MANSHI L/H LATE GAYA PRASAD, BARABANKI V. Income TAx Officer, Range 5(4), Barabanki-1, Barabanki

ITA 131/LKW/2021

AI Insights

The case involves an appeal by Mansi, the legal heir of the late Gaya Prasad, against the order of the CIT(A)-2, Lucknow, which sustained various additions to the income of the deceased assessee for the assessment year 2017-18. The primary issues revolved around the addition of Rs.27,30,000 as unexplained cash credit under section 68 of the Income Tax Act, and other additions related to estimated income from a liquor business and disallowed agricultural income. The Assessing Officer had initially added these amounts due to the non-furnishing of adequate documentation by the assessee to explain the sources of these incomes. The Income Tax Appellate Tribunal (ITAT) decided to restore the matter to the Assessing Officer, allowing the assessee another opportunity to present the necessary documents.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113233 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 01-12-2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Rejection of books of accounts; Period of limitation; Time period of passing order
• Section: 68

Judgement Text

I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘SMC’, LUCKNOW BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 Mansi L/h Late Gaya Prasad 05/150 OBRI Awas Vikas Colony Barabanki. PAN:BEEPP8003H Vs. Income Tax Officer, Range-5(4), Barabanki. (Appellant) (Respondent) O R D E R Captioned appeal, by the deceased assessee, through his legal heir, arises out of order dated 30/07/2020 of learned CIT(A)-2, Lucknow for the assessment year 2017-18. 2. The registry has notified delay of 65 days in filing of the appeal. It is the submission of the assessee that there is no delay as the limitation period was extended by Hon'ble Supreme Court in view of the restrictions imposed on account of COVID-19. Considering the submission of the assessee, I am of the view that the delay notified by the registry needs to be ignored and the appeal has to admitted for adjudication. Accordingly, the appeal is admitted. Appellant by Ms. Gurmeet Kaur, Advocate Respondent by Shri Sanjeev Krishna Sharma, Addl. CIT (D.R.) Date of hearing 20/07/2023 Date of pronouncement 20/07/2023 I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 2 3. The effective grounds raised by the assessee are as under: “1. Because without considering the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts in sustaining the addition of Rs.27,30,000/- being cash deposited during demonetisation out of cash balance as on 08/11/2016. 2. Because without considering the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and in facts in sustaining the addition of Rs.27,30,000/- by treating the same as unexplained credit u/s 68 of the Act. 3. Because without considering the facts and in the circumstances of the case, the Ld. CIT(A) has erred in facts and in law by sustaining the addition on account of estimation of income and rejection of books of accounts of the assessee. 4. Because without considering the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in disbelieving the Tax Audit Report. 5. Because without considering the facts and in the circumstances of the case, the Ld. A.O. has erred in law and in facts in sustaining addition of Rs.1,25,200/- being agricultural income of the assessee by treating the same as non agricultural income. 6. That in any case and in any view of the matter, impugned addition/allowance assessment order are bad in law, illegal, unjustified, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed.” 4. Briefly, the facts are that the assessee was an individual. For the assessment year under dispute, the assessee had filed his return of income on 31/10/2017, declaring total income of Rs.7,53,520/-. Assessee’s case was selected for scrutiny to examine abnormal increase in cash deposit during the demonization period. In course of assessment proceedings, the Assessing Officer called upon the assessee to explain the source of cash I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 3 deposit of Rs.27,30,000/- in two bank accounts i.e. State Bank of India, Barabanki and Federal Bank. In response, the assessee submitted that being an illiterate person unable to sign, the banks were not accepting cheques. Hence, he used to deposit cash in his wife’s account for payment to be made to vendors. In support of such contention, the assessee furnished copy of ledger in the books of M/s Flora & Founa Housing & Land Developments Pvt. Ltd., one of the vendors and copy of the bank account of his wife. The Assessing Officer, however, did not find merit in the submissions of the assessee and ultimately, added back the amount of Rs.27,30,000/- to the income of the assessee by treating it as unexplained cash credit u/s 68 of the IT Act. Additionally, the Assessing Officer also estimated the profit from the liquor business carried on by the assessee and added back an amount of Rs.3,48,443/-. Further, rejecting assessee’s claim of agricultural income, the Assessing Officer added back an amount of Rs.1,25,500/- as income from other sources. He also disallowed assessee’s claim of deduction of Rs.10,000/- u/s 80TTA of the Act. 5. Being aggrieved, the assessee preferred an appeal before learned first appellate authority. While deciding the appeal, learned first appellate authority granted partial relief to the assessee, by allowing assessee’s claim of deduction u/s 80TTA of the Act. He also directed the Assessing Officer to reduce the cash deposits of Rs.27,30,000/- from the gross receipts of business for estimating profit. 6. Before me, learned counsel, appearing for the assessee, submitted that due to unavoidable circumstances the assessee was unable to furnish the books of account and various other documentary evidences to prove the source of cash deposits in the bank accounts as well as the receipts from business. She submitted, the assessee has maintained proper books of account and since the assessee was in liquor business, his books of account I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 4 and documents were also under the cheque and measure of Excise authorities. She submitted, given an opportunity, the assessee is willing to produce the books of account and other documents not only to prove the source of cash deposit but also to substantiate the income declared from business as well as agricultural source. Thus, she submitted, the issues may be restored back to the Assessing Officer for re-examination. 7. Learned Departmental Representative submitted, though sufficient opportunity was granted to the assessee by the Assessing Officer as well as first appellate authority, however, he failed to produce books of account and other documentary evidence to prove the source of cash deposits, business income as well as agricultural income. Thus, he submitted, the addition made be sustained. 8. I have considered rival submissions and perused materials on record. Perusal of the assessment order as well as the order passed by the first appellate authority reveals that the disputed additions on account of cash deposited during demonization period, estimation of net profit and disallowance of agricultural income, were made primarily due to non furnishing of books of account, various details and incomplete information available with the Assessing Officer. However, before me, learned counsel, appearing for the assessee, has made a statement that due to circumstances beyond the control of the assessee, the books of account and other details could not be furnished before the Assessing Officer. This could have been due to some health issues of the assessee. It is also a fact that the assessee was in liquor business. Therefore, he must be maintaining books of account as he was dealing in excisable commodities which required scrutiny of Government agencies/authorities. If the assessee has available with him books of account and other documents maintained in regular course of business, which could not be produced earlier before the I.T.A. No.131/Lkw/2021 Assessment Year:2017-18 5 departmental authorities for certain unavoidable circumstances, in my view, the assessee deserves an opportunity to produce the books of account and details to establish his case. In view of the aforesaid, I am inclined to restore the issues raised in the present appeal to the file of the Assessing Officer for de novo adjudication after providing due opportunity of being heard to the assessee. The assessee is directed to furnish the books of account and other details before the Assessing Officer to prove his case. The assessee is also directed to co-operate with the Assessing Officer in finalizing the proceedings. At this stage, it is made clear that I have not expressed any opinion on the merits of the issues arising in the appeal. It is further made clear, the Assessing Officer has to confine himself to the issues arising in the present appeal and should not negate the relief already granted to the assessee by learned first appellate authority. With the aforesaid observations, grounds are allowed for statistical purposes. 9. In the result, the appeal of the assessee stands allowed for statistical purposes. (Order pronounced in the open court on 20/07/2023) Sd/. (SAKTIJIT DEY) Vice President Dated:20/07/2023 *Singh Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. D.R., I.T.A.T., 5. CIT(A) Assistant Registrar