Shri Naranbhai Jadavbhai Vithani, Bhavnagar V. The Income tax Officer,Ward-2(4), Bhavnagar

ITA 1255/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6864 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 31-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 20-04-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Unexplained cash credit; Income from undisclosed sources; Salary income; Opportunity of being heard; Additional evidence; Non compliance
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.1255/AHD/2009 A. Y.: 2004-05 NARANBHAI JADAVBHAI VITHANI, AT DATRETIYA, TAL. VALLABHIPUR, DIST. BHAVNAGAR VS THE INCOME TAX OFFICER, WARD 2 (4), BHAVNAGAR PA NO. AAUPV 5416 D (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. N. SOPARKAR, AR RESPONDENT BY SHRI R. K. DHANISTA, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XX , AHMEDABAD DATED 12-01-2009 FOR ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1.0 THE GROUNDS OF APPEAL MENTIONED HEREUNDER ARE WITHOUT PREJUDICE TO ONE ANOTHER. 2.0. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XX, AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A):] ERRED ON FACTS AS ALSO IN LAW IN CONFIRMING THE ACTION OF PASSING ORDER U/S. 144 OF THE ACT. 3.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LA W IN TREATING THE INCOMES VIZ. SALARY, PROFIT FROM SHARE TRADING & DIVIDEND AS INCOME FROM UNDISCLOSED SOURCES AND THEREBY DISALLOWING THE CLAIM OF ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 2 LEGITIMATE EXPENSES. THE SAME MAY KINDLY BE TREATED AS RETURNED. 4.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LA W IN CONFIRMING THE ADDITION OF RS.2,70,169/- MADE U/S. 68 OF THE ACT TREATING AGRICULTURAL INCOME AS INCOM E FROM UNDISCLOSED SOURCES. THE ADDITION MAY KINDLY BE DELETED. 5.0 THE LEARNED CIT(A) ERRED ON FACTS AS ALSO IN LA W IN CONFIRMING THE ADDITION OF RS.7,75,000/- MADE U/S. OF THE ACT TREATING THE UNSECURED LOANS AS UNEXPLAINED. THE ADDITION MAY KINDLY BE DELETED. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE CASE WAS SELECTED FOR SCRUTINY AND VARIOUS STATUTORY NOTICES WERE ISSUED TO THE ASSESSEE FOR COMPLETION OF THE ASSESSMENT BUT THE ASSESSEES COU NSEL DID NOT ATTEND THE PROCEEDINGS BEFORE THE AO AND NO COMPLIA NCE WAS MADE. THE DETAILS CALLED FOR BY THE AO WERE NOT FURNISHED . THE AO, THEREFORE, PROCEEDED EX-PARTE U/S 144 OF THE IT ACT AND NOTED THAT NO DETAILS HAVE BEEN FILED WITH REGARD TO THE GROSS S ALARY INCOME, SHARE TRADING PROFIT, DIVIDEND INCOME AND INCOME FROM OT HER SOURCES AND IN THE ABSENCE OF SOURCES OF THESE INCOME, ADDITION OF RS.60,345/- WAS MADE ON WHICH THE ASSESSEE RAISED GROUND NO.3 ABOVE . THE AO FURTHER NOTED THAT THE ASSESSEE HAS CLAIMED AGRICUL TURAL INCOME OF RS.2,70,169/- AND THE SAME HAS BEEN CREDITED TO THE CAPITAL ACCOUNT. IN THE ABSENCE OF ANY DETAILS REGARDING LANDHOLDING , RECEIPTS FROM SALE OF AGRICULTURAL PRODUCE, EXPENSES ETC. AND THE ACTIVITIES ALLEGED TO BE CARRIED ON BY THE ASSESSEE, CLAIM OF AGRICULT URAL INCOME WAS REJECTED AND ADDITION OF RS.2,70,169/- WAS MADE U/S 68 OF THE IT ACT TREATING AS UNEXPLAINED CASH CREDIT ON