Shri Ali Hasan, Gurgaon V. ITO, New Delhi

ITA 2212/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3583 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Assessee Lawyers: BHAGIRATH TIWARI
• Keywords: Unexplained cash credit; Additional evidence; Reasonable cause
• Section: 44AD; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NOS. 2211 & 2212/DEL/2010 ASSESSMENT YEAR: 2006-07 ALI HASAN, 4-18/21, PINK TOWER HOUSE, DLF, PHASE III, GURGAON. AAVPH9005M VS. ITO, WARD 38(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : BHAGIRATH TIWARI RESPONDENT BY: AMRENDRA KUMAR, SR. DR O R D E R PER I.P. BANSAL, J.M. BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND THEY ARE DIRECTED AGAINST TWO ORDERS OF CIT(A) DATED 23.02.10 FOR A.Y . 2006-07. GROUNDS OF APPEALS READ AS UNDER: - GROUNDS OF ITA NO. 2211/DEL/10 : 1. THE LD. AO HAD ERRED IN COMPLETING EX-PARTE ASS ESSMENT WITHOUT KNOWING THAT THE ASSESSEE WAS SERIOUSLY ILL FROM JU NE, 2009 TO JANUARY, 2009 AS HE HAD SEVERE PROBLEM OF HIP DISC AND WAS U NDER THE TREATMENT OF ORTHOPAEDECIAN. AS SUCH, THE ACTION OF THE LD. AO IN FRAMING EX-PARTE ASSESSEE IS UNJUSTIFIED AND UNCALLED FOR. 2. THE LD. AO HAS ERRED IN MAKING AN ADDITION OF RS . 11,85,000/- TO THE INCOME OF THE ASSESSEE ALLEGING THE SAME TO BE AMOU NTS DEPOSITED IN THE BANK ACCOUNT ON VARIOUS DATES, WHICH, IN FACT, ARE OUT OF THE GROSS RECEIPTS SHOWN BY THE ASSESSEE TO THE TUNE OF RS. 3 2,92,800/-. THE 2 ITA NOS. 2211 & 2212/DEL/2010 ASSESSEE HAD OFFERED TO BE ASSESSED UNDER THE PROVI SIONS OF SEC. 44AD AS PER OUR 8% OF THE GROSS RECEIPTS ARE TAKEN AS NE T ASSESSABLE INCOME. THE APPELLANT HAD CLEARLY MENTIONED IN THE STATEMEN T OF ASSESSABLE INCOME THAT THE INCOME WAS BEING OFFERED U/S 44AD A ND INSTEAD OF 8% , HAD OFFERED 10% OF HIS GROSS RECEIPTS AND HIS NET I NCOME. THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT LOOKING INTO THE CASH FLOW STATEMENT OF THE ASSESSEE. THE ASSESSEE IS A TOTALLY ILLITERATE PETTY PRIVATE CONTRACTOR WHO IS OTHERWISE SUFFERING FROM ILLNESS. INSTEAD OF TAKING A LENIENT VIEW OF THE MATTER, A SUM OF RS. 1 1,85,000/- HAS BEEN ADDED TO THE DECLARED INCOME OF RS. 3,24,560/- WHIC H IS TOTALLY UNJUSTIFIED, UNCALLED FOR, BAD IN LAW AND, AS SUCH, THE SAME IS REQUESTED TO BE DELETED. 