Manju Singh, Fatehpur V. ITO, Ward- 2 (4), Fatehpur

ITA 27/ALLD/2023

AI Insights

The case involves Manju Singh Chandelan, an individual and partner in the firm M/s. Samar Brick Field, who appealed against the order of the CIT(A) confirming the AO's assessment for AY 2017-18. The AO had mistakenly attributed the firm's bank account transactions to the individual assessee, leading to an erroneous addition of Rs.4,04,374 to her income. The Tribunal noted that the PAN of the firm was incorrectly fed as that of the assessee, causing confusion and wrongful taxation. Despite the assessee providing necessary documents, the AO proceeded without considering them, leading to a decision in her favor by the Tribunal, directing a reassessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114365 (ITAT-ALLAHABAD)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-09-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 26-03-2023
• Other Referred Cases: ITO Vs. Ch. Atchaiah 218 ITR 239 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAYANK ARORA
• Keywords: Set aside
• Section: 144; 142(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD “SMC” BENCH, ALLAHABAD BEFORE SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.27/Alld/2023 (ननधधारण वर्ा / Assessment Year: 2017-18) Manju Singh Chandelan KA Purwa Jamrawa, Fatehpur-212654. बनधम/ Vs. ITO-2(4) Income Tax Office, Fatehpur-212601. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : DIWPS4493G (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 05/09/2023 घोषणा की तारीख /Date of Pronouncement: 08/09/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 27.01.2023 for AY. 2017-18. 2. The main grievance of the assessee an individual (Partner of a firm) is that the AO misdirected himself while passing the assessment order by mistakenly taking note of the bank accounts of the Firm (M/s. Samar Brick Field) as that of assessee and thereby erroneously made addition of Rs.4,04,374/-. 3. Brief facts is that assessee is an individual and a partner in a partnership firm M/s. Samar Brick Field (PAN: ACBFS1057I), and her source of income is from the Firm i.e. interest on capital remuneration and share of profit from the firm (M/s. Samar Brick Field) and since her income in this relevant year was less than the threshold limit prescribed by the Finance Act, she did not file her return of income. Assessee by: Shri Mayank Arora Revenue by: Shri A. K. Singh (Sr. DR) ITA No.27/Alld/2023 A.Y. 2017-18 Manju Singh 2 4. However, AO got information from the ITD System that assessee has deposited Rs.20,50,000/- in her bank account during demonetization period and not filed any return this year. So he issued notice to the assessee regarding this information i.e. deposit of Rs.20,50,000/- in her bank account, and asked her for explanation and gave time for reply till 18.11.2019. Finding no reply from assessee, AO drew adverse information against the assessee in respect of deposit in bank account (Bank of Baroda) and taking note that the total credit in the bank accounts were to the tune of Rs.40,43,740/-, the AO made an addition of Rs.4,04,374/-. Aggrieved, the assessee preferred an appeal before Ld. CIT(A), who confirmed the action of AO. Aggrieved, the assessee is before this Tribunal. 5. Assailing the action of Ld. CIT(A), the Ld. AR submitted that the assessee had uploaded the replies before the AO albeit on 24.11.2019 (even though the AO had asked the assessee to file the same before 18.11.2019). According to the Ld. AR, the AO has not considered any of the documents requisitioned by him and filed by the assessee which is found placed at page no. 35 to 38 of PB. According to him, the AO erred in passing the best judgment assessment order u/s 144 of the Income Tax Act, 1961 (hereinafter “the Act”) since AO has passed the assessment order on 28.12.2019 i.e. after assessee had uploaded all the information/documents sought by the AO on 24.11.2019. According to Ld. AR, the AO patently erred in considering the bank account in the name of Firm (M/s. Samar Brick Field) as that of assessee and thus erred in considering the assessee’s turnover as per the credit in that bank account as that of assessee and computed the net profit @ 10% of Rs.40,43,740/- and made an ITA No.27/Alld/2023 A.Y. 2017-18 Manju Singh 3 addition of Rs.4,04,374/-. According to Ld. AR, the Ld. CIT(A) ignored the main contention of the assessee that the AO erred in taking into consideration the partnership firms bank account for saddling the presumptive taxation and thus the action of the Ld. CIT(A) confirming the action of the AO is erroneous and so it should be deleted. 6. Per contra, the Ld. DR brought to our notice that the assessee failed to file the return of income u/s 139(1) of the Act, and also failed to file her return of income in time pursuant to the notice u/s 142(1) of the Act. It was further pointed out by the Ld. DR that even the assessee did not bother to respond to the notices issued by the AO within the time given by AO i.e. 18.11.2019, therefore, the AO has passed the best judgment assessment u/s 144 of the Act. Therefore, according to the Ld. DR, the action of the authorities below need not be disturbed. 7. I have heard both the parties and perused the records. The assessee is an individual who was a partner of the Firm named M/s Samar Brick Field. From the facts discussed (supra), it is discerned that the whole confusion was basically because of the wrong PAN number fed/quoted by the Bank of Baroda of the Firm as that of the assessee which led to the ITD System getting alerted of the deposit of Rs.20,50,000/- in assessee’s bank account. Based on that wrong information, the AO has started the inquiry and since there was delay on the part of the assessee in giving the replies to the AO (i.e, before the cut-off date given by him i.e. 18.11.2019) and even though assessee filed/uploaded the relevant information as sought by AO on 24.11.2019, the AO has passed the assessment order on 28.12.2019 u/s 144 of the Act [i.e, without considering the documents uploaded by the ITA No.27/Alld/2023 A.Y. 2017-18 Manju Singh 4 assessee on 24.11.2019]. And the Ld. CIT(A) has upheld the action of the AO without considering the crucial fact that bank account presumed to be that of assessee was factually that of the Firm M/s. Samar Brick Field. Therefore, impugned action of the AO as well as the Ld. CIT(A) cannot be countenanced. From the material placed before this Tribunal, it is noted that the bank accounts in question i.e. Account Nos. 06510200000226 and 06510500001160 of Bank of Baroda are related to the partnership firm M/s Samar Brick Field (PAN no. ACBFS1057J). The assessee has filed the bank statement of both these accounts (i.e. of Firm) as well as that of assessee for the relevant assessment year. From a perusal of the copy of statements of bank accounts, it is noted that these two bank accounts are related to that of the Firm i.e. M/s Samar Brick Field and not of the assessee Manju Singh. Based on the confusion created due to the wrong feeding/quoting of the PAN of the assessee to that of the bank account of Firm, the AO erroneously presumed that assessee’s turnover was to the tune of Rs.40,43,740/- and computed presumptive taxation u/s 44AD of the Act @ 10% as income of the assessee i.e. Rs.4,04,374/-. It has been brought to my notice that assessee being a partner of the Firm has only income from firm i.e. interest on capital, remuneration and share of profit from the firm (M/s Samar Brick Field) to the tune of Rs.1,72,805/- and since the assessee’s income was within the taxable limit, the assessee did not file any return of income and that the Firm has duly disclosed its income and has been taxed separately. Thus according to Ld. AR, the action of AO/Ld. CIT(A) again taxing the same amount in the hands of assesse tantamount to double taxation. Be that as it may, it is noted that even though the assessee ITA No.27/Alld/2023 A.Y. 2017-18 Manju Singh 5 had filed the relevant documents requisitioned by the AO albeit on 24.11.2019, the AO ought to have taken note of the documents uploaded before him as evidenced from perusal of page no. 35 to 38 of PB. Thus, AO erred in ignoring the documents uploaded in the Portal of Income Tax Department on the specious plea that assessee did not file reply by 18.11.2019. It is noted that AO passed the order on 28.12.2019, so he ought to have been fair while framing the assessment and should have considered the assessee’s reply dated 24.11.2019. Therefore, for the interest of justice and fair play, I am inclined to set aside the impugned order of the Ld. CIT(A) and restore the issue back to the file of the AO with a direction to verify the fact as to whether the bank accounts of Frim M/s. Samar Brick Field has been wrongly considered for computation of the presumptive taxation u/s 44AD in the hands of the assessee and frame assessment accordingly. It is trite law that the AO should only tax the income of the right person, in the right year, on the right income [Refer Hon’ble Supreme Court decision in ITO Vs. Ch. Atchaiah 218 ITR 239 (SC)]. On the aforesaid discussion (supra), the AO is directed to frame assessment after giving proper opportunity to the assessee. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 08/09/2023. Sd/- (ABY T. VARKEY) JUDICIAL MEMBER Allahabad ददनांक Dated : 08/09/2023. Vijay Pal Singh, (Sr. PS) ITA No.27/Alld/2023 A.Y. 2017-18 Manju Singh 6 Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT(A) , Allahabad 4. CIT 5. DR - By order Assistant Registrar