Chandra Shekhar Carprnter, Agar Malwa V. The ITO,Ward, 1-1 , Ujjain

ITA 246/Ind/2023

AI Insights

The case revolves around an appeal by Chandra Shekhar Carpenter against the order of the Commissioner of Income Tax (Appeals), which confirmed the addition of Rs. 11,00,650 to the assessee's income for the assessment year 2009-10. The addition was initially made by the Assessing Officer following a notice under section 148 of the Income Tax Act, 1961, due to unexplained bank deposits. The assessee contended that these deposits were from legitimate business transactions. The Tribunal found that the assessee had provided sufficient evidence through bank statements showing that the deposits were from business sales and the corresponding payments for purchases were also documented through bank drafts. The Tribunal's decision to allow the appeal was based on the merits of the case, highlighting the importance of considering all relevant facts and evidence before making additions to a taxpayer's income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135707 (ITAT-INDORE)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-09-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Reasonable cause
• Section: 148; 263; 144; 143(3); 22

Judgement Text

आयकरअपील यअ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA No.246/Ind/2023 A.Y. 2009-10 Chandra Shekhar Carpenter 100, Village-Bheshoda Tehsil Nalkheda Distt Agar Malwa Indore बनाम/ Vs. ITO Agar Malwa (Appellant) (Revenue ) P.A. N. – AOMPC 7381J Appellant by Shri Pavan Ved, AR Respondent by Shri Ashish Porwal Sr. DR Date of Hearing: 18.09.2023 Date of Pronouncement: 20.09.2023 आदेश / O R D E R This appeal by the assesse is directed against the order dated 27.05.2022 of Ld. Commissioner of Income (Appeals), National Faceless Appeal Centre (NFAC), Delhi (in short Ld. CIT(A) for A.Y. 2009-10. SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 2 2. The assesse filed this appeal on 03.07.2023 and therefore, there is a delay of about one year in filing the present appeal. The assessee has filed an affidavit explaining the cause of delay. The Ld. AR has submitted that the assessee belongs to rural area and also was suffering from ill health after the Covid Pandemic infection. The assesse was not aware about the impugned order passed by the Ld. CIT(A) as it was not served upon the assessee. Thereafter on 15.05.2023 the bank account of the assessee was attached by the department due to arrear demand arising from the assessment order and subsequent impugned order passed by the Ld. CIT(A). The AR has submitted that the assessee then approached his CA who has obtained copy of the impugned order from the Income Tax Department website and advised him to file appeal before the Tribunal. 3. Ld. AR has submitted the delay in filing the appeal is neither intentional nor willful but due to the reasons that the assessee was not served upon with the impugned order and come to know about the impugned order only when the department attached the bank account of the assessee on 15.05.2023. He has pleaded that the delay in filing the present appeal be condoned and appeal of the assessee be decided on merits. 4. On the other hand, Ld. DR has submitted that the order of the Ld. CIT(A) was duly sent to the e-mail-ID given by the assessee and SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 3 therefore, the assessee cannot take a plea of none-service of the impugned order. He has objected to the condonation of delay. 5. I have considered the rival submissions and perused the contents of the affidavit filed by the assessee to explain the cause of delay in para no.2 to 4 of the affidavit as under: “2. I am the appellant in my own case; against the order of ld. CIT(A) for AY 2009-10. I am from rural area. Due to my own ill health, I had closed business after this year and joined as school teacher in rural area. Since Mar 17 and particularly after Covid infection, my health became worse and I do my duty of teacher ship with much difficulty. 3. That I had not received the appeal order any time and I came to know of the same only when Narmada Jhabua Gramin Bank intimated me on 15/5/23 that my bank account had been attached by income tax department due to arrear demand. 4. Then I approached CA Mr. Atul Chauhan of Ujjain who obtained copy of appeal order from income tax website and advised me to file appeal before Hon'ble ITAT by engaging senior practitioner. Accordingly work of preparation of appeal started.” 6. It transpires from the record that e-mail ID given in form no.35 appears to be of authorized representative and not of the assessee and therefore, the possibility of non-communication of the impugned order to the assesse is not rules out. 7. Having considered the facts and circumstances of the case when the assessee belongs to the rural area and the impugned order was not received by the assessee in time I am satisfied that the assessee was having a reasonable cause for not filing the appeal within the period of limitation. Accordingly in the facts and circumstances of the case and in the interest of justice the delay in SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 4 filing the appeal is condoned. The assessee has raised following grounds of appeal as under: “1.Entire proceedings by way of sec. 148 is null and void ab initio. 2.ld. CIT(A) erred in confirming addition of bank deposit of Rs. 11,,00,650/-.” 8. The assessee did not filed any return of income for the year under consideration and thereafter the AO issued notice u/s 148 of the Act on 23.03.3016 to assess the income of the assessee on account of deposit of Rs.11,00,650/- in the Saving Bank Account of the assessee. In response to the notice the assessee filed return of income declaring total income of Rs.1,27,370/- and also explained that the said deposit in bank account represents the sale proceeds of the business of trading in Cattle Feed (Cotten Seed Cake). The assesse has also explained that the entire purchase and sale has been done through the said bank account and pointed out that all the payment for purchase of goods were made through demand drafts as reflected in the bank account of the assessee. The AO passed the assessment order u/s 143(3) r.w.s. 147 on 25.11.2016 whereby the return income of the assessee was accepted which is below the minimum slab of taxable income. Thereafter, the order of the AO passed u/s 143(3) r.w. section 147 was revised by the Pr. CIT, Ujjain u/s 263 vide order dated 05.03.2019 and thereby the AO was directed to examine the issue of source of cash deposit in the bank account after giving proper opportunity of hearing to the assessee. In the assessment order passed in pursuant u/s 263 SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 5 order, the AO has assessed the entire deposit in the bank account to tax. 8.1 Ld. AR has submitted that the AO has passed assessment order dated 28.11.2019 ex-parte u/s 144 r.w. section 263 which was challenged by the assessee before the Ld. CIT(A). But the Ld. CIT(A) has confirmed the addition made by the AO without considering undisputed facts as reflected from the bank account statement of the assessee that the deposit represents the sale of the Cattle Feed (Cotten Seed Cake) and corresponding payment was also made through banking account by issuing bank draft to the suppliers. Thus, Ld. AR has submitted that the addition made by the AO in the order passed u/s 144 r.w. section 263 is not justified and liable to be deleted. 9. On the hand, ld. DR has submitted that the assessee has failed to explain the source of deposit in the bank account and consequently the AO has passed best judgment in pursuance to under section 263 order passed by the Pr. CIT. He has further submitted that the assesse did not challenge the order of the Pr. CIT passed u/s 263 of the Act and therefore, the AO as well as the Ld. CIT(A) is justified in assessing income of the assessee on account of deposit made in the bank account. 10. I have considered the rival submissions as well as relevant material on record. The assessment was reopened by the AO for assessing the income on account of deposit made in the bank SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 6 account of Rs.11,00,650/-. In response to notice u/s 148 the assesse filed the return of income declaring total income of Rs.11,27,370/- from the business of trading in Cattle Feed (Cotten Seed Cake). The assesse also explained that during the year under consideration the assessee has done the trading in Cattle Feed (Cotten Seed Cake). The deposit in the bank account primarily represents the sale and corresponding entry in the bank account also reflects the payments towards purchase of the goods through bank drafts. After considering this explanation the AO accepted the return income of the assessee. It is pertinent to note that as per the bank account statements as placed at pageno.21 & 22 of the paper book all these entries are deposited as well as withdrawal are reflected as under: SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 7 11. Thus, the deposit as well as withdrawal mostly by issuing cheques in banks favour showing the narration y/s (yourself) clearly manifest the transactions of issuing drafts as explained by the assessee for purchase of the goods. The AO has added the entire deposit in the bank account to the income of the assessee without even considering facts available on record in the shape of the bank account statement of the assessee having both entries of deposit as well as the payments through bank drafts. Therefore, the addition made by the AO ignoring the relevant facts available on record is not justified when the assessee have already explained the source of deposit as sale proceeds and corresponding withdrawals represent the payments made for the purchases through bank drafts corroborating explanation of the assessee. Accordingly having considered the undisputed facts as reflected from the bank account statement of the assesse the addition made by the AO of the entire SMC – I.T.A. No.246 of 2023 Chandra Shekhar Carpenter 8 deposit made in the bank account is not justified and the same is deleted. Since the issue on merit is decided in favour of the assessee and addition made by the AO is deleted therefore, the another issue raised by the assessee challenging validity of reopening becomes academic in nature and hence, I do not propose to take up the same for adjudication. 12. In result, the appeal filed by the assessee is allowed. Order was pronounced in the open court on 20.09.2023. Sd/- (VIJAY PAL RAO) JUDICIAL MEMBER Indore; दनांक Dated : 20/09/2023 Patel/Sr. P.S. Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Sr. Private Secretary ITAT, Indore