Shri Bogha Naran Dhrevada, Jamnagar V. The ITO, Ward-1(5), Jamnagar

ITA 218/RJT/2019

AI Insights

The case involves Shri Bogha Naran Dhrevada, the appellant, who contested the additions made to his income by the AO, which were later upheld by the CIT(A). The additions pertained to an amount of 38,35,577/-, which the AO considered as income but the assessee claimed it was an advance from Bombay Minerals Ltd for mining contracts. The Tribunal examined the documents and certificates provided by the assessee and Bombay Minerals Ltd, and concluded that the assessee had sufficiently demonstrated that the amount in question was indeed an advance and not income for the year under assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124027 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-03-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 06-10-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; FORM 26AS
• Section: 44AD; 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH VIRTUAL COURT ] Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Bog ha Naran Dhrevada, Jo isher Estate, B/h. Water Tank, Aero dra m Road, Near Digja m Circl e, Ja mnagar PAN: AEBP D9 584K (Appellant) Vs The ITO, Ward-1(5), Ja mnagar (Resp ondent) Asses see by : None Revenue by : Shri B. D. Gupta, Sr. D. R. Date of hearing : 06-03 -2023 Date of pronouncement : 14-03-2023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This assessee’s appeal for A.Y. 2016-17, arises from order of the CIT(A), Jamnagar dated 12-07-2019, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”. ITA No. 218/Rjt/2019 Assessment Year 2016-17 I.T.A No. 218/Rjt/2019 A.Y. 2016-17 Page No. Shri Bogha Naran Dhrevada vs. ITO 2 2. The assessee has raised the following grounds of appeal:- “1. The Ld. CIT (A) has grossly erred in facts and laws of the case & has with prejudiced state of mind added the entire advance money received by the assessee in his gross receipts. 2. The Ld. CIT (A) has erred in treating 8% of advance money received as net income of assessee. 3. Further Ld. CIT (A) has also grossly erred in laws & violated the principal of natural justice by not providing any further opportunity to assessee to prove the amount received from M/S Bombay Minerals Limited as advance. 4. The Ld. CIT (A) failed to properly considered, analyzed and has not appreciated the evidences filed before him and thus the addition was made merely on conjecture. Thus the additions was uncalled for and same be deleted. 5. It is therefore prayed that above addition made by Ld. A.O. may, please be deleted. 6. Appellant craves for to add, alter, delete or modify any grounds either before or in the course of hearing of the appeal.” 3. The brief facts of the case are that the assessee filed its return of income for assessment year 2016-17 declaring total income of 5,04,820/ -. During the year under consideration, the assessee was engaged in business of mining contract with primarily two entities- Ashapura Minechem Ltd and Bombay Minerals Ltd. The assessee did not maintain the books of accounts and offered his business income under section 44AD of the Act in his return of income. During the course of assessment, the AO observed that as per Form 26AS, the assessee has gross receipts of 1,29,61,187/-whereas as per the return of income, the receipt of the assessee are 91,25,610/-. The AO asked the assessee to explain the difference between the same amounting to 38,35,577/- and to provide supporting documents in support of the same. In response, the assessee filed written submission regarding the difference of 38,35,577/ -and submitted that this difference was on account of the fact that this amount of 38,35,577/- represented advance received by the assessee from Bombay Minerals Ltd and hence the same was not I.T.A No. 218/Rjt/2019 A.Y. 2016-17 Page No. Shri Bogha Naran Dhrevada vs. ITO 3 shown as income of the assessee during the year under consideration. To verify the details submitted by the assessee, the AO issued notice under section 133(6) to Bombay Minerals Ltd, who also filed a response to the AO in respect of the aforesaid notice issued to it. However, the AO was not convinced with the explanation provided by Bombay Minerals Ltd and also the replies filed by the assessee on the ground that the assessee has not been able to furnish the necessary evidences/proof in support of its claim that the aforesaid amount constituted advance and hence the AO added a sum of 38, 35,577/-as income of the assessee during the year under consideration. 4. In appeal before ld. CIT(A), the assessee produced a certificate from Bombay Minerals Ltd stating that it had advanced a sum of 1,29,29,300/- in financial year 2015-16 and had again given advance of 1,04,04,044/ - in financial year 2016-17 to the assessee against mining work. However, Ld. CIT(Appeals) dismissed the appeal of the assessee on the ground that the amount mentioned in the certificate issued by Bombay minerals Ltd is not matching with the difference of 38,35,577/- which has been subject to tax in the hands of the assessee on account of the difference arising in Form 26AS and the ITR filed by the assessee. 5. The assessee is in appeal before us against the aforesaid additions confirmed by Ld. CIT(Appeals). From the facts placed before us, we observe that when the assessee was asked to explain the difference of 38,35,577/- during the course of assessment proceedings, it filed several details before the AO viz. Income tax return for assessment year 2016-17, Form 26AS, profit and loss account and balance sheet for year ended 31-03- I.T.A No. 218/Rjt/2019 A.Y. 2016-17 Page No. Shri Bogha Naran Dhrevada vs. ITO 4 2015 and 31-03-2016, bank statement and bank passbook for the relevant period, details of income statement in comparison to Form 26AS for assessment year 2015-16 and 2016-17, ledger account of Bombay Minerals Ltd for assessment year 2016-17 and 2017-18. Further, the AO also issued notice under section 133(6) of the Act to Bombay minerals Ltd to verify whether the said party had advanced any amount to the assessee during the course of assessment proceedings. The AO also made an observation at para 4 of his order that Bombay Minerals Ltd also filed reply in response to the notice under section 133(6) issued to it. Further, in appellate proceedings before Ld. CIT(Appeals), the assessee also furnished a certificate from Bombay Minerals Ltd stating that it had given an advance of 1,29,29,300/-in financial year 2015-16 and had again given advance of 1,04,04,044/-in financial year 2016-17 to the assessee against mining work. However, the Ld. CIT(Appeals) overlooked the certificate furnished by the assessee from Bombay Minerals Ltd on the ground that the amounts mentioned in the certificates are not matching with the difference which has been added by the AO in the hands of the assessee. In our considered view, looking into the facts of the case and documents furnished by the assessee during the course of assessment proceedings and appellate proceedings, the replies provided by the assessee to explain the difference between the amount coming in the Form 26 AS and that appearing in the return of income filed by the assessee, reply of Bombay Minerals Ltd to the AO in response to notice issued under section 133(6) of the Act and further the certificate issued by Bombay Minerals Ltd certifying that it had made advances to the assessee against mining work in financial years 2015-16 and 2016-17 which were produced by the assessee before Ld. CIT(Appeals), we I.T.A No. 218/Rjt/2019 A.Y. 2016-17 Page No. Shri Bogha Naran Dhrevada vs. ITO 5 are of the view that the assessee has been able to able to explain the difference between the amount coming in Form 26AS and the amount declared in the return of income. The assessee has time and again furnished details to the AO/CIT (Appeals) which were not appreciated by them. In view of the above observations, the appeal of the assessee is allowed since, in our view, the assessee has been able to explain the difference with the help of supporting documents and certificate issued by Bombay Minerals Ltd certifying that the party had advanced amounts the assessee against mining work in financial years 2015-16 and 2016-17. 5. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 14-03-2023 Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 14/03/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot