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Judgment
PER MANISH AGARWAL, AM:
Both captioned appeals are filed by the Revenue for Assessment Year 2013-14 wherein the ITA No. 3552/Del/202 is preferred against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“the CIT(A)” for short) in Appeal No. NFAC/2012-13/10182863 arising out of the assessment order dated 30.03.2022 passed u/s 143(3) r.w.s. 147 of the Act and ITA No. 3735/Del/2024 is preferred against the order of Ld. CIT(A), NFAC dated 30.04.2024 in Appeal No. NFAC/2012-13/10182862 arising out of penalty order passed u/s 271(1)(c) of the Act dated 26.09.2022.
Since, both the appeals are with respect to the one assessee and for same assessment year, therefore, they are taken together for consideration.
First we take appeal of the Revenue in ITA No.3552/Del/2024 for Assessment Year 2013-14.
ITA No. 3552/Del/2024 [Assessment Year 2013-14]
Brief facts of the case are that assessee has not filed return of income u/s 139 of the Act for the year under appeal and since, there were transactions in the bank accounts and also in preceding year, assessee has disclosed turnover of more than Rs. 460 Crs. and claimed exempt income u/s 10B of the Act, therefore, the case of the assessee was reopened u/s 147 of the Act and reassessment order was passed u/s 143(3) r.w.s 147 of the Act dated 31.12.2016 wherein the total income of the assessee was assessed at Rs.8,63,12,518/-.
Against the said order, the assessee filed an appeal before the Ld. CIT(A), where due to non-prosecution on behalf of assessee, ld. CIT(A) had dismissed the appeal of the assessee. Thereafter, the assessee filed an appeal before the Tribunal wherein the Co-ordinate Bench of Delhi Tribunal vide its order dated 14.08.2018 has set aside the order of the lower authorities and remitted the matter back to the file of AO to frame the fresh assessment as per law. During the course of set aside proceedings, the assessee filed ITR on 10.08.2019 declaring total income at Rs.2,35,60,850/- including income from business at Rs.1,43,72,199/- and income from other sources at Rs. 91,88,651/-. The assessee also filed computation of income, Balance Sheet and P&L Account and audit report in Form 3CD. The said return was accepted by the AO and examined the expenses claimed in the Profit & Loss account. Thereafter, the AO completed the set aside proceedings and passed the order u/s 254/147 dated 22.12.2019 wherein the AO has disallowed bad debts claimed at Rs. 3,39,96,856/- and further disallowed interest expenses of Rs. 4,54,26,629/- and, accordingly, the total income was assessed of Rs. 10,29,84,335/-and after taking cognizance of the income declared in the return of income filed by the assessee.
Against the said order, an appeal is filed by the assessee before the ld. CIT(A) which still pending for adjudication. In the meantime, the AO again initiated the reassessment proceedings by issue of notice u/s 148 of the Act for the sole reason that no return of income was filed for the year under appeal and AO has the information that assessee has Time deposits of more than 67.00 crores. Thereafter, the AO passed the reassessment order ex-parte wherein as per the information available in Actionable Information Monitoring System (i.e. AIMS) that the assessee had time deposits of Rs.67,22,90,323/- with the Bank of Nova Scotia as on 31.03.2013 and time deposit of Rs.40,20,000/- with SBI and since the source of the same remained unexplained made the addition for the same. Besides this, interest income of Rs. 1,83,77,302/- as appearing in the AIMS was also added. Accordingly, the total income of the assessee was assessed at Rs.69,46,87,625/-. It is observed in the reassessment order dt. 30.03.2022, the income already assessed in terms of the reassessment order passed u/s 143(3)/254 dated 22.11.2019 was not taken into consideration nor made part of the total income assessed.
Aggrieved by the said order, the assessee preferred an appeal before the Ld. CIT(A) wherein the assessee filed additional evidences with respect to the source of Time deposits and reconciliation of interest income as per P&L A/c and as per AIMS. The ld. CIT(A) sent these papers to the AO and asked for the remand report however, despite of giving three reminders, and further requested the Range head and the concerned PCIT, no remand report was sent by the Assessing Officer, therefore, the Ld. CIT(A) by placing reliance on the judgment of the Hon’ble Delhi High Court in the case of CIT, International Tax-2 vs. Hotchand Techchand Punjabi in Appeal No. 701 of 2023 and in the case of International Tractors Ltd. v. DCIT (LTU) reported in [2021] 127 taxmann.com 822 (Delhi), the Ld. CIT(A) has exercised the powers conferred u/s 250(4) of the Act and examined the details filed by the assessee with reference to the additions made. Thereafter the ld. CIT(A) has deleted the additions made.
Aggrieved by the said order, the Revenue preferred the appeal before the Tribunal.
In Ground of appeal No.1, the Revenue has challenged the deletion of addition of Rs. 67,22,30,323/- made towards time deposit with Bank of Nova Scotia.
Ground of appeal No.2 is with respect to the deletion of addition of Rs.40,20,000/- on account of time deposits with SBI and in other grounds of appeal revenue has challenged the action of ld. CIT(A) deleting the additions solely on the basis of evidences and submissions filed by the assessee without making any independent enquiries or investigation / verification from Third party.
Before us, Ld. CIT-DR for the Revenue vehemently supported the order of the AO and submits that the ld. CIT(A) has deleted the addition by accepting the evidences filed by the assessee which are in the nature of ledger account of its books of accounts, Balance Sheet, Affidavit and copies of bank statements, and no independent enquiry / verification whatsoever was made from the bank before reaching to the conclusion that assessee was not having other margin account except with the Bank of Nova Scotia and having no other FDRs as per the information available with the AO in AIMS. Ld. CIT-DR further submits that assessee has never filed 139(1) not filed any return of income nor any return was filed in response to notice u/s 148 of the Act. Even prosecution proceedings u/s 276CC of the Act were also initiated against the assessee for non-filing the return of income. Ld. CIT DR further drew our attention to the earlier order passed u/s 147 of the Act wherein the reassessment proceedings were initiated for the reason that no return of income was filed by the assessee. Ld. CIT-DR further stated that factually, the assessee has never filed e-return for the year under appeal. The assessee in the course of set aside assessment proceedings, vide letter dated 10.08.2019, filed the ITR filled in through system, Balance Sheet and audit report. The Ld. CIT-DR placed before us the copy of the Balance Sheet and ITR so filed by the assessee and drew our attention to the fact that the Balance sheet was not signed by the auditors. Ld. CIT-DR further drew our attention to ITR filed by the assessee available at page 9 to 38 of the PB which is printout paper of the ITR Form through computer and no evidence placed on record that the said return was filed online. The Ld. CIT-DR submits that in the balance sheet produced before us the Assessee has shown the FDRs of Rs.1,75,41,533/- with Nova Scotia Bank and FDRs of Rs.3,84,20,785/- with State Bank of India and Rs.3,97,08,095.30 with Corporation Bank. The Ld. CIT-DR submits that these figures were neither audited nor verified and the part of the balance sheet however, Ld. CIT(A) by placing reliance on these evidences has deleted the addition which order deserves to be reversed . Ld. CIT-DR alternatively contended that the matter may be remit back to the file of the AO with the direction to pass the order after making verification of the facts submitted by the assessee regarding time deposits. Per contra, the Ld. AR for the assessee, submits that before Ld. CIT(A) assessee has filed all the necessary details in order to establish that the total value of FDRs with the Bank of Nova Scotia at the end of the previous year was of Rs.1,75,00,000/- only and the other Time deposit of Rs. 40,20,000/- was with State Bank of India for which all the necessary evidences in the shape of bank statements and ledger accounts were submitted before the Ld. CIT(A). Ld. AR drew our attention to the facts with the Ld. CIT(A) in para 4 of the order has observed that the details filed by assessee were sent to the Judicial Assessing Officer through NFAC along with entire submissions made by the assessee vide letter dated 01.05.2024, however despite of the reminders given and further request made directly to the AO, Range head and concerned PCIT, for furnishing the remand report, the AO preferred not to file any report. The Ld. AR submits that it is very surprising that despite of the serious efforts made by the Ld. CIT(A), no action was taken by the supervising authorities to instruct and ensure that the Assessing Officer must sent the remand report to the ld. CIT(A) and when the, Ld. CIT(A) has deleted the additions by making verification of the details /evidences so filed by exercising the power conferred u/s 250(4) of the Act, revenue has filed the present appeal challenging the action of ld. CIT(A) in deleting the additions. Ld. AR submits that the ld. CIT(A) has coterminous powers and after verifying the material placed before him, has deleted the additions, therefore, the order of the Ld. CIT(A) deserves to be upheld more particularly when the AO has failed to examine and submit any remand report despite of reminders.
Heard both the parties and perused the materials available on record. In the instant case, it is the second re-assessment order passed by the AO wherein, two rounds of proceedings were have taken place and in the set aside proceedings, the assessee has filed its ITR alongwith audit report and Balance Sheet declaring total income of Rs. 2,35,60,850/- comprising of the business income of Rs.1,43,72,199/-and interest income of Rs.91,88,651/-. It is observed that while passing the order u/s 250(4)/147 dated 22.12.2019, the AO has taken cognizance of the income declared by the assessee in the return of income filed before him and further made the disallowance out of the expenses claimed in the Profit & Loss account and, total income was assessed at Rs.10,29,84,336/- which include the income declared by the assessee at Rs.2,35,60,850/- in the return of income filed. Though the appeal was filed against the said order, however, as per the assessee this appeal is still pending before the Ld. CIT(A).
In the instant case, the present re-assessment proceedings were initiated on the basis of the information available in AIMS as per which the assessee was having time deposits and interest income and no return of income was filed. While observing so the AO has failed the appreciate the fact that in the case of the assessee itself, a reassessment order u/s 254/147 has already been passed on 22.12.2019 by the ACIT, Central Circle-25, New Delhi, wherein return of income filed by the assessee during the course of proceedings was accepted and due cognizance of the income declared therein was taken in the computation of income.
It is further observed that the assessee has filed all the relevant details before the Ld. CIT(A) which were sent to the AO and sought remand report however, despite of repeated reminders given by Ld. CIT(A) and further even requested through the Range head and the concerned jurisdictional PCIT, the AO had not filed any report on the documents so filed by the assessee, therefore, the Ld. CIT(A) has proceeded to decide the appeal of the assessee after making verification of the details filed by exercising the powers conferred u/s 250(4) of the Act.
It is observed that after examining the claim of the assessee, Ld. CIT(A) concluded that assessee was having only one Margin Account bearing No. 0127G003084 with The Bank of Nova Scotia, B-5, Mittal Tower, wherein total FDRs made during the year were of Rs.27,10,00,000/- out of which FDRs of Rs. 25,35,00,000/- were got matured and only FDRs of Rs.1,75,00,000/- + interest credited of Rs.10,79,240/- remained at the end of the previous year. Assessee further have FDRs with SBI of Rs.3,84,20,785/- as at 31.3.2013 which also include the FDRs was of Rs. 40,20,000/-. After appreciating these facts, Ld. CIT(A) has deleted the addition made on account of deposits with respect to the interest income. The claim of the assessee was that in AIMS information interest was shown twice and assessee has also disclosed interest of 91,88,651/-. Therefore, the addition made of Rs.1,83,72,302/- which is exactly twice of interest declared by the assessee, therefore, the said amount is also deleted by Ld. CIT(A) for which no appeal is preferred by the revenue.
The relevant observations of Ld. CIT(A) as contained in para 7 to 7.8 of the order are reproduced as under:
7.Carefully considered the submission of the appellant in view of the impugned assessment order. Also perused and considered the details and documents uploaded by the appellant on ITBA portal during the appellant proceedings. Went through the case laws referred to and relied upon by the appellant.
7.1.From the details and documents furnished by the appellant firm, it appears that it has only one bank account i.e. Margin Account No. 127G003084 with the Bank of Nova Scotia, B5, Mittal Tower, Nariman Point, Mumbai. It has furnished copy of bank statement of the aforesaid bank account. In this regard, the appellant has furnished an affidavit which is reproduced as under:-
INDIA NON JUDICIAL Government of National Capital Territory of Delhi e-Stamp Certificate No. : IN-DL6063640286008W Certificate Issued Date : 26-Mar-2024 01:25 PM Account Reference : IMPACC (IV) d1028203/ DELHI/ DL-DLH Unique-Doc. Reference : SUBN-DLDL1028203063658274482W Purchased by : PP JEWELLERS EXPORTS Description of Document : Article 4 Affidavit Property Description : Not Applicable Consideration Price (Rs.) : 0 First Party : PP JEWELLERS EXPORTS Second Party : Not Applicable Stamp Duty Paid By : PP JEWELLERS EXPORTS Stamp Duty Amount (Rs.) : 100 (One Hundred only) Affidavit The appellant (i.e. M/s PP Jewellers Exports) has filed return of income of AY 2013-14 vide letter dated 13-08-2019 along with Financial Statements and computation of income. Thereafter, National Faceless Assessment Centre (NFAC) has issued notice u/s 148 of the Income Tax Act, 1961 ("the Act") dated 30-03-2021 and initiated reassessment proceedings u/s 147 of the Act. Thereafter, NFAC passed the assessment order u/s 147 r.w.s. 144 r.w.s. 1448 of the Act dated 30-03-2022 wherein addition amounting to Rs.67,63,10,323/- on account of time Statutory Alert:
1.The authenticity of this Stamp certificate should be verified in some publications prior to issue. e-Stamp Mobile App of India, including Any discrepancy in the content on this Certificate and its condition on the particular Notice App marked is invalid.
2.The error of checking the legitimacy is on the basis of the certificate.
3.In case of any discrepancy please inform the Certificate's body. deposit exceeding Rs.2 Lakhs amounting to Rs.67,22,90,323/- with the Bank of Nova Scotia, B-5, Mittal Tower, Nariman Point, Mumbai-400021, and time deposit of Rs. 1 Lakhs and time amounting to Rs.40,20,000/-
In this regard, I (Kamal Kumar Gupta, S/o, Late Shri M.L. Gupta, R/o, C-19, Rana Pratap Bagh, Delhi-110009) in the capacity of Partner hereby submit and reiterate that the Ld. AO (NFAC) has passed the aforesaid order hypothetically, in surmises and without application of mind as the additions to Rs. 67,63,10,323/- on account of time deposit on the ground that (1) assessee has not shown any inclination to reply to any notice, and (2) the assessee has not filed any return of income for the relevant previous year.
It is hereby affirmed and declared that:
1.The assessee had already filed its return of income for the very same assessment year.
2.The income had already been assessed under section 143(3) vide assessment orders dated 22.12.2019 by the Ld. AO, Central Circle-25, New Delhi well before the present assessment orders which have been challenged in the present appeal before your good self.
3.During the assessment proceedings, all the relevant information and records that were required by the Ld. AO, CC 25 was duly submitted from time to time.
4.The Ld. AO (NFAC) chose to ignore the above assessment orders and passed the assessment orders n/s 144 r.w.s. 147 r.w.s. 144B on 30.03.2022 for the assessment year which was already assessed under section 254 r.w.s. 147.
5.The assessee had made various fixed deposits to be kept as margin money with the said bank; bank statements were already submitted during assessment proceedings and as such, there was no ground to treat the deposits (principal) amount as income.
