Dishant Chimanbhai Mangroliya, Surat V. Income Tax Officer, Ward-3(3)(2), Surat

ITA 217/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7483 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 25-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice
• Section: 144; 139; 142(1); 133(6); 274; 69A

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.217/SRT/2024 Assessment Year: (2017-18) (Physical Court Hearing) Dishant Chimanbhai Mangroliya B-83, Govindpark Society, Varachha Road, Nr. Sarthana Jakatnaka, Surat-395008 Vs. Income Tax Officer, Ward- 3(3)(2), Surat, Room NO.421, 4 th Floor, Aayykar Bhawan, Nr. Majura Gate, Opp. New Civil Hospital, Surat -395001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: DDDPM 0074 F (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) िनधाŊįरती की ओर से /Appellant by Shri Sapnesh R Sheth, CA िनधाŊįरती की ओर से /Respondent by Shri Vinod Kumar, Sr-DR अपील पंजीकरण/Appeal instituted on 26.02.2024 सुनवाई की तारीख /Date of Hearing 30.04.2024 घोषणा की तारीख /Date of Pronouncement 30.04.2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal filed by the appellant emanates from the order dated 09.01.2024 passed by the Learned Commissioner of Income-tax (Appeals) National Faceless Appeal Centre, Delhi, (in short, “the Ld.CIT(A)”) which in turn was against the assessment order passed by Assessing Officer u/s 144 of the Income-tax Act, 1961 (for short, ‘the Act’) for assessment year (AY) 2017-18 dated 05.10.2019. The grounds raised by the appellant is as under: - “1. On the facts and circumstances of the case as well as law on the subject, the ld. Commissioner of Income Tax (Appeals), NFAC has erred in 2 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad rejecting the appeal filed by the assessee on the ground that assessee has not fulfilled the provisions of Section 249(4)(b) of the I.T act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in dismissing the appeal filed by the assessee on the ground that appeal cannot be admitted in view of specific provisions under section 249(4)(b) of the Act, without appreciating that in statement of facts it is clearly stated that assessee did not have any taxable income in the year under consideration and as such there is no liability to pay advance tax. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of Assessing Officer in making addition of Rs.1,96,55,634/- on account of unexplained money u/s 69A of the I.T Act, 1961. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC, has erred in confirming the action of Assessing Officer in invoking provisions of section 115BBE of the Act and in thereby taxing entire unexplained money at 60% and levying surcharge at 25% which is not applicable on above addition. 5. It is therefore prayed that above appeal of assessee may kindly be admitted and addition made by Assessing Office and confirmed by Commissioner of Income-tax (Appeals), NFAC 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 appellant has not filed his return of income for the assessment year (AY) 2017-18 as required u/s 139 of the Act. On verification of the data relating to cash deposits during the demonetization period (09.11.2016 to 30.12.2016), which was available in AIMS module of ITBA, it was found that appellant had deposited substantial cash in his bank account during demonetization period (from 09.11.2016 to 30.12.2016). Hence, notice u/s 142(1) was issued and served upon the assessee but the assessee did not respond to the said notice. Accordingly, Assessing Officer (AO) has passed assessment order u/s 144 of the Act on 3 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad 05.10.2019. It is mentioned in the assessment order that appellant has deposited cash of Rs.25.90 lakh in his bank account maintained in The Financial Co-Op. Bank, New Bombay Market, Umarwada, Surat. In absence of the return of income and reply of assess to the notice u/s 142(1) of the Act, the source of cash deposits could not be explained. The AO has mentioned that as many as five opportunities were granted to appellant but there was no compliance by the assessee. Subsequently, AO obtained details of various cash deposits and other credit entries from the “The Financial Co-Op.Bank” by calling information u/s 133(6) of the Act. It was found therefrom that appellant has deposited cash of Rs.25.90 lakh and there were other credit entries of Rs.1,70,65,634/- during the period under consideration. The AO issued final show-cause notice on 21.09.2019, wherein the assessee was asked as to why the order should not be finalized u/s 144 of the Act and why the amount of Rs.1,96,55,634/- (Rs.25,90,000 + Rs.1,70,65,634/-) should not be added as undisclosed income of the appellant. The appellant did not reply to the said show cause notice and hence, AO invoked the provision of Section 69A of the Act and added cash deposit of Rs.25,90,000/- and credit entries of Rs.1,70,65,634/- as unexplained money u/s60A of the Act. The AO also initiated penalty u/s 274 r.w.s. 272A(1)(d) of the Act separately. The tax has been calculated as per rate specified u/s115BBE of the Act. Aggrieved 4 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad by the order of AO, the appellant has filed appeal before Ld.CIT(A)-3 Surat. The case of appellant migrated before NFAC/Ld.CIT(A). 3. Before Ld.CIT(A) while processing the appeal filed in Form-35, it was noticed that the appellant has not paid any tax equal to the amount of advance tax u/s249(4)(b) of the Act. As per provision of us/249(5)(b) of the Act, the appellant is mandatorily required to pay an amount equal to the amount of advance tax, which was payable by him to get his appeal admitted. Since the appellant had not paid the impugned tax, a deficiency letter was issued to the appellant requesting for compliance within five days of receipt of the said deficiency letter. In response to the deficiency letter, the appellant vide its reply dated 15.12.2023 stated that when the appellant has not filed return of income for the impugned assessment year, the question of paying tax thereon does not arise. Hence, there is no mistake apparent on the part of appellant in filing Form-35. The Ld.CIT(A) considered the submission of appellant and held that appeal is not liable to be admitted unless appellant has paid amount equal to the amount of advance tax, which was payable by him if no return of income has been filed, as per the clear provisions of Section 249(4)(b) of the Act. The appellant has not also provided any satisfactory explanation / clarification in response to the deficiency letter issued by the Ld.CIT(A). Hence, the Ld.CIT(A) has not admitted the appeal of appellant and dismissed the 5 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad appeal in limine. Aggrieved by the order of Ld.CIT(A) the appellant has filed present appeal before the Tribunal. 4. Before us, Ld.AR for the appellant has strongly contested the action of the Ld.CIT(A) in not admitting the appeal of appellant. He has argued that the appellant did not have any taxable income in the year under consideration and therefore there was no liability to pay advance tax. He further stated that the appellant is an ordinary person and is not well versed with the income-tax proceedings. The appellant was completely unaware of the issue of notice on e-mail. Therefore, he could not file the details asked by the AO / Ld.CIT(A). He further stated that appellant was engaged in the business of trading of yarn during the year and the credits appearing in the bank account represents gross business receipts of the appellant and also the cash withdrawals made in the past period. Hence, cash deposited and credit entries do not represent unexplained money of the appellant. Only the profit element could be added and not the entire deposit as has been done by the AO. He requested that another opportunity of hearing may be given to explain his case and to decide the case on merit in accordance with law. 5. On the other hand, Ld.Sr-DR for the Revenue supported the order of lower authorities. He, however, stated that the Department would not have any objecting if the matter is restored back to the file of AO. 6 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad 6. We have considered the submissions of both parties and perused the records carefully. We find that the AO passed the assessment order u/s 144 of the Act because appellant did not comply with the notices issued to him on various dates. The order passed u/s 144 is best judgment assessment in absence of return of income filed u/s 139 or failure to comply with the terms of notice issued u/s 142(1). Since the appellant could not explain the source of cash deposits of Rs.25,90,000/- and credit entries of Rs.1,70,65.634/-, the AO has invoked the provision of Section 69A and added the total amount as unexplained money u/s 69A of the Act. On further appeal before first appellate authority, he has not admitted the appeal of assessee by stating that the appellant has not paid an amount equal to the amount of advance tax as per the provisions of Section 249(4)(b) of the Act. We further note that both the authorities below have passed their respective orders without considering the merit of the case, as stated earlier. The Ld.AR has stated that appellant was engaged in the business of trading of yarn during the year and only the profit element would be liable to tax and not the gross receipt. Without delving much into the merit of the present case, we are of the considered opinion that the appellant should be granted one more opportunity of hearing to furnish its explanation and supporting documents / details to support his case. In the interest of justice and following the principle of natural justice, we set aside the order of Ld.CIT(A) and matter is remitted back to the file of AO to 7 ITA No.216/SRT/2024 / AY.22-23 Radha Krishna Mandir Trust Nansad make de novo assessment after giving adequate opportunity of being heard to appellant. The assessee is also directed to file necessary documents and evidences as needed by the AO. For statistical purposes, the appeal of the assessee is treated as allowed. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order is pronounced in the open court on 30/04/2024 after closing of hearing. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत/Surat Ǒदनांक/ Date: 30/04/2024 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/PS ITAT, Surat