3. THE ASSESSEE MAY BE PERMITTED TO RAISE ADDITIONA L GROUNDS OF APPEAL OR AMEND OR ALTER THE GROUND OF APPEAL, IF REQUIRED SU BSEQUENTLY. GROUNDS OF ITA NO. 2212/DEL/10 : 1. THE LD. AO HAD ERRED IN IMPOSING A PENALTY OF R S. 80,000/- AND THE LD. CIT(A) HAS ERRED IN CONFIRMING THE SAID PENALTY OF RS. 80,000/- WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE WAS TOTALLY BED RIDDEN AND WAS NOT ABLE TO ATTEND TO PROCEEDINGS FOR WHICH MEDICAL CERTIFICATE WAS ALSO PRODUCED BEFORE THE LD. CIT(A). AS SUCH, THE ACTIO N OF THE LD. AO AS WELL AS THE LD. CIT(A) IS ARBITRARY, UNJUSTIFIED AND BAD IN LAW AND UNCALLED FOR. 2. THE ASSESSEE MAY BE PERMITTED TO RAISE ADDITIONA L GROUNDS OF APPEAL OR AMEND OR ALTER THE GROUND OF APPEAL, IF REQUIRED SU BSEQUENTLY. 2. THE ASSESSEE IS A CONTRACTOR WHO HAS FURNISHED T HE RETURN OF INCOME ON 31 ST AUGUST, 2006 DECLARING AN INCOME OF RS. 3,07,650/- . 3. ACCORDING TO AIR INFORMATION THERE WERE CASH DEP OSITS OF RS. 11,85,000/- IN SAVING BANK ACCOUNT WITH NAINITAL BA NK, GURGAON. IN RESPONSE TO VARIOUS NOTICES ISSUED FOR FRAMING THE ASSESSMEN T THE ASSESSEE DID NOT APPEAR HENCE EX-PARTE ASSESSMENT WAS MADE U/S 144 O F THE INCOME TAX ACT, 3 ITA NOS. 2211 & 2212/DEL/2010 1961, WHEREBY AN ADDITION OF RS. 11,85,000/- BEING CASH DEPOSIT IN BANK ACCOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT BEING UNEXPLAINED CASH DEPOSITS. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT ASSESSEE DOE S NOT MAINTAIN BOOKS OF ACCOUNT AS THE TURN OVER OF THE ASSESSEE IS LESS THAN RS. 40 LAKH. THE CASH FLOW STATEMENT WAS FILED WHEREIN THE SOURCE OF DEPO SIT IN THE BANK ACCOUNT WAS REFLECTED AND IT WAS SUBMITTED THAT THE CASH DEPOSI TED IN THE BANK ACCOUNT IS SUPPORTED BY THE EXPLAINED SOURCE OF INCOME. 5. IN THE ALTERNATIVE IT WAS SUBMITTED THAT THERE W AS A REASONABLE CAUSE FOR NON-APPEARANCE BEFORE THE AO. IT WAS SUBMITTED THA T THE ASSESSEE WAS SUFFERING WITH A CHRONIC DISEASE OF P.I.V.D. RADIAT ING LEFT LEG AND A MEDICAL CERTIFICATE WAS FILED TO SUPPORT SUCH ARGUMENT IN W HICH THE ASSESSEE WAS ADVISED COMPLETE BED REST FOR A PERIOD OF ALMOST FO R AN YEAR FROM JUNE, 2008 TO JAN, 2009 AND DUE TO THAT THE BED REST THE ASSESSEE COULD IMPROVE HIS HEALTH. THUS, IT WAS SUBMITTED THAT THERE WAS LACK OF OPPOR TUNITY AND THERE WAS REASONABLE CAUSE FOR NON-ATTENDANCE BEFORE AO. LD. CIT(A) HAS REJECTED ALL THESE DOCUMENTS. HE DENIED TO TAKE INTO CONSIDERAT ION THE CASH FLOW STATEMENT ON ACCOUNT OF THE SAME BEING ADDITIONAL EVIDENCE. HE OBSERVED THAT ASSESSEE COULD NOT FILED ADDITIONAL EVIDENCE IN ABSENCE OF E XPLANATION TO SHOW THAT HOW THE CONDITIONS LAID DOWN UNDER RULE 46 WERE APPLICA BLE FOR ADMISSION OF THE ADDITIONAL EVIDENCE. THUS, THE ADDITIONAL HAS BEEN UPHELD BY LD. CIT(A). 