6.The interest on all the fixed deposits has already been included in the income in the audited balance sheet and ITR for the relevant assessment year.
7.The copy of bank statement in respect of bank account no. 0127G003084 with Bank of Nova Scotia was already filed along with details of all the debit and Credit entries.
8.In the absence of any such material and merely on the whims and fancies, the Ld. AO, NFAC, assessed the deposit amounts as income; taxed the same and raised such a huge demand.
9.The assessee is subjected to unwarranted mental pressure and harassment on account of this demand and also huge penalty imposed under section 271 (1) (c).
10.The Ld. AO(NFAC) has, presumably, taken the total of both the FDs made and FDs realised during the year from various banks as detailed below:
Bank Name FD made FD Realised a. The Bank of Nova Scotia 27,10,00,000.00 25,35,00,000.00 b. SBI 7,15,20,000.00 6,75,00,000.00 c. Corporation Bank 1,36,00,000.00
7.2.Further, the appellant has stated that the actual figure of Time Deposit with the Bank of Nova Scotia as on 31.03.2013 was Rs. 1,75,41,533/- which includes interest of Rs. 10,79,240/- and this amount is also reflecting in the audited balance sheet of the appellant firm. Further, the appellant firm has pointed out that it had Time Deposits with State Bank of India and Corporation Bank. During the appellate proceedings, the appellant firm has furnished the bank statements for its bank account with Nova Scotia Bank, State Bank of India and Corporation Bank.
7.3.A perusal of impugned assessment order shows that Ld. AO has not provided any reason for making addition of Rs. 67,22,90,323/- on account of time deposit with the Bank of Nova Scotia. Nothing is clear from the assessment order as to what are the grounds of treating Rs. 67,22,90,323/- as income of the appellant firm. The appellant has provided statement of bank account with the above mentioned branch of the Bank of Nova Scotia and also filed an Affidavit on Stamp Paper stating that it has no any other bank account with Nova Scotia Bank. The captioned bank statement shows that there is a difference of Rs.1,75,41,533/-(debit balance) between entire debit and credit transactions of the time deposits with the said branch of the Bank Nova Scotia during the financial year under reference. The figure of Rs. 1,75,41,533/- is reflected in the Balance Sheet of the appellant firm. There is no logical reason for making huge addition on account of time deposit without discussing any cogent basis for doing so. Therefore, I don't have any other option except directing the Ld. AO. to delete the entire addition of Rs.67,63,10,323/-.
7.4.The Ld. AO has made an addition of Rs. 40,20,000/- being amount of another Time Deposit. From the detail uploaded by the appellant during the appellate proceedings, it appears that the amount of above mentioned addition is actually debit balance figure of time deposit with State Bank of India i.e. difference total amount debited Rs. 7,15,20,000/- minus total amount credited Rs. 6,75,00,000/-. A perusal of bank statement of the appellant's account with State Bank of India shows that the appellant has made Time Deposit of Rs. 7,15,20,000/- and encashed the Time Deposit of Rs. 6,75,00,000/- during the financial year under reference. It is evident from the facts that the balance amount of Rs. 40,20,000/-is not an income of the appellant firm but the Ld. AO has wrongly treated the same as income of the appellant and made the captioned addition. In view of the facts of the case, 1 am of the considered opinion that the Ld. AO is not justified in making addition of Rs.40,20,000/- on account of Time Deposit of the appellant firm with State Bank of India. Accordingly, the Ld. AO is directed to delete the above discussed addition.
7.5.The Ld. AO has also made an addition of Rs. 1,83,77,302l- on account of interest income of the appellant firm from different banks wherein it had bank Account or Time Deposit account during the financial year under reference. The Ld. AO has just stated that the appellant firm was in receipt of the above mentioned interest income. He has already mentioned in the impugned assessment order that the appellant had not filed return of income for the assessment year under reference. Thus, he made addition of entire amount of interest received by the appellant.
7.6.During the appellate proceedings, the appellant has stated that it had earned interest income amounting to Rs.91,88,651/- during the year under consideration which was verified from the Form 26AS by the Id. AO while passing to first assessment order. Further, the appellant has submitted that it has duly accounted for the interest income of Rs. 91,88,651/- in the Profit & Loss Account and TDS amounting to Rs.9,18,880/- in the Schedule -D i.e. 'Current Assets and Loans & Advances' to Balance Sheet. The appellant has stated that the Ld. AO has just doubled the actual amount of interest received (Rs. 91,88,651 × 2 = Rs. 1,83,77,302) and made addition of the same amount without verifying the data available on AIMS moudle).
7.7.At the outset, it is pointed out that the Ld. AO was not aware of the facts of the case as he has mentioned that the appellant did not filed its return of income whereas the facts of the case is that the appellant has not only filed its return of income for the year under reference but two assessments have already been completed before passing the impugned assessment order by him. I have perused the copy of Audited Balance Sheet, Profit & Loss Account and Form 26AS uploaded by the appellant during the appellate proceedings and found that the appellant has duly credited the amount of Rs. 91,88,651/- to the Profit & Loss account under the head 'interest income!' A perusal of bank wise interest received shows that the Ld. AO has just doubled the actual amount of interest received from each bank and made addition of Rs. 1,83,77,302l-. From the facts of the case, it is evident that the addition of Rs. 1,83,77,302/- made the Ld. AO arbitrarily without any logical basis. Accordingly, the Ld. AO is directed to delete this addition.
