Alok Kumar Sahu, Lucknow V. Income Tax Officer-4(1), Lucknow

ITA 119/LKW/2023

AI Insights

The case involves an appeal by the assessee, Alok Kumar Sahu, against the order of the National Faceless Appeal Centre (NFAC), which had dismissed his appeal in limine. The primary contention was regarding the arbitrary addition of income and unexplained cash credits during the demonetization period. The Assessing Officer had made significant additions to the assessee's income based on non-compliance with notices and unexplained cash deposits. The Tribunal found merit in the assessee's arguments, particularly regarding the nature of his business and the deposits made during demonetization, and thus admitted additional evidence to substantiate the assessee's claims.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123076 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-08-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Additional evidence; Condonation of delay
• Section: 68; 144; 80C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH “SMC”, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA No.119/LKW/2023 A.Ys. 2017-18 Income Tax Office –4(1), Aayakar Bhavan, 5, Ashok Marg, Lucknow, U.P. 226001 Vs. Alok Kumar Sahu, 380/100/58, Noor Bari Saadatganj, Lucknow 226003 (U.P.) PAN BDJPS 6530E (Respondent) (Appellant) Shri Ashwani Jaiswal, CA Appellant by Shri Sanjeev Krishna Sharma, Addl. CIT(DR) Respondent by 22/08/2023 Date of hearing 22/08/2023 Date of pronouncement O R D E R This appeal is preferred by the assessee against the order dated 10.01.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi for Assessment Year (AY) 2017-18. 2.0 The brief facts of the case are that the return for the captioned year was filed declaring income at Rs.3,72,760/-. Subsequently, the assessee’s case was selected for scrutiny under the CASS guidelines and the statutory notices were issued, requiring the assessee to submit various details and evidences from time to time. However, the assessee 2 ITA No. 119/Lkw/2023 did not comply with any of the notices. Therefore, the Assessing Officer proceeded to collect requisite information from HDFC Bank and Andhra Bank (both Rajajipuram Branch, Lucknow). Thereafter, the Assessing Officer proceeded to finalize the assessment in terms of Section 144 of the Income Tax Act, 1961 (hereinafter called the ‘Act’). The Assessing Officer observed that the gross receipts were shown at Rs.7,82,480/- and the assessee had claimed expenditure at Rs.4,52,140/- and the net profit had been shown at Rs.3,30,340/-. The nature of business as per the ITR was that of general Commission agent. The Assessing Officer further noted that during the demonetization period, the assessee had deposited cash in the bank accounts in old specified bank notes to the tune of Rs.3,44,500/-. Since the assessee was not responding to any of the queries raised by the Assessing Officer, an amount of Rs.3,44,500/- was added to the income of the assessee as unexplained cash credit in terms of Section 68 of the Act. It was further noted by the Assessing Officer that during the year the assessee had made total deposits of Rs.1,35,90,117/- in the two bank accounts being maintained by the assessee and again in absence of any compliance on the part of the assessee, the Assessing Officer estimated the turnover of the assessee at Rs.1,35,34,529/- and also estimated the net profit by applying the rate 3 ITA No. 119/Lkw/2023 of 8%, which worked out to Rs.10,59,649/. After giving the benefit of Rs.3,30,340/- already declared in the return of income, the differential amount of Rs.7,27,309/- was also added to the income of the assessee and the assessment was completed at Rs.14,44,570/-. 3.0 Aggrieved, the assessee approached the ld. First Appellate Authority. However, there was no proper compliance on the part of the assessee before the ld. First Appellate Authority and as per the impugned order, the assessee was afforded as many as five opportunities which were not availed by the assessee. Therefore, the NFAC proceeded to dismiss the assessee’s appeal in limine. 4.0 Now, the assessee has approached this Tribunal, challenging the dismissal of his appeal by the NFAC by raising the following grounds of appeal: “1. Arbitrary addition - The assessee has already shown profit and gains from business other than speculative business and specified business is of Rs. 3,30,340/- in ITR, but in assessing total income AO made an addition of Rs.7,27,309/- (Rs. 10,59,649 - Rs.3,30,340 to the total income of the assessee. 2. See 68- Cash Deposited during demonetization period. During demonetization period cash deposited Rs. 3,44,500.00 was from opening cash in hand as on 9th November 2016 of assessee, whereas as per order 143(3) is considered as unexplained money. 4 ITA No. 119/Lkw/2023 3. Assessee claimed deduction u/s 80C Rs. 13,645.00, was premium paid against LIC which is being arbitrary disallowed 4. That the appellant seeks permission to modify and /or add any other ground or grounds of appeal as the circumstances of the case might require or justify.” 5.0 At the outset, the ld. Authorized Representative submitted that there was a delay of 31 days in filing of the capitioned appeal before the Tribunal. It was submitted by the ld. Authorized Representative that the delay was caused due to the fact that earlier the assessee had deposited the appeal fee under a wrong head and when the appeal was refused to be received by the Registry of the Tribunal, the defect came into light and it was only after that that the assessee took steps to deposit the appeal fee under the correct head. It was submitted that, thus, there was no intentional delay on the part of the assessee and it was prayed that the delay be condoned. 6.0 Per contra, the ld. Senior D.R. had no objection to delay being condoned. 7.0 I have heard both the parties on the issue of condonation of the delay. It is seen that the application for condonation of delay submitted by the assessee is duly supported by an affidavit and in my considered 5 ITA No. 119/Lkw/2023 opinion, the bona fide of the assessee on this issue, is beyond doubt. Therefore, I condone the delay and admit the appeal for the purpose of regular hearing. 8.0 The ld. Authorized Representative submitted that the assessee is a facilitator between the mobile operators and the consumers and during the year, the turnover was only Rs.7,82,480/- and after deducting salary paid and other expenses, the return was filed declaring taxable income at Rs.3,30,340/-. It was submitted that the assessee was not aware about the e-proceedings and the fact of the assessee’s case having been selected for scrutiny under the CASS guidelines and, therefore, there was no occasion for the assessee to make compliance during the assessment proceedings. It was further submitted that the assessee is only a mobile charge facilitator wherein he loads e-money in the accounts of small operators who recharge the consumers’ mobile and in return the assessee only gets a small percentage as commission. It was submitted that the turnover as taken from the bank account was not actually the turnover but the amounts received from the operators which the assessee returned in the form of e-money for the purpose of recharging for the consumers by these operators. 6 ITA No. 119/Lkw/2023 8.1. The ld. Authorized Representative also drew my attention to two paper books filed in support of the case and submitted that the assessee seeks to file additional evidence in terms of Rule 18 of the ITAT Rules, 1963. It was prayed that these additional evidences go to the very root of the matter and contained documents like bank statements from HDFC Bank, Andhra Bank and Bank of Baroda as well as copies of receipts of Life Insurance deposited by the assessee. It was prayed that these evidences be admitted for the purpose of ensuring that the assessee is able to suitably represent his case. 9.0 Per contra, the ld. Senior D.R. had no objection to the additional evidences being admitted but submitted that since the lower authorities did not have the benefit of going through these additional evidences now being filed, it would be in fitness of things if the lower authorities were given an opportunity to verify the same. 10.0 I have heard both the parties on the issue of admitting of additional evidence. I agree with the contention of the ld. Authorized Representative that these additional evidences go to the very root of the matter and, therefore, in the interest of substantial justice I admit these additional evidences. I also agree with the submission of the ld. Senior 7 ITA No. 119/Lkw/2023 D.R. that since the lower authorities did not have the benefit of verifying and examining these evidences, it will be in fitness of things that they are given an opportunity to examine and verify the same. Accordingly, on an overall factual matrix of case, while admitting the additional evidences filed by the assessee, I restore this appeal to the Office of the Assessing Officer with the direction to make a de novo assessment after duly considering the evidences which have been filed by the assessee and also after providing a proper opportunity to the assessee to present his case. Apart from examining the additional evidences which have been admitted by me, the Assessing Officer shall be at liberty to call for various other evidences also if he so deems fit. Further, the assessee will also be at liberty to file any other documents or evidence in support of his claim before the Assessing Officer. 11.0 In the result, appeal filed by the assessee stands allowed for statistical purposes. . (Order pronounced in the open court on 22/08/2023) Sd/- (SUDHANSHU SRIVASTAVA) JUDICIAL MEMBER Aks – Dtd. 22/08/2023 8 ITA No. 119/Lkw/2023 Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) Departmental Representative (5) Guard File By order Assistant Registrar