AAMIR HAJIASHIF PATEL,SHAHIBAGU ROAD V. INCOME TAX OFFICER WARD 1(2)(1) , AHMEDABAD

ITA 963/AHD/2024

AI Insights

The case involves Aamir Hajiashif Patel, who appealed against the order of the National Faceless Appeal Centre (NFAC)/CIT(A), which upheld various additions and disallowances made by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 for the Assessment Year 2017-18. The primary issues included the legality of additions related to cash deposits during the demonetization period, estimations of gross profit, and disallowances of various expenditures. The Tribunal noted that the CIT(A) did not fully consider the assessee's contentions and additional evidences during the appeal, leading to the decision to remand the case for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361158 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B.P SRIVASTAVA
• Assessee Lawyers: MEHUL THAKKAR
• Keywords: Additional evidence; Rejection of books of accounts; Principle of natural justice
• Section: 143(3)

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ , अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ A ” BENCH, AHMEDABAD ] BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER And SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 963/AHD/2024 िनधाᭅरण वषᭅ/Asstt. Year: 2017-2018 Aamir Hajiashif Patel, Shop No. I-10, New Madhupura Market, Shahibaug Road, Ahmedabad-380004. PAN: CQLPP4918H बनामVs . The Income Tax Officer, Ward 1(2)(1), Ahmedabad. (अपीलाथᱮ /Appellant ( ᮧ᭜यथᱮ /Respondent) Assessee by : Shri Mehul Thakkar, AR Revenue by : Shri B.P Srivastava, Sr. DR सुनवाई कᳱ तारीख/Date of Hearing : 30/04/2025 घोषणा कᳱ तारीख /Date of Pronouncement: 21/05/2025 आदेश/O R D E R PER SUCHITRA KAMBLE, JM: The captioned appeal has been filed at the instance of the Assessee against the order dated 08.03.2024 passed by the National Faceless Appeal Centre(NFAC)/CIT(A), arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as \"the Act\") relevant to the Assessment Year 2017-18. ITA No.963/Ahd/2024 Asst. Year 2017-18 2 2. The assessee has raised the following grounds of appeal: 1.1 The order passed u/s. 250 on 08.03.2024 for A.Y.2017-18 by NFAC, Delhi upholding the additions / disallowance of Rs.2,29,00,541 is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,45,47,320 being cash deposit into bank account during demonetization period. 2.2 That the Ld. CIT(A) ought not to have upheld addition of Rs. 1,45,47,320 being cash deposit into bank account during demonetization period generated out of sale. 3.1 The Ld. CIT(A) has erred in law and or on facts in upholding the addition of Rs.9,95,477 being estimation of Gross Profit at the rate of 5.5%. 3.2 That the Ld. CIT(A) ought not to have upheld the addition of Rs.9,95,477 being estimation of Gross Profit at the rate of 5.5%. 3.3 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the rejection of books of account without pointing out drastic error in books. 3.4 That the Ld. CIT(A) ought not to have upheld the rejection of books of account without pointing out drastic error in books. 3.5 Without prejudice to the above and in the alternative, the appellant raises that in the facts and circumstances of the case, the GP rate estimated at 5.5% is excessively high which deserves to be lower. 4.1 The Ld. CIT(A) has erred in law and or on facts in upholding the disallowance of Rs.16,68,269 being various expenditure claimed by the appellant as follows. (a) Interest Exps. CAMPCO Rs. 15,15,959 (b) Interest Exps. Campco Rs.4,830 (c) Rent Rs. 1,44,000 (d) VAT Interest Exps. Rs.3,480 ITA No.963/Ahd/2024 Asst. Year 2017-18 3 4.2 That the Ld. CIT(A) ought not to have upheld the disallowance of Rs.16,68,269 being various expenditure claimed by the appellant. 4.3 The Ld. CIT(A) has failed to appreciate that no other addition /disallowance based on books can be made when the book result is rejected u/s 145. 5.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.56,58,475 being sundry Creditors. 5.2 That the Ld. CIT(A) ought not to have upheld the addition of Rs.56,58,475 being sundry Creditors. 5.3 The Ld. CIT(A) has failed to appreciate that no other addition /disallowance based on books can be made when the book result is rejected u/s 145. 6.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.31,000 being Unsecured Loan. 6.2 That the Ld. CIT(A) ought not to have upheld the addition of Rs.31,000 being Unsecured Loan. 6.3 The Ld. CIT(A) has failed to appreciate that no other addition /disallowance based on books can be made when the book result is rejected u/s 145. 7.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the levy of higher tax u/s 115BBE. 7.2 That the Ld. CIT(A) ought not to have upheld the levy of higher tax u/s 115BBE. It is therefore prayed that the addition / disallowance made by Ld. AO and upheld by the CIT(A) may please be deleted in the interest of natural justice and considering the eccentric facts of the case. 3. The assessee is an individual mainly engaged in the business of trading of Areca Nuts (Supari) in the name and style of M/s. Patel Stores. The assessee filed return of income for Assessment Year 2017-18 on 04.11.2017, showing total income of Rs.7,01,500/-. During the assessment proceedings, the Assessing Officer observed that the assessee deposited cash into the bank account to the tune of Rs.1,45,47,320/- (Axis Bank: Rs.68,50,800 + Kotak Mahinda Bank : 76,96,520/-). The Assessing Officer asked the assessee to provide the source of the sales cash deposits. The ITA No.963/Ahd/2024 Asst. Year 2017-18 4 assessee submitted his reply and filed the details such as cash book, bank book, day-wise & transaction-wise stock registered, sales details, purchase details, contract confirmation, bank statement, cross confirmation, VAT returns etc. The Assessing Officer observed that the assessee has not provided PAN of the persons to whom goods were sold. The Assessing Officer has also doubted the purchase due to the non availability of PAN & ITR of the parties and therefore, rejected the books of accounts us.145 of the Act, and made addition of Rs.9,95,477/- by estimating gross profit at the rate of 5.5%. The Assessing officer further observed that the assessee had incurred various expenses like interest expenses, rent expenses and VAT interest expenses which was disallowed to the tune of Rs.16,68,269/-. The Assessing Officer further observed that the assessee could not furnished all the confirmation from Sundry Creditors and hence made addition of Rs.56,58,475/-. The Assessing Officer also made addition of Rs.31,000/- being unsecured loan in absence of PAN, ITR & confirmation. Thus, the Assessing officer, made additions/disallowance to the extent of Rs.2,36,02,041/- 4. Being aggrieved by the assessment order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A), dismissed the appeal of the assessee. 5. The Ld.AR submitted that the Ld. CIT(A) failed to appreciate that the video conferring link was not working and the assessee could not endorse his contentions before the Ld.CIT(A). The Ld.AR further submitted that the Ld.CIT(A), dismissed the appeal without considering the factual aspect and the additional evidences given by the assessee. The Ld.AR filed the additional evidences before the Tribunal in respect of following details: ITA No.963/Ahd/2024 Asst. Year 2017-18 5 ITA No.963/Ahd/2024 Asst. Year 2017-18 6 6. The Ld.AR also submitted the cash transaction form 2016 wherein the details of cash amount related to cash sales was submitted before the Tribunal. Thus, the Ld.AR submitted that the Assessing Officer was not right in rejecting the books of accounts as the Assessing Officer has not pointed out any specific error while rejecting the books of accounts. The Ld.AR submitted that the Assessing Officer failed to appreciate that after rejecting book result, no addition based on books can be made. As relates to cash deposits the Ld. AR submitted that the Assessing Officer failed to appreciate that even as per the Rule 114B the assessee was not liable to quote PAN in the cash sales if the sales bill does not exceed Rs.2,00,000/- and thus he made addition of Rs.1,45,47,320/- 7. The Ld. DR submitted that the assessee is filing additional evideces at this juncture which was not produced either before the Assessing Officer or before the Ld.CIT(A). Therefore, the Assessing Officer has righly made addition which was confirmed by the Ld.CIT(A). The Ld. DR relied upon the Assessment Order and the order of the Ld.CIT(A). 8. We have heard both the parties and perused the material available on record. It is pertinent to note that Ld.CIT(A) has not taken into account all the contentions of the assessee during the video conferring, as submitted by ITA No.963/Ahd/2024 Asst. Year 2017-18 7 the assessee and besides this the assessee is filing the additional evidence before the Tribunal which is required to be verified in respect of the issues contested by the assessee herein. The said additional evidences are admitted and the matter is remanded back to the file of the Assessing Officer for proper adjudication of the issues on merits as per the Income-tax Act. The assessee is given opportunity of hearing by following the Principle of Natural Justice. 9. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 21st May, 2025 at Ahmedabad. Sd/- Sd/- (NARENDRA PRASAD SINHA) ACCOUNTANT MEMBER (SUCHITRA KAMBLE) JUDICIAL MEMBER (True Copy) अहमदाबाद/Ahmedabad, ᳰदनांक/Dated 21/05/2025 Manish, Sr. PS आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent. 3. संबंिधत आयकर आयुᲦ / Concerned CIT 4. आयकर आयुᲦ ) अपील ( / The CIT(A)-(NFAC) 5. िवभागीय ᮧितिनिध , आयकर अपीलीय अिधकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाडᭅ फाईल /Guard file. आदेशानुसार/ BY ORDER, स᭜यािपत ᮧित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad "