. A few of the so called manufacturer/ sellers of crockery at khurja has sent their reply which is reproduced as under: -
Sl.No. Name & address of the so called seller Date of issue of notice u/s 133(6) Date of reply received in this office Result/response of notice u/s 133(6) 1 Anil Agarwal, C/o Anurag Udyog, Junction Road, Khurja 27.11.2018 17.12.2018 There is some cash sales were made through Shri Anil Kumar Singhal in the year concerned. He visited my factory premises in the F.Y.2009-10 with some buyers and make the payment before dispatch the goods, hence question of his A/c in our books of A/cs does not arise. 2 Jagdish Udyog, Near New Tehsil,Khurja 27.11.2018 7.12.2018 No transaction has been done for the period from 01.4.2010 to 31.3.2011 3 Koel Pottery, Junction Road, Khurja 27.11.2018 - No reply 4 Shri Arun Kumar Bansal, Peeli Kothi, Khurja, 27.11.2018 3.12.2018 No transaction has been done for the period from 01.4.2010 to 31.3.2011 5 Shri Shyam Chitkara, C/o Boby Pottery, Baroli Mod, Munda Khera Road, Khurja, 27.11.2018 - No reply 6 Shri Suneel Bansal, Kishan Khat Road, Kakrala, Khurja, Distt-Bulandshahr 27.11.2018 - No reply 7 Star Potteries, G.T.Road, Khurja, Bulandshahr 27.11.2018 5.12.2018 Dak returned back to this office on 5.12.2018 with postal remarks "Locked for a long period". 8 Shri Man Mohan Narula,Pottery Centre, G.T.Road, Khurja, Distt-Bulandshahr 27.11.2018 5.12.2018 Dak returned back to this office on 5.12.2018 with postal remarks "Locked for a long period". 9 Shri Vinod Khurana, G.T.Road, Khurja, Distt-Bulandshahr 27.11.2018 Dak returned back to this office on 5.12.2018 with postal remarks "Address incomplete". 10 Shri Puneet Sahni, Hanuman Teela Road, Purani Tehsil, Khurja, Distt-Bulandshahr 27.11.2018 6.12.2018 No transaction has been done for the period from 01.4.2010 to 31.3.2011 11 Solanki Pottery Centre,G.T.Road, Khurja, Distt-Bulandshahr 27.11.2018 Dak returned back to this office on 5.12.2018 with postal remarks "Locked for a long period". 12 Shri Shyam Sachdeva, C/o Sachdeva Crokeries, Subhash Road, Khurja, Distt-Bulandshahr 27.11.2018 7.12.2018 No transaction has been done for the period from 01.4.2010 to 31.3.2011 13 New Adarsh Pottery, G.T.Road, Khurja, 27.11.2018 11.12.2018 We have no business relation/transaction with the
10.Thus, it is evident from the above facts, that the submission of the assessee on the above issue is not acceptable. Neither the assessee could succeed to prove his transactions nor could he succeed to produce a single party to confront the same before the assessing officer. Thus, the assessee is misleading to the Assessing officer. The assessee is hiding the facts before the assessing officer. While recoding statement on oath the assessee, was asked to explain why none of the seller/manufacturer has furnished positive reply in favour of the assessee, in reply to the question No. 06 the assessee has stated that since the period of transaction is very old, some of the parties have no existing at present and some are denying to reply due to fear of departmental proceedings of Income Tax & Sales Tax department etc. This is nothing but pretence. The banking transactions are more than Rs. 8 Crore but why the assessee has not maintained the record in physical form while it is mandatory for him as per law. Ignorance of law is no excuse. ………. ………
16.Therefore, in view of the above facts and circumstances, queries raised by the assessing officer during the assessment proceedings as well as replies/submissions/evidences duly furnished by the assessee, it is clearly established that the assessee has failed to explain the sources of cash deposits in his bank accounts maintained during the financial year 2010-11 [relevant to the Asstt. Year 2011-12]. He has been allowed proper opportunities to be heard but again and again he could not produce cogent reply/submission/evidence to prove him a justified tax payer. Facts furnished by assessee before the assessing officer during the course of assessment proceedings are not acceptable and are being rejected. Therefore, the provisions of section 69A of the Income Tax Act, 1961 are fully applicable in the instant case. Thus, the total amount of cash deposits made by the assessee amounting to Rs. 8,21,04,242/- [Rs. Eight Crore Twenty-one lakh Four thousand Two hundred and forty-two only] is being treated as unexplained money of the assessee for the year under consideration and being added to his taxable income u/s 69A of the Income Tax Act, 1961.”
Dissatisfied with the assessment order, the assessee filed appeal before the Ld. CIT(A), who upheld the addition to the extent of 5% of entire bank deposits including cash and credit as under:
“3.3It would seem reasonable to assume that appellant would have earned at least 5% from the sale facilitated by him and on which he claims some commission. He has shown cheque and cash deposits and then withdrawals from his bank accounts.
3.4.It would seem reasonable to assume that an assessee would not just deposit and then withdraw the cash with him if the same was wholly unaccounted. Subsequent withdrawal of cash would by the very act show that the same would be used for the business of the assessee.
3.5Estimation is inevitable part of assessment of income. This however should be on some basis and must not be a complete guess work and must keep realities of actual commercial world in the sight. In. consideration of the above and keeping in view that assessee was working in backward area, and dealing with hawkers and other itinerant suppliers/sellers of locally made crockery/pottery, it would seem reasonable that profit at 5% of the aggregate sales would be a fair estimate of actual amounts so earned by him.
3.6The aim of tax administration must be to reduce frivolous addition and tax litigation and encourage voluntary tax compliance so that energies of people are used to promote business and to have equitable distribution of wealth.
3.7The addition so made is restricted to 5% of Rs. 11,27,78,939/- (which is the total of Rs 8,20,35,790/- of cash deposits and Rs.3,07,43,149/- of cheque payments received) being the aggregate deposits made by the assessee. As a result, the income of assessee from the business is Rs.56,38,950/-, less what has already been disclosed by him.”
Before us, the assessee was not represented by anyone. Therefore, we heard Sr. DR as there was no compliance on the part of the assessee. Nothing has been brought on the record to contradict the finding of the Ld. CIT(A). Therefore, we do not intent to interfere to finding of the Ld. CIT(A). Therefore, we do not see any infirmity in the impugned order; hence, we decline to interfere with. Thus, the appeal is dismissed.
The appeal filed by the assessee stands dismissed.