INCOME TAX OFFICER, MAHASAMUND V. LOCHAN PRADHAN, MAHASAMUND

ITA 393/RPR/2024

AI Insights

The case involves an appeal by the Income Tax Officer, Mahasamund against the order of the Commissioner of Income Tax (Appeals), which had favored the assessee, Lochan Pradhan. The primary contention revolves around the additions made by the ITO under sections 69A, 69C, and 56 of the Income Tax Act, 1961, which were later deleted by the CIT(A). The revenue challenged the CIT(A)'s decision, arguing that the additions were justified based on the non-compliance of the assessee and the incorrect application of legal provisions by the CIT(A). The tribunal found that the transactions related to cash deposits and withdrawals, as well as income from contractual receipts, were not adequately examined and thus restored the matter to the ITO for a thorough investigation.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 299021 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2024
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 23-08-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Set aside; Additional evidence; Unexplained expenditure; Principle of natural justice; TDS
• Section: 147; 144; 69C; 69A; 194C

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM (आयकर अपील सं. / ITA No: 393/RPR/2024) (िनधा[रण वष[ Assessment Year: 2018) Income Tax Officer, Mahasamund v s Lochan Pradhan, 8, Beldih, Bundeli, Tendukona, Mahasamund, C.G. 493449 PAN: DAVPP8314N (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : None राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 21.10.2024 घोषणा की तारीख/Date of Pronouncement : 24.10.2024 आदेश / O R D E R Per Arun Khodpia, AM: The Captioned appeal is filed by the department against the order of Commissioner of Income Tax (Appeal), NFAC, Delhi [for short, “Ld. CIT(A)”], u/s 250 of the Income Tax Act, 1961 (for short, “The Act”), for the Assessment Year (AY) 2018-19, dated 04.07.2024. Resulted, from the order passed by the Income Tax Officer, Mahasamund (for short, “The Ld. AO”), U/s 147 r.w.s. 144 r.w.s. 144B of the Income Tax Act, dated 24.03.2023. 2. The grounds of appeal raised by the assessee are culled out as under: 2 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund 1. \"Whether on points of law and on facts & circumstances of the case, the ld. CIT(A) was justified in deleting the addition of Rs. 88,600/-, Rs. 1,40,47,000 /- and Rs. 1,10,000/- made by the AO u/s 69A, 69C and 56 of the Act respectively?\" 2. “Whether on points of law and on facts & circumstances of the case, the Id. CIT(A) was justified in deleting the additions by holding that AO invoked incorrect provision like u/s 69A, 69C and 56 of the I. T. Act and added Rs. 88,600/-, Rs. 1,40,47,000/- and Rs. 1,10,000/-. respectively without carrying out any verification contrary to the fact on record that necessary verification was made by the AO before issuing notice u/s 148 of the I. T. Act and also ignoring the facts on record that additions were made under the correct provision of the Act in absence of any documentary evidences produced by the assessee in respect of cash deposit and withdrawal from the bank account and other receipts?” 3. \"Whether on points of law and on facts & circumstances of the case, the ld. CIT(A) was justified in allowing the appeal of the assessee stating that the AO has accepted the contention of the appellant at the stage of remand by ignoring the facts that the AO has categorically submitted his first remand report not to admit additional evidences as claimed by the assessee by pointing out there in that documents produced by the assessee were not verifiable and even in subsequent remand which covered only the reply received from the Bank and not the opinion of the AO regarding its acceptability ?” 4. The order of the Id. CIT(A) is erroneous both in law and on facts. 5. Any other ground that may be adduced at the time of hearing. 3. The present case is filed at the instance of revenue, which was fixed for hearing on 01.10.2024, wherein the respondent assessee has filed the application for adjournment stating that his counsel, CA Sheetal Khandelwal is out of town for next 3 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund 10 days, therefore, the matter was requested to adjourned for 15 days’ time, accepting the request of the assessee the next date of hearing was fixed for 21.10.2024, after confirmation by the assessee in the open court. However, on 21.10.2024, neither the assessee or the assessee’s counsel have appeared before us nor any adjournment application was furnished seeking further time in the matter, which shows that the assessee has no further explanation / submission to offer. As the facts of the case are entirely discernible from the material on record, therefore, the matter is taken up for hearing. 4. Brief facts of the case are that the assessee in present case is an individual, who had not filed his return income for the AY 2018-19. Certain information was available on record of the department about the assessee, that TDS u/s 194C was deducted on contractual receipts of Rs. 1,10,000/-. It is also found that the assessee had deposited cash amounting to Rs. 88,600/- in his current account and have withdrawn an amount of Rs. 1,40,47,000/- and during the relevant assessment year. Since the assessee has not filed his ROI, hence the case of assessee based on aforesaid information selected for reopening assessment u/s 147 of the Act. During the reopening assessment proceedings, the assessee was afforded with various opportunities but the assessee remains non-compliant towards all the statutory notices, therefore, a show cause notice u/s 144 was issued to the assessee to complete the assessment on best judgment basis, however the assessee again 4 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund remain absent. Ld. AO, therefore, proceeded with the best judgment assessment in the manner specified u/s 144 of the Act and have made the following additions: Return of Income Nil Cash deposits added as unexplained money under section 69A of the Act Rs. 88,600/- Cash withdrawal added as unexplained expenditure under section 69C of the Act Rs. 1,40,47,000/- Commission income added u/s 56 under the head income from other sources Rs. 1,10,000/- ASSESSED INCOME Rs. 1,42,45,600/- 5. Aggrieved with the aforesaid additions in the order of Ld. AO, assessee preferred an appeal before the Ld. CIT(A), wherein certain additional evidence u/r 46A are submitted by the assessee to which remand report was called for from the Ld. AO on two occasions. 6. Finaly Ld. CIT(A) have accepted the contentions of the assessee and have decided the issue in favour of the assessee by allowing the grounds of appeal of assessee, with the following observations: 6. I have perused the order passed by the AO, the written submissions filed by the appellant and the Remand Report. It is evident from the assessment order that the AO invoked incorrect provisions like 69A, 69C & section 5 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund 56 of the IT Act and added Rs. 88,600/-, Rs. 1,40,47,000/- & Rs. 1,10,000/- respectively without carrying out any verification. It is the case of reopened assessment. It is mandatory on the part of the AO to carry out such basic verification on the information received and then he has to proceed to issue notice u/s 148 of the IT ACT. 7. In the present case, it is seen from the assessment order that no such verification has been carried out by the AO before making such high pitch additions. AO should not have added these sums by invoking wrong provisions of the IT Act. Amount withdrawn from the Bank cannot be treated as unexplained expenditure u/s 69C of the IT Act. Further, amount received u/s 194C of the IT Act cannot be considered as income from other source. 8. The amount deposited into the bank account and cash withdrawn from the bank account were clearly explained by the appellant. The appellant submitted all the necessary evidences in support of his contention. When it was forwarded to the AO as principle of natural justice, the AO in the remand report requested not to admit such evidences. It is not acceptable and hence he was asked to carry out necessary enquiries at least at this juncture. In the second remand report the AO has accepted the contention of the appellant. Accordingly, the AO is directed to delete the additions MADE IN THE assessment order. 9. As a result, the appeal is allowed. 7. Aggrieved with the aforesaid order of Ld. CIT(A), the revenue has filed the present appeal assailing the issues as per grounds of appeal extracted (supra). 8. At the outset, it was the submission by Ld. Sr. DR representing the revenue, that though the assessee had furnished certain information and facts before the Ld. CIT(A), however, the amount of cash deposit in the bank of assessee for Rs. 88,600/- cash withdrawal of Rs. 1,40,47,000/- are remain unexamined. It was the submission 6 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund that the Ld. Appellate Authority have forwarded all the additional evidence to the Ld. AO for remand report, to which Ld. AO had categorically objected to the admission of such additional evidence. Further in second remand report, Ld. AO mentioned that as per certificate issued by the bank, the Over-Draft Account No. 085513031323 was used by the assessee for customer-based transaction. All such comments of the Ld. AO are only for apprising the information received from the bank but there was no confirmation by the Ld. AO to the genuineness of the transactions undertaken by the assessee in withdrawal and deposits of the huge cash in his account, whereas such report by the Ld. AO was considered by the Ld. CIT(A) as acceptance to the contentions of the appellant. Ld. Sr. DR further submitted that the huge transactions of cash withdrawal amounting to Rs. 1,40,47,000/- and cash deposits of Rs. 88,600/-, therefore, remain unverified. Under such facts and circumstances, the orders of Ld. CIT(A) in summarily accepting the contentions of the assessee were not justified and liable to be set aside. 9. We have considered the rival submission, perused the material available on record and including the orders of revenue authorities and assessee’s submissions before the Ld. CIT(A). 10. On perusal of the aforesaid material on record, admittedly there were transaction of cash deposits and cash withdrawals from the account of assessee who 7 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund as per facts on record, was the Banking correspondent of the Dena Bank which was later merged with Bank of Baroda. A certificate dated 24.04.2023 is issued by the Bank of Baroda, Pithora Branch that the transactions during the FY 2017-18 are genuine or customer-based transactions. Ld. CIT(A) has decided the issue in favour of the assessee on the basis of such certificate from the Bank however, the nature of transactions pertaining to cash deposits, the contractual income earned by the assessee and the huge cash withdrawal of Rs. 1,40,47,000/- are not examined by either of the revenue authorities. Even before us there was no explanation furnished by the assessee qua the nature of transaction, copy of relevant bank statement and the modus operandi of the assessee’s work as a banking correspondent. Under such facts and circumstances, in the interest of justice, we find it appropriate to restore this matter back to the file of Ld. AO for de novo adjudication, so as to verify the nature of transactions and to arrive at a logical and justifiable conclusion about assessable income of the assessee. Needless to say, the assessee shall be provided with reasonable opportunities of being heard and to furnish necessary documents, explanations and evidence in support of their contentions. However, if the assessee remains non-compliant in set aside de novo assessment proceedings, Ld. AO shall be at liberty to complete the assessment in accordance with the provisions of law. 11. In result, appeal of the department is partly allowed for statistical purposes in terms of our aforesaid observations. 8 ITA No. 393/RPR/2024 Income Tax Officer vs. Lochan Pradhan, Mahasamund Order pronounced in the open court on 24/10/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 24/10/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : // स×याǒपत Ĥित True copy // आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Income Tax Officer, Mahasamund 2. ŮȑथŎ / The Respondent- Lochan Pradhan 3. आयकर आयुƅ(अपील) / The CIT(A), 4. The Pr. CIT, Raipur (C.G.) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 6. गाडŊ फाईल / Guard file. "