WHICH THE AS SESSEE HAS RAISED ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 3 GROUND NO.4. FURTHER, THE AO NOTED THAT THE ASSESSE E HAS RECEIVED UNSECURED LOANS FROM 8 PERSONS FOR WHICH THE ASSESS EE HAS NOT FURNISHED DETAILS IN RESPECT OF 4 PERSONS MENTIONED AT SR. NO.3, 4, 5 AND 7 NOTED AT PAGE 3 OF THE ASSESSMENT ORDER TOTAL ING TO RS.7,75,000/-. THEREFORE, THE SAME WERE TREATED AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT AND ADDITION WAS ACCORD INGLY MADE OF RS.7,75,000/-. THESE ADDITIONS WERE CHALLENGED BEFO RE THE LEARNED CIT(A) AND IT WAS SUBMITTED THAT THE ASSESSEE IS AN ILLITERATE FARMER AND STAYING IN REMOTE VILLAGE AND HE WAS IGNORANT A BOUT THE INCOME TAX PROCEEDINGS. THE ASSESSEE SUBMITTED THE NECESSA RY DETAILS TO HIS AUTHORIZED REPRESENTATIVE FROM TIME TO TIME BUT THE ASSESSEE WAS SHOCKED WHEN HE RECEIVED THE ASSESSMENT ORDER THAT THE DETAILS AND EVIDENCES WERE NOT FILED BY HIS AUTHORIZED REPRESEN TATIVE. IT WAS SUBMITTED THAT THERE WAS NON COMPLIANCE ON THE PART OF HIS AUTHORIZED REPRESENTATIVE. THE DETAILS WERE SUBMITTED TO THE L EARNED CIT(A) ALONG WITH WRITTEN SUBMISSION AND IT WAS EXPLAINED THAT INJUSTICE/UNDUE SUFFERINGS CAUSED TO THE ASSESSEE W ITHOUT HIS KNOWLEDGE MAY BE CONDONED AND HE MAY BE GIVEN JUSTI CE. THE LEARNED CIT(A) HOWEVER, NOTED THAT SINCE NO DETAILS WERE FURNISHED BEFORE THE AO, THEREFORE, PROCEEDINGS U/S 144 OF TH E IT ACT WERE RIGHTLY CONDUCTED. WITH REGARD TO THE ADDITION OF RS.60,345/-, THE LEARNED CIT(A) NOTED THAT NO AUTHENTICATED DETAILS OF SALARY INCOME, SHARE TRADING INCOME AND DIVIDEND INCOME HAVE BEEN FILED BEFORE HIM ALSO, THEREFORE, THAT GROUND WAS REJECTED. AS REGA RDS AGRICULTURAL INCOME ALSO, THE LEARNED CIT(A) NOTED THAT NO DETAI LS HAVE BEEN CLARIFIED BEFORE HIM WITH REGARD TO OWNERSHIP OF TH E AGRICULTURAL LAND. ADDITION WAS ACCORDINGLY CONFIRMED. FOR CASH CREDIT S, THE LEARNED ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 4 CIT(A) NOTED THAT THE ASSESSEE DID NOT FILE SUPPORT ING EVIDENCE BEFORE THE AO AND EVEN THE EVIDENCES FURNISHED BEFO RE HIM ARE NOT SUFFICIENT TO SUBSTANTIATE THE CLAIM. ACCORDINGLY, ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDITS WAS ALSO CONFIRMED AND THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE SUBMITTED THE REQUIRED DETAILS TO HIS AUTHORIZED REPRESENTATIVE, WHO HOWEVER, DID NOT FURNISHED THE SAME BEFORE THE AO, THEREFORE, THE ASSESSEE FILED DETAILED WRITTEN SUBMISSIONS BEFORE THE LEARNED CIT(A) ON ALL THE GROUNDS SUPPORTED BY DOCUMENTS IN SUPPORT OF THE SUBMISSIONS ON ALL THE GROUNDS. HE H AS SUBMITTED THAT WITH REGARD TO ADDITION OF RS.60,345/- THE ASSESSEE FURNISHED THE REQUIRED DETAILS COPIES OF WHICH ARE FILED IN THE P APER BOOK FROM PAGES 8 TO 11. WITH REGARD TO AGRICULTURAL INCOME, DETAILS HAVE BEEN FURNISHED FROM PAGES 12 TO 50 OF THE PAPER BOOK AND WITH REGARD TO UNSECURED LOANS, DETAILS HAVE BEEN FURNISHED FROM P AGES 51 TO 88 OF THE PAPER BOOK. HE HAS SUBMITTED THAT ALL THESE EVI DENCES WERE FURNISHED BEFORE THE LEARNED CIT(A) WITH A REQUEST TO CONSIDER THE SAME EVIDENCES BECAUSE THE ASSESSEE WAS PREVENTED B Y SUFFICIENT CAUSE FOR NOT PRODUCING THE SAME BEFORE THE AO. HE HAS SUBMITTED THAT DESPITE SPECIFIC EVIDENCES WERE AVAILABLE BEFO RE THE LEARNED CIT(A), THE SAME WERE NOT APPRECIATED AND TAKEN IN TO CONSIDERATION BY THE LEARNED CIT(A). HE HAS, THEREFORE, SUBMITTED THAT THE MATTER MAY BE REMANDED TO THE FILE OF THE LEARNED CIT(A) T O RECONSIDER ALL ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 5 THE ADDITIONS ON MERIT IN THE LIGHT OF THE EVIDENCE S AVAILABLE ON RECORD. 4. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT NO EVIDENCE WAS FILED BEFORE THE AO AND THAT EVIDENCES FURNISHE D BEFORE THE LEARNED CIT(A) WERE SOMEHOW TAKEN INTO CONSIDERATIO N BY THE LEARNED CIT(A) WHICH WAS NOT FOUND SUFFICIENT, THER EFORE, THE APPEAL OF THE ASSESSEE WAS RIGHTLY DISMISSED. THE LEARNED DR HOWEVER, SUBMITTED THAT IN CASE THE MATTER IS REMANDED TO TH E FILE OF THE LEARNED CIT(A), THE LEARNED CIT(A) MAY BE DIRECTED TO CALL FOR THE REMAND REPORT FROM THE AO BECAUSE SUCH DETAILS WERE NOT FILED BEFORE THE AO AT THE ASSESSMENT STAGE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE DID NOT RESPOND TO THE STATUTORY NOTICES BEFORE THE AO AND THE REQUIRED DETAILS AND EVIDENCES WERE NOT FILED ON ALL THE ABO VE THREE ADDITIONS. THEREFORE, THE AO WAS JUSTIFIED IN PASSING THE ASSE SSMENT ORDER EX- PARTE U/S 144 OF THE IT ACT. THE LEARNED CIT(A) WAS THUS JUSTIFIED IN CONFIRMING THE FINDING OF THE AO WITH REGARD TO PAS SING EX-PARTE ORDER U/S 144 OF THE IT ACT. WE, THEREFORE, DO NOT FIND A NY MERIT ON GROUNDS NO.1 AND 2 OF THE APPEAL OF THE ASSESSEE. THE SAME ARE ACCORDINGLY DISMISSED. 5.1 HOWEVER, WITH REGARD TO THE ADDITION ON MERIT O N GROUNDS NO.3 TO 5 ABOVE, WE FIND THAT THOUGH THE ASSESSEE DID NO T FURNISH ANY DETAILS OR EVIDENCE BEFORE THE AO AT THE ASSESSMENT STAGE BUT THE ASSESSEE FILED COMPLETE DETAILS AND EVIDENCES BEFO RE THE LEARNED ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 6 CIT(A) ALONG WITH WRITTEN SUBMISSIONS. COPIES OF TH E SAME ARE FILED IN THE PAPER BOOK. THE DETAILS AND EVIDENCES AND EXPLA NATION OF THE ASSESSEE CLEARLY SUPPORT THE ALLEGATION OF THE ASSE SSEE THAT HIS EARLIER COUNSEL DID NOT FURNISH THE REQUIRED EVIDEN CES AND DETAILS BEFORE THE AO DESPITE THE ASSESSEE SUBMITTED THE SA ME EVIDENCES TO HIS COUNSEL AT THE ASSESSMENT STAGE. THE ASSESSEE C LAIMED TO BE ILLITERATE AND LIVING IN REMOTE AREA, THEREFORE, DU E TO NEGLIGENCE OF HIS COUNSEL, THE ASSESSEE WAS PREVENTED BY SUFFICIENT C AUSE FROM PRODUCING THE EVIDENCES WHICH WERE CALLED UPON TO B E PRODUCED BY THE ASSESSEE BEFORE THE AO. SINCE THESE DETAILS AND EVIDENCES WERE FURNISHED BEFORE THE LEARNED CIT(A) ALONG WITH THE ABOVE SUBMISSIONS, THE LEARNED CIT(A), THEREFORE, SHOULD HAVE CONSIDERED THE CASE OF THE ASSESSEE IN THE LIGHT OF THE PROVIS IONS OF RULE 46A (1) OF THE IT RULES WHERE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE TO PRODUCE EVIDENCES BEFORE THE AO AT THE ASS ESSMENT STAGE. THE LEARNED CIT(A) INSTEAD OF CALLING FOR REMAND RE PORT FROM THE AO OR GIVING OPPORTUNITY OF BEING HEARD TO THE AO ON T HE ADDITIONAL EVIDENCES PRODUCED BEFORE HIM, CHOOSE TO TAKE COGNI ZANCE OF SOME OF THE DOCUMENTS FILED BY THE ASSESSEE ON RECORD AN D DISMISSED THE APPEAL OF THE ASSESSEE. THE LEARNED CIT(A) WITH REG ARD TO ADDITION OF RS.60,345/- NOTED THAT AUTHENTICATED DETAILS OF SAL ARY INCOME, SHARE TRADING INCOME AND DIVIDEND INCOME HAVE NOT BEEN F ILED BEFORE HIM. HOWEVER, PAPER BOOK SHOWS THAT COMPLETE DETAILS WER E FILED BEFORE THE LEARNED CIT(A) TO SUPPORT THE CLAIM. FURTHER, W ITH REGARD TO AGRICULTURAL INCOME, THE ASSESSEE FURNISHED THE DET AILS OF EXPENDITURE INCURRED FOR EARNING AGRICULTURAL INCOME AND FURTHE R DOCUMENTS IN RESPECT OF OWNERSHIP OF LAND OF HIS COUSIN BROTHERS WAS FURNISHED ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 7 ALONG WITH THEIR ASSESSMENT ORDERS. WITH REGARD TO THE CASH CREDITS, THE ASSESSEE HAS FURNISHED CONFIRMATION FROM THE CR EDITORS, THE DETAILS OF SALES OF AGRICULTURAL PRODUCE AND COPY O F BANK PASS BOOK OF THE CREDITORS. THUS, THE ASSESSEE FURNISHED THE EVI DENCES TO PROVE THE IDENTITY OF THE CREDITORS, THEIR SOURCES OF INC OME AND THE GENUINENESS OF THE TRANSACTION IN THE MATTER. THE L EARNED CIT(A) HOWEVER, FOUND THAT SOME EVIDENCES FILED BEFORE HIM WERE NOT SUFFICIENT TO SUBSTANTIATE THE CLAIM OF CASH CREDIT IN THE MATTER. IT WOULD, THEREFORE, SHOW THAT THE LEARNED CIT(A) HAS TAKEN INTO CONSIDERATION THE ADDITIONAL EVIDENCES FILED BEFORE HIM FOR THE PURPOSE OF CONSIDERING THE APPEAL OF THE ASSESSEE I N VIOLATION OF RULE 46 A OF THE IT RULES BECAUSE NO OPPORTUNITY WAS GIV EN TO THE AO TO FILE REMAND REPORT ON SUCH ADDITIONAL EVIDENCES OR TO COMMENT UPON THE ADDITIONAL EVIDENCES. CONSIDERING THE FACTS AND CIRCUMSTANCES NOTED ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE H AS MADE OUT A CASE OF ADMISSION OF ADDITIONAL EVIDENCES AS PER RU LE 46A OF THE IT RULES BECAUSE THE ASSESSEE WAS PREVENTED BY SUFFI CIENT CAUSE FROM PRODUCING THE ADDITIONAL EVIDENCES BEFORE THE AO. THEREFORE, THE LEARNED CIT(A) BEFORE TAKING INTO CONSIDERATION SUCH ADDITIONAL EVIDENCES SHOULD HAVE CALLED FOR THE REMAND REPORT FROM THE AO OR SHOULD HAVE GIVEN OPPORTUNITY TO THE AO TO COMMENT UPON THE SAME ADDITIONAL EVIDENCES AT THE APPELLATE STAGE. IN THE ABSENCE OF FOLLOWING RULE 46A OF THE IT RULES, WE SET ASIDE TH E ORDER OF THE LEARNED CIT(A) AND RESTORE THESE GROUNDS TO HIS FIL E ON MERIT WITH DIRECTION TO RE-DECIDE THESE GROUNDS AFRESH BY ADMI TTING ADDITIONAL EVIDENCES UNDER RULE 46 A OF THE IT RULES. THE LEAR NED CIT(A) SHALL GIVE REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEA RD TO THE AO AND ITA NO.1255/AHD/2009 NARANBHAI J VITHANI VS ITO, WARD 2(4) BHAVNAGAR 8 SHALL CALL FOR THE REMAND REPORT FROM THE AO ON ADD ITIONAL EVIDENCES PRODUCED BEFORE HIM BY THE ASSESSEE AND AFTER CALLI NG REMAND REPORT FROM THE AO, THE LEARNED CIT(A) SHALL DECIDE ALL TH E THREE GROUNDS ON MERIT BY GIVING REASONABLE SUFFICIENT OPPORTUNITY O F BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE ON GROUNDS NO.3, 4 AND 5 IS ALLOWED FOR STATISTICAL PURPOSES. 7. NO OTHER GROUND IS ARGUED OR PRESSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01-04-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 01-04-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD