M/s. Patel Mukeshbhai Narandas and Co., Ahmedabad V. The DCIT, Circle-1(2), Ahmedabad

ITA 160/AHD/2019

AI Insights

The case involves M/s. Patel Mukeshbhai Narandas & Co., who appealed against the order of the CIT(A)-6, Ahmedabad, which upheld the addition of Rs.6,00,000 to the assessee's income for the Assessment Year 2013-14. The addition was based on cash seized during a police action, which was later seized by the Income Tax Department. The assessee contested the validity of the reassessment proceedings and the addition itself, arguing that the cash was recorded in their books and belonged to them. The Tribunal dismissed the ground regarding the procedural lapse of not issuing a notice under Section 143(2) but accepted the arguments regarding the cash's legitimacy and the proper maintenance of books of account.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129272 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 31-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 147; 148; 143(3); 143(1); 292BB; 143(2)

Judgement Text

ITA No.160/Ahd/2019 Assessment Year: 2013-14 Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.160/Ahd/2019 Assessment Year: 2013-14 M/s. Patel Mukeshbhai Narandas & Co., 102, Srinidhi Complex, 1 st Floor, Vaghan Pole, Zaveri Vad, Ratan Pole, Ahmedabad – 380 001. [PAN – AAMFP 0339 B] Vs. The Dy. Commissioner of Income Tax, Circle – 1(2), Ahmedabad (Appellant) (Respondent) Assessee by Shri Rohan Thakkar, C.A. Revenue by Shri Purushottam Kumar, Sr. DR Da te o f He a r in g 01.06.2023 Da te o f P ro n o u n ce m e n t 02.06.2023 O R D E R This appeal is filed by the Assessee against order dated 05.12.2018 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2013-14. 2. The Assessee has raised the following grounds of appeal :- “1 The appellant humbly prays that the Ld. CIT(A) has erred in law as well on facts in upholding the order of Ld. DCIT who has passed the order without issuing mandatory notice under Section 143(2) of the Income Tax Act. Thus, the order passed in response to that is entirely void and deserves to be deleted. 2. The Ld. CIT(A) has erred in facts as well as in law in upholding the addition made by Ld. DCIT of Rs.6,00,000/- of cash especially when it belong to the assessee and is duly recorded in the books. 3. The Ld. CIT(A) has erred in facts as well as in law in upholding the order passed by Ld. DCIT when the order has been made without complying with the condition of section 147 of the Act. 4. The assessee prays before your good honour grant any other relief that your good honour may grant considering the facts of the case.” ITA No.160/Ahd/2019 Assessment Year: 2013-14 Page 2 of 4 3. The return of income was filed on 13.07.2013 declaring total income at Rs. Nil. The said return was processed under Section 143(1) of the Income Tax Act, 1961. Subsequently, it was observed that the cash amount of Rs.6,00,000/- was recovered by Lucknow Police from Shri Nitinkumar Ramjibhai Patel, employee of the assessee which was seized by the Income Tax Department on 19.10.2012 under Section 132A of the Act. During the course of search, a statement on oath was recorded of Shri Nitin Patel and it was stated that he is the employee of the Company M/s. Patel Mukeshbhai Narandas & Co. and cash found as well as seized belonged to his employer. The books of account were not produced during the course of search and, therefore, the source of cash of Rs.6,00,000/- remained unexplained as per the observations of the Assessing Officer. The case was reopened under Section 147 of the Act by issuing notice under Section 148 of the Act after recording reasons for the same. In response to the notice under Section 148, the assessee submitted copy of return of his income on 28.03.2015. The copy of reasons recorded was provided to the assessee on 22.06.2015. Thereafter, letter dated 21.08.2015 was issued to the assessee in which it was stated that as per the statement of Shri Nitin Patel, the cash belonged to the assessee firm and during the course of search, no books of accounts were produced. Hence, the source of the cash remained unexplained. Further, the assessee was not able to furnish name, address and PAN of the persons from whom assessee firm has transported the cash for which income have been earned and, therefore, the assessee was given show cause notice dated 21.08.2015 in the form of letter as to why cash seized amounting to Rs.6,00,000/- should not be added to the total income of the assessee. The assessee raised objections against the reopening of the reassessment and issue related to notice under Section 148 of the Act. The objections were disposed of. In the present case, no assessment order has been passed under Section 143(3) of the Act and, therefore, objections taken by the assessee was rejected by the Assessing Officer. The Assessing Officer further made addition of Rs.6,00,000/- towards undisclosed income on the basis that no evidence that books of accounts was maintained on the date of search and the same was not produced by the assessee. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. ITA No.160/Ahd/2019 Assessment Year: 2013-14 Page 3 of 4 5. The Ld. AR submitted that notice under Section 143(2) of the Act was not issued by the Assessing Officer and, therefore, the assessment itself is null & void. 6. The Ld. DR submitted that the assessee has participated in the assessment proceedings under Section 148 & 143(3) read with Section 147 of the Act and, therefore, as per Section 292BB of the Act, the assessment order passed by the Assessing Officer is justifiable. 7. Heard both the parties and perused all the relevant material available on record. From the contents of the Assessment Order, it appears that the show cause notice was represented and the assessee’s case was validly assessed though mentioning of the Section 143(2) was not there on record. Yet, opportunity of representing the assessee was given during the assessment proceedings. Prima facie, from the assessment order, it appears that notice under Section 143(2) of the Act was issued to the assessee and the observations of the CIT(A) needs no interference. Hence, ground no.1 is dismissed. 8. As regards ground nos.2 & 3, the Ld. AR submitted that the assessee at the time of search has given books of accounts to the Revenue Officer and the said books of accounts were produced on 18.12.2013 during the course of assessment proceedings. The same can be seen from the paragraph no. 5 of the Assessment Order. The Ld. AR submitted that all the relevant evidences were filed in respect of cash found/cash seized from the employee of the assessee firm and the cash was entered into books of account for A.Y. 2012-13. Therefore, on merit the assessee has explained cash seized and the creditworthiness and genuineness of the transactions related to the said amount. 9. The Ld. DR submitted that the books of accounts maintained by the assessee was after the search took place and the same can be fabricated. The Ld. DR relied upon the Assessment Order and the Order of the CIT(A). 10. Heard both the parties and perused all the relevant material available on record. From the perusal of paragraph no.5 of the Assessment Order, the Assessing Officer has not doubted the books of accounts which was produced before the Assessing Officer on 18.12.2013 during the course of assessment proceedings. On ITA No.160/Ahd/2019 Assessment Year: 2013-14 Page 4 of 4 the contrary, in paragraph no.6 the observations are related to the evidence regarding books of accounts maintained on date of search was taken into account. At no point of time the Assessing Officer has doubted the books of accounts produced during the assessment proceedings and, therefore, the observation made by the Assessing Officer in conclusion is not justifiable. Further, the assessee has furnished the name address and PAN of the persons from whom assessee firm has transported the cash for which income has been shown by the assessee and, therefore, the onus casts upon the assessee to prove identify, creditworthiness and genuineness of the transaction was discharged fully by the assessee in respect of cash seized amounting to Rs.6,00,000/-. Therefore, the addition made by the Assessing Officer was not justifiable. Hence, ground no.2 & 3 are allowed. 11. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open Court on this 2 nd June, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 2 nd day of June, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad