Bridjesh Harsitbhai Patel, Ahmedabad V. ITO,(Int. Taxation)-1, Ahmedabad

ITA 1787/AHD/2018

AI Insights

The case involves Bridjesh Harsitbhai Patel, an NRI, who appealed against the order of the CIT(Appeals)-13, Ahmedabad, which confirmed the additions made by the Assessing Officer to his income for the Assessment Year 2015-16. The additions were made under Section 69A read with Section 115BBE of the Income Tax Act, 1961, treating the assessee's declared consultancy and agricultural incomes as unexplained, and taxing them at a special rate of 30% without the benefit of a basic exemption limit. The Tribunal found that the CIT(A) had not adequately considered the documents and evidence provided by the assessee regarding his consultancy and agricultural incomes, which were crucial in justifying the source of substantial cash deposits made during the demonetization period.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300002 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 12-08-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 142(1); 133(6); 143(2); 69A; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I. T .A . N o .1 78 7 / Ah d/2 0 1 8 ( A s se ss m e nt Y e a r : 20 15- 16 ) B ri d j es h H a r s it bh a i Pa te l Nr . S un - N - S te p Cl u b, B h u ya n g de v C h a r t R a sta , Gh atl o d ia , A h m e d a b ad - 3 80 0 6 1 V s . I T O ( I n te r n a ti on al T a x a tio n) - 1 A h me da ba d [P AN N o.A P G P P0 7 26 F] (Appellant) .. (Respondent) Appellant by : Shri M. J. Shah, A.R. & Shri Rushin Patel, A.R. Respondent by: Shri Ramesh Kumar, JCIT D a t e of H ea r i ng 01.02.2023 D a t e of P r o no u n ce me nt 15.02.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals)-13, Ahmedabad on 29.06.2018 for A.Y. 2015-16. 2. The grounds of appeal raised by the assessee are as under: “1. The C.I.T.(Appeals) erred in law and facts in confirming the addition made by the Assessing Officer of Rs.3,30,497/- by treating the consultancy income declared by the assessee as unexplained income and thereby invoking the provision of section 115BBE of the I.T. Act, 1961 to tax the aforesaid income at a special rate of 30% without giving assessee a benefit of a basic exemption limit. 2. The C.I.T.(Appeals) erred in law and facts in confirming the addition made by the Assessing Officer of Rs.2,38,050/- by treating the agricultural income declared by the assessee as unexplained income and thereby invoking the provision of section 114BBE of the I.T. Act, 1961 to tax the aforesaid income at a special rate of 30% without giving assessee a benefit of a basic exemption limit. The appellant reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing.” 3. The assessee filed return of income dated 26.02.2017 showing total income of Rs. 1,70,330/- and exempt income of agricultural income of Rs. 2,38,050/-. The case was selected under limited scrutiny for the reason to examine whether cash deposit has been made from disclosed sources. As per ITA No. 1787/Ahd/2018 Bridjesh Harsitbhai Patel vs. ITO (Int. Taxation) Asst.Year–2015-16 - 2 - the information the assessee made total cash deposit of Rs. 20,00,000/- during demonetization period that is 09.11.2016 to 30.12.2016. Statutory notice under Section 143(2) of the Act was issued on 19.09.2017 by ITO, Ward-3(2)(1), Ahmedabad and the same was duly served upon the assessee. The assessee is an NRI and notice under Section 142(1) alongwith detail questionnaire was issue on 24.10.2016 which was duly served. In response to the notice Authorized Representative attended the assessment proceedings form time to time and file details and particulars accordingly, The Assessing Officer observed that the assessee filed statement of income showing agricultural income of Rs. 2,38,050/- and income from consultancy of Rs. 3,30,457/-. The assessee submitted before the Assessing Officer that the income is actually generated from consultancy and agriculture, but the Assessing Officer observed no evidences was filed in respect of the same. Thus, the Assessing Officer made addition of Rs. 3,30,457/- as income from unexplained sources. The Assessing Officer thus made total addition of Rs. 5,68,507/- as cash receives from unexplained sources of income and added the said amount under Section 69A r.w.s. 115BBEE of the Act. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 5. The Ld. A.R. submitted that the assessee filed return of income showing total income of Rs. 1,70,330/- on the basis of regular books of account maintained by the assessee and during the course of assessment proceedings the appellant furnished the Profit & Loss, capital account and balance sheet to the Assessing Officer. In respect of addition on account of consultancy income the Ld. A.R. submitted that the assessee rendered various services to his clients in respect of preparation of certain documents related to Visa for foreign ITA No. 1787/Ahd/2018 Bridjesh Harsitbhai Patel vs. ITO (Int. Taxation) Asst.Year–2015-16 - 3 - countries. The consultancy income receive from various parties were also credited in the regular books of account on cash basis. Therefore, all the relevant documents were before the Assessing Officer as well as before the CIT(A) and the same addition was not proper. As relates to addition on account of agricultural income to the extent of Rs. 2,38,050/- the Assessing Officer never made cross verification under Section 133(6) in respect of sale bill produced during the course of assessment proceedings. The assessee was showing income regularly any books accounts derive from agricultural income, therefore, the authorities have failed to take cognizance of evidence as such. The Ld. A.R. further submitted that the total addition of Rs. 5,68,509/- applying the Section 115BBEE which represents the unexplained income cannot be applied in present case as the assessee has explained all the details which were produced during the course of assessment proceedings as well as before the CIT(A). The income derived by the assessee from consultancy services and agricultural income were the main source for cash deposit at the time of demonetization period and therefore, the addition should be deleted. 6. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). The Ld. D.R. submitted that the assessee being an NRI visited India only 4 days during the year and deposited Rs. 20,00,000/- during demonetization period. The Ld. A.R. as well as the assessee could not justify their claim of cash deposits. Therefore, the Assessing Officer was right in making addition. 7. Heard both the parties and perused all the relevant materials available on record. Before the CIT(A) the assessee has given the details related to the consultancy income which was derived from the client in respect of preparation of certain documents related to Visa. These documents were not ITA No. 1787/Ahd/2018 Bridjesh Harsitbhai Patel vs. ITO (Int. Taxation) Asst.Year–2015-16 - 4 - taken into consideration by the CIT(A) while confirming the addition. It appears that these documents and the related documents for the income derived from the said activity needs to be taken into account. As regards, the income derived from agricultural income the CIT(A) has not taken cognizance of the sales bills in support of the assessee’s claim of agricultural income. Thus, the explanation for addition of Rs. 5,68,507/- should have been taken into consideration by the CIT(A) which the CIT(A) failed to do so. Therefore, it will be appropriate to remand back the entire issue to the file of the CIT(A) for proper verification and adjudication and decide accordingly. Needless to say, the assessee be given opportunity of hearing by following principle of natural justice. 8. In result, the appeal of the assessee is partly allowed for statistical purposes. This Order pronounced in Open Court on 15/02/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 15/02/2023 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, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad