Mahendra Sharma , Ajmer vs Department Of Income Tax

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 864/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2009-10

Income Tax Officer cuke Mahendra Sharma, Ward-1(1), Ajmer. Vs. Prop- M/s Sharma Book Seller, Near Raghunath Temple, Purani Mandi, Ajmer. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BIHPS 3245 P vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Mrs. Neena Jeph (JCIT). fu/kZkfjrh dh vksj ls@ Assessee by : None (Ad on record)

lquokbZ dh rkjh[k@ Date of Hearing : 27/04/2015 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 30/04/2015

vkns'k@ ORDER

PER: R.P. TOLANI, J.M.

This is an appeal filed by the revenue against the order dated

28/09/2012 by the learned CIT(A), Ajmer for A.Y. 2009-10. The

effective grounds of appeal are as under:

"1. Restricting the addition of Rs. 29,17,715/- to Rs. 2,05,690/- made on account of unexplained cash deposit in Special Bench account, without appreciating the 2 ITA 864/JP/2012_ ITO Vs. Mahendra Sharma

detailed reasons narrated in the assessment order for making such addition;

2. Holding that the A.O. has not proved alternative use of cash withdrawals, whereas the primary onus lies on the assessee to establish the nexus between the bank transactions and the business transactions;

3. Restricting the addition of Rs. 29,17,715/- to Rs.

2,05,690/- made on account of unexplained cash deposit in Special Bench a/c, when the cash deposits in bank should have been explained by the assessee, otherwise, it is unexplained income u/s 69 or 69B of the I.T. Act as upheld by the Apex Court in the case of CIT Vs. K. Chinnatham Bai (SC) 292 ITR 682 and also by ITAT SB- Delhi in the case of Manoj Agarwal Vs. DCIT 113 ITD 377;

4. Restricting the addition of Rs. 29,17,715/- to Rs.

2,05,690/- by entertaining the alternative claim of the assessee, which was not raised before the A.O."

2. The brief facts of the case are that the assessment in question

was framed ex parte U/s 144 of the Income Tax Act, 1961 (in short the

Act) by the Assessing Officer by following observations which resulted in

impugned additions:

"In response to the notices issued by my predecessor Shri Rajesh Jain the ITP and A/R of the assessee attended. But after wards neither the assessee nor the A/R appeared before me nor and submitted any reply in response to the notices dated 08.08.2011

3 ITA 864/JP/2012_ ITO Vs. Mahendra Sharma

and show cause notice dated 08.11.2011. Since the assessee has failed to comply with the notice dated 08.11.2011 informing him that on failure on part of him the Ex-parte assessment u/s 144 of the IT Act, 1961 will be made, the assessment order is being passed u/s 144 of the It Act, 1961 on the material available on record."

3. Aggrieved, the assessee preferred first appeal. The ld CIT(A) has

allowed the appeal partly by observing as under:-

4.3 "I have considered the assessment order as well as the submission made by the appellant. It is seen that assessee has claimed to be a retailer of stationary item and old and new books. No regular books have been maintained claiming that assessee is covered U/s 44AF of the Act. However, it is seen that assessee has not submitted any instance of having made any purchases, sales or incurring expenses for the said business as pointed out by the A.O. nor assessee is registered with the Commercial Taxes Department. The gross receipts have also not been shown by the assessee from the sales before the A.O. as pointed out by him. Similarly no evidence of incurring the expenses for the above business were submitted. In view of this, it is apparent that assessee has not been able to submit any evidence regarding carrying on the business of retail trade of stationary items and books. The assessee's claim that 4 ITA 864/JP/2012_ ITO Vs. Mahendra Sharma

assessee has filed the return from year to year is not acceptable as assessee filed returns for A.Y. 2008-09 and 09-10 on single day i.e. 08.01.2010.

4.4 As regarding the assessee alternative claim that as per cash flow there is no negative balance and assessee should be given the benefit of peak balance in the bank accounts as A.O. has not proved the alternative use of the cash withdrawal is acceptable as is evident from the rotation of the funds in the above bank accounts. The assessee has given the consolidated statement of deposits in Indian Bank and SBI and withdrawals thereof by way of detailed working as per which the peak balance is Rs. 2,05,690/- on 29.01.2009. In view of above the addition to the extent is upheld. The above income constitutes income from undisclosed sources used for bank deposits. The addition in this case falls U/s 69 of the I.T. Act as the unexplained bank deposits. This ground of appeal is partly allowed."

4. Aggrieved revenue is in appeal. Ld. DR contends that the findings

of the ld CIT(A) are self contradictory on one hand the assessment U/s

144 is upheld by concluding that the assessee could not substantiate its

claim about expenses of purchases, carrying on business and filing of

the returns of A.Y. 2008-09. Despite these observations, the cash flow 5 ITA 864/JP/2012_ ITO Vs. Mahendra Sharma

statement filed by the assessee has been relied on without calling any

remand report from the Assessing Officer. There is no reference of cash

flow statement in the assessment order, which implies that the ld

CIT(A) entertained additional evidence without recording any finding in

this behalf or calling for any remand report. Thus, the order of the ld

CIT(A) suffers from infirmities, consequently, the same may be reversed

and Assessing Officer's order should be upheld.

5. None appeared on behalf of the assessee despite several

opportunities including proper service of this notice on him.

6. We have heard the ld. DR and perused the material available on

the record. We find merit in the arguments of ld D.R. There are

inherent contradictions in the order of ld. CIT(A) as pointed out; besides

it emerges that for awarding the relief a cash flow statement has been

relied on by ld. CIT(A) recording finding about no negative balance. No

such cash flow statement is mentioned in the assessment order. No

remand report has been called from the Assessing Officer, which implies

to deviating from the statutory provisions of rule 46A and denial of

opportunity of hearing to the department. In the entirety of the facts

and circumstances of the case, we are inclined to set aside the issues

raised in revenue grounds back to the file of the Assessing Officer to 6 ITA 864/JP/2012_ ITO Vs. Mahendra Sharma

decide the same afresh in accordance with law after giving the assesee

an adequate opportunity of being heard.

7. In the result, revenue's appeal is allowed for statistical purposes

only.

Order pronounced in the open court on 30/04/2015.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P.Tolani) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 30th April, 2015 *Ranjan

vkns'k dh izfrfyfi vxzsf'kr@Copy of the Order forwarded to:

1. vihykFkhZ@The Appellant- The ITO, Ward 1(1), Ajmer.

2. izR;FkhZ@ The Respondent- Shri Mahendra Sharma, Ajmer.

3. vk;dj vk;qDr@ CIT-

4. vk;dj vk;qDr¼vihy½@The CIT(A)-

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No. 864/JP/2012)

vkns'kkuqlkj@ By order,

lgk;d iathdkj@Asst. Registrar