7.8.As per discussion in foregoing paras (Para No. 7.3, 7.4 and 7.7) the Ld.A O is directed to delete the entire amount of addition of Rs. 69,46,87,625l- (i.e.Rs. 67,22,90,323 + Rs. 40,20,000 + Rs. 1 83,77,302/-). Accordingly, ground no. 1 of the appeal is allowed.
Further the assessee has filed the reconciliation statements which are reproduced in para 6.1 of the order, the relevant extract of which are as under:
| Sl.No. | Name of the Deductor | Amount (in Rs.) |
|---|---|---|
| 1 | Corporation Bank | 8762184 |
| 2 | Bank of Nova Scotia | 2621012 |
| 3 | Bank of India | 370054 |
| 4 | State Bank of India | 5975750 |
| 5 | Bank of India | 648302 |
| Total | 18377302 |
In addition to the above, the assessee is also in receipt of interest from different sources as below:-
Sl.No. Name of the Deductor Amount (in Rs.) 1 Corporation Bank 8762184 2 Bank of Nova Scotia 2621012 3 Bank of India 370054 4 State Bank of India 5975750 5 Bank of India 648302 Total 18377302 Since the assessee has not shown any inclination to reply to any notices and the assessee has not filed any return of income for relevant previous year, the aforementioned amounts are brought to tax in hands of the assessee and the assessment is completed u/s 144. Assessed Income Rs.69,46,87,625/-.
6.1.During the appellate proceedings, the appellant has uploaded detailed written submission against the additions made by the Ld. AO, along with certain details and documents. The appellant has also uploaded the details and documents asked for vide enquiry letter u/s 250(4) dated 16.03.2024. The appellant has vehemently contended against the addition made by the Ld. AO. The relevant part of the appellant's written submission on the issue under reference is reproduced as under:
“1.0In reference to the captioned subject matter and in furtherance to reply dated 02-02-2024, we are submitting herewith the following details and /or information on behalf of the assessee in response to your enquiry initiated u/s 250(4) of the Act:
2.0Undisclosed Fixed Deposits of Rs.67,22,90,323/- with The Bank of Nova Scotia
2.1In this regard, it is to be submitted that the appellant has only one bank account i.e. Margin Account No. 0127G003084 with the Bank of Nova Scotia, B-5, Mittal Tower, Nariman Point, Mumbai-400021 during the year under consideration. Further, the copy of bank statement of aforesaid account was already filed to your goodself vide reply dated 02-02-2024.
2.2It is pertinent to mention that the appellant has no other account with The Bank of Nova Scotia, Mumbai and such fact was already disclosed in earlier reply dated 02-02-2024 filed to your goodself. Further, after perusal of bank statement, it was observed that the fixed/time deposits having principal amounting to Rs.27,10,00,000/- debited and principal amounting to Rs.25,35,00,000/- credited in appellant's aforesaid margin account maintained with The Bank of Nova Scotia and remaining principal balance amounting to Rs.1,75,00,000/- (i.e. 27,10,00,000 - 25,35,00,000) was actual amount of fixed/time deposits lying with the aforesaid bank during the year under consideration.
2.3In this regard, it is to be submitted that, summary of fixed/time deposits transactions i.e. all debit and credit entries reflected in aforesaid bank account during the year under consideration was already filed to your goodself vide reply dated 02-02-2024.
Further, date wise summary of fixed/time deposits opened and closed in respect of The Bank of Nova Scotia during the year consideration is annexed hereunder for your ready reference:
Date wise summary of Fixed/Time Deposits opened & Closed during the F.Y. 2013-14 The Bank of Nova Scotia (Margin Account No. – 0127G003084) Date Particulars / Reference No. Debited Amount (in Rs.) Credit Amount (in Rs.) 25-Apr-12 Ref. No. 411 1,40,00,000 27-Apr-12 Ref. No. 514 9,00,00,000 03-May-12 Ref. No. 232 2,80,00,000 04-May-12 Ref. No. 351 1,00,00,000 17-May-12 Part of Ref No. 514,232, 351 closed 4,75,00,000 18-May-12 Interest Credited 2,04,978 21-May-12 Part of Ref No. 514,232, 351 closed 5,90,00,000 ATTORNEY AT LAW ITSA/INFAC/5/250/2023-24/106
22-May-12 Interest Credited 2,17,849 23-May-12 Ref. No. 212 5,30,00,000 11-Jun-12 Part of Ref No. 514,232, 351 closed 2,15,00,000 12-Jun-12 Interest Credited 2,08,742 15-Jun-12 Part of Ref No. 212 closed 2,70,00,000 18-Jun-12 Part of Ref No. 212 closed 2,60,00,000 19-Jun-12 Ref. No. 411 closed 1,40,00,000 19-Jun-12 Interest Credited 1,24,496 19-Jun-12 Interest Credited 1,41,683 20-Jun-12 Interest Credited 1,56,638 11-Oct-12 Ref. No. 452 30,00,000 12-Oct-12 Ref. No. 452 closed 30,00,000 06-Nov-12 Ref. No. 331 25,00,000 06-Nov-12 Ref. No. 711 50,00,000 07-Nov-12 Ref. No. 711 closed 50,00,000 09-Nov-12 Ref. No. 331 closed 25,00,000 15-Feb-13 Ref. No. 71/1 20,00,000
