Pawan Kumar vs ITO Ward – 3, Karnal: Reopening of Assessment for Cash Deposits

Pawan Kumar vs ITO Ward – 3, Karnal: Reopening of Assessment for Cash Deposits

Case Number: ITA 5788/DEL/2019
Appellant: Pawan Kumar, Karnal
Respondent: ITO Ward – 3, Karnal
Assessment Year: 2010-11
Result: Appeal dismissed
Case Filed on: 2019-07-03
Order Type: Final Tribunal Order
Date of Order: 2022-12-08
Pronounced on: 2022-12-08

Introduction

This appeal by Pawan Kumar (the appellant) is directed against the order dated 23/04/2019, passed by the Commissioner of Income-tax (Appeals), Karnal, which pertains to the assessment year 2010-11. The appellant challenged the retention of an addition of Rs. 4,19,823 made by the Assessing Officer (AO).

Background

The assessment was reopened based on the appellant’s cash deposits amounting to Rs. 77,29,040. In response to the notice under section 148 of the Income-tax Act, 1961 (the Act), the appellant filed a return of income declaring Rs. 1,98,500 on gross receipts of Rs. 39,70,000. However, the AO assessed the income at Rs. 6,18,323. The appellant’s subsequent appeal to the CIT(A) was dismissed, leading to the present appeal before the tribunal.

Grounds of Appeal

The appellant raised the following grounds:

1. The CIT(A) was not justified in retaining the addition of Rs. 4,19,823 made by the AO.
2. The CIT(A) applied an unjustifiably high rate of 8% against the maximum rate of 5% prescribed under section 44AF.
3. The CIT(A) and the AO unjustifiably treated all cash deposits of Rs. 77.29 lacs in bank accounts as sales despite detailed evidence provided.

Hearing and Proceedings

The hearing was held on 05.12.2022, but no one appeared on behalf of the appellant. The records show that the appellant had not attended the proceedings since 21.12.2020, and notices sent to the provided address were returned unserved. Therefore, the appeal was decided based on the available material.

Findings of the CIT(A)

The CIT(A) observed that the reopening of the assessment was justified due to the appellant’s unexplained cash deposits. The appellant’s claim of cash deposits being related to the sale of vegetables was unsupported by any evidence. The CIT(A) noted that the appellant consistently failed to provide documentation to substantiate the source of cash deposits, confirming the AO’s addition of Rs. 6,18,323 at an 8% profit rate on gross receipts of Rs. 77,29,040.

Respondent’s Arguments

The respondent, represented by Shri Sumesh Swani, Sr. DR, supported the CIT(A)’s decision. The DR argued that the AO correctly applied an 8% profit rate due to the appellant’s failure to provide explanations for the cash deposits.

Tribunal’s Decision

The tribunal, presided by Shri Kul Bharat, Judicial Member, examined the material on record. The tribunal noted that the appellant had not rebutted the findings of the CIT(A) with any contrary evidence. Therefore, the tribunal found no reason to interfere with the CIT(A)’s order and affirmed the addition made by the AO.

Conclusion

The appeal was dismissed, with the tribunal concluding that the CIT(A) rightly upheld the addition due to the appellant’s failure to substantiate the source of cash deposits.

Order Pronounced in the Open Court on 8th December, 2022.

Signed:
Kul Bharat, Judicial Member

Dated: 8th December, 2022
MP*

Copy Forwarded to:

1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR

Assistant Registrar, ITAT, New Delhi

Pawan Kumar vs ITO Ward – 3, Karnal: Reopening of Assessment for Cash Deposits