ASHOK KUMAR JAIN, BHATAPARA,BALODA BAZAR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), RAIPUR, RAIPUR

ITA 390/RPR/2024

AI Insights

The case involves Shri Ashok Kumar Jain, an authorized dealer of Indian Oil Corporation Limited, who appealed against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, Delhi. The appeal was related to the assessment year 2017-18, where the Assessing Officer (A.O) made several additions to the assessee's income, including discrepancies in fuel purchases and unexplained cash deposits during the demonetization period. The CIT(Appeals) upheld these additions without providing substantial reasoning, leading to the current appeal before the Income Tax Appellate Tribunal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35688 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 21-08-2024
• Other Referred Cases: CIT Vs. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: VEEKASS S SHAMRA
• Keywords: Set aside; Business income; Opportunity of being heard; Reasonable cause; Rejection of books of accounts; Principle of natural justice
• Section: 143(3); 143(2); 250; 251; 68; 44AB; 246A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 390/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Shri Ashok Kumar Jain New Bus Stand, Bhatapara, Baloda Bazar- 493 332 PAN: ACHPJ4868Q .......अपीलाथȸ / Appellant बनाम / V/s. The Assistant Commissioner of Income Tax, Circle-1(1), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Veekass S Shamra, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 01.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 25.06.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income- tax Act, 1961 (in short ‘the Act’) dated 29.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. On the facts and in the circumstances of the case, the order passed by the Learned CIT (Appeal), NFAC, Delhi is wholly arbitrary, irrational and unjustified inasmuch as the same is an unreasoned order, the Learned CIT (Appeal) has passed the most cryptic order without dealing with the detailed explanation and documentary evidences filed by the assessee thereby violating all the principles of natural justice. It is prayed that the order passed by the Learned CIT (Appeal) being violative of principles of natural justice may kindly be struck down. 2. On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in making addition of Rs.24,75,000/- on account of alleged difference in purchases of petrol and diesel as per audit report and as per Oil supplier company as there was no difference and inference drawn is factually incorrect and arbitrary and the Learned CIT (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the same as the addition is contrary to facts, law and legislative intent, hence, it is prayed that the addition of Rs.24,75,000/- confirmed by the Learned CIT (Appeal) may kindly be deleted. 3. On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in adding cash deposited in bank during demonetization period amounting to Rs.53,00,000/- by invoking Section 68 of the Income Tax Act, 1961 holding the. same to be abnormal cash 'deposit disregarding the bonafide explanation 3 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 that cash deposits represented sales/business receipts and the Learned CIT (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the same as the addition is contrary to facts, law and legislative intent, hence, it is prayed that the addition of Rs.53,00,000/- confirmed by the Learned CIT (Appeal) may kindly be deleted. 4. On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in rejecting the books of accounts u/s. 145 r.w.s. 144 of the Income Tax Act, 1961 and the Learned CIT(Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the rejection of books of accounts u/s 145 r.w.s. 144 as the conditions precedent for rejection are not fulfilled and the books of accounts could not be produced owing to reasonable cause. It is prayed that the rejection of books of accounts may kindly be declared illegal, not in accordance with law and ultimate assessment also as void, more particularly, when the books of accounts were not produced. 5. On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in estimating the income @ 5% of gross receipts/turnover of Rs.47,54,13,723/- amounting to Rs.2,37,70,686/- from the transportation business and fuel trading business, particularly, when books of accounts are audited and duly supported by bills and vouchers and estimation of income @ 5% is not consistent with the past assessment history of the assessee nor did the Learned A.O cited any specific comparable instance and merely made vague assertion which is wholly arbitrary, unjustified and unsustainable. Hence, it is prayed that the estimation of income @ 5% and consequential enhancement to the total income amounting to Rs. 2,37,70,686/- being violative of principles laid down by the Hon'ble Supreme Court, hence, it is prayed that the addition of Rs.2,37,70,686/- confirmed; by the Learned CIT (Appeal) may kindly be deleted. 6. The Appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of Appeal.” 2. Succinctly stated, the assessee who is an authorized dealer of Indian Oil Corporation Limited, had filed his return of income for A.Y.2017-18, declaring an income of Rs.42,83,140/-. The books of accounts of the 4 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 assessee were duly audited u/s. 44AB of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 3. Assessment was, thereafter, completed by the A.O vide his order passed u/s. 143(3) of the Act, dated 29.12.2019 determining the income of the assessee at Rs.3,58,28,826/- after, inter alia, making the following additions/disallowances: Sl. No. Particulars Amount 1. Addition of difference amount in purchase of petrol and diesel as per audit report and as per Oil supplier company Rs.24,75,000/- 2. Addition on account of cash deposited during demonetization period u/s. 68 of the Act. Rs.53,00,000/- 3. Disallowance of 5% profit on turn over of Rs.47,54,13,723/- ( transportation business and petrol pump business) after rejecting books of account u/s. 145 r.w.s. 144 of the Act. Rs.2,37,70,686/- 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. Ostensibly, the CIT(Appeals) while disposing of the appeal had merely referred to the grounds of appeal, based on which, the impugned order was assailed by the assessee before him and had failed to give any justifiable reason as to why the view taken by the A.O was being approved by him. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: 5 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 “1. Ground No.1 objects to making addition of Rs.2475000/- on account of difference in petrol and diesel prices. In audit report the assessee has shown purchase during A.Y. 2017- 18:- petrol 552KL & diesel 4030KL. But as per the Oil supplier company petrol purchase done by you was 530KL & diesel purchase 4011KL. So an addition of difference amount i.e.24.75 lacs has been done in absence of satisfactory reply with proof. 2. Ground no.2 objects to adding Rs.5300000, the amount deposited during demonetization period u/s 68. The assessee was asked to explain the abnormal cash deposit during demonetization. But he could not explain this issue properly. Hence, in absence of satisfactory submissions, Rs.53 lacs (Total cash deposit during demonetization — average cash in hand and normal cash deposit), has been proved as abnormal cash deposit during the specified period. The action of the AO is justified. The assessment is confirmed. 3. Ground no.3 objects to rejecting the books of account u/s.145 r w s 144. Several show cause notices were sent to the assessee calling for explanation. The details of such notices are recorded in the assessment order. In the absence of any submissions in response to those notices, an addition of 5% of the turnover amounting to Rs.23770686 is made. The addition has been made after considering net profit of the transportation business and petrol pump business. The assessment of net profit of Rs.23770686 is confirmed. 4. The appeal filed by the assessee is dismissed.” 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements 6 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 that have been pressed into service by the Ld. AR to drive home his contentions. 7. On a perusal of the order of the CIT(Appeals), it transpires that he had disposed off the appeal by a non-speaking order, and had failed to give any justifiable reasons as to why the view taken by the A.O was being approved by him. We are of the view that the CIT(Appeals) who though had remained under a statutory obligation to dispose off the appeal by a well-reasoned and speaking order, had failed to do so in the present case before us. 8. As observed by us hereinabove, the CIT(Appeals) had disposed off the appeal without giving any justifiable reason as to why the view taken by the A.O was being approved by him and, thus, had failed to apply his mind to the issues which did arise from the impugned order and were assailed by the assessee before him. We are unable to persuade ourselves to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals). In our considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal by a non-speaking order. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(A) remains under a statutory obligation to apply his 7 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before 8 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 9. We, thus, not being able to persuade ourselves to subscribe to the dismissal of the appeal by the CIT(Appeals) by a non-speaking order, therefore, set-aside his order with a direction to re-adjudicate the same afresh. Needless to say, the CIT(Appeals) in the course of the set-aside proceedings shall afford a reasonable opportunity of being heard to the assessee who shall remain at a liberty to substantiate his claim on the basis of fresh documentary evidence, if any. 10. As we have restored the matter to the file of the CIT(Appeals) for fresh adjudication, therefore, we refrain from adverting to and dealing with the issues which had been raised before us which, thus, are left open. 11. In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- Sd/- ARUN KHODPIA RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024. *****SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 9 Shri Ashok Kumar Jain Vs. ACIT, Circle-1(1), Raipur ITA No. 390/RPR/2024 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. The Pr. CIT, Raipur-1 (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "