DCIT 42.3.1, MUMBAI V. SHRADHA HARSHIT SAIYA, MUMBAI

ITA 5327/MUM/2024

AI Insights

The case involves cross-appeals by the assessee, M/s. Shradha Harshit Saiya, and the revenue against the order of the National Faceless Appeal Centre (NFAC), Delhi, for the Assessment Year 2015-16. The primary issues revolve around large value imports and substantial cash deposits linked to the assessee's accounts, which were not initially reported as income. The AO made additions under sections 68 and 69C of the Income Tax Act, citing unexplained cash deposits and unaccounted imports. The CIT(A) later deleted the addition related to imports but upheld the cash deposit addition. The Tribunal found that further verification was needed regarding the imports and customs duty payments, and thus restored these issues to the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36657 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BHANGEPATIL PUSHKARAJ RAMESH; DR
• Assessee Lawyers: NISHIT GANDHI; SOME
• Keywords: Opportunity of being heard
• Section: 143(1); 22; 44AD; 69C

Judgement Text

"| आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 5297/Mum/2024 Assessment Year: 2015-16 M/s. Shradha Harshit Saiya 40, 3rd Floor Moreshwar Building Lakhamshi Napoo Road Matunga - 400019 [PAN: AFPPD6268P] Vs Income Tax Officer, Circle- 27(3)(3), Mumbai अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) I.T.A. No. 5327/Mum/2024 Assessment Year: 2015-16 DCIT, 42(3)(1), Mumbai Vs M/s. Shradha Harshit Saiya 40, 3rd Floor Moreshwar Building Lakhamshi Napoo Road Matunga - 400019 [PAN: AFPPD6268P] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Nishit Gandhi – Advocate & Aadnya Bhandari – Advocate, A/Rs Revenue by : Shri Bhangepatil Pushkaraj Ramesh, Sr. D/R सुनवाई की तारीख/Date of Hearing : 22/01/2025 घोषणा की तारीख /Date of Pronouncement: 29/01/2025 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: I.T.A. No. 5297/Mum/2024 & I.T.A. No. 5327/Mum/2024, are cross-appeals by the assessee and the revenue preferred against the order dated 29/08/2024 by NFAC Delhi [hereinafter ‘the ld. CIT(A)’], pertaining to AY 2015-16. I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 2 2. Both these appeals were heard together and are disposed off by this common order for the sake of convenience and brevity. ITA No. 5327/Mum/2024; AY 2015-16 3. Briefly stated the facts of the case are that the assessee filed her return of income on 28/08/2015, declaring total income at Rs.8,77,950/-. The return was processed u/s 143(1) of the Act and subsequently selected for scrutiny assessment and accordingly statutory notices were issued and served upon the assessee. 4. While scrutinising the return of income, the AO noticed that the assessee has done large value of imports amounting to Rs.5,14,06,752/-. The AO found that the assessee has not shown any income from business even though she has imported various items of Rs.5,14,06,752/- under proprietorship concern M/s. Shradha Industries and further found that the assessee has deposited cash of Rs.53,89,000/- for payment of demurrage charge for importing commodities by RR Traders. 4.1. The assesse was asked to furnish the details of imports and the cash deposited in The Greater Bombay Co-operative Bank. On receiving no plausible reply, insofar as the cash deposits were concerned, the AO made addition of the entire cash deposit of Rs. 53,89,000/- u/s 68 of the Act. 4.2. Insofar as the large value of imports of Rs.5,14,06,752/- is concerned, the AO observed that the assessee has not shown any income I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 3 from business though she has imported substantial amount of goods and paid custom duty of Rs.1,45,04,888/-. The assessee was asked to submit details along with invoices, bill of entry, bill of lading and challans of payment of custom duty. The assessee did not furnish any profit and loss account, bills/vouchers of imports and any income derived from these transactions. The assessee explained that she is doing job in CITIUS IT Solution Pvt. Ltd. and her father is looking after the business in her name by virtue of a general power of attorney and imported various items using her IEC code. The AO further observed that the AIR information could not be reconciled with any documentary evidence. The AO was left with no choice but to make the addition of Rs. 6,59,11,640/- being import of Rs.5,14,06,752/- plus custom duty of Rs.1,45,04,888/- u/s 69C of the Act. 5. The assessee challenged the addition before the ld. CIT(A) and reiterated that no import was done and no custom duty was paid though the same has been done using IEC code of the assessee by some unscrupulous brokers. It was brought to the notice of the ld. CIT(A) that a complain has been filed with the police authorities and also with the Commissioner of Customs. The details of such complaints were provided. In order to verify this contention of the assessee, the ld. CIT(A) called for the comments of the AO several times on 19/10/2022, 05/02/2024, 14/05/2024 and 10/06/2024 and on receiving no plausible reply/comments from the AO and simply quoting that no such entries I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 4 were found in the bank account of the assessee, the ld. CIT(A) deleted the addition of Rs.6,59,11,640/-. 5.1. Insofar as the addition on account of cash deposit is concerned, the same was upheld by the ld. CIT(A) for which the assessee is in appeal. 6. Before us, the ld. Counsel for the assessee reiterated what has been stated before the ld. CIT(A). 6.1. The ld. D/R strongly contended that the police complaints and the complaint with the Customs Authorities have been furnished for the first time before the ld. CIT(A) and the ld. CIT(A) deleted the addition merely on the strength of the submissions made by the assessee without any verification. 7. We have given a thoughtful consideration to the orders of the authorities below. It is true that letters of complaints were furnished for the first time before the ld. CIT(A) but it is equally true that the ld. CIT(A) called for comments of the ld. AO on four occasions and on not receiving the reply, the ld. CIT(A) went ahead in deleting the impugned addition. We are of the considered view that there was no pressure of the appeal getting time barred by limitation before the ld. CIT(A). Therefore, the ld. CIT(A) ought to have waited for the report of the AO. The ld. CIT(A) could himself have verified the veracity of the documents filed by the assessee as his powers are co-terminus to that of the AO. In our I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 5 considered opinion, this issue needs verification by the AO. Therefore, in the interest of justice, we restore this issue to the file of the AO. The assessee is directed to justify her claim that her IEC code was exercised by some unscrupulous brokers and demonstrate that she has never imported the impugned goods nor paid the impugned customs duty. The AO is also directed to verify from the Custom Department as to who has actually made the payment of the customs duty and from which bank account the payments were made and after examining the same, decide the issue afresh after affording a reasonable and proper opportunity of being heard to the assessee. 8. Coming to the appeal of the assessee in ITA No. 5297/Mum/2024; AY 2015-16, the ld. Counsel drew our attention to the profit and loss account exhibited at page 22 of the paper book and pointed out that the assessee had sales of Rs.56.59 Lakhs. It is the say of the ld. Counsel that such sale should have been assessed u/s 44AD of the Act. 8% being the net profit and the same treatment should be given to the cash deposit found in The Greater Bombay Co-operative Bank. 8.1. Per contra, the ld. D/R stated that the assessee in her return of income has nowhere mentioned any income from business. Therefore, this claim of presumptive tax of 8% is an afterthought as the profit and loss account was never submitted before the AO and the AO has rightly made the addition of Rs.53.89 Lakhs and rightly confirmed by the ld. CIT(A). I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 6 9. We have carefully perused the orders of the authorities below. A perusal of the computation of income shows that the assessee has not show any profits or gains from business thought the profit and loss account placed at page 22 shows the business of the assessee which was never furnished before the AO. Therefore, we restore this issue to the file of the AO. The assessee is directed to justify its sales and the P&L account furnished before us and demonstrate that the impugned cash deposit of Rs.53.89 Lakhs is out of the sales recorded in her books of account which is subjected to presumptive tax u/s 44AD of the Act. The AO is directed to verify such details and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. 10. In the result, the appeals of the assessee and the revenue are allowed for statistical purposes. Order pronounced in the Court on 29th January, 2025 at Mumbai. Sd/- Sd/- (SAKTIJIT DEY) (NARENDRA KUMAR BILLAIYA) VICE-PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 29/01/2025 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 5297/Mum/2024 I.T.A. No. 5327/Mum/2024 7 आदेश की \u0015ितिलिप अ\u001aेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001c / The Appellant 2. \u0015\u001dथ\u001c / The Respondent 3. संबंिधत आयकर आयु\" / Concerned Pr. CIT 4. आयकर आयु\" ) अपील ( / The CIT(A)- 5. िवभागीय \u0015ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड& फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "