Jai Club, Jaipur V. ACIT/DCIT CIRCLE-6, JAIPUR

ITA 229/JPR/2023

AI Insights

The case involves Jai Club, which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming an addition of Rs. 5,97,248 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The addition was initially made by the AO during the assessment proceedings for the year 2016-17, which was upheld by the CIT(A). The Tribunal noted that the assessee had not been given a proper opportunity to present additional evidence due to various administrative oversights and thus decided to admit the additional evidence and remand the case back to the AO for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132362 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-07-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 12-04-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NAMAN KUMAR JAIN
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 143(2)

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 229/JPR/2023 fu/kZkj.k o"kZ@Assessment Year :2016-17 Jai Club Jai Club, Mahaveer Marg, C-Scheme, Jaipur. cuke Vs. ACIT/DCIT, Circle-6, Jaipur. LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAAJ 3200 G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby : Shri Naman Kumar Jain(C.A.) jktLo dh vksjls@Revenue by: Smt. Monisha Choudhary (Addl.CIT) lquokbZ dh rkjh[k@Date of Hearing :21/06/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 30/06/2023 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee aggrieved from the order of the National Faceless Appeal Centre, Delhi [herein after referred to as “NFAC/ld.CIT(A)”] dated 14.02.2023 for the assessment year 2016-17. 2. The assessee has raised the following grounds of appeal:- “1. In the facts and circumstances of the case and in law, Ld. CIT(A) has erred in confirming the action of Ld. AO of making addition of Rs. 597248 by wrongly considering the genuine creditors as unexplained cash credit u/s 68. The action of ld. CIT(A) is illegal, unjustified, arbitrary and against the 2 ITA No. 229/JPR/2023 Jai Club vs. ACIT/DCIT facts of the case. Relief may please be granted by quashing the said addition made by Ld. AO and confirmed ld. CIT(A). 2. The assessee craves the right to add, amend or alter nay of the grounds on or before the hearing.” 2. Brief facts of the case are that the assessee filed its return of income on 15.10.2016 declaring a total income of Rs. Nil and show loss of (-) Rs. 2,39,90,206/-. The case was selected under complete scrutiny through CASS. Notice u/s 143(2) was issued on 03.07.2017 which was duly served upon the assessee. The ld. AO completed assessment proceedings u/s 143(3) of the Act vide order dated 17.12.2018, and made addition of Rs. 5,97,248/- u/s 68 of the Act as unexplained cash credit on account of unverifiable creditors, thereby resulting in reduction of loss to (-) Rs. 2,33,92,958/-. 3. Being aggrieved, the assessee carried the matter in appeal before the ld. CIT(A). A propose to the grounds so raised by the assessee the relevant findings of the ld. CIT(A) is reproduced here in below:- “6.5 It is thus also a settled legal position that the onus of the assessee, of explaining nature and source of credit, does not get discharged merely by filing confirmatory letters, or demonstrating that the transactions are done through the banking channels or even by filing the income tax assessment particulars. The genuineness of the transaction as a whole is thus a very important and critical factor in the examination of explanation of the assessee, as required under section 68, with respect to the share application monies received by an assessee. 7. With these observations as made above, the actual facts of this case are to be examined. In this case, as can be seen from the assessment order that the assessee did not provided 3 ITA No. 229/JPR/2023 Jai Club vs. ACIT/DCIT the complete details required for examining the genuineness in respect of certain sundry creditors, and thereby failed to discharge the onus of establishing identity, creditworthiness and genuineness, cast upon him. 7.1 Even during the course of appellate proceedings the appellant remained absolutely silent and has merely stated in the statements of facts that the all of 18 sundry creditors were paid in the next Financial Year by banking Chanell. As mentioned above under para no. 05 of this order, the appellant was given sufficient 05 number of opportunities by way of hearing notices u/s. 250, however none of the notices were complied. It is apparent that the appellant has failed to discharged the onus of furnishing explanation in respect of credits appearing in their books in the name of 18 parties. 7.2 Having considering entire facts of the case and evidences brought on record! find no infirmity in the order of AO, hence, addition made of Rs. 5,97,248/- is confirmed. As a result, the appeal is dismissed.” 4. Feeling dissatisfied from the order of the ld. CIT(A), the ld. AR for the assessee has filed the appeal as per grounds so raised. The ld. AR of the assessee in support of the grounds so raised and filed a detailed a written submissions. The ld. AR of the assessee filed additional evidence under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 which reads as under:- “The assessee prays, for the documents mentioned in separate paper book containing additional evidence, to admit the same as additional evidence under rule 29 of Income Tax (Appellate Tribunal) Rules, 1963 for the following reasons: 1. The assessee was not asked to produce in assessment proceedings these documents by ld. AO. 2. The assessee could not produce the same before the ld. CIT(A) because: a. There was no proper full-time accountant at that time with the assessee. b. Further elections take place for new managing committee every 2 years, and in January 2021, there were elections in the assessee AOP, and the new management had recently taken charge on 26.01.2021. c. Therefore, the new managing committee were not aware of the income tax cases going on and any notices for the same. Since there was no full-time accountant at that time, the managing committee was not informed about the pending income 4 ITA No. 229/JPR/2023 Jai Club vs. ACIT/DCIT tax matters and further the managing committee was also not well conversant with the mail. d. All above factors combined together and therefore, the assessee was not aware of the notices dated 26.02.2021. 22.03.2021 and 14.01.2023 of Id. CIT(A) and missed the same. e. Thereafter, the assessee came to know about the fresh notice dated 24.01.2023 and sought adjournment on 30.01.2023 for one month as certain details or information were under collection and preparation. f. Thereafter, a new notice dated 07.02.2023 was issued. In the meantime, the previous A/R of the assessee got busy in marriage of his relative, so assessee then engaged a new A/R for submission before Id. CIT(A). Upon appointment, the new A/R sought adjournment on 13.02.2023 of three weeks to study and prepare the case. g. However, the very next day, on 14.02.2023, Id. CIT(A), passed his order ex-parte confirming the addition made by Id. AO. Hence in the interest of natural justice it is humbly prayed to kindly admit the above additional evidence which goes to the root of matter and oblige.” 5. Per contra, the ld. DR relied on the orders of the lower authorities. 6. We have heard the rival contentions and perused material available on record. It is noted that ld. AR for the assessee has prayed for to admit additional evidence under Rule 29 of the IT Rules, 1963 and for documents mentioned in separate paper books containing at page 1 to 267. We noted that the ld. AO and the ld. CIT(A) has not adjudicated on merits we also noticed that the assessee has not submitted any supporting documents in inspite of number of notices sent to the assessee and also has not made proper submissions before the ld. CIT(A) and before the ld. AO also. In 5 ITA No. 229/JPR/2023 Jai Club vs. ACIT/DCIT effect the impugned order has been dismissed by the ld. CIT(A)as prayed by the ld. AR of the assessee that looking to the merits of the case coupled with the evidences so filed, we feel that in the interest of natural justice, we are of the considered view that let these evidences be examined by the ld. AO based on the issues raised in the assessment order. Therefore, the matter restored to the file of the ld. AO for adjudication on merits based on the evidence placed. Thus, we admit the additional evidences filed before us and set aside the order passed by the ld. CIT(A) and restore all the issues to ld. AO for adjudication on merit, after providing adequate opportunity of being heard to the assesee. We also direct the assessee to cooperate with the ld. AO for expeditious disposal of the appeal. Thus, the appeal filed by the assessee is treated as allowed for statistical purpose. In the result, the appeal of the assesseeis allowed for statistical purpose. Coupled with the Order pronounced in the open court on 30/06/2023. ¼jkBksMdeys'kt;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 30/06/2023 *Santosh 6 ITA No. 229/JPR/2023 Jai Club vs. ACIT/DCIT vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Jai Club, Jaipur. 2. izR;FkhZ@ The Respondent- ACIT/DCIT, Circle-6, Jaipur. 3. vk;djvk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZQkbZy@ Guard File (ITA No. 229/JPR/2023) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar