Kiran Rupchand Oswal, Pune, Pune V. Income Tax Officer, NFAC, Pune

ITA 503/PUN/2022

AI Insights

The case involves Kiran Rupchand Oswal, who appealed against the order of the National Faceless Appeal Centre (NFAC), which had confirmed the addition of \\u20b912,80,00,000 as unexplained cash credit under section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer (AO) during scrutiny proceedings, where the appellant failed to substantiate the source of a substantial credit in his capital account. The appellant argued that the credit represented his share of future profits from a partnership in 'Ojas Project', which was exempt under section 10(2A) of the Act. Both the AO and NFAC rejected this explanation, leading to the current appeal. The tribunal, acknowledging the lack of proper representation and evidential documents during the earlier proceedings, remanded the matter back to the AO for a thorough re-examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136224 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 29-06-2022
• Other Referred Cases: CIT Vs Precision Finance (P) Ltd. reported in 208 ITR 465 (Kol), N. K. Proteins Ltd Vs CIT reported in 2017-TIOL-23-SC-IT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Earning of tax free income
• Section: 250; 208; 139(1)

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “ए” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “A” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI,ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.503/PUN/2022 निर्धारण वर्ा / Assessment Year : 2018-2019 Kiran Rupchand Oswal, Store No.18/19 8, M. G. Road, Pune – 411 001 PAN : AADPO3423A . . . . . . . अपऩलधथी / Appellant बनाम / V/s. Income Tax Officer, National E-Assessment Centre . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Smt. Deepa Khare Revenue by : Shri Ramnath Murkunde सपिवधई की तधरऩख / Date of conclusive Hearing : 28/03/2023 घोर्णध की तधरऩख / Date of Pronouncement : 28/03/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; By the present appeal, the assessee challenges the order of National Faceless Appeal Centre, Delhi [for short ‘NFAC’] dt. 30/05/2022 passed u/s 250 of the Income-tax Act, 1961 [for short ‘the Act’] for the assessment year [for short ‘AY’] 2018-19. Kiran Rupchand Oswal, ITA No.503/PUN/2022 AY: 2018-19 ITAT-Pune Page 2 of 4 2. In the extant appeal we note that, assessee filed his return of income for the impugned year on 28/07/2018 u/s 139(1) of the Act declaring total income of ₹4,14,260/- along with a claim of exempt income for ₹12,84,20,662/-. For the reason of substantial increase in the capital, the return of the assessee was subjected to limited scrutiny by service of notice u/s 143(2). In a scrutiny proceedings, the Ld. AO called upon the assessee to prove the source of ₹12,80,20,000/- credited to capital account with supporting evidences. In reply thereto, the assessee submitted that, he was one of the partners of ‘Ojas Project’ which owns a development right in prime location of pune which yet to commence its project, however on the occasion of retirement his share in the future profits of the firm has been credited to his capital account without actual receipt. The assessee also contended that, since the credit to capital solely represents a share of future profit from his firm, the same is exempt u/s 10(2A) of the Act. This explanation however failed to inspire concurrence of Ld. AO. Kiran Rupchand Oswal, ITA No.503/PUN/2022 AY: 2018-19 ITAT-Pune Page 3 of 4 3. In the event of failure to establish and explain the genuine source of credit, the Ld. AO placing reliance on ‘CIT Vs Precision Finance (P) Ltd.’ reported in 208 ITR 465 (Kol) and N. K. Proteins Ltd Vs CIT’ reported in 2017-TIOL- 23-SC-IT, held the transaction as bogus / non genuine and made an addition of ₹12,80,00,000/- u/s 68 of the Act as unexplained cash credit vide order dt. 16/03/2021. 4. In an appeal before the Ld. NFAC the appellate reiterated his submission; however of no success the matter came on board by the present appeal. 5. In the course of hearing, the Ld. AR adverting to paper book filed containing 52 pages has candidly submitted that, neither during assessment nor appellate proceedings the case was properly represented by adducing evidential documents, for the reason one more opportunity of being heard be accorded by remanding the matter back to AO. Per contra, the Ld. DR adverting to detailed discussion laid in the impugned order has strongly objected the plea. Kiran Rupchand Oswal, ITA No.503/PUN/2022 AY: 2018-19 ITAT-Pune Page 4 of 4 6. Without going into the merits of the case, we note that, the appellant during assessment as well before first appellate authority has dejectedly failed explain the source of credit by adducing cogent documentary proof in support of his claim, for the reason in the interest of larger justice, we deem fit to remand the matter back to the file of assessing officer for de-nova adjudication preferably in three effective hearings to the appellant. