Shaikh Abdul Hameed, New Delhi V. ACIT Circle-32(1), New Delhi

ITA 1935/DEL/2020

AI Insights

The case involves Shaikh Abdul Hameed, the appellant, contesting an order from the CIT(A)-11, New Delhi, which confirmed additions made by the AO under section 69 of the Income Tax Act, 1961, labeling them as 'Unexplained Investments'. The additions amounted to Rs.24,35,180, which represented an increase in deposits, loans, and advances to corporates and others compared to the previous year. The AO had initially added this amount to the assessee's income due to lack of documentary evidence supporting the taxability of these transactions. The CIT(A) upheld this decision, leading to the appeal before the Tribunal. The Tribunal, after considering the submissions and the remand report from the AO, decided to set aside the CIT(A)'s order and restore the matter to the AO for further verification of the assessee's claims.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122252 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-02-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-12-2020
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Principle of natural justice; Additional evidence; Set aside
• Section: 69; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.1935/Del/2020 [Assessment Year : 2015-16] Shaikh Abdul Hameed, A-54, Ground Floor, Hauz Khas, New Delhi-110016. PAN-ABBPH8500Q vs ACIT, Circle-32(1), New Delhi. APPELLANT RESPONDENT Appellant by None Respondent by Ms. Maimun Alam, Sr.DR Date of Hearing 02.02.2023 Date of Pronouncement 28.02.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2015-16 is directed against the order of Ld. CIT(A)-11, New Delhi dated 28.08.2020. The assessee has raised following grounds of appeal:- 1. “On the facts and circumstances of the case, the Ld.CIT(A) erred in law by not appreciating the facts of the case and submission made before him by dismissing the grounds of appeal and confirming the impugned additions made by Ld.AO. 2. On the facts and circumstances of the case, Ld. CIT(A) has erred in law by refusing to admit and consider the Additional Evidence, related to confirmation of receipt of loan, submitted under Rule 46A of Income Tax Rules, 1962 related to Ms. Shaik Haseena Begum, which were banking transactions. By not considering the Additional Evidence submitted before him, in view of the unfavorable Remand Report of Ld.AO, the Ld. CIT(A) has even violated the principle of natural justice. 3. On the facts and merits of the case, Ld.CIT(A) has erred in law by confirming the additions made by ld.AO u/s 69 as “Unexplained Investments” when the party wise bifurcation of the Loans & Advances for Asst. Yr 2014-15 and 2015-16 were already provided to the Page | 2 Ld.CIT(A) and even to the Ld.AO. An entry in books of account cannot be deemed unexplained just because the confirmation was not available in time during assessment proceedings. The Ld.AO had not rejected the books of accounts of assessee on basis of which ITR data was complied. Thereby acting ultra vires the provision of the Section 69. Thus, Ld.CIT(A) has erred by not considering the legality of additions made u/s 69 and merits of the submissions during the appellate proceedings. 4. That, the Ld.CIT(A) has erred in law by confirming the additions made by Ld.AO u/s 69 with the basis that the differential figures of total amount of “Loans & Advances” for Asst Yr: 2014-15 and 2015-16 which were duly disclosed. The ITR itself can be done for making additions u/s 69. Thus, the invoking of section 69 to the make hasty additions to the declared income was beyond the scope of the section 69. 5. That the ld.CIT(A) has not appreciated the peculiar facts of the case related to the request for revision of books of accounts of assessee which were duly presented before him during appellate proceedings and even before the Ld.AO during assessment proceedings. The circumstances of the case were not properly considered while analyzing the submissions before Ld.AO and thereby confirming the impugned additions. 6. Any other ground that may be urged at the time of hearing with the permission of the Bench.” 2. At the time of hearing, no one attended the proceedings on behalf of the assessee. It is seen from the record that no one has been attended the proceedings since 21.07.2022. Despite various opportunities of hearing provided to the assessee, no one has attended the proceedings on behalf of the assessee. On the date fixed for hearing i.e. 02.02.2023, no one attended the proceedings on behalf of the assessee. The assessee has not provided any current address to the Page | 3 Registry. Therefore, the appeal is taken up for hearing in the absence of the assessee and is being disposed off on the basis of material available on record. 3. The present appeal filed by the assessee is barred by time. There is a delay of 15 days in filing of the present appeal. The assessee has filed an application seeking condonation of delay. It is stated that the impugned order was communicated through e-mail on 11.09.2020. Therefore, the limitation would be reckoned from the date when the order is communicated not to the date of the order i.e 28.08.2020. It is stated that the delay has been caused due to the illness of the Ld. Authorized Representative of the assessee and his mother. Therefore, there was a reasonable cause for filing the appeal belatedly by the assessee. 4. On the other hand, Ld. Sr. DR opposed these submissions and supproted the orders of the authorities below. 5. I have heard Ld. Sr. DR and perused the material available on record. Considering the fact that due to illness of Ld. AR and his mother and affidavit filed by the assessee, I therefore, condone the delay in filing the appeal by the assessee and the appeal is admitted for hearing. 6. The only effective ground in this appeal is related to confirmation of addition of Rs.24,35,180/-. 7. Facts giving rise to the present appeal are that in this case, the assessee filed return of income, declaring income of Rs.37,530/- on 31.01.2017. The case of the assessee was selected for limited scrutiny under CASS. The assessee is dealing in trading of construction material, contracts for road developments, Page | 4 maintenance & repairs-construction contracts. The assessment was framed vide order dated 30.12.2017 u/s 143(3) of the Income Tax Act, 1961 (“the Act”). During the course of assessment proceedings, it was noticed by the AO that the assessee had shown an increase of Rs.24,35,180/- over previous year under the head deposits, loans and advances to corporate and others. The assessee was asked to explain as to why the amounts specified by him as his investment/advances/loans should not be added to his total income as no documentary evidences was filed before the Department in relation to tax aspects in his return of income. Thereafter, the Assessing Officer (“AO”) assessed the income of the assessee at Rs.24,72,710/-. 8. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A) who after considering the submissions, dismissed the appeal of the assessee. 9. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 10. Ld. Sr. DR opposed these submissions and submitted that there is no infirmity in the order of the authorities below. She contended that the assessee was required to explain about the increase in the loan and advances. 11. I have heard Ld. Sr. DR and perused the material available on record and gone through the orders of the authorities below. Before Ld.CIT(A), the assessee had moved an application under Rule 46A of the Income Tax Rules, 1962 (“the Rules”) for admission of addition evidences. Ld.CIT(A) sought Remand Report from the AO who in the Remand Report, stated that the assessee has first time mentioned the name of Mrs. Shaik Haseena Begum to whom the assessee had Page | 5 given a sum of Rs.31,65,230/-. However, Ld.CIT(A) has decided the application and the issue by observing as under:- 7.3. “The AO was directed to submit a remand report on the additional evidences submitted by the assessee under 46-A of the I.T. Rules, 1962. The AO in his remand report dated 31.07.2019 stated that during the course of assessment proceedings assessee was provided with more than adequate opportunities to provide the requisite details. The assessee was asked explain as to why the amounts specified by him as his investments/ advances/ loans should not be added to his total income as no documentary evidence on his part has been provided to the AO in relation to tax aspects related to them in his return of income. However the assessee has not been able to reconcile and establish the source of the said amount and whether this amount was ever taxed or not, therefore the amount of Rs.24,35,180/- was added to the income of the assessee as unexplained investment. The assessee was in the full knowledge of the reasons for which the case was selected for scrutiny however, he did not arrange for the, confirmations [or a long time and was not forthcoming submitting information before the AO. Therefore assessee contention that he was prevented by 8ufficient cause from producing the evidence does not hold merit. During the appellate proceedings, the additional evidences filed 'by the assessee ought to have not been accepted, since the assessee was provided with enough opportunities during the assessment proceedings. 7.4. The AO has further stated in. his remand report that it is pertinent to mention here that during the entire assessment proceedings, the name of Mrs. Shaik Haseena Segum had not been mentioned anywhere on the schedule of lo~fadvance8 rued as on 31.03.2015. During the course of assessment proceedings it was observed that assessee had shown an increase of Rs.24,35,180/- over previous year under the head deposits, loans and advances to corporate and others. Vide show cause dated 19112/2017, he was asked explain as to why the amounts specified by him as his investments/ advances/ loans should not be Page | 6 added to his total income as no documentary evidence on his part has been provided to the this office in relation to tax aspects related to them in his return of income. But during the entire proceedings, nowhere the name of Mrs. Shaik Haseena Begum cropped up. Hence, it is clear that the name of Mrs. Shaik Haseena Begum is an afterthought to cover up the undisclosed transaction. Further, a confirmation letter from in the (arm of letter has been filed alongwith the copy of the passport and no supporting document has been filed which can substantially prove the claim of the transaction had taken place during the year. The assessee has failed to substantiate its claim of loan/advances given to Mrs. Shaik Haseena Begum. 7.5. I have perused the assessment order, submissions of the appellant and the remand report of the AO. I am in agreement with the views of the AO in the remand report that during the course of assessment proceedings, assessee was provided with more than adequate opportunities to furnish the requisite details and to explain as to why the amounts of Rs 24,35,180/- being increase over previous under the head deposits, loans and advances to corporate and others, should not be added to his total income. But the appellant could neither furnish an explanation nor any documentary evidences in support of his case. At the appellate stage he has come forward with an explanation that the increase of Rs.24,85,180/- over previous under the head deposits, loans and advances is on account of loan given by her sister Mrs. Shaik Haseena, who is a non resident based in USA. It is pertinent to mention here that during the entire assessment proceedings, the name of Mrs. Shaik Haseena had not been mentioned anywhere on the schedule of loan/advances filed as on 31.03.2015. Hence, It is clear that the name of Mrs. Shaik Haseena Begum is an afterthought to cover up the undisclosed transaction. Even the documents submitted now contain only a confirmation letter from Mrs Shaik Haseena and the copy of the passport. There are no supporting documents which can substantially prove the claim of the transaction had taken place during the year. Page | 7 8. In view of the above discussion, I am of the opinion that there is no merit in the grounds raised by the appellant. Accordingly grounds no. 1,2,3,4 & 5 are dismissed and addition made by the AO in assessment order dated 31.12.2017 amounting to Rs 24,35,180/- as unexplained investment is confirmed.” 12. Looking to the totality of the facts and the view of the ground taken by the assessee that there is a violation of principle of natural justice as the assessee was not provided sufficient opportunity by the AO. We hereby, set aside the impugned order and restore the issue to the file of AO. The AO would verify the claim of the assessee regarding the transaction with Mrs. Shaik Haseena Begum and if the assessee is able to prove the correctness of his claim regarding the loan given to Mrs. Shaik Haseena Begum, he would delete the addition to the extent of the amount given to Mrs. Shaik Haseena Begum. Thus, grounds raised by the assessee are allowed for statistical purposes. 13. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 28 th February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI