SHRI JASWINDER SINGH , BATHINDA V. INCOMETAX OFFICER WARD-1 (3), BATHINDA

ITA 301/ASR/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6085 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-05-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 15-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Business expenditure; Peak credit; Assessment record; Set aside
• Section: 44AD; 143(3); 133(6); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 Jaswinder Singh, VPO Dayalpura Bhai Ka, Rampura Phul. [PAN:ETMPS3532L] (Appellant) Vs. ITO-Ward 1(3), Bathinda. (Respondent) Appellant by Sh. J. K. Gupta, Adv Respondent by Smt. Priyanka Patel, Sr. DR Date of Hearing 07.05.2024 Date of Pronouncement 03.07.2024 ORDER Per: Udayan Das Gupta, JM This appeal is preferred by the assessee against the order of the CIT (A) / NFAC, passed u/s 250 of the Act 61, dated 21/09/2023, which has arisen out of the order of the AO, ward 1(3), Bhatinda dated 21/12/2018, passed u/s 143(3). 2. The grounds of appeal taken by the assessee are as follows: “1. That on the facts and in the circumstances of the case and in law, the learned I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 2 C1T(A), NFAC, Delhi erred in upholding the addition of Rs. 6360500/-. 2. That on the facts and in the circumstances of the case and in law, the learned CIT(A), NFAC, Delhi erred in upholding the assessment as no reasonable opportunity was given to the assessee to explain his case. So. the assessment is liable to be quashed. 3. That on the facts and in the circumstances of the case and in law, the learned CIT(A), NFAC, Delhi erred in upholding the ex-parte assessment u/s 144/143(3) as the notice issued u/s 142(1)/143(2) was not served upon the assessee in any manner. So, the assessment is liable to be quashed. 4. That on the facts and in the circumstances of the case and in law, the learned CIT(A), NFAC, Delhi erred in upholding the addition of Rs. 6360500/- on the basis cash deposited in bank account without considering the return of income wherein assessee is running poultry farm and cash is deposited out of sale proceeds. So, the addition is liable to be deleted. 5. That on the facts and in the circumstances of the case and in law, the learned CIT(A), NFAC, Delhi should have quashed the assessment made on 21.12.2018 as the notice was issued u/s 143(2) on 23.12.2018 i.e after the assessment order was passed on 21.12.2018 in name of previous AO Brij Lal without his digital signature. Screen shot of portal shows notice u/s 143(2) was I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 3 issued on 23.12.2018 Served on 19.12.2017 Response due Date is 28.09.2017. Even the notice on portal is Dated 18.09.2017 fixing the case for 28.09.2017 and assessment order says the notice is served on 26.09.2017. It is clear that the AO who made assessment has tempered the record. So, the assessment is bad in law and liable to be quashed. 6. That on the facts and in the circumstances of the case and in law, the learned CIT(A), NFAC, Delhi erred in giving a finding that the assessee is not paying taxes and keeping income below taxes and not running poultry farm by ignoring the fact that net profit rate of business is very low. So, treating the cash deposit as income of assessee as unexplained cash deposits is wrong when assessee is running business of poultry farm and earning agricultural income also duly shown in the return of income. 7. That the learned AO should have given the set off of the returned income of Rs. 300330/- as well as the agricultural income of Rs. 178215/- against the addition of Rs. 6360500/-. Even benefit of income of earlier years should have been given. So, the necessary relief may kindly be given now.” 3. First we take up ground no 5, which is a legal ground and goes to the root of the proceedings. The assessee has challenged the non-service of statutory notice u/s 143(2) of the Act 61, by the AO, which is a statutory requirement for assumption of jurisdiction. I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 4 4. At the outset, the Ld. AR of the assessee argued that in the instant case the notice u/s 143(2) has been issued on 23 rd December, 2018, and the scrutiny assessment has been completed u/s 143(3) of the Act 61, on 21 st December, 2018 (two days earlier). So he argues that the AO has put the cart before the horse, and under the circumstances, the entire assessment is invalid. 5. In response the Ld. DR referred to the assessment order, where the AO has recorded: “statutory notice u/s 143(2) issued and served on the assessee on 26/09/2017”. However, the Ld. DR was asked to produce assessment records and clarify the matter in consultation with the jurisdictional AO on the next date of hearing. 5.1 The Ld. DR has furnished before the Tribunal, copies of notice u/s 143(2) dated 18 th September, 2017, duly issued by the ITO, Ward 1(3), Bhatinda, dispatched through registered post vide RP 670448548IN, on 19/09/2017, post office receipt serial 868863. Copies of the said evidence has also been handed over to the Ld. AR of the assessee on the hearing date. The departmental portal also records the date of service on 28 th September, 2017. Moreover, it is seen from assessment order, that the assessee has participated in assessment proceedings and has filed written submissions in response to notice u/s 142(1) of the Act 61, through on line proceedings and in course of assessment I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 5 proceedings no objection has been raised by the assessee regarding non service of notice u/s 143(2) of the Act 61, and after examination of documents furnished before AO, the proceedings are completed u/s 143(3) of the Act 61. 6. As such we are of the opinion that in the instant case the AO has assumed jurisdiction correctly, by issue of statutory notice u/s 143(2) of the Act 61, on 18 th September, 2017, which is perfectly within the time period of six months from the end of the relevant assessment year, and jurisdiction has been legally assumed by the AO and consequential assessment proceedings are legally valid. Not only that, the records reveal that the said notice has also been duly served on the assessee within the same month. In the instant case both issue as well as service of notice u/s 143(2) has been correctly done. 6.1 As such this ground of appeal is decided against the assessee. 7. Now on facts of the case, it is seen that the assessee is an individual and claimed to have income from business of poultry farm and has agricultural income, for the year under appeal. Total Income returned is Rs.3,00,330/- and agricultural income disclosed at Rs.1,78,215/-. As per bank statement obtained u/s 133(6) by the AO, there is cash deposit of Rs. 82,92,500/- (eighty two lakhs, ninety two thousand five hundred), in savings bank account of the assessee , throughout the entire financial year as per date wise I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 6 details contained in page 3 and 4 of the assessment order ,( and cash withdrawal is Rs. 21.42 lakhs only). 7.1 Even though information and documents has been filed in course of assessment proceedings, the assessee has not been able to satisfactorily explain the source of the cash deposit in bank amounting to Rs. 82.92 lakhs. Considering the date wise deposits and withdrawals in cash in the savings account, the AO has worked out the peak credit at Rs. 63,60,500/- and since the assessee failed to explain the source of the cash deposit in the said bank throughout the year vis-a-vis the cash withdrawals, the peak credit is added to total income. 8. The matter was carried in appeal before the first appellate authority, but there has been no compliance, before the CIT(A) NFAC, in spite of the fact that the case being fixed for hearing on five different dates starting from 13 th November, 2019 and last hearing date being 13 th September, 2023, and in respect of all such dates, the notice has been issued electronically through ITBA portal. The Ld. CIT(A), sustained the addition of Rs. 63,60,500/- in absence of any submissions or documentary evidences properly explaining the source of cash deposits. 9. Now the assessee is before the Tribunal, against the said addition of Rs. 63.60 lakhs on various grounds taken in Form 36. I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 7 10. The Ld. AR argued on the ground (no 2 in Form 36) that no reasonable opportunity was given to the assessee by the CIT (A), to explain his case, because no notice of hearing has been served in the email id provided in Form 35, and service in ITBA portal is not complete service. And the Ld. AR further argues (relying on his synopsis) that the assessee is engaged in the business of poultry farm as per return filed, and the cash deposit in bank is the turnover of poultry farm, (which is less than audit limit) and as an alternative argument, he states that profit should be determined @ 8% (eight percentage), on total turnover. 11. On the other side, the ld. DR argued that notice of hearing has been served through ITBA portal on various dates but in absence of any response from the assessee , and in absence of any documentary evidence explaining the source of cash deposit in bank account and also in absence of evidence of any agricultural activities pertaining to agricultural income , and also in absence of any evidence regarding poultry business, the AO has rightly worked out the peak deposit and the Ld. CIT ( A ) has rightly sustained the said addition. 11.1 The Ld. DR further argued that section 44AD of the Act 61, is a presumptive section, which applies to eligible business , and any assessee, opting for the same has to declare the correct turnover from eligible business and the correct percentage of income, in the return itself as per section 44AD(4) of the Act 61 at I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 8 the very first instance, in proper return form applicable for such declaration , because the words used in sub section (4) of 44AD is “ where an eligible assessee declares ” , which has not been the case here , and the AO was justified in his action because as per bank particulars , the cash deposit in this case cannot be covered by poultry business turnover , in absence of matching cash withdrawals to cover poultry business expenses . 12. We have heard both the parties and considered all materials on record. In respect of service of notice , we find that the assessee has given the email id in Form 35 , serial – 17 , where the hearing notice is supposed to be issued , [e-mail] , but in the instant case the notice has been served through ITBA portal only. On this issue we are guided by the Hon’ble jurisdictional Punjab and Haryana High Court, in the case of Munjal BCU Centre, CWP-21028-2023 (O&M) dated 04.03.2024, where the Hon’ble court has observed that notice has to be issued as per provisions of section 282 of the Act 61, and simply uploading the same in departmental portal is not sufficient compliance. 12.1 Respectfully following the observations of the Hon’ble High Court, we are of the opinion that in this case notice of hearing has not been properly issued in the email stated in Form 35, from the office of the CIT (A), and as such the appellant could not make proper representation before the first appellate authority. I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 9 12.2 As such in the interest of justice, we set aside the matter to the file of the CIT(A), with direction to decide the grounds contained in memorandum of appeal in Form 35, on merits, after allowing proper opportunity of hearing to the assessee and we also direct the assessee to file all necessary documentary evidences , and explanations , to satisfactorily explain the source of the cash deposited in savings bank, as per provisions of law and fully cooperate with the first appellate authority, by filing all necessary evidences , to establish his case. 13. Since, we have already remanded the matter to the CIT (A), all other remaining grounds of appeal, on merits, becomes academic and as such not adjudicated upon. 14. In the result, the appeal of the assessee bearing ITA No. 301/Asr/2023 is allowed for statistical purposes. Order pronounced in the open court on 03.07.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. I.T.A. No.301/Asr/2023 Assessment Year: 2016-17 10 True Copy By order