4 ITA NOS. 2211 & 2212/DEL/2010 6. ONE SHRI BHAGIRATH TIWARI APPEARED ON BEHALF OF ASSESSEE FOR TAKING ADJOURNMENT. HOWEVER, HE SUBMITTED THAT AS THE ASS ESSEE IS PLEADING LACK OF OPPORTUNITY ON ACCOUNT OF PREVENTED BY REASONABLE C AUSE FOR NON-APPEARANCE BEFORE AO AND ALSO REFUSAL OF ADMISSION OF ADDITION AL EVIDENCE BEFORE CIT(A), IT WILL SERVE THE PURPOSE OF INTEREST OF JUSTICE, IF T HE MATTER MAY BE RESTORED BACK TO THE FILE OF AO FOR MAKING DENOVO ASSESSMENT. 7. HOWEVER, LD. DR RELIED UPON THE ORDER OF AO AND CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THE ASSESSEE HAS PLEADE D BEFORE CIT(A) THAT HIS FAILURE TO ATTEND THE ASSESSMENT PROCEEDINGS WAS ON ACCOUNT OF MEDICAL PROBLEM AND TO SUPPORT SUCH CONTENTION MEDICAL CERT IFICATE WAS ALSO FILED. HOWEVER, HIS NON-ATTENDANCE BEFORE AO HAS RESULTED INTO EX-PARTE ASSESSMENT ORDER IN WHICH MAIN ADDITION HAS BEEN MADE ON ACCOU NT OF UNEXPLAINED CASH CREDITS IN THE BANK ACCOUNT. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HAD SUBMITTED CASH FLOW STATEMENT TO CONTE ND THAT THE CASH DEPOSITS IN THE BANK ACCOUNT WERE SUPPORTED BY EXPLAINED SOU RCE. THE SAID EVIDENCE HAS BEEN REFUSED TO BE ADMITTED BY THE LD. CIT(A) D ESPITE THE FACT THAT ASSESSEE HAD PRODUCED MEDICAL CERTIFICATE TO CONTEN D THAT HIS FAILURE TO APPEAR BEFORE AO WAS ON ACCOUNT OF MEDICAL PROBLEMS. KEEP ING IN VIEW THE ENTIRETY OF THESE FACTS, WE ARE OF THE OPINION THAT IN THE INTE REST OF JUSTICE THIS MATTER SHOULD BE RESTORED BACK TO THE FILE OF AO WITH THE DIRECTION TO RE-FRAME DENOVO ASSESSMENT AFTER GIVING REASONABLE OPPORTUNITY OF H EARING AS WELL AS PLACING ALL 5 ITA NOS. 2211 & 2212/DEL/2010 THE EVIDENCES ON RECORD TO THE ASSESSEE TO EXPLAIN HIS CASE. WITH THESE DIRECTIONS, WE RESTORE THIS MATTER TO THE FILE OF A O. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. 10. SO AS IT RELATES TO PENALTY LEVIED U/S 271B, WE HAVE ALREADY OBSERVED THAT NON-ATTENDANCE OF THE ASSESSEE WAS ON ACCOUNT OF MEDICAL PROBLEM BEING FACED BY THE ASSESSEE FOR WHICH THE MEDICAL CERTIFI CATE WAS ALSO FILED BEFORE CIT(A). IN ANY CASE NOW WE HAVE RESTORED THE MATTE R TO THE FILE OF AO WITH A DIRECTION TO FRAME DENOVO ASSESSMENT. IN THIS VIEW OF THE SITUATION, WE FIND NO JUSTIFICATION IN CONFIRMING THE PENALTY WHICH IS DE LETED, HENCE, THE APPEAL FILED IN RESPECT OF LEVY OF PENALTY IS ALLOWED. 11. IN THE RESULT, THE APPEAL IN QUANTUM PROCEEDING S IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL IN PENALTY PROCEEDINGS IS ALLOW ED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16.07.201 0 (K.D. RANJAN) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 16.07.2010 *KAVITA 6 ITA NOS. 2211 & 2212/DEL/2010 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR