Shree Abhishek Bipinbhai Naik, Surat V. Income Tax Officer, Ward 1(2)(1), Surat

ITA 12/SRT/2023

AI Insights

The case revolves around the appeal by Abhishek Bipinbhai Naik against the order of the CIT(A) which confirmed the addition of Rs. 13,74,000 to his income for the Assessment Year 2017-18. This addition was initially made by the Assessing Officer on the grounds that these were unexplained cash deposits made during the demonetization period. The assessee argued that these deposits were part of the business transactions of his proprietorship, Shivbhole Services, and involved receipts from companies like Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. The Tribunal found that the lower authorities had not adequately considered the business nature of these transactions and the supporting evidence provided by the assessee, leading to the decision to allow the appeal and delete the additions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301512 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 02-01-2023
• Other Referred Cases: New Pooja Jewellers Vs ITO, Gur Prasad Hari Das Vs CIT, DCIT Vs M/s Karthik Construction Co., Smt. Teena Bethala Vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS
• Section: 131; 69A; 194J

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 12/Srt/2023 (Assessment Year 2017-18) (Virtual hearing) Abhishek Bipinbhai Naik (Prop. of M/s Shivbhole Services), House No. 1, Desai Faliyu, at PO Vaktana, Tal, Choryasi Via Sachin, Surat-394230. PAN No. AGPPN 5994 H Vs. I.T.O., Ward 1(2)(1), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Deven Kapadia, CA and Ms. Resha Chaliawala, A.R. Department represented by Shri Vinod Kumar, Sr. DR Date of Institution of Appeal 03/01/2023 Date of hearing 28/03/2023 Date of pronouncement 31/05/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)) dated 11/03/2023 for the Assessment Year (AY) 2017-18. The assessee has raised following grounds of appeal: “1. The learned CIT (A) has erred both in law and on the facts in confirming the action of the Ld. AO by making high pitch addition of Rs. 13,74,000/- on account of cash deposit made during the demonetization period (08.11.2016 to 30.12.2016) and thereby raised demand of Rs. 14,12,441/- without considering the submission made by the appellant and rejecting the explanation and requisite documents already submitted by the appellant during the course of assessment proceedings. ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 2 2. The learned CIT(A) has erred both in law and on the facts in confirming the addition of Rs. 13,74,000/- u/s.69A r.w.s.115 BBE of the Act, on account of alleged Unexplained Money ignoring the business of the appellant and/or without appreciating the fact that the same is the part of gross receipts from business and the net income on such receipts have already been offered to tax as income in the ROI filed for the captioned year. 3. The learned CIT (A) has erred both in law and on the facts in confirming the impugned addition to the total income of the appellant by wrongly invoking section 69A r.w.s. 115BBE of the Act. 4. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring submission/s, explanations and information submitted by the appellant which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 5. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s "234/234B/234C" of the Act. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in initiating penalty u/s 271AAC of the Act. The assessee craves leave to add, amend, modify alter or delete modify or change all of any of the grounds of appeal at the time of or before the hearing of appeal.” 2. Perusal of record shows that the impugned order was passed by the ld. CIT(A) on 11/03/2022, however, the present appeal is filed only on 03/01/2023, there is delay of 230 days in filing of the appeal. The assessee has filed an application for condonation of delay. The learned Authorised Representative (ld. AR) of the assessee submits that the assessee has engaged Abhishek Bipinbhai Naik CA as consultant to represent him before the First Appellate Authority and to take necessary action. The said representative went to USA for his personal visit without intimating the assessee about the result of first appellate authority order, The said A.R. of assessee came back to India in the month of November ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 3 2022 and intimated the assessee about passing the order against the assessee by the ld. CIT(A). On coming to know, the assessee immediately took step for filing appeal before the Tribunal. The ld. AR of the assessee submits that the delay in filing appeal was neither intentional nor deliberate for the reasons that the representative who was engaged by the assessee has gone to USA and informed the assessee only in the month of November 2022. The ld. AR of the assessee submits that the assessee has good case on merit and is likely to succeed if one more opportunity is provided to contest the appeal on merit and on the other hand, the revenue will not suffer any prejudice if the appeal of assessee is decided on merit. 3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submits that the assessee has not shown reasonable and plausible explanation, therefore, delay in filing of appeal may not be condoned. 4. I have considered the submissions of both the parties and find that there is no intentional and deliberate delay on the part of assessee rather the assessee has engaged Abhishek Bipinbhai Naik CA to conduct his case before the First Appellate Authority, who has not informed the assessee in time. I find that the assessee is not going to be benefited in filing appeal belatedly, therefore, considering the overall facts and circumstances of ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 4 the case, the delay in filing appeal is condoned. Now adverting to the merit of the case. 5. Brief facts of the case are that the assessee is an individual, filed his return of income for A.Y. 2017-18 on 08/08/2017 declaring income of Rs. 2,37,920/- which consists of income from business of Rs. 1,78,673/- and income from other sources of Rs. 59,249/-. The assessee filed revised return on 24/02/2018 declaring same income. The return was again revised on 01/08/2018 declaring income of Rs. 2,91,130/- by showing income from other sources. The case of assessee was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee has made cash deposit in his bank accounts during demonetization period aggregating of Rs. 13,74,000/-. The Assessing Officer issued show cause notice to explain the source of cash deposit with supporting evidence. The Assessing Officer recorded that the assessee has not furnished any reply/document/explanation or information to the said show cause notice. The Assessing Officer in absence of any explanation added the entire amount as unexplained and brought the same to tax under Section 115BBE of the Income Tax Act, 1961 (in short, the Act). 6. On appeal before the ld. CIT(A), the assessee filed detailed written submission. Submission of assessee is recorded in para 4 of order of ld. CIT(A). In the submission, the assessee submitted that the Assessing ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 5 Officer misinterpreted the business of assessee and added Rs. 13,74,000/- on account of depositing in bank. The assessee received amount/cash for and on behalf of Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. The assessee is carrying business in the name of proprietorship concern ‘Shivbhole Services’. The assessee is distributor of Interactive Financial & Trading Services Pvt. Ltd and agreement was made with them on 24/09/2014. Copy of certificate issued by them was filed. The assessee further stated that he used to sell coupons and recharge vouchers of Interactive Financial & Trading Services Pvt. Ltd. and sale proceed were deposited in the bank account which was transferred to these companies on daily basis. The amount was transferred on the same date which is evident from the bank statement. The assessee furnished copy of bank statement. The assessee has offered commission income from such company. The assessee furnished return of income. The assessee further stated that TDS was deducted under Section 194J of the Act and the copy of such TDS were furnished. The Assessing Officer accepted that TDS deducted under Section 194H of Rs. 1,78,673/-, thus the Assessing Officer was aware about the business activities of assessee. No notice or summon under Section 131 or 136 of the were issued for calling information from Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. On the applicability of Section 69A of the Act, the assessee ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 6 submitted that the Assessing Officer made addition under Section 69A in respect of cash deposit during demonetization period. Section 69A of the Act is not applicable in case of assessee as cash collected by assessee during the year and particularly during demonetization period was self- explanatory and does not require any further clarification because necessary evidence is like bank statement, return of income, 26AS statement were in possession of Assessing Officer. All such evidences were ignored. The assessee reiterated that the bank deposits were immediately transferred to Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. through RTGS/NEFT, so the assessee collecting cash and remitting to both the companies. 7. The ld. CIT(A) after considering the submission of assessee and the assessment order, held that during the assessment, the assessee has not complied the notices nor responded. Cash was deposited during demonetization but not supporting evidence was produced about the business of assessee. The Assessing Officer made addition for want of compliance. The assessee has relied on statement in AS-26, on the basis of statement, it is not possible to come on a conclusion of business of assessee, the assessee should have submitted the details of commission earned during the period under consideration. No month wise sale, month wise deposit, statement of purchase from concerned entity, total sales, details of cash and sales during demonetization were provided. The ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 7 assessee has not furnished any submission before the Assessing Officer and in absence of such information, the cash deposit in the bank account had become unexplained. On the plea of assessee about the details in AS-26, the ld. CIT(A) held that the responsibility and liability lies on the assessee to furnish the information and to prove the transaction. The assessee has not responded to the statutory notices and in response to show cause notices. During the appellate stage, the assessee has furnished bank account, AS-26 details and copy of agreement only. The documents are not sufficient to decide the cash source which was deposited in the bank of assessee. On such observation, the ld. CIT(A) upheld the order of Assessing Officer. Further aggrieved, the assesse has filed present appeal before this Tribunal. 8. I have heard the submissions of ld. AR of the assessee and the ld. Sr. DR for the revenue and have perused the orders of lower authorities carefully. The ld. AR of the assessee submits that the assessee has filed his return of income (revised) on 01/08/2018 declaring income of Rs. 2,91,930/-. The assessee is engaged in business of financial services and was doing his business in the name of Shivbhole Services. The assessee was having dealership of Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd., copy of agreements of dealerships are filed on record. The assessee has filed copy of agreement dated 25/09/2014. Though, the agreement was again revised prior to ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 8 19/07/2017 but the same is misplaced. Copy of agreement with Flight Raja Travels Pvt. Ltd. is also filed. The assessee was distributor and used to act as a commission agent for promotion, marketing and distribution of various cash products. As per the policy of such companies, it uses to give balance in distributor’s code and distributor further distributes the same into valet of retail distributors. The assessee used to deposit daily cash collected from retailers, who were working under the assessee and used to deposit the same in the bank account which was transmitted into bank of Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. through RTGS/NEFT which is evident from the bank statement. All the deposits are the sale proceed of distributorship. Copy of bank account of Varachha Co-operative bank Ltd. and copy of bank account of Bank of Maharashtra is placed on record. The ld. CIT(A) has not appreciated all such fact and evidence nor any remand report was called from the Assessing Officer. The Assessing Officer wrongly taxed the deposits under Section 115BBE of the Act. The deposits in bank accounts were in fact part and parcel of business or transaction. The ld. AR of the assessee submits that the entire addition is liable to be deleted. To support his submission, the ld. AR of the assessee has relied upon the following decisions: (i) New Pooja Jewellers Vs ITO ITA No. 1329/Kol/2018 dated 26/02/2020. (ii) Gur Prasad Hari Das Vs CIT (1963) 47 ITR 634 (All) ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 9 (iii) DCIT Vs M/s Karthik Construction Co. ITA No. 2292/Mum/2016 dated 23/02/2018. (iv) Smt. Teena Bethala Vs ITO ITA No. 1383 & 1384/Bang/2019 dated 28/08/2019 9. On the other hand, the ld. Sr. DR for the revenue submits that the assessee has not furnished any evidence in response to show cause notice before the Assessing Officer, thus, the Assessing Officer left no option but to make the addition on aggregate of the deposit in the bank. The assessee has taken a new plea that all deposits in the bank are proceed of business transaction. The ld. Sr.DR for the revenue submits that the assessee failed to substantiate such contention before the lower authorities. 10. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. I find that the assessing officer made addition of Rs. 13,74,000/- by taking view that no details and explanation was were furnished by the assessee about the cash deposited in his two bank account during demonetization period. As recorded above, before ld CIT(A), the assessee filed detailed written submission. I find that ld CIT(A) despite recording the submission of the assessee that he has filed copy of agreement, bank account, AS-26 details has not examined the business activities nor any remand report was called from assessing officer. Perusal of bank accounts of the assessee clearly shows that the cash amount deposited by the assessee prior to the demonetization period was immediately transferred to the ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 10 accounts of Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. through RTGS/NEFT. Thus, these entries in the bank statement clearly shows that the assessee was in the business activities associated with Interactive Financial & Trading Services Pvt. Ltd. and Flight Raja Travels Pvt. Ltd. I further noted that the cash deposits in the bank accounts are not abnormal comparatively to the transaction in earlier period. The ld CIT(A) confirmed the addition without seeking remand report from assessing officer or investigating the facts independently. Thus, in my view the addition made by assessing officer and sustained by ld CIT(A) is not justified. In the result, the ground No. 1 of the appeal is allowed. Considering the fact that I have allowed ground No.1, therefore, all other grounds of appeals are consequential and needs no specific adjudication. 11. In the result, appeal of the assessee is allowed. Order announced in open court on 31 st May, 2023 at the time of hearing of appeal. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 31/05/2023 *Ranjan ITA No. 12/Srt/2023 Abhishek Bipinbhai Naik Vs ITO 11 Copy to: 1. Assessee – 2. Revenue – 3. CIT 4. DR 5. Guard File By order Sr. Private Secretary, ITAT, Surat