The ITO, Ward-1(3)(1), Ahmedabad V. Shri Dharmesh Hasmukhbhai Mehta, Ahmedabad

ITA 289/AHD/2020

AI Insights

The case involves an appeal by the Revenue and a Cross Objection by the assessee, Shri Dharmesh Hasmukhbhai Mehta, against the order of the Commissioner of Income Tax (Appeals), Ahmedabad. The dispute arose from an assessment order passed under sections 147 and 143(3) of the Income Tax Act, 1961, for the Assessment Year 2012-13. The AO had initiated proceedings under section 147, suspecting undisclosed cash deposits and unaccounted cash sales by the assessee, who is engaged in the business of trading gold and silver bullion. The assessee contested the validity of the notice under section 148 and the proceedings under section 147, arguing that all transactions were duly audited and accounted for. The Tribunal examined the submissions, audit reports, and the reasons recorded by the AO for reopening the assessment and found them to be based on incorrect assumptions and incomplete facts.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135993 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 01-06-2020
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEASSESSEEBEFOREUSSUBMITTEDTHAT
• Assessee Lawyers: SHRIS.N.DIVATIA; WITHSHRISAMIRVORA

Judgement Text

आयकरअपीलीयअधिकरण,अहमदाबादनायपीप INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’B’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And Ms.MADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं ./ITANo.289/AHD/2020 With CONo.79/Ahd/2020 निर्धररवरध/Asstt.Year:2012-13 I.T.O, Ward-1(3)(1), Ahmedabad. Vs. ShriDharmeshHasmukhbhaiMehta, 77,GhachiNiPole, Opp.BandharaNoKhancho, Manekchowk, Ahmedabad-380051. PAN:AFRPM3573L (Applicant)(Respondent) Revenueby:ShriSudhenduDas,CITDR Assesseeby:ShriS.N.Divatia,withShriSamirVora, A.Rs सुिव्ईकीत्रीख/DateofHearing:02/08/2023 घोरर्कीत्रीख /DateofPronouncement:23/08/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealandtheCOhavebeenfiledattheinstanceofthe RevenueandtheassesseeagainsttheorderoftheLearnedCommissionerof IncomeTax(Appeals),Ahmedabad,(inshort“Ld.CIT(A)”)arisinginthematterof assessmentorderpassedunders.147r.w.s.143(3)oftheIncomeTaxAct1961 (here-in-afterreferredtoas"theAct").TheassesseehasfiledtheCrossObjection intheRevenue’sappealbearingITANo.289/Ahd/2020fortheAssessmentYear 2012-13. ITANo.289/AHD/2020 With C.O.No.79/Ahd/2020 A.Y.2012-13 2 First,wetakeupCrossObjectionbearingNo.79/AHD/2020in Revenue’sappealinITANo.289/AHD/2020forAY2012-13. 2.TheassesseehasraisedthefollowingobjectionintheCOasdetailedbelow: 1.TheLd.CIT(A),hasgrievouslyerredinlawandoronfactsinnotconsideringthe groundofappealrelatingtothevalidityofnoticeu/s.148andproceedinginitiatedu/s.147 inspiteofthesubmissionmadeandevidenceproducedbytheappellantwithregardtothe impugnedground. 2.Thatinthefactsandcircumstancesofthecaseaswellasinlaw,theLd.CIT(A), oughttohaveappreciatedthatthenoticeu/s.148andproceedingsu/s.147bothwere illegalandunlawfulonaccountsoftheconditionprecedentnotsatisfied. Itis,therefore,prayedthatthenoticeu/s.148andproceedingsu/s.147shouldbequashed andtheorderpassedbyAOmaybesetaside. 3.TheassesseeintheCOhaschallengedthevalidityoftheproceedings- initiatedu/s147oftheAct.Thenecessaryfactsarethattheassesseeinthe presentcaseisanindividualandengagedinthebusinessoftradingofGoldand SilverBullionasproprietorunderthenameandstyleofM/sMahalaxmiJewellers. Inthepresentcase,theproceedingsu/s147oftheAct,wereinitiatedagainstthe assesseeonthereasoningthattherewascashdepositintheBankaccountNo. 730606021000062maintainedwithVijayBankwhichwasnotdisclosedinthe Income-taxreturn.Likewise,theAOalsoobservedthattherewascashdepositin thebankaccountoftheassesseeamountingtoRs.36,88,15,000/-inthebank accountbearingNo.73060030000306maintainedwithVijayaBankwhichwasin mostofthecasesimmediatelytransferredthroughRTGStoanotheraccount bearingNo.730606021000062beingundisclosedaccount.Assuch,theassessee failedtoreconcilethecashdepositsinthebankaccountwithcashsalesmadeby it.Basedontheabovefact,theproceedingswereinitiatedagainsttheassessee undertheprovisionofsection147oftheAct. ITANo.289/AHD/2020 With C.O.No.79/Ahd/2020 A.Y.2012-13 3 4.AtthetimeofhearingtheLd.ARfortheassesseebeforeussubmittedthat thebooksofaccountoftheassesseeweredulyAuditedundertheprovisionsof section44ABoftheAct.TherewascashsaleamountingtoRs.2,64,27,76,935/- outofwhichthecashdepositsofRs.36,88,15,000/-wasmadeintheimpugned Vijayabankaccount. 4.1TheLd.AR,furthersubmittedthatVATAuditwasalsodoneu/s63ofthe Act,whereinnodiscrepancyofsaleswasmade.TheLd.ARinsupportofhisclaim hasdrawnourattentiononthetaxauditreportandVATAuditreportwhichwere placedonpages5to31and32to39ofthepaperbooks.Thus,itwascontended bytheLd.ARthattheproceedingsundersection147oftheAct,wereinitiatedby theAOonwrongassumptionoffactsandthereforethesameisliabletobe quashed. 4.2Onthecontrary,theLd.DRappearedonbehalfoftherevenuesubmitted thatthebankaccountmentionedbytheassesseeintheFinancialStatementinthe nameoftheVijayaBankisdifferentwiththebankaccountasobservedbytheAO inthereasonrecordedforinitiatingtheproceedingsu/s147oftheAct.TheLd. DRtodemonstratehiscontentionhasdrawnourattentiononpage27ofthe paperbook.TheLd.DRvehementlysupportedtheorderoftheauthoritiesbelow. 5.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Onperusalofthereasonrecordedforinitiatingthe proceedingsu/s147oftheAct,placeonpages51to55ofthepaperbook,we notethattheAOhimselfobservedcertainfactswithrespecttothecashsales madebytheassessee.Therelevantextractisreproducedasunder: Theassessee,videhissubmissiondated26.02.2019statedthatnameandaddress ofpartiesarenotavailableinrespectofcashsalesofRs.2,61,66,10,786/-.theassessee hasalsonotsubmittedanyproofregardingcashsalesofRs.2,61,66,10,786/-.the assesseehasalsonotsubmittedanyproofregardingcashsalestojustifythe ITANo.289/AHD/2020 With C.O.No.79/Ahd/2020 A.Y.2012-13 4 correspondingcashdepositsRs.36,88,15,000/-inthebankaccountmaintainedwithVijaya BankforA.Y.2012-13.theassesseehasalsonotsubmitted/provedthenexusbetweenthe cashsalesandcashdepositedintothebankaccount,inspiteofthefactthatthereareonly 43instancesofsaleslessthanRs.2lakhsandmorethan3000salesinstancesofRs.2 lakhs&above.ThoughtheassesseehassubmittedthatVAThasbeenpaidonthecash sales,itcannotprovethesalesinabsenceofName,Address,PANoranyidentityofthe personreceivingsuchgoods. 6.Onperusaloftheaboveobservation,wenotethattheassesseehas justifiedcashdepositinthebankoutofcashsales,butthecontentionwas rejectedbytheAOonthereasoningthattheassesseefailedtofurnishname, address,PAN,oranyidentityofthepersontowhomthesaleswasmade.Inthis regard,wenotethatthebooksofaccountweredulyauditedandtherewas availableVATAuditedreportu/s63oftheVATAct,nodiscrepancyhasbeen pointedoutbytheAOwithrespecttosuchdocuments.Assuch,theassesseehas dischargedhisonusbysubmittingtheauditedfinancialstatementandVATAudit reportforthecashsalesmadebyit.Now,theonusshiftedupontheAOto disregardthecontentionthatthecashsalesshownbytheassesseeamountingto Rs.2,64,27,76,935/-doesnotrepresentcashsales.However,AOhasnot controvertedtheabovecontentionoftheassesseebasedonthedocumentary evidence. 7.Likewise,theAOhimselfhasrecordedthattheamountofcashdeposit madebytheassesseeinonebankaccountwastransferredtoanotherbank accountoftheassesseewhichwasnotdisclosedinthebooksofaccount.Again, thisfindingoftheAOiscontrarytothefactsavailableonrecord.Itisbecausethe booksofaccountweredulyauditedandnodefectofwhatsoeverwaspointedout bytheAObeforetheinitiatingtheproceedingsu/s147oftheActinthepresent setoffacts.Theassesseewasmaintainingitsaccountsondoubleentrysystem, anditwasdutytobroughtonrecordthatifthecashhavebeentransferredbythe assesseeintheundisclosedbooksofaccounts,thenhowthebooksofaccount ITANo.289/AHD/2020 With C.O.No.79/Ahd/2020 A.Y.2012-13 5 werereconciled.Accordingly,thefindingsoftheAOthatthebankaccountwas notdisclosedbytheassesseeisbasedonwrongassumptionoffacts. 8.Beforeparting,itisimportanttonotethatthereistypographicalerrorin thebankaccountnumbermentionedintheAuditedFinancialStatementvisavis bankaccountnumberrecordedbytheAOinthereasonforreopening.Inour consideredviewmerely,atypographicalerrorcannotbeareasontobelievethat theincomeoftheassesseehasescapeassessment. 9.Inadditiontotheabove,wenotethattheassesseeduringtheoriginal proceedingsinresponsetothenoticeu/s142(1)oftheActdated26/08/2014vide letterdated08/09/2014hasfurnishedthefollowingdetails: Copyofbooksofaccountsmaintained: Thefollowingregistershavebeenproducedinperson: 1.PurchaseRegister 2.SalesRegister 3.CashBook 4.BankBook I.AxisBank II.OtherBanks 5.LedgerAccounts. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx CopyofdetailedstatementshowingParty-wiseandMonth-wiseSalesduringtheA.Y. 2012-13AsperAnnexure-“E” 9.1Inviewoftheabove,weareoftheviewthattheAOhasinitiatedthe proceedingsu/s147oftheAct,basedonthewrongassumptionsoffactsand thereforethesameisherebyquashed.Hence,thegroundraisedbytheassessee intheCOisallowed. 10.Intheresult,theCOfiledbytheassesseeisallowed. ITANo.289/AHD/2020 With C.O.No.79/Ahd/2020 A.Y.2012-13 6 ComingtotheITANo.289/AHD/2020anappealbytheRevenueforA.Y 2012-13. 11.Attheoutset,wenotethatwehavealreadygivenfindingontechnical groundraisedinthecrossobjectionbytheassesseethatreopeningofthe assessmentbytheAOisnotsustainableintheeyesoflawasthesamewasmade onwrongassumptionsoffacts.Hencethegroundraisedbytherevenuebecomes redundantandinfructuous.Therefore,weprecludeourselvesfromgivingany findingonthegroundraisedonmeritofthecasebytheRevenue.Accordingly, thegroundsoftheRevenue’sappealsareherebydismissedasinfructuous. 12.Intheresult,theappealfiledbytheRevenueisdismissedasinfructuous. 13.Inthecombinedresult,theCOfiledbytheassesseeisallowedwhereasthe appealfiledbytherevenueisherebydismissedasinfructuous. OrderpronouncedintheCourton23/08/2023atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated23/08/2023 Manish