15-Feb-13 Ref. No. 71/2 20,00,000 15-Feb-13 Ref. No. 71/3 20,00,000 15-Feb-13 Ref. No. 71/4 20,00,000 26-Feb-13 Ref. No. 71/1 closed 20,00,000 26-Feb-13 Ref. No. 71/2 closed 20,00,000 27-Feb-13 Interest Credited 8,285 07-Mar-13 Ref. No. 71/3 closed 20,00,000 07-Mar-13 Ref. No. 71/4 closed 20,00,000 08-Mar-13 Interest Credited 16,569 21-Mar-13 Ref No. 451/3 1,00,00,000 21-Mar-13 Ref No. 451/4 1,00,00,000 21-Mar-13 Ref No. 451/5 1,00,00,000 21-Mar-13 Ref No. 451/6 1,00,00,000 21-Mar-13 Ref No. 451/7 25,00,000 21-Mar-13 Ref No. 451/8 1,00,00,000 21-Mar-13 Ref No. 451/9 50,00,000 28-Mar-13 Ref No. 451/3 closed 1,00,00,000 28-Mar-13 Ref No. 451/4 closed 1,00,00,000
28-Mar-13 Ref No. 451/5 closed 1,00,00,000 28-Mar-13 Ref No. 451/6 closed 1,00,00,000 Total 27,10,00,000 25,45,79,240
Summary of the above transactions made during A.Y. 2013-14 The Bank of Nova Scotia (Margin Account No. – 0127G003084) Particulars / Reference No. Debited Amount (in Rs.) Credit Amount (in Rs.) Remarks Total Principal amount of fixed/time deposits opened during the year 27,10,00,000 Total Principal amount of fixed/time deposits closed during the year 25,35,00,000 Balance amount of fixed/time deposits not closed or realized during the year 1,75,00,000 Kindly refer Ref Nos. 451/7, 451/8 and 451/9 created on 21.03.2013 of above table Total 27,10,00,000 27,10,00,000 Total Interest amount credited in bank account 10,79,240 2.4In this regard, it is to be stated that the appellant has duly reflected FDRs with Bank of Nova Scotia amounting to Rs.1,75,41,533 /- including accrued interest in Schedule- D (ie. Current Assets and Loans & Advances) of Balance Sheet for the year under consideration. Copy of balance sheet was already filed to your goodself vide reply dated 02-02-2024.
2.5Further, in the assessment order the Ld. AO has: made a reference of fixed/term deposits in The Bank of Nova Scotia. However, as the details are submitted by the appellant herein above only of Rs.1,75,00,000/- i.e. fixed/term deposits have been opened and not realised. The details have already been attached herein above. Other than above, the appellant has opened and closed some fixed/term deposits with State Bank of India and Corporation Bank which has not been referred by the Ld. AO, the summary of FDs/TDs is annexed hereunder for your ready reference:
Date wise summary of fixed/time deposits during A.Y. 2013-14: State Bank of India (Account No. 10324774778) Date Particulars Debited Amount (in Rs.) Credited Amount (in Rs.) Remarks 19-May-12 STDR created 6,75,00,000 Fixed/time deposits opened during the year 21-May-12 STDR created 6,75,00,000 fixed/time deposits during 19-Jan-13 STDR created 35,00,000 fixed/time deposits during 07-Mar-13 STDR created 5,20,000 fixed/time deposits during
Total 7,15,20,000 6,75,00,000
Date wise summary of fixed/time deposits during A.Y. 2013-14: Corporation Bank (Account No. CA/01/004548) Date Particulars Debited Amount (in Rs.) Credited Amount (in Rs.) Remarks 22-Dec-12 STDR created 1,36,00,000 Fixed/time deposits opened during the year Total 1,36,00,000 2.6It is pertinent to mention that, the appellant has duly reflected above FDRs with State Bank of India amounting to Rs.40,20,000/- [7,15,20,000/- (-) 6,75,00,000/-] and Corporation Bank amounting to Rs.1,36,00,000/- in Schedule-D (i.e. Current Assets and Loans & Advances) of Balance Sheet for the year under consideration. The relevant extracts of bank statements of aforesaid banks are attached as Annexure-1 and 2 respectively. Further, copy of affidavit given by the appellant in respect of above FDs/TDs details is also attached as Annexure-3 for your ready reference.
2.7In this regard, it is to be submitted that Ld. AO has passed ex-parte order without substantiate the facts that no reasonable opportunity to be heard provided to the assessee. Further, additions were made merely on the basis of information available in Actionable Information Monitoring System (i.e. AIMS) and the Ld.AO has passed assessment order in a hurried manner i.e. without verifying the correctness of AIMS data.
2.8It is pertinent to mention that the Ld. AO has considered principal amount of fixed/term deposits as income of the assessee instead of interest amount at the time of making additions in the total income. Thus, it clearly shows that the aforesaid order has been passed without application of mind and in a hypothetical manner.
