MANISH BHAGVANJIBHAI KAPURIYA, Kamrej, Surat V. Income Tax Officer, Ward-2(3)(3), Aayakar Bhavan, Surat

ITA 199/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 5653 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-06-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Principle of natural justice; Additional evidence; TDS; Set aside
• Section: 68; 144; 142(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JIDICIAL MEMBER & SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.199/SRT/2024 Assessment Year: (2017-18) (Physical Court Hearing) Manish Bhagvanjibhai Kapuriya F-2, 304, Star Dharm Residency, Pasodra Kamrej, Surat-394185 Vs. Income Tax Officer, Ward- 2(3)(4), Surat, Aaykar Bhawan, Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: BXMPK 1732 M (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Mehul Shah, CA िनधाŊįरती की ओर से /Respondent by Shri Vinod Kumar, Sr. DR अपील पंजीकरण/Appeal instituted on 21.02.2024 सुनवाई की तारीख /Date of Hearing 24.06.2024 घोषणा की तारीख /Date of Pronouncement 25.07.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order of the Learned Commissioner of Income-tax(Appeals) /National Faceless Appeal Centre, Delhi [in short, “CIT(A)]” u/s 250 of the Income-tax Act, 1961 (in short, “the Act”) dated 19.01.2024 for assessment year 2017- 18. Grounds of appeal raised by the assessee are as under:- 2 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) ought to have admitted the additional evidence under Rule 46A. 2. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in making an deduction of Rs.35,35,939/- on account of unexplained credits u/s 68 of the IT Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the Assessing Officer in taxing the income u/s 115BBE @ 77.25% in a retroactive manner by applying the duly substituted section 115BBE inserted retrospectively instead of taxing at it 35.54% as per the old provision of section 115BBE. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of the Assessing Officer in taxing the total business receipts by taking the rate @77.25% by attracting section 115BBE instead of estimation of profits at normal tax rate. 5. It is therefore prayed that above addition made by the Assessing Officer and confirmed by CIT(A) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 2. Facts in brief are that the assessee filed his return of income (in short, ‘ROI’) for the AY 2017-18 on 07.03.2018 declaring total income of Rs.2,33,470/-. The AO issued notices u/s 142(1) of the Act on 05.10.2019 and 10.12,2019 which was not responded by the assessee. Subsequently, a show cause notice u/s 144 of the Act was issued on 10.12.2019 requiring the assessee to furnish complete source of cash 3 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya deposited along with supporting evidence. Again, there was no compliance. Thereafter, AO observed that assessee has not produced any details or evidence to establish that he was prevented by sufficient cause from producing any evidence which he was called upon to produce. The assessee was also not prevented by sufficient cause from producing any evidence on which he relies. In view of the above, he passed best judgment assessment by u/s 144 of the Act on 10.12.2019 by adding credit of Rs.17,60,900/- in SBI, credit of Rs.11,74,300/- in Laxmi Vilas Bank, Rs.6,00,739/- in Kotak Mahindra Bank (i.e., total Rs.35,35,939/-) u/s 68 of the Act and levied tax u/s 115BBE of the Act. Aggrieved by the order of AO, assessee preferred appeal before CIT(A). 3. The Ld. CIT(A) has examined the submission of the assessee which was e-filed by the assessee. He called for a remand report based on submissions of assessee. The remand report was submitted by ITO on 13.09.2023 which is reproduced at pages 4 to 6 of the appellate order. The CIT(A) considered the submission of the assessee and the remand report of the AO. He observed that adequate opportunities were given by AO during assessment proceedings which was not availed by the assessee and therefore additional evidence was not admitted. Thereafter, he observed that the assessee did not satisfactorily explain the cash deposit in his bank accounts. Accordingly, 4 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya he upheld the addition made by the AO. Further aggrieved by the order of CIT(A), the assessee has filed present appeal before this Tribunal. 4. Before us, Ld. AR submitted a paper book containing 435 pages and copies of various decisions on which the Ld.AR relied. The Ld. AR of assessee submitted that the assessee only earns monthly commission income from TIN-Facilitation Centre (TIN-FC)-cum-PAN Centre established by the National Security Depository Limited. (in short, ‘NSDL’) on behalf of Income-tax Department. The assessee collected government fees from TDS taxpayers, PAN applicants and deposits the amount in the bank account and ultimately transfers the same to Religare Security Ltd. He receives monthly commission for the above transactions from Religare Security Ltd. Since the assessee is a small person and since he was not aware of the nuisances of e-proceedings, he could not reply of the notices issued by AO. He stated that his case was selected for scrutiny for the first time. He further stated that assessee had filed on-line response after demonetization period about the cash transactions. However, no further enquiry or additional information was called for by the Department. Hence, it is wrong on part of AO to conclude assessment without making any reference to the replies under clean money operation. Thus, the appellant was prevented by sufficient cause from producing the evidence and since it 5 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya goes to the root of the issue, the additional evidence deserves to be admitted in the interest of substantial justice. For this, Ld.AR of the assessee relied on the decision of Hon’ble Delhi High Court in case of CIT vs. Virgin Securities & Credits (P) Ltd. 332 ITR 396 (Del) where it was held that CIT(A) can admit additional evidence if the same is crucial for disposal of appeal. He also relied on following decisions: (i) Smt. Prabhadevi S. Shah vs CIT, 231 ITR 1 (Bom.) (ii) ITO vs. Bajoria Foundation, 117 Taxman 126 (Cal.) (iii) Smt Geeta Devi Sharma vs. ITO, 159 taxmann.com 483 (Jaipur) Trib.) (iv) Smt Chandadevi Patodia vs. ITO, ITA No.4040/Ahd/2008 dated 10.05.2011 (v) Bhavnaben B Chauhan vs. ITO ITA No.270/SRT/2024 dated 05.06.2024 (vi) M/s Dhanalakshmi Jewellers vs. ITO in ITA No.1609/Bang/2017 dated 16.09.2020 (vii) M/s Bidar Nirmithi Kendra vs. ITO ITA Nos.1875- 1878/Bans/2018 dated 26.07.2019 (viii) Rajendra Chaudhary (HUF) vs. ITO in ITA No.7687/Bum/2019 dated 04.04.2022 and (ix) CIT vs. Pradeep Shantilal Patel (2014) 42 taxmann.com 2 (Guj). The Ld.AR of the assessee also stated that copy of remand report of the AO was not given to the assessee for rebuttal of the contention of AO. Hence, principle of natural justice was not followed by the CIT(A) before deciding the appeal. 6 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya 5. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. He submitted that adequate opportunity was given to the assessee by the lower authorities. 6. We have heard the rival submissions of the parties and perused the materials available on record. We have also deliberated various case law cited by Ld.AR of the assessee. We find that the assessee was receiving commission from Religare Securities Ltd., for running his branch office of TIN-FC-cum-PAN Centre established by NSDL on behalf of Income-tax Department. He was depositing the fees collected from the taxpayers and clients which was transferred to Religare Securities Ltd. After demonetization period, the assessee has submitted response to on-line Cash Transactions 2016 declaring SBN of Rs.5,18,000/- in SBI. This information has not been verified by the AO. We also find that the remand report submitted by the AO to CIT(A) has not been made available to the assessee to file his response and explain the issue on merit. Therefore, there is clear violation of the principle of natural justice. Further, it may be stated that under sub-section (4) of Section 250 of the Act the CIT(A) is empowered to make further enquiry as he thinks fit or to direct AO to make further enquiry and report the result of such enquiry to him. If the appellate authorities fails to exercise his discretion judicially and arbitrarily refuses to make enquiry in a case 7 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya where the facts and circumstances so demand, his action would be open to correction by higher authorities. In case of Bajoria Foundation (supra) the Kolkata ITAT held that where assessment was done u/s 144 of the Act, the assessee obviously did not have opportunities to produce evidence before the AO. In such circumstance, if the assessee produce some evidence before the CIT(A), such additional evidence was clearly covered by clause-(c) of Rule-46A of the Income-tax Rules, 1962 and admission of same was within the powers vested in CIT(A) u/s 250(4) of the Act. In view of these facts and circumstances of the case and the decision cited supra we are of the considered opinion that the additional evidence produced before the CIT(A) should have been admitted. We also find that the CIT(A) has not adhered to the principle of natural justice by not providing copy of remand report to assessee for his response. Accordingly, considering all the facts, in the interest of justice, we set aside the order of Ld. CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to assessee. The assessee is directed to be more vigilant and to furnish all details and explanation as needed by AO by not seeking adjournment without valid reason. With this direction, the grounds of appeal raised by the assessee is treated as allowed for statistical purposes. 8 ITA No.199/SRT/2024 AY.17-18 Manish B. Kapuriya 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 25/07/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत/Surat Ǒदनांक/ Date: 25/07/2024 DKP Outsourcing Sr.P.S Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS ITAT, Surat