Shri Rahim Umarbhai Ravkarda, Rajkot V. The ACIT, Circle-3(1), Rajkot

ITA 167/RJT/2022

AI Insights

The case involves Shri Rahim Umarbhai Ravkarda, who appealed against the order of the Ld. Commissioner of Income Tax (Appeals), which confirmed an addition of Rs. 3,84,43,550 as unexplained cash credit under Section 68 of the Income Tax Act, 1961. The Assessing Officer had initially made this addition after finding discrepancies in the assessee's reported financial activities and failing to verify the creditworthiness of substantial unsecured loans received. The CIT(Appeals) upheld this decision due to the absence of any evidence or appearance from the assessee. The Income Tax Appellate Tribunal, considering the non-compliance and non-cooperation of the assessee but the significant amount involved, decided to restore the matter for a fresh examination while imposing a cost on the assessee for non-compliance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 138276 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 09-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Opportunity of being heard
• Section: 68; 271(1)(c); 2; 234B; 274; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o .1 6 7 /R j t /2 02 2 ( A s se ss m e nt Y e a r : 20 15- 16 ) Sh r i R a hi m U m ar bh ai R a vk a r d a, K al pe s h S . D o s h i & C o., C h a rt e r ed A c co un ta nts , 10 06- 09 , Th e Sp ir e - 2 , N ea r S h ee tal P ar k B R TS S to p, 15 0f t . R i ng R oa d, R a j ko t- 3 6 00 0 5 Vs .As s is ta nt C o m mi s s i one r of I nc o me Ta x , C ir c l e- 3 ( 1 ), R aj ko t [P A N N o.A WPP R 6 15 6 H] (Appellant) .. (Respondent) Appellant by : Shri Kalpesh Doshi, A.R. Respondent by: Shri Shramdeep Sinha, CIT DR D a t e of H ea r i ng 09.08.2023 D a t e of P r o no u n ce me nt 23.08.2023 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre, (in short “NFAC”) in Order No. ITBA/NFAC/S/250/2021-22/1040875100(1) vide order dated 16.03.2022 passed for Assessment Year 2015-16. 2. The assessee has taken the following grounds of appeals:- “1. That, the Ld. AO as well as Ld. CIT(A) has passed the order without affording proper opportunity of being heard. ITA No.167/Rjt/2022 Shri Rahim Umarbhai Ravkarda vs. ACIT Asst.Year –2015-16 - 2 - 2. That, the Ld. CIT(A) has wrongly confirmed addition of Rs. 3,84,43,550/- on account of unexplained cash credit u/s 68 of the I.T. Act. 3. That, the Ld. CIT(A) has wrongly confirmed initiation of penalty proceedings u/s 274 r.w.s. 271(1)(c) of the I.T. Act, 1961. 4. That, the Ld. CIT(A) has wrongly confirmed levy of interest u/s 234A, 234B and 234C of the I.T. Act, 1961. 5. That, the findings of the Ld. AO and Ld. CIT(A) are not justified and are bad-in-law. 6. That appellant craves to add, amend, alter or delete any of the above grounds of appeals.” 3. The brief facts of the case are the assessee is shown to have been engaged in the business of trading in commodities/shares. The assessee has declared a loss from trading operations. The assessee has carried out trading through a broker namely Sunflower Broking Private Ltd. The contract receipt from the aforesaid broker shows a trading loss. During the course of assessment, the Assessing Officer observed that there is a huge increase in unsecured loans from Rs. 75.67 lakhs to Rs. 4.60 crores. Accordingly, the assessee was asked to furnish the identity of the depositors, their creditworthiness and genuineness of the transaction. However, despite repeated opportunities, the assessee did not cause any appearance before the Assessing Officer. Therefore, an Inspector was ITA No.167/Rjt/2022 Shri Rahim Umarbhai Ravkarda vs. ACIT Asst.Year –2015-16 - 3 - deputed to verify the whereabouts of the assessee and to serve notice upon him. However, the Inspector found that the assessee is staying in a one room rented house, is hardly in possession of any assets and is a driver by profession. Accordingly, the Assessing Officer held that the aforesaid transaction of increase in unsecured loans is not genuine looking into the instant facts, since the creditworthiness of the recipient is equally important since no person would give such a huge amount of loan to the assessee who is having no creditworthiness at all. Therefore, the Assessing Officer held that the entire transaction is a sham and the assessee is only a face for real beneficiaries. Accordingly, the Assessing Officer made an addition of Rs. 3.84 crores to the income of the assessee as unexplained crash credit under Section 68 of the Act. 4. In appeal, none appeared before Ld. CIT(Appeals) and no submissions were also filed. Accordingly, Ld. CIT(Appeals) upheld the additions made by the Assessing Officer with the following observations: “5.1.2 All the facts and circumstances of the case and position of law related to the impugned addition of Rs. 3,84,43,550 u/s 68 of the Act are duly considered. There is no occasion, I am afraid, to give any relief whatsoever as neither in the impugned assessment proceedings nor in the appeal proceedings the appellant has produced a single piece of paper what to say, any evidence (documentary or otherwise) which may have entitled the appellant to claim any relief as the Ld. AO in para no. 3.1 sub para b & c has mentioned that when the inspector of his good office was ITA No.167/Rjt/2022 Shri Rahim Umarbhai Ravkarda vs. ACIT Asst.Year –2015-16 - 4 - deputed to make enquiry it was found that the appellant is a man of no means and in fact, he is a driver by profession. On the other hand, in the Return of Income the appellant claimed himself to be a person engaged in the business of trading in commodities/shares. As the Ld AO rightly observed that "Normally, in unexplained cash credit, the credit worthiness of the lender is being verified. But here it is important to appreciate that, the credit worthiness of the recipient is equally important. Why would somebody give huge loans to a person of no means?" 5.1.3. In the light of above discussion, the action of Ld AO in making of impugned addition of Rs. 3,84,43,550 u/s 68 of the Act, 1961 is found to be sustainable in the facts of the case and in law. Thus, the addition of Rs. 3,84,43,550 is confirmed as the appellant fails to get any relief on account of non production of any evidence both in assessment proceeding as well as in these appeal proceedings. 5.1.4. Thus, the Ground no. 3 and 4 are dismissed as the appellant fails to get any relief as he is not entitled for the same. 6.0 In the result, this appeal is dismissed, for statistical purposes.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals). Before us, the Counsel for the assessee submitted that the assessee could not cause appearance before Ld. CIT(Appeals) owing to the faceless scheme of appellate hearing. The ITA No.167/Rjt/2022 Shri Rahim Umarbhai Ravkarda vs. ACIT Asst.Year –2015-16 - 5 - Counsel for the assessee submitted that the assessee has not been given adequate opportunity to present its case on merits. It was further submitted that the assessee has maintained regular books of accounts which are also audited by a qualified chartered accountant. Further, during the year under consideration, the assessee has received unsecured loans from various parties and the loans have been received through normal banking channels. However, during the course of assessment proceedings, the Assessing Officer did not issue notices under Section 133(6) of the Act to the depositors who had given unsecured loans to the assessee. Accordingly, it was requested that in the interest of justice the matter may be restored to the file of Ld. CIT(Appeals) and if given an opportunity, the assessee would be able to prove the genuineness of the aforesaid transaction along with the creditworthiness of the parties. 6. In response, the Ld. DR relied upon the observations made by the Assessing Officer and Ld. CIT(Appeals) in their respective orders. 7. We have heard the rival contentions and perused the material on record. On going to the facts of the case, it is evident that the assessee has been non-compliant and non-cooperative at all stages of proceedings. However, in the interest of justice, and looking into the quantum of addition made in the assessee’s hands amounting to Rs. 3.84 crores, the matter is being restored to the file of Ld. CIT(Appeals) for de novo consideration, after giving due opportunity of hearing to the assessee. However, since the assessee has been non-compliant at all stages of the proceedings before the Department, the assessee is directed to pay a cost ITA No.167/Rjt/2022 Shri Rahim Umarbhai Ravkarda vs. ACIT Asst.Year –2015-16 - 6 - of Rs. 10,000/- to be deposited with the Registrar, ITAT towards cost of non-compliance. 8. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 23/08/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 23/08/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot 1. Date of dictation 21.08.2023(Dictated on his dragon software by Hon’ble Member on 19.08.2023) 2. Date on which the typed draft is placed before the Dictating Member 21.08.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 21.08.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .08.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 23.08.2023 7. Date on which the file goes to the Bench Clerk 23.08.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................