2.9Hence, the Ld. AO has unjustified to made addition amounting to Rs.67,63,10,323 /- [i.e. 67,22,90,323/- (+) 40,20,000/-] merely on the basis of AIMS data without verifying the correctness of such data.
3. Undisclosed Interest Income of Rs.1,83,77,302/-
3.1In this regard, it is to be submitted that the appellant has earned interest income amounting to Rs. 91,88,651/- during the year under consideration which was also verified from the Form 26AS. The copy of Form 26AS was already filed to your goodself vide reply dated 02-02-2024.
3.2From the perusal of aforesaid 26AS, it is evident that the appellant has earned interest income from the various banks and TDS was also deducted u/s 194A of the Act. The details of such interest income and TDS deducted & deposited are annexed hereunder:
Sr.No. Name of Deductor TAN Total Amount Paid or in Credited in Rs. Total Tax Deducted in Rs. Total Tax Deposited in Rs. 1 Bank of India and Corporate DELB06220E 5,09,178/- 50,930/- 50,930/-
Banking 2 Corporation Bank DELC00391G 43,81,092/- 4,38,108/- 4,38,108/- 3 State Bank of India DELS21189A 29,87,875/- 2,98,792/- 2,98,792/- 4 The Bank of Nova Scotia MUMT04113E 13,10,506/- 1,31,050/- 1,31,050/- Total 91,88,651/- 9,18,880/- 9,18,880/- 3.3In this regard, it is to be submitted that the appellant has duly accounted interest income amounting to Rs. 91,88,651/- in Profit & Loss account and TDS amounting to Rs. 9,18,880/- in Schedule – D i.e. Current Assets and Loan & Advances of Balance Sheet. Copy of Profit and Loss account and Balance Sheet already filed to your goodself vide reply dated 02-02-2024, Hence, the appellant has made full and true disclosure of interest income in the financial statements of the concerned year.
3.4It is pertinent to mention that the Ld. AO has passed ex-parte order without substantiate the facts that the addition was made merely on the basis of information available in Actionable Information Monitoring System (i.e. AIMS). Further, the Ld. AO has not verified the AIMS data and passed the order as considered interest income amounting to Rs.1,83,77,302/- which was actually double amount from interest income earned (i.e. 91,88,651/-* 2) during the year under consideration. Thus, it clearly shows that the aforesaid order has been passed without application of mind and in a hypothetical manner.
3.5Hence, the Ld. AO has unjustified to made addition amounting to Rs.1,83,77,302/- merely on the basis of AIMS without verifying the correctness of such data.
4.We hope that clarification furnished above, shall suffice your purpose. In case your goodself would require any further information / clarification / documents, we shall be obliged to provide you the same. It is further requested that in case your goodself in an unlikely event is not satisfied with the explanation been offered, no order may please be passed without granting an opportunity of being heard in person to the appellant. We further request your goodself to kindly grant us the opportunity of video conferencing before finally deciding the matter."
7.Carefully considered the submission of the appellant in view of the impugned assessment order. Also perused and considered the details and documents uploaded by the appellant on ITBA portal during the appellant proceedings. Went through the case laws referred to and relied upon by the appellant.
7.1.From the details and documents furnished by the appellant firm, it appears that it has only one bank account i.e. Margin Account No. 127G003084 with the Bank of Nova Scotia, B5, Mittal Tower, Nariman Point, Mumbai. It has furnished copy of bank statement of the aforesaid bank account. In this regard, the appellant has furnished an affidavit which is reproduced as under:-
deposit exceeding Rs.2 Lakhs amounting to Rs.67,22,90,323/- with the Bank of Nova Scotia, B-5, Mittal Tower, Nariman Point, Mumbai-400021, and time deposit of Rs. 1 Lakh and more amounting to Rs.40,20,000/-
In this regard, I (Kamal Kumar Gupta, S/o, Late Shri M.L. Gupta, R/o, C-19, Rana Pratap Bagh, Delhi-110007) in the capacity of Partner hereby submit and reiterate that the Ld. AO (NFAC) has passed the aforesaid order hypothetically, in surmises and without application of mind as the additions to Rs. 67,63,10,323/- on account of time deposit on the ground that (1) assessee has not shown any inclination to reply to any notice, and (2) the assessee has not filed any return of income for the relevant previous year. it is hereby affirmed and declared that:
1.The assessee had already filed its return of income for the very same assessment year.
2.The income had already been assessed under section 143(1) vide assessment orders dated 22.12.2019 by the Ld. AO, Central Circle-25, New Delhi well before the present assessment orders which have been challenged in the present appeal before your good self.
3.During the assessment proceedings, all the relevant information and records that were required by the Ld. AO, CC-25 was duly submitted from time to time.
4.The Ld. AO (NFAC) chose to ignore the above assessment orders and passed the assessment orders u/s 114 r.w.s. 147 r.w.s. 144B on 30.03.2022 for the assessment year which was already assessed under section 254 r.w.s. 147.
5.The assessee had made various fixed deposits to be kept as margin money with the said bank; bank statements were already submitted during assessment proceedings and as such, there was no ground to treat the deposits (principal) amount as income.
6.The interest on all the fixed deposits has already been included in the income in the audited balance sheet and ITR for the relevant assessment year.
7.The copy of bank statement in respect of bank account no. 0127G003084 with Bank of Nova Scotia was already filed along with details of all the debit and Credit entries.
8.In the absence of any such material and merely on the whims and fancies, the Ld. AO, NFAC, assessed the deposit amounts as income; taxed the same and raised such a huge demand.
9.The assessee is subjected to unwarranted mental pressure and harassment on account of this demand and also huge penalty imposed under section 271 (1) (c).
10.The Ld. AO(NFAC) has, presumably, taken the total of both the FDs made and FDs realised during the year from various banks as detailed below:
Bank Name FD made FD Realised a. The Bank of Nova Scotia 27,10,00,000.00 25,35,00,000.00 b. SBI 7,15,20,000.00 6,75,00,000.00 c. Corporation Bank 1,36,00,000.00 11.The sum aggregate of all the above figures comes to Rs. 67,21,20,000.00 which is higher by just Rs. 8,09,677.00 then the figure treated as income by the Ld. AO (NFAC).
12.Requesting you to kindly consider the same while adjudicating the appeal filed before your goodself.
13.The assessee is not in a financial position to pay such a huge and illegal demand of tax and penalty.
DEPONENT
I, the above named deponent do hereby solemnly affirm and declare that whatever stated above is true and correct to the best of my knowledge and belief and nothing has been concealed. Verified at Delhi on this the 26th day of March 2024
DEPONENT
Further, the appellant has stated that the actual figure of Time Deposit with the Bank of Nova Scotia as on 31.03.2013 was Rs. 1,75,41,533/- which includes interest of Rs. 10,79,240/- and this amount is also reflecting in the audited balance sheet of the appellant firm. Further, the appellant firm has pointed out that it had Time Deposits with State Bank of India and Corporation Bank. During the appellate proceedings, the appellant firm has furnished the bank statements for its bank account with Nova Scotia Bank, State Bank of India and Corporation Bank.
A perusal of impugned assessment order shows that Ld. AO has not provided any reason for making addition of Rs. 67,22,90,323/- on account of time deposit with the Bank of Nova Scotia. Nothing is clear from the assessment order as to what are the grounds of treating Rs. 67,22,90,323/- as income of the appellant firm. The appellant has provided statement of bank account with the above mentioned branch of the Bank of Nova Scotia and also filed an Affidavit on Stamp Paper stating that it has no any other bank account with Nova Scotia Bank. The captioned bank statement shows that there is a difference of Rs.1,75,41,533/- (debit balance) between entire debit and credit transactions of the time deposits with the said branch of the Bank Nova Scotia during the financial year under reference. The figure of Rs. 1,75,41,533/- is reflected in the Balance Sheet of the appellant firm. There is no logical reason for making huge addition on account of time deposit without discussing any cogent basis for doing so. Therefore, I don't have any other
From the perusal of the above observations of the Ld. CIT(A), it is observed that Ld. CIT(A) has considered the allegations made by the AO in the assessment order and further the bank statements of The Bank of Nova Scotia and statement of State Bank of India filed by the assessee alongwith the reconciliation statements with respect to the time deposits, as reproduced herein above, and concluded that the assessee has duly disclosed the FDRs of Rs.1,75,41,533/- with Bank of Nova Scotia as on 31.03.2012 and further observed that FDRs of Rs.40,20,000/- are performing part of the FDR total of Rs.3,84,20,785/- with State Bank of India and thus, deleted the addition. Before us, the Revenue has filed the factual report of the AO wherein the AO has reiterated the same facts as were stated in the reassessment order and no new evidence /material was placed on record to hold that the Ld. CIT(A) has deleted the addition on wrong appreciation of the facts. Thus, we find no error in the order of ld. CIT(A) which is hereby upheld.
Regarding the request of Ld. CIT DR that matter be remitted to the AO for verification, as observed that ld. CIT(A) has send all the material to the AO and request him to file the factual remand report however, despite of providing ample opportunities, the AO has opted not to file remand report and now in factual report filed before us, the AO has not disputed the facts and submissions made by the assessee with regard to the correct amount of FDR owned by it and merely filed the copies of the re-assessment order dated 31.12.2016 and the order passed u/s 154/147 dated 22.12.2019. Therefore, this request of the Revenue is nothing but an attempt to drag the proceeding without any reason and thus cannot be accepted.
In view of above discussion, all the grounds of appeal taken by the revenue are dismissed.
In the result, appeal of the revenue is dismissed.
ITA No.3735/Del/2024
This appeal is filed by the revenue against the deletion of penalty levied u/s 271(1(c) of the Act by the AO on the additions made in the reassessment order passed under 147 r.w.s 144 dated 30.03.2022. Since, we have already upheld the order of Ld. CIT(A) deleting the additions made in the aforesaid order, therefore, the penalty levied u/s 271(1)(c) has not legs to stand. Ld. CIT(A) after considering these facts has deleted the penalty which order is hereby by upheld. Thus, all the grounds of appeal of the revenue are dismissed.
In the result, appeal of the revenue is dismissed.
In the final result, both the appeals filed by the Revenue in ITA No. 3552/De/2024 and ITA No. 3735/Del/2024 for Assessment Year 2013-14, both are dismissed.