Mahadeo Vithhalrao Lokhande, Nashik V. Income-tax Officer, Ward - 1(5), Nashik

ITA 185/PUN/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6614 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 01-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Assessee Lawyers: P M SHINGTE
• Keywords: Business income; Principle of natural justice; Source of fund; Set aside
• Section: 44AD; 144; 68

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.185/PUN/2019 / ASSESSMENT YEAR : 2014-15 MAHADEO VITHHALRAO LOKHANDE, FLAT NO.14, SIDDHESH GLORI, OPP. ASHOKA GARDEN, KURUDKAR NAGAR, RAVI SHANKAR MARG, NASHIK 422 011. PAN : AIBPL6031H. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(5), NASHIK. . / RESPONDENT ASSESSEE BY : SHRI P.M. SHINGTE. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF ORDE R OF COMMISSIONER OF INCOME-TAX (A) 1, NASHIK DATED 12.12.2018 FOR A.Y. 2014-15. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND IS STATED TO BE DERIVING INC OME FROM THE PROFITS AND GAINS OF THE BUSINESS AND ALSO INCOME FROM OTHER SOURCES. ASSESSEE FILED HIS RETURN OF INCOME FOR A.Y. 2014-1 5 ON / DATE OF HEARING : 10.04.2019 / DATE OF PRONOUNCEMENT: 30.04.2019 2 31.03.2015 DECLARING TOTAL INCOME AT RS.4,00,470/-. THEREAFT ER, THE CASE WAS SELECTED UNDER CASS FOR SCRUTINY AND SUBSEQUE NTLY ASSESSMENT WAS FRAMED U/S 144 OF THE ACT VIDE ORDER DT .18.11.2016 DETERMINING THE TOTAL INCOME AT RS.20,40,360/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO V IDE ORDER DT.12.12.2018 (IN APPEAL NO.NSK/CIT(A)-1/301/2016-17) DISM ISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTIO N OF THE ASSESSING OFFICER TO PASS ASSESSMENT ORDER U/S 144 OF THE ACT WITHOUT APPRECIATING THE FACT THAT APPELLANT COULD NOT ATTEND ASSESSMENT PROCEEDINGS DUE TO GENUINE / GOOD AND SUFFICIENT REASONS. THEREFORE, I T IS PRAYED TO SET ASIDE THE ORDER AND GRANT APPELLANT AN OPPORTUNITY TO REP RESENT AND EXPLAIN HIS RETURN OF INCOME. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF CASH DEPOSITS IN BANK ACCOUNT AMOUNTING TO RS.10,68,200/- TO THE GROSS BU SINESS RECEIPTS OF THE APPELLANT BASED ON PURE SURMISE, CONJECTURES AND SU SPICIONS AND BY DISREGARDING THE SUBMISSIONS MADE IN THIS REGARD. T HEREFORE, IT IS PRAYED TO CANCEL THE ADDITION OF RS.10,68,200/- MADE TO GROSS BUSINESS RECEIPTS. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF ALLEGED FIXED BANK DEPOSITS OF RS.6,20,000/- TO THE GROSS BUSINESS REC EIPTS OF THE APPELLANT BY RELYING ON INCORRECT INFORMATION AND ON PURE SURMIS E, CONJECTURES AND SUSPICIONS. THEREFORE, IT IS PRAYED TO CANCEL THE A DDITION OF RS.6,20,000/- MADE TO GROSS BUSINESS RECEIPTS. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, TH E LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.4,95,420/- MADE U/S 68 ON ACCOUNT OF ALLEGED SHORT BUSINESS RECEIPTS WITHOUT APPRECIATING THE FA CT THAT ADDITION ,IF ANY, CAN BE MADE ONLY OF ELEMENT OF PROFIT INCLUDED IN B USINESS RECEIPTS. THEREFORE, IT IS PRAYED TO CANCEL THE ADDITION OF R S.4,95,420/- MADE. 5. WITHOUT PREJUDICE TO ABOVE GROUNDS OF APPEAL, TH E LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.4,95,420/- MADE U/S 68 ON ACCOUNT OF ALLEGED SHORT BUSINESS RECEIPTS WITHOUT APPRECIATING THE FA CT THAT APPELLANT HAS DECLARED PROFIT U/S 44AD AND PROFIT DECLARED BY TH E APPELLANT IS MORE THAN 8% OF BUSINESS RECEIPTS COMPUTED BY LEARNED AO. THE REFORE, IT IS PRAYED TO CANCEL THE ADDITION OF RS.4,95,420/- MADE. 6. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 11,44,470/-BEING 50% OF TOTAL EXPENSES WITHOUT APPRECIATING THE FACT THAT APPELLANT HAS DECLARED PROFIT FROM BUSINESS @ 14.99% OF GROSS REC EIPTS UNDER THE PROVISIONS OF SEC. 44AD OF THE INCOME TAX ACT, 1961 AND HENCE NO DISALLOWANCES OF EXPENSES CAN BE MADE AS PER PROVIS IONS OF SEC.44AD. 3. BEFORE US, AT THE OUTSET, LD.A.R. SUBMITTED THAT THOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS BUT THE MAIN CONTR OVERSY IS WITH RESPECT TO THE ADDITIONS OF RS.4,95,420/- ON ACCOUNT OF UNEXPLAINED 3 RECEIPTS U/S 68 OF THE ACT AND RS.11,44,470/- BEING DISALLOW ANCE OF 50% OF TOTAL EXPENSES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ICED THAT ASSESSEE HAD SHOWN RECEIPTS INCLUDING THE CASH DEPOSITS IN THE BANK FOR THE YEAR UNDER CONSIDERATION AT RS.31,88,290/- BUT IN H IS RETURN OF INCOME, HE HAD SHOWN THE TOTAL RECEIPTS AT RS.26,92,870/-. AO FURTHER NOTICED THAT ASSESSEE HAD SHOWN GROSS PROFIT OF RS.26,92,8 70/- AND NET PROFIT OF RS.4,03,929/- AFTER CLAIMING EXPENSES OF RS.22,88,941/- . AO THUS NOTED THAT ASSESSEE HAD OFFERED THE BUSINESS RECE IPTS SHORT BY RS.4,95,420/- AND CLAIMED EXPENSES TO THE TUNE OF RS.22,88 ,941/- WITHOUT FILING ANY SUPPORTING DOCUMENTS. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO AO AS ASSESSE E FAILED TO SHOW THE SOURCES OF INCOME AND TO FILE SUPPORTING DOCUMENTS AN D THEREAFTER HE MADE ADDITION OF RS.4,95,420/- ON ACCOUNT OF UNEXPLAINED RECEIPTS U/S 68 OF THE ACT AND RS.11,44,470/- BEING 50% OF EXPENS ES OF RS.22,88,941/- ON ACCOUNT OF NON-GENUINE EXPENSES. AGGR IEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO DISM ISSED THE APPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A ), ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US, LD.A.R. AT THE OUTSET SUBMITTED THAT ASSESS EE COULD NOT APPEAR BEFORE THE AO TO DUE TO GENUINE AND SUFFICIENT RE ASONS. LD.CIT(A) HAS CONFIRMED THE ORDER OF AO. HE FURTHER SUBMIT TED THAT DUE TO UNAVOIDABLE CIRCUMSTANCES, ASSESSEE COULD NOT APPEAR BEFORE AO. HE SUBMITTED THAT IF GIVEN A CHANCE, ASSESSEE UNDERTAKES TO APPEAR BEFORE THE AO AND FURNISH ALL THE REQUIRED DETAILS TO SUBSTANTIATE HIS CASE AND PRAYED TO SET ASIDE THE ASSESSMENT ORDER. LD.D.R. ON TH E OTHER HAND SUPPORTED THE ORDER OF AO AND LD.CIT(A) AND OBJECTED TO LD.A.R.S PRAYER FOR 2 ND INNINGS. 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO ADDITIONS OF RS.4,95,420/- U/S 68 OF THE ACT AND RS.11,44,470/- BEING 5 0% OF EXPENSES. IT IS AN UNDISPUTED FACT THAT DESPITE SERVICE OF NO TICE OF HEARING ON VARIOUS OCCASIONS, NONE ATTENDED BEFORE THE AO AND LD.CIT(A) AND THEREFORE LD.CIT(A) HAS PASSED AN ORD ER BASED ON WRITTEN SUBMISSIONS. HOWEVER, CONSIDERING THE FACT THAT LD.A.R. HAS GIVEN AN ASSURANCE THAT ASSESSEE WILL CO-OPERATE AND AP PEAR BEFORE LOWER AUTHORITIES AND I N VIEW OF THE WELL SETTLED PRINCIPLE OF NATURAL JUSTICE THAT SUFFICIENT OPPORTUNITY OF HEARING SHOULD BE AFFOR DED TO THE PARTIES AND NO PARTY SHOULD BE CONDEMNED UNHEARD, WE A RE OF THE VIEW THAT ONE MORE OPPORTUNITY BE GRANTED TO THE ASSESSEE TO PRESENT HIS CASE. WE THEREFORE RESTORE THE MATTER BACK TO THE FILE OF AO TO DECIDE THE ISSUE ON MERITS IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT AO SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PART IES. ASSESSEE IS ALSO DIRECTED TO PROMPTLY FURNISH ALL THE DETAILS CALLED FOR B Y THE LOWER AUTHORITIES. IN VIEW OF OUR DECISION TO RESTORE THE ISSUE TO AO, WE AR E NOT ADJUDICATING ON MERITS THE GROUNDS OF THE APPEAL RAI SED BY THE ASSESSEE. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED FOR STATI STICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30 TH DAY OF APRIL, 2019. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 30 TH APRIL, 2019. YAMINI 5 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1 NASHIK. PR. CIT-1, NASHIK. '#$ %%&',) &', + / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.