Mohd Idrees, Indore V. ITO, Indore

ITA 190/Ind/2020

AI Insights

Shri Mohd. Idrees, engaged in the business of transport commission and shares, filed an appeal against the order of the Commissioner of Income-Tax (Appeals)-I, Indore, which itself arose from an assessment order by the ITO, Ward-2(3), Indore. The assessment order added Rs. 43,40,300 to the assessee's income, citing unexplained cash deposits totaling Rs. 40,08,000 in his bank account, purportedly for purchasing a crane. The assessee's appeal to the CIT(A) was unsuccessful, leading to the current appeal before the Tribunal. The Tribunal examined the procedural fairness of the CIT(A)'s decision and the substantive issue of the cash deposits' source, ultimately dismissing the appeal on both grounds.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130872 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 30-06-2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 68; 69; 143(3)

Judgement Text

Page 1 of 6 आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.190/Ind/2020 Assessment Year: 2015-16 Shri Mohd. Idrees 15, Naya Pitha, Indore बनाम/ Vs. ITO, Indore (Appellant / Assessee) (Respondent / Revenue) PAN: AAPPI 5368 G Assessee by None Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 28.02.2023 Date of Pronouncement 28.03.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 27.02.2020 passed by learned Commissioner of Income-Tax (Appeals)-I, Indore [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 27.12.2017 passed by learned ITO, Ward-2(3), Indore [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the assessee has filed this appeal on following grounds: “(1) The assessee has not been provided sufficient opportunity of being heard in the said matter and has therefore been denied the principle of natural justice. The appellant prays that the order of CIT(A) be set aside to him to provide property opportunity of hearing and decide on merits. (2) On the facts and in the circumstances of the case and in the law, the learned CIT(A) erred in making addition of Rs. 40,68,000/- in the income of assessee.” Mohd. Idrees ITA No.190/Ind/2020 Assessment year 2015-16 Page 2 of 6 2. When the case was called, none appeared on behalf of assessee nor any adjournment application filed. On perusal of case record, it is observed that enough opportunities have already been given to the assessee but there is no representation from assessee’s side on any of the dates of hearing. Ld. DR representing the revenue submitted that the appeal can be decided on the basis of material held on record and after hearing him. Accordingly, the hearing was proceeded and the matter is being disposed of. 3. Briefly stated the facts are such that the assessee is earning income from the business of transport commission and shares. The assessee filed return of income of relevant AY 2015-16 on 13.03.2016 declaring a total income of Rs. 2,72,500/- which was subjected to scrutiny-assessment and the assessment was finalized u/s 143(3) at a total income of Rs. 43,40,300/- after making certain additions. Aggrieved, the assessee filed first-appeal but could not succeed. Still aggrieved, the assessee has filed this appeal and now before us. Ground No. 1: 4. In this ground, the assessee claims that the Ld. CIT(A) has passed order of first-appeal without giving proper opportunity of hearing. 5. With the assistance of Ld. DR representing the revenue, on perusal of para No. 2 and 3.4 of the order of first-appeal, we are able to find that during the course of first-appeal, the counsel of assessee has represented the assessee and also filed a written-submission. The submission is re- produced by Ld. CIT(A) in Para No. 2 of his order and the Ld. CIT(A) has considered the same in deciding appeal. That means, the Ld. CIT(A) has given opportunity to the assessee and the assessee has availed the same. Therefore, this ground raised by assessee is meritless and we are inclined to dismiss the same. Mohd. Idrees ITA No.190/Ind/2020 Assessment year 2015-16 Page 3 of 6 Ground No. 2: 6. In this ground, the assessee claims that the Ld. CIT(A) has erred in confirming the addition of Rs. 40,68,000/- made by AO. 7. Drawing our attention to assessment-order, Ld. DR submitted that during the relevant year, the assessee made a total payment of Rs. 55,00,000/- for purchase of crane from his a/c with IDBI Bank and for that purpose, the assessee made a total cash deposit of Rs. 40,08,000/- in IDBI bank a/c. Referring to Para No. 2.1 of assessment-order, Ld. DR submitted that when the AO confronted the assessee about the source of cash-deposits in bank a/c, the assessee stated to have taken unsecured loans from his relatives and friends. Ld. DR submitted that the assessee reported to have taken loans from 215 persons, Rs. 19,000/- from each lender. However, the assessee could not produce a/c confirmations form those lenders; the assessee only produced 11 lenders whose statements were recorded by Ld. AO. Ld. DR submitted that after examination of those 11 persons, the Ld. AO was not satisfied with their creditworthiness. 8. Ld. DR then carried us to the order of first-appeal, which we extract below for an immediate reference: “3.4 During the course of appeal proceedings, the counsel of the appellant has filed written submissions which are reproduced above. In the written submission, the AR has come out with different explanation to say that the appellant had formed the group of community members and each one of them contributed amounts for purchase of crane. The entire assessment proceedings were carried out on the basis of "unsecured loans received from relatives and friends" but, suddenly, during appeal proceedings it has been stated to be the contribution of members of purchasing crane. Unfortunately, the crane was never received due to some technical issues. Further, the counsel of the appellant has filed the copies of same vouchers which were filed before the AO. These vouchers identical and do not bear any address and purpose of deposits. 3.5 I have gone through, the contents of the assessment order, written submissions and the statements of 11 persons recorded during the Mohd. Idrees ITA No.190/Ind/2020 Assessment year 2015-16 Page 4 of 6 course of assessment proceedings. In my considered, the appellant has miserably failed to explain the source of deposits of Rs. 4008000/- in IDBI Bank Account. The explanation given before, the AO has been proved to be false and afterthought. The 11 persons whose statements were recorded have failed to prove the genuineness of transaction and creditworthiness the remaining 204 parties have never been produced, nor the addresses were provided. The copies of vouchers filed during assessment and appeal proceedings have been found to self serving documents without having any evidentiary value. In fact, the AO has proved beyond doubt that the story of unsecured loans from relatives and friends was a cooked story and afterthought. This fact is cemented from the "change of stand during appeal proceedings” when the impugned grounds were stated to be contribution by community members for purchase of crane. In view of all the above stated facts, in my considered opinion, the cash deposits of Rs.40,08,000/- has remained to be explained and AO has been found justified in making addition u/s 69 of the Income Tax Act, 1961. The same is hereby confirmed. Both the grounds of appeal are dismissed.” 9. Analyzing the same, Ld. DR submitted that there is a total contradiction in the assessee’s explanation before lower authorities. While the assessee submitted to Ld. AO that he had taken unsecured loans from relatives/friends, he changed his stand altogether before Ld. CIT(A) and stated to have formed a group of community members and received contributions from them for purchase of crane. Ld. DR submitted that an assessee, who has full knowledge of his financial affairs, cannot be said to play with the tax-authorities in this manner by changing his explanation about facts. Ld. DR submitted that the sum of Rs. 40,08,000/- is not a small amount; it’s a very hefty sum and there is a strong burden upon assessee to explain the identity and creditworthiness of the giver as also the genuineness of transactions. But since the assesese has miserably failed to do so, the lower authorities have rightly made/upheld addition. Ld. DR prayed to uphold the action of lower authorities. 10. We have considered submissions of Ld. DR and also perused the orders of lower authorities. After a careful consideration, we find a strong weightage in the submission of Ld. DR that (i) the assessee has made contradictory explanations before the AO and CIT(A) as to the source of Rs. Mohd. Idrees ITA No.190/Ind/2020 Assessment year 2015-16 Page 5 of 6 40,08,000/-; (ii) the assessee has shown receipts of Rs. 19,000/- each from as many as 215 persons which raises eyebrow on the explanation of assessee; (iii) the assessee has not been able to file any confirmation from 204 persons and 11 persons examined by AO are also not found to be persons of creditworthiness. Therefore, we find that the assessee has not been able to discharge the heavy burden cast upon him to prove the three ingredients of section 68 viz. identity, creditworthiness and genuineness. Hence, the revenue-authorities have rightly made the addition. We find that the order of first-appeal passed by Ld. CIT(A), as reproduced above, is self- speaking and reasoned one and it does not require any interfere by us. Accordingly, we uphold the addition and dismiss ground No. 2 of assessee. 11. Resultantly, this appeal of assessee is dismissed. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 28/03/2023. Order pronounced in the open court on ....../....../2023. Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 28.03.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Mohd. Idrees ITA No.190/Ind/2020 Assessment year 2015-16 Page 6 of 6 1. Date of taking dictation 20.3.23 2. Date of typing & draft order placed before the Dictating Member 20.3.23 3. Date on which the approved draft comes to the Sr. P.S./P.S. 20.3.23 4. Date on which the approved draft is placed before other Member 5. Date on which the fair order is placed before the Dictating Member for pronouncement 6. Date on which the file goes to the Bench Clerk 7. Date on which the file goes to the Head Clerk 8. Date on which the file goes to the Assistant Registrar for signature on the order 9. Date of dispatch of the Order