Parveen Yadav vs. ITO Ward-35(5), New Delhi – Assessment Year 2011-12 – Reopening of Assessment and Cash Deposit

Case Overview: Parveen Yadav vs. ITO Ward-35(5), New Delhi – ITA No. 6514/DEL/2019

Case Number: ITA 6514/DEL/2019

Appellant: Parveen Yadav, Delhi

Respondent: ITO Ward-35(5), New Delhi

Assessment Year: 2011-12

Date of Filing: 2019-08-05

Order Type: Final Tribunal Order

Date of Order: 2021-06-14

Date Pronounced: 2021-06-14

Introduction

This case involves the appellant, Smt. Parveen Yadav, challenging the reopening of her assessment for the assessment year 2011-12 and the subsequent addition of Rs. 11,33,000 as unexplained cash deposits. The case was reopened under Section 147/148 of the Income Tax Act, 1961, and the reassessment was contested by the appellant on various grounds, including the legality of the reopening and the validity of the addition made by the Assessing Officer (AO).

Background of the Case

The appellant, Smt. Parveen Yadav, is a resident of South West Delhi, Delhi. For the assessment year 2011-12, her income tax return was selected for scrutiny under the Income Tax Act, 1961. The case was reopened by issuing a notice under Section 148 of the Act, based on information received by the AO regarding cash deposits in the appellant’s bank account held with Syndicate Bank.

According to the AO, cash deposits totaling Rs. 25,49,500 were made in the appellant’s bank account during the relevant financial year. However, the AO’s reassessment found that only Rs. 11,33,000 was actually deposited, leading to an addition of this amount to the appellant’s taxable income. The appellant challenged both the reopening of the assessment and the addition made by the AO.

Appellant’s Arguments

The appellant, represented by her counsel Shri P.C. Yadav, raised several grounds of appeal against the order of the CIT(A). The primary arguments included:

• The reopening of the assessment was based on incorrect information and lacked proper application of mind by the authorities.
• The addition of Rs. 11,33,000 was made without proper justification, relying on conjecture and surmises rather than concrete evidence.
• The AO failed to consider the appellant’s explanation that the cash deposits were gifts received from her father-in-law, supported by documentary evidence.
• The CIT(A) erred in upholding the addition without thoroughly examining the evidence provided by the appellant.

Respondent’s Arguments

The respondent, represented by Shri R.K. Gupta, Sr. DR, defended the actions of the AO and the CIT(A). The respondent argued that the reopening of the assessment was justified based on the information received about the cash deposits and that the AO had followed due procedure in reassessing the appellant’s income. The respondent further contended that the addition of Rs. 11,33,000 was based on the appellant’s failure to provide satisfactory evidence regarding the source of the cash deposits.

Tribunal’s Findings

The ITAT Delhi SMC-1 Bench, presided over by Shri Kul Bharat, Judicial Member, examined the facts and arguments presented by both parties. The Tribunal noted that the reopening of the assessment was based on information that was later found to be incorrect. Specifically, the AO had initially recorded that Rs. 25,49,500 was deposited in the appellant’s bank account, but the reassessment revealed that only Rs. 11,33,000 was deposited.

The Tribunal observed that the AO’s decision to reopen the assessment lacked proper application of mind, as the information on which the reopening was based was materially different from the actual facts. The Tribunal also noted that the CIT(A) had failed to provide adequate justification for upholding the addition made by the AO, despite the appellant’s explanation and documentary evidence.

Tribunal’s Decision

After considering the submissions and reviewing the evidence, the Tribunal concluded that the reopening of the assessment was invalid due to the incorrect information provided to the AO and the lack of proper application of mind by the authorities. As a result, the Tribunal held that the reopening of the assessment was not in accordance with the law and allowed the appellant’s grounds of appeal on this issue.

Regarding the addition of Rs. 11,33,000, the Tribunal found that the AO had made the addition based on suspicion rather than concrete evidence. The Tribunal noted that the appellant had provided an explanation supported by a gift letter from her father-in-law and that the AO had not brought any material evidence to disprove the appellant’s claim. Consequently, the Tribunal deleted the addition of Rs. 11,33,000 from the appellant’s taxable income.

Conclusion

The Tribunal’s ruling in favor of Smt. Parveen Yadav highlights the importance of proper application of mind by tax authorities when reopening assessments and making additions based on alleged unexplained income. In this case, the reopening of the assessment was found to be invalid, and the addition of Rs. 11,33,000 was deleted due to lack of evidence and improper procedure.

This case serves as a reminder to both taxpayers and tax authorities that any action taken during reassessment proceedings must be supported by accurate information and a thorough examination of the facts. The Tribunal’s decision underscores the need for adherence to principles of natural justice and proper legal procedures in tax assessments.

Keywords: ITAT, Income Tax Appellate Tribunal, Parveen Yadav, Reopening of Assessment, Cash Deposit, Assessment Year 2011-12, Tribunal Order

Parveen Yadav vs. ITO Ward-35(5), New Delhi – Assessment Year 2011-12 – Reopening of Assessment and Cash Deposit