DUSHYANT SHANTILAL PATEL,AHMEDABAD V. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), AHMEDABAD

ITA 296/AHD/2024

AI Insights

The case involves Dushyant Shantilal Patel, the proprietor of M/s. Aavakar Travels, who appealed against the orders of the Commissioner of Income Tax (Appeals)-11, Ahmedabad, which confirmed the assessment order passed by the Assessing Officer under various sections of the Income Tax Act, 1961 for the assessment year 2017-18. The Assessing Officer had made several additions to the assessee's income, treating certain loans and investments as unexplained, and sales as suppressed, based on a survey and subsequent scrutiny of the assessee's financial records. The CIT(A) dismissed the appeal for non-prosecution and upheld the additions on merits. The Tribunal, considering the assessee's medical and procedural hardships, decided to remand the case for a fresh assessment, imposing a cost for the restoration of proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315721 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Other Referred Cases: CIT v. B.N. Bhattacharjee, Estate of Late Tukojirao Holkar v. CWT, Jamunadas v. CST, CIT v. Durga Prasad More, Sumati Dayal v. CIT, CIT v. P. Mohanakala
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TRUPTI PATEL
• Assessee Lawyers: UMEDSINGH BHATI
• Keywords: Set aside; Business income; Reassessment proceedings; Unexplained cash credit; Unexplained investment
• Section: 143(3); 142(1); 68; 69; 133A

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘D’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.296/Ahd/2024 Asstt.Year : 2017-18 Dushyant Shantilal Patel B-44, Saptak Bungalows Science City Road Sola Ahmedabad 380 060. The DCIT, Cent.Cir.1(1) Ahmedabad. (Applicant) (Responent) Assessee by : Shri Umedsingh Bhati, AR and Shri Abhimanyu Singh Bhati, AR Revenue by : Smt.Trupti Patel, Sr.DR सुनवाई क तारीख/Date of Hearing : 08/05/2025 घोषणा क तारीख /Date of Pronouncement: 15/05/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 18.12.2023 passed by the learned Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as “CIT(A)”], confirming the assessment order passed by the Assessing Officer (AO) u/s. 143(3) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] on 17.12.2019 for the A.Y. 2017–18. Facts of the Case 2. The assessee, a proprietor of M/s. Aavakar Travels, had filed his return of income on 25.07.2017 declaring total income of ITA No.296/Ahd/2024 2 Rs.1,76,780/-. The case was selected for scrutiny under CASS based on the information gathered during a survey conducted under section 133A of the Act on 29.11.2016 at the business premises of the assessee. A notice under section 143(2) was issued on 27.09.2018, followed by notices under section 142(1) dated 19.09.2019, 26.11.2019 and 06.12.2019 along with detailed questionnaires. Though the assessee submitted a partial reply on 19.10.2019, he failed to respond to subsequent notices, and no explanation or evidence was furnished for the issues raised. During the course of assessment, the Assessing Officer noticed that the assessee had shown unsecured loans of Rs.42,69,500/- from various individuals including relatives and friends. The assessee was required to establish the identity, creditworthiness and genuineness of the lenders by submitting PAN, bank statements and confirmation letters. However, no such details were submitted. In the absence of satisfactory explanation, the AO treated the entire amount of Rs.42,69,500/- as unexplained cash credit under section 68 of the Act. Further, the AO observed that the assessee had advanced a sum of Rs.64,26,500/- to one Shri Mahesh C. Shah, which the assessee claimed was for property dealings and medical expenses. Despite repeated opportunities, the assessee failed to produce any evidence such as mode of payment, loan agreements or confirmation from the said person. The AO, therefore, treated the amount as unexplained investment under section 69 of the Act. 3. The AO also examined the impounded documents and books of accounts obtained during the survey. It was noticed that while the total sales as per the books were shown at Rs.5,53,053/-, the actual monthly sales recorded in the seized material aggregated to Rs.19,69,592/- for a period of 9 months. The difference of ITA No.296/Ahd/2024 3 Rs.14,16,539/- was treated as suppression of sales. The assessee did not offer any reconciliation or evidence to explain the discrepancy. Consequently, the AO added Rs.14,16,539/- to the total income as undisclosed turnover. Further, the AO observed that the assessee had deposited cash amounting to Rs.8,34,500/- in his bank account during the demonetization period between 09.11.2016 to 30.12.2016. The assessee was called upon to explain the source of these cash deposits and to substantiate it with documentary evidence. Despite repeated notices and show cause opportunities, the assessee did not furnish any explanation. In view of the absence of any credible source, the AO treated the said cash deposit as unexplained money under section 69A of the Act. 4. The AO initiated penalty proceedings under section 270A for under-reporting and misreporting of income and under section 271AAC on the additions made under sections 68, 69, and 69A. Interest under sections 234A, 234B, 234C and 234D was also levied. Accordingly, the assessed income was computed at Rs.1,31,23,819/- which was rounded off to Rs.1,31,23,820/-. The assessment was completed ex parte as the assessee failed to furnish complete details or comply with the notices. 5. The assessee preferred appeal before CIT(A), who dismissed the appeal of the assessee ex parte after issuing multiple notices (as tabulated in paragraph 3 of the appellate order). The CIT(A) noted that despite lapse of more than 3 years and 11 months since filing of appeal, the assessee had not made any effective representation. Relying on the judgments in CIT v. B.N. Bhattacharjee [(1979) 10 CTR 354 (SC)], Estate of Late Tukojirao Holkar v. CWT [(1979) 223 ITR 480 (MP)] and Jamunadas v. CST [1993 38 MPLJ 462], the CIT(A) ITA No.296/Ahd/2024 4 dismissed the appeal for non-prosecution. Without prejudice, the learned CIT(A) also upheld the additions on merits by relying on judicial precedents such as CIT v. Durga Prasad More [(1971) 82 ITR 540 (SC)], Sumati Dayal v. CIT [(1995) 80 Taxman 89/214 ITR 801 (SC)], and CIT v. P. Mohanakala [(2007) 291 ITR 278 (SC)]. 6. Aggrieved by the order of CIT(A), the assessee raised revised and additional grounds of appeal as detailed below: 1.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in dismissing the appeal of the appellant in limine. 2.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in passing an ex-parte order without considering the facts on record as well as facts stated in the \"Statement of facts\" incorporated in Form No.35 of the Appeal Memo. 3.0 The order passed by the learned Commissioner of Income-tax (Appeals) is not in accordance with the provisions of section 250 of the Income Tax Act, 1961, as he has failed to consider several crucial facts mentioned in the order passed by the learned Assessing Officer. 4.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming additions of Rs.42,69,500/- u/s 68 of the Income Tax Act, 1961. 5.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming additions of Rs.64,26,500/-u/s 69 of the Income Tax Act, 1961, without allowing set off 6.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming addition of Rs.14,16,539/- in respect of suppression of sales. 7.0 The learned Commissioner of Income-tax (Appeals) erred in law and on facts in confirming addition of Rs.8,34,500/- u/s 69A of the Income Tax Act, 1961. 8.0 The appellant may be allowed to add, amend, alter or raise additional grounds of appeal. 7. During the course of hearing before us, the learned AR submitted that the impugned additions have been sustained ex parte without appreciating the factual difficulties faced by the assessee. In ITA No.296/Ahd/2024 5 support of such contentions, two affidavits dated 13.03.2025 and 03.04.2025 were placed on record, wherein the assessee detailed his medical ailments including cardiac complications, spinal injuries from a car accident in 2017, partial paralysis in 2019, and COVID- related hospitalization in 2021. It was further submitted that the failure to file submissions before the lower authorities was due to ineffective representation by erstwhile authorised representatives and loss of documents during business closure. The AR submitted that the assessee has now collected relevant records and filed a paper book listing documents such as bank statements, medical records, GST cancellation certificate, adjournment letters, and correspondence with the AO and CIT(A). However, no fresh documentary evidence was actually filed before us. The AR prayed for one last opportunity to submit all materials before the AO and requested restoration of the matter to the file of AO for de novo adjudication on merits. 8. The learned Departmental Representative (DR) did not raise any objection to the request for remand. 9. We have considered the rival submissions and perused the materials available on record. We find that the appeal has been dismissed by the CIT(A) primarily for want of prosecution. Though the assessee claims to have faced genuine medical and procedural hardships, it is admitted that even before us, no additional documentary evidence has been produced to substantiate the grounds of appeal. However, in the interest of justice, we deem it fit to grant one final opportunity to the assessee to present his case before the Assessing Officer. 10. At the same time, it is noted that the assessee has failed to diligently pursue the appellate proceedings before the CIT(A) as well ITA No.296/Ahd/2024 6 as failed to file relevant evidence before this Tribunal. To discourage such conduct, we direct that the restoration of proceedings shall be subject to payment of cost of Rs.10,000/- by the assessee to the credit of the Government exchequer as a measure of deterrence. 11. The impugned assessment order dated 17.12.2019 and appellate order dated 18.12.2023 are hereby set aside. The entire matter is restored to the file of the Assessing Officer with a direction to examine the issues afresh after giving due opportunity to the assessee to file necessary documentary evidence in support of his claims. The assessee shall furnish the evidence promptly and cooperate in the proceedings. The restoration is subject to the payment of cost of Rs.10,000/- by the assessee before commencement of the reassessment proceedings. 12. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 15th May, 2025 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 15/05/2025 "