BHAVESH SHARMA,DURG V. INCOME TAX OFFICER-1(3), BHILAI (ERSTWHILE INCOME TAX OFFICER, KAWARDHA), BHILAI

ITA 394/RPR/2024

AI Insights

The case involves an appeal by Bhavesh Sharma against the order of the Commissioner of Income-Tax (Appeals), which confirmed an addition of Rs. 11,00,000 to Sharma's income under Section 69A of the Income-tax Act, 1961, due to unexplained cash deposits during the demonetization period. The A.O had initially made this addition after Sharma failed to substantiate the source of these deposits, which he claimed were from agricultural income. The Tribunal found that the A.O had not considered Sharma's detailed reply and supporting documents submitted in response to a show cause notice, leading to the decision to restore the matter for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469761 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 03-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 24-08-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: R.B DOSHI
• Keywords: Opportunity of being heard
• Section: 147; 148; 69A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 394/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Bhavesh Sharma House No.33, Ward-02, Village: Arjuni, Balsamund, Durg (C.G.)-491 335 PAN : CPEPS6333B .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer-1(3), Bhilai (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri R.B Doshi, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 03.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/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)/147 of the Income-tax Act, 1961 (in short ‘the Act’) dated 18.12.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: “1. Ld. CIT(A) erred in deciding appeal Nil without service of notice. Resultantly, appellate order is illegal & unsustainable. 2. Ld. CIT(A) erred in confirming Rs. 8,49,750/- addition of Rs. 11,00,000/- made by AO on account of cash deposited by appellant during demonetization, invoking section 69A. The addition made by AO and confirmed by CIT(A) is arbitrary, illegal and not justified. 3. The reassessment order dt. Nil 18.12.2019 passed by the AO is illegal and invalid as it is in contravention of mandatory condition prescribed by CBDT vide its Circular No. 19/2019 dt. 14.08.2019 inasmuch as reassessment order does not contain DIN. In absence of generation & communication of DIN consequent reassessment order is liable to be annulled. 4. The re-assessment order passed by Nil the AO is illegal, invalid and ab initio void inasmuch as the notice u/s 148 was issued by AO who does not have jurisdiction over the appellant. The re-assessment order is illegal, not sustainable and liable be quashed. 5. The assumption of jurisdiction by the AO, reassessment proceedings and the consequent reassessment order passed by the AO is illegal, ab initio void. 3 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 6. The appellant reserves the right to amend, modify or add any of the ground/s of appeal.” 2. Succinctly stated, the A.O based on information gathered during the phase of online verification under ‘Operation Clean Money’ that the assessee had during the demonetization period, i.e. 09.11.2016 to 30.12.2016 made cash deposits in Specified Bank Notes (SBNs) of Rs.11 lacs. In his bank account, but had not filed his return of income for the subject year, i.e. A.Y.2017-18, thus, initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 24.03.2019 was issued to the assessee. In compliance, the assessee had filed his return of income on 04.12.2019 declaring an income of Rs.8,135/- a/w. agricultural income of Rs.8,93,250/-. 3. Ostensibly, the assessee on being queried about the source of the cash deposits of Rs.11 lacs had stated before the A.O that the same were sourced out of his agricultural income. The A.O in order to verify the authenticity of the assessee’s claim had issued a “Show Cause Notice” (SCN), dated 14.12.2019, wherein the assessee was directed to place on record documentary evidence to substantiate the factum of receipt of agricultural income which, for the sake of clarity is culled out as under: 4 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 4. The A.O, holding a conviction that as the assessee had failed to substantiate his claim that the cash deposits in SBNs of Rs.11 lacs was sourced out of his agricultural income, held the same as his unexplained money u/s. 69A of the Act. Accordingly, the A.O vide his order passed u/ss. 143(3)/147 of the Act dated 18.12.2019 determined the income of the assessee at Rs.11 lacs (after inter alia referring to agricultural income of Rs.8,93,250/- disclosed by the assessee in his return of income filed u/s. 148 of the Act). 5. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee had failed to substantiate his claim in the course of the proceedings before the first appellate authority, therefore, the latter after referring to the facts and 5 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 material available on record found no infirmity in the view taken by the A.O and approved the addition of Rs.11 lacs made by him u/s. 69A of the Act. 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 7. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. 8. Controversy involved in the present appeal lies in a narrow compass, i.e. as to whether or not both the lower authorities had rightly rejected the explanation of the assessee as regards the source of cash deposits in SBNs made during the demonetization period in his bank account, and made/sustained the addition of Rs.11 lacs u/s. 69A of the Act. 9. Shri R.B Doshi, Ld. Authorized Representative ( for short ‘AR’) for the assessee at the threshold submitted that the A.O had grossly erred in law and facts of the case in making the addition of Rs.11 lacs u/s. 69A of the Act. Elaborating on his contention, the Ld. AR submitted that though the assessee in compliance to SCN, dated 14.12.2019 had uploaded his reply a/w. annexures as on 15.12.2019, but the same had not been considered by the A.O. The Ld. AR in support of his contention had placed on record a 6 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 reply dated nil filed/uploaded by the assessee in response to notice u/s. 142(1) of the Act dated 07.12.2019 a/w. screen shot of the e-portal account of the assessee. The Ld. AR had specifically taken me through Sr. No.7 of the reply wherein it was specifically stated that the receipt of sale proceeds of agricultural produce were being attached in the attachment section of the portal. Also, the Ld. AR had drawn my attention to the fact that the assessee had stated before the A.O that the expenses incurred in form of seeds, crop insurance, fertilizers taken from Sewa Sahakari Samiti, Kusmi was evidenced from the credit card passbook. Apart from that, the Ld. AR had taken me through Sr.No.8 of the aforesaid reply, dated 15.12.2019, wherein it was mentioned that the sale receipts of paddy, gram, soyabean, wheat were attached a/w. the reply. Also, the Ld. AR had referred to Sr. No.9 of the reply wherein it was stated that sale of paddy was carried out directly to the government through society and the sale receipts were being attached a/w. the reply. The Ld. AR further submitted that the assessee in compliance to the A.O’s query in respect of holding of land had attached copy of Form B-I and P-II with the reply. Also, it was specifically has brought to my notice by the Ld. AR that the agricultural land was situated at Village Arjuni (individual as well as jointly) and Village: Bagaud. The Ld. AR submitted that the aforesaid reply filed/uploaded on 15.12.2019 had not been considered by the A.O which, 7 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 thus, had resulted to the impugned addition of Rs.11 lacs in the hands of the assessee. 10. Per contra, Dr. Priyanka Patel, Ld. Sr. Departmental Representative ( for short ‘DR’) relied on the orders of the lower authorities. 11. As is discernible from the assessment order, the primary reason that had weighed in the mind of the A.O while making the impugned addition of Rs.11 lacs u/s. 69A of the Act, i.e. after rejecting the assessee’s explanation that the cash deposits made in SBNs in his bank account during the demonetization period were sourced out of his agricultural income, but had failed to place on record supporting documentary evidence as were called for by him to substantiate the same. As stated by the Ld. AR, and rightly so, it appears from the assessee’s reply that was uploaded on 15.12.2019, that though he had specifically replied to the specific queries that were raised by the A.O vide SCN dated 14.12.2019, but the same had inadvertently remained omitted to be considered by the A.O. Neither there is any whisper in the assessment order as regards the aforesaid reply dated 15.12.2019 (supra) nor the veracity of the aforesaid claim of the assessee had been dislodged by the A.O while framing the assessment. 12. Considering the aforesaid facts, I am of the view that as the explanation of the assessee as regards the source of the cash deposits of 8 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 Rs.11 lacs in SBNs in his bank account during the demonetization period, which he had substantiated by placing on record his reply filed/uploaded on 15.12.2019, had remained omitted to be considered by the A.O, therefore, the matter in all fairness requires to be restored to the file of the A.O with a direction to re-adjudicate the same afresh. Needless to say, the A.O shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee who shall remain at liberty to substantiate his claim on the basis of fresh documentary evidence, if any. 13. In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/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. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. 9 Bhavesh Sharma Vs. ITO-1(3), Bhilai ITA No. 394/RPR/2024 आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "