Assistant Commissioner of Income-tax, Circle -2, Kolhapur V. Vijay Vasant Sannake, Kolhapur

ITA 316/PUN/2018

AI Insights

The case involves Shri Vijay Vasant Sannake, the appellant, and the Income Tax Officer, Ward-2(2), Kolhapur, the respondent, concerning disputes over the assessment years 2010-2011 and 2011-2012. The primary issues revolved around additions made by the Assessing Officer regarding unexplained cash deposits and disallowance of bogus purchases, which were partly upheld and partly deleted by the CIT(A). Both parties appealed against the CIT(A)'s decision, leading to the current proceedings before the Tribunal. The Tribunal's decision focused on procedural aspects, particularly the admission of additional evidence without proper opportunity for the AO to respond, and the need for a comprehensive examination of the financial transactions involved.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137352 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-02-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-02-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 07-02-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase; Income from undisclosed sources; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA.No.235 & 236/PUN./2018 Assessment Years 2010-2011 & 2011-2012 Shri Vijay Vasant Sannake, Shahupuri, Dist. Kolhapur. PAN AOQPS8758D vs. The Income Tax Officer, Ward – 2 (2), Ayakar Bhavan, Tarabai Park, Kolhapur. (Appellant) (Respondent) ITA.No.316/PUN./2018 Assessment Year 2010-2011 The ACIT, Circle – 2, 31C/2, Aayakar Bhavan, Tarabai Park, Kolhapur. vs. Shri Vijay Vasant Sannake, 401, Square-9, Opp. IDBI Bank, Assembly Road, Shahupuri, Dist. Kolhapur - 416 001. PAN AOQPS8758D (Appellant) (Respondent) For Assessee : Shri Nikhil S. Pathak For Revenue : Shri M.G. Jasnani Date of Hearing : 21.02.2023 Date of Pronouncement : 24.02.2023 ORDER PER SATBEER SINGH GODARA, J.M. The instant batch of three cases pertains to a single assessee herein Shri Vijay Vasant Sannake. And that the assessment year 2010-11 involves the assessee’s and Revenue’s cross-appeals ITA.Nos.235 & 316/PUN./2018 followed by former’s appeal ITA.No.236/PUN.2018 for 2 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. assessment year 2011-12, arising against the CIT(A)-2, Kolhapur’s common order dated 28.11.2017, passed in case no. Kop/8&9/2016-17, assessment year-wise, respectively, in proceedings u/s. 144 r.w.s.147 of the Income Tax Act, 1961 (in short "the Act"). Heard both the parties. Case files perused. 2. We proceed assessment year-wise for the sake of convenience and brevity. Assessment Year 2010-2011 ITA.Nos.235 & 316/PUN./2018 Assessee’s & Revenue’s cross appeals 3. The assessee’s appeal ITA.No.235/PUN./2018 raises the following substantive grounds : 1. “On facts and in circumstances of the case, the learned CIT(Appeals) has erred in law and on merit in confirming additions of Rs.1,31,20,320/- being amount paid to Sai Enterprises as Rate difference when such amount was paid towards purchase of sugar. The CIT(A) has erred in appreciating that the assessee had lifted the sugar from the factory for which it had evidence by way of transport details. 2. On facts and in circumstances of the case, the learned CIT(Appeals) has erred in law and on merit 3 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. in confirming additions of Rs.2,25,07,023/- being amount paid to Sai Enterprises as Rate difference when such amount was paid towards purchase of sugar. The CIT(A) has erred in appreciating that the assessee had lifted the sugar from the factory for which it had evidence by way of transport details. 3. The appellant craves leave to add, alter, amend or delete any of the grounds of appeal with the permission of the Hon’ble Tribunal.” 4. The Revenue’s cross-appeal ITA.No.316/PUN./2018 on the other hand raises the following pleadings : 1. “On the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.4,02,74,790/- made by the AO on account of unexplained cash deposits in bank accounts by accepting the additional evidence furnished by the assessee, without granting opportunity to the AO under Rule 46A of the I.T. Rules, 1962. 2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in holding that the assessee has made a declaration of Rs.19,50,000/- as unexplained cash deposits, whereas, in fact the 4 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. declaration made by the assessee on account of unexplained cash deposits is only Rs.5,00,000/- and the balance Rs.14,50,000/- pertains to declaration on account of unaccounted income for land purchases detected during survey. 3. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in giving relief of Rs.40,54,845/- in respect of addition made by the AO on account of bogus Hawala accommodation entries by accepting the additional evidence furnished by the assessee, without granting opportunity to the AO under Rule 46A of the I.T. Rules, 1962. 4. The appellant prays that the order of the Ld. CIT(A), Kolhapur be vacated and that order of the Assessing Officer be restored. 5. The appellant craves leave to add, alter, amend and modify any of the above or all grounds raised at the time of proceedings before the Hon’ble Tribunal which may please be granted.” 5. Suffice to say, it transpires during the course of hearing with the able assistance coming from both the parties that the Assessing Officer’s assessment herein dated 14.03.2016 had added the assessee’s cash deposits in bank 5 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. accounts of Rs.4,02,74,790/- followed by his disallowance of bogus purchases as mere ‘hawala’ entries of Rs.4,48,20,320/-, respectively. And that the CIT(A)'s lower appellate order has deleted the former unexplained cash deposits addition in entirety whereas he has partly upheld the latter addition of bogus purchases to the extent of Rs.40,54,845/- only in his lower appellate order. This leaves both the parties aggrieved. 6. The Revenue’s case as per it’s pleadings, therefore, is that the CIT(A) has erred in law and on facts in deleting unexplained cash deposits addition and partly restricting the Assessing Officer’s action disallowing bogus purchases by admitting additional evidence thereby violating Rule 46A of the Income Tax Rules, 1962 whereas the assessee seeks to confirm the CIT(A)'s above lower appellate findings in entirety regarding unexplained cash deposits and endeavors to delete the latter’s disallowance of bogus purchases intoto; respectively. 7. It is in this factual backdrop that we have given our thoughtful consideration to vehement rival stands against and in support of Assessing Officer’s action hereinabove. We make it clear that the first and foremost issue before us is more procedural in nature as to whether the CIT(A) has admitted any additional evidence at the assessee’s behest in his lower appellate proceedings in violating Rule 46A of the Income Tax 6 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. Rules, 1962 or not. Learned authorised representative could hardly dispute as per the CIT(A)'s corresponding detailed discussion in paras 5.1 to 5.1.3, and more particularly in para 5.1.1. [regarding assessment year 2010-11] that there indeed had been some additional evidence in the nature of cash books as well as detailed reconciliation of all the corresponding bank accounts which resulted in the former addition of unexplained cash deposits of Rs.4,02,74,790/- getting deleted. The factual position is no different regarding the latter issue of bogus purchases as well wherein the CIT(A)'s detailed discussion in paragraphs 5.4 to 5.4.1 prima facie considered the assessee’s alleged additional submissions regarding the supplier party(ies) M/s. Sai Enterprises and M/s. GM Traders details of which had been found to have been providing mere accommodation entries by charging commission @ 1%. Learned counsel at this stage vehemently argued that even if it has held that the assessee had merely availed accommodation entries in bogus purchases, the same would result in the corresponding disallowance of Rs.4,48,20,320/- as forming source of the cash deposits of Rs.4,02,74,790/- along with the other relevant opening balances figures without prejudice to his stand throughout adopted that he had duly explained the source of the cash deposits as well as genuineness of the purchases before the lower authorities by way of cogent 7 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. evidence. Faced with the situation and in view of the fact that the CIT(A)'s lower appellate discussion on both these issues has nowhere prepared a detailed reconciliation of all the purchases vis-à-vis assessee’s cash deposits thereby taking into consideration his alleged additional submissions, we deem it appropriate to restore these twin issues forming subject matter of the instant cross-appeals back to the Assessing Officer for his afresh appropriate adjudication and factual verification as per law preferably within three effective opportunities of hearing. Ordered accordingly. 8. These assessee’s and Revenue’s cross-appeals ITA.Nos.235 & 316/PUN./2018 are accepted for statistical purposes in very terms. 9. Coming to the assessee’s latter appeal ITA.No.236/PUN./2018 for assessment year 2011-12, we note that he has filed his letter dated 20.02.2023 seeking to withdraw the same as follows : 8 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. 10. The Revenue is fair enough in not objecting to the assessee’s above withdrawal submissions subject to all just exceptions. Ordered accordingly. 11. No other ground or argument has been pressed during the course of hearing. 12. To sum-up, assessee’s and Revenue’s cross-appeals ITA.Nos.235 & 316/PUN./2018 are allowed for statistical purposes and the former’s latter appeal ITA.No.236/PUN./2018 is dismissed as withdrawn in above terms. A copy of this common order be placed in the respective case files. 9 ITA.Nos.235, 236 & 316/PUN./2018 Shri Vijay V. Sannake, Kolhapur. Order pronounced in the open Court on 24.02.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 24 th February, 2023 VBP/- Copy to 1. Shri Vijay Vasant Sannake, Shahupuri, Dist. Kolhapur. C/o. Sushant S. Phadnis, 613 E-Ward, Phadnis Chambers, Shahupuri, 1 st Lane, Kolhapur – 416 001. 2. The ITO, Ward-2(2), Ayakar Bhavan, Tarabai Park, Kolhapur. 3. CIT(A)-2, Kolhapur 4. The Pr. CIT-2, Kolhapur 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.