Assistant Commissioner of Income-Tax, Circle -4, Pune V. Pratham Builders and Developers P Ltd, Pune

ITA 484/PUN/2021

AI Insights

The case involves the Assistant Commissioner of Income Tax, Circle 4, Pune (Appellant) vs. Pratham Builders and Developers Pvt. Ltd. (Respondent) concerning the assessment year 2012-13. The primary issue was the addition of Rs. 1,72,43,000 made under section 68 of the Income Tax Act, 1961, which the CIT(A) later deleted, stating that the amount was explained by the cash in hand balance of Rs. 6,63,88,376 as on 31-03-2011. The Tribunal found that the CIT(A) had accepted additional evidences without giving the A.O an opportunity to comment on them, which was not in accordance with the judicial process. Therefore, the Tribunal remanded the matter back to the CIT(A) for a proper examination of the additional evidences and a decision in compliance with the principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124418 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-01-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 05-10-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Additional evidence; Set aside
• Section: 147; 68; 148; 144; 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA No. 484/PUN/2019 : A.Y. 2012-13 The Asstt. C.I.T. Circle 4, Pune. Appellant Vs. Pratham Builders and Developers Pvt. Ltd. 1194/27A Shivajinagar, Yashomala, Pune-411 005 PAN: AADCM 4243 K Respondent Appellant by : Shri M.G. Jasnani Respondent by : None Date of Hearing : 17-01-2023 Date of Pronouncement : 17-01-2023 ORDER PER BENCH This appeal preferred by the Revenue emanates from order of the NFAC Delhi dated 10-09-2021 for assessment year 2012-13 as per the following grounds of appeal. “1. On the facts and circumstances of the case and in law, the ld. CIT(A)/NFAC erred in deleting the addition of Rs. 1,72,43,000/- made u/s 68 of the IT Act, 1961. 2. On the facts and circumstances of the case and in law, the ld. CIT(A)/NFAC erred in considering the cash in hand balance as per the return of income & accounts for A.Y. 2011-12 which has not been filed by the assessee. 3. On the facts and circumstances of the case and in law, the ld. CIT(A)/NFAC erred in not remanding the issue to the A.O though additional evidence in the form of accounts and manual return of income was not before the A.O in the course of assessment proceedings. 4. On the facts and circumstances of the case and in law, the ld. CIT(A)/NFAC erred in computing the net profit of the assessee on the basis of turnover as per return of income for A.Y. 2011-12 which has not been filed by the assessee. 5. On the facts and circumstances of the case and in law, the ld. CIT(A)/NFAC erred in not considering the fact that the assessee is a non-filer and the only return of income filed by the assessee is that for A.Y. 2007-08 and 2013-14 wherein the cash in hand is reported at Rs. 70,542/- and NIL respectively. 6. The order of CIT(A)/NFAC may be vacated and that of the A.O be restored. 2 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 7. The assessee craves to add, amend, alter or delete any of the above ground of appeal during the course of appellate proceedings before the Hon’ble Tribunal.” 2. At the time of hearing none appeared for the assessee neither any adjournment was filed. Notices have been served at the registered address and since there is no evidence on record to suggest why there should be non- compliance by the assessee irrespective of the valid service of notices the submissions of the ld. D.R are heard and the relevant documents on record considered. 3. The brief facts in this case are that the assessee is a private ltd. company engaged in the business of promoter & developers. The assessee had not filed its return of income for the AY 2012-13. As per the NMS Database and information received from ITD Individual Transaction Statement, it was noticed that the assessee company had made total cash deposits of Rs. 1,17,60,000/- during the F.Y. 2011-12 relevant to AY 2012-13. The assessee also had not replied to the NMS notice issued by the AO. In absence of any evidence the source of cash deposits of Rs. 1,17,60,000/- is remained unexplained. Thus the AO had reason to believe that the cash deposit has escaped the assessment due to failure on the part of the assessee to disclose the income in the return of income. In view of the above fact, the AO had re-opened the case u/s 147 of the IT Act, 1961 (hereinafter referred to as the Act) after obtaining the Administrative approval from the Pr.CIT-2, Pune and issued the notice u/s 148 of the Act on 28.03.2019 on the last known address of the assessee available to the office. Further, the notice u/s 142(1) of the Act was issued to the assessee . However, the assessee had not replied to any notices issued under the relevant section of the Act. On the part of the assessee failing to comply with any notices on the stipulated 3 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 date. Meanwhile, information had been called for u/s 133(6) of the Act vide letter dated 05.03.2019 from the HDFC Bank Ltd., Shivaji Nagar, Pune- 411004 and Janata Sahakari Bank Ltd., Bajirao Road, Pune-411002. The Bank Statements were received in response to summon u/s 133(6) of the Act. On verification of bank statement, it is found that the assessee had deposited the cash of Rs. 1,62,43,000/- and Rs. 10,00,000/- in the HDFC Bank, Pune- 411004 and Janata Sahakari Bank, Pune-411002 respectively during FY 2011-12. After absence of reply on the part of the assessee , as per the principle of natural justice a final opportunity was accorded to assessee by issuing the show cause notice u/s142(1) of the Act on 27.11.2019 through ITBA Portal for mentioning that to comply with the notice on or before 02.12.2019. The assessee has failed to attend/comply till 02.12.2019. In view of the above, as assessee has failed to attend/comply with the show cause notice so the A.O treated the cash deposit as unexplained cash credit u/s 68 of the Act and applying the tax rate thereon as per section 115BBE of the Act. Accordingly, the AO completed the assessment proceedings in the manner considering the assessee as Ex-parte u/s 144 r.w.s 147 of the Act and assessed the total income of Rs. 1,72,00,000/- for the year under consideration. Aggrieved by the order of the A.O, the assessee filed an appeal before the CIT(A). Decision of the National Faceless Appeal Centre (NFAC) The Ld. CIT(A) has decided the appeal in favor of the Assessee stating that "On verification of the details submitted by the assessee , it is found that the assessee has a cash in hand balance of Rs. 6,63,88,376/- on 31.03.2011. Therefore, the deposit of Rs. 1,72,43,000/- is explained by cash in hand. The A.O has made the addition without considering the Cash in hand balance of Rs. 6,63,88,376/-. The addition made without considering the cash balance is not as per law. Since, the cash deposit is explained by the 4 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 Cash in hand balance, Section 68 is not applicable in this case. The addition of Rs. 1,72,43,000/- is hereby deleted. However, the assessee has not filed the return of income for A Y 2012-13. Since, the return of income was not filed the case was re-opened u/s 148 of the Act. No income has been offered by the assessee for AY 2012-13. In the previous year 2011-12 the assessee had a turnover of Rs. 6,06,27,825.14/- and had offered Nil income. The assessee is builder and developers and in the interest of revenue and facts and circumstances of the case, I hereby compute the net profit for the AY 2012-13 @ 8% of total deposit of Rs. 1,72,43,000/- in the hands of the assessee . The Assessing Officer is hereby directed to compute the total income at Rs. 13,79,440/- which is 8% of total cash deposit. The addition of Rs. 13,79,440/- is hereby confirmed. The ground of appeal is partly allowed." 4. The assessee had not filed return of income for A.Y. 2012-13 and the assessment order was framed u/s 144 of the Act due to non-compliance by the assessee. The ld. D.R vehemently submitted that the ld. CIT(A) has decided the assessee’s appeal in favour of the assessee taking into consideration the total cash deposits of Rs. 1,72,43,000/- as business turnover and estimated the profit @ 8% of the total turnover. The assessee had submitted the financial statement of the previous year including P & L a/c and balance sheet during the appellate proceedings. The ld. CIT(A) has given finding that the cash deposit of Rs. 1,72,43,000/- was out of cash in hand as on 31-3-2011 of Rs. 6,63,88,376 as per the balance sheet of the assessee. It was further submitted by the ld. D.R that on perusal of system data by the ld. A.O it was observed that the assessee had not filed either return of income or financial statements or copy of audit report for F.Y. 2011-12 with the department. During the course of appellate proceedings, the ld. 5 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 CIT(A) has admitted the assessee’s additional evidences such as statement of previous year, P & L account and balance sheet which was not available with the A.O. The ld. CIT(A) should have allowed the ld. A.O an opportunity to give his statement on the said additional evidences. The ld. D.R demonstrated from the ld. CIT(A)’s order at para 4.3 page 6 which is as follows: “On verification of the details submitted by the appellant, it is found that the appellant had a cash in hand balance of Rs. 6,63,88,376 as on 31-3-2011. This is as per the balance sheet filed by the appellant. In the balance sheet (Schedule B) the appellant had a cash in hand of Rs. 6,63,88,376/- as on 31-3-2011. Therefore, the deposit of Rs. 1,72,43,000/- is explained by the cash in hand. 5. The ld. D.R also demonstrated from the e-portal of the department that these additional evidences were not filed before the ld. A.O. Therefore, it was contended that the matter should be remanded back to the file of the ld. CIT(A) whereby the additional evidences should be sent to the ld. A.O and a remand report should be called taking the comments of the A.O after due verification of facts. 6. We have perused the case records and the relevant materials/documents with the department and we are in conformity with the submissions of the ld. D.R as it is observed that the ld. CIT(A) has given relief to the assessee accepting additional evidences in the form of financial statements and the balance sheet which were actually not filed by the assessee before the ld. A.O. The ld. CIT(A) should have given an opportunity to the ld. A.O by calling for a remand report sending these additional evidences for his comments and thereafter taking a judicial decision. However, this has not been done by the ld. CIT(A) and he simply relied on the additional evidences without confronting the ld.A.O and gave relief to the assessee which is not in accordance with the judicial process specially coming from a quasi-judicial authority . In the interest of justice, we therefore, set aside the order of the ld. CIT(A) and remand the matter back to his file directing him to 6 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 forward the additional evidences filed before him to the ld. A.O calling for a report and thereafter take a decision as per law while complying with the principles of natural justice. Grounds of appeal are allowed for statistical purposes. 8. In the result, appeal of the revenue is allowed for statistical purposes. Order pronounced in the open court on 17 th January 2023 Sd/- sd/- (INTURI RAMA RAO) PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated : 17 th January 2023 Ankam Copy of the Order forwarded to : 1. The Assessee 2. The Respondent 3. The NFAC Delhi 4. The Pr. CIT-2 Pune 5. DR, ITAT, ‘B’ Bench Pune 6. Guard File. //सत्यापित प्रपत// True Copy// BY ORDER, Sr. Private Secretary ITAT, Pune /// TRUE COPY /// 7 ITA 484/PUN/2019 Pratham Builders & Developers A.Y. 2012-13 Date 1 Draft dictated on 17-01-2023 Sr.PS 2 Draft placed before author 17-01-2023 Sr.PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 17-01-2023 Sr.PS/PS 7 Date of uploading of order 17-01-2023 Sr.PS/PS 8 File sent to Bench Clerk 17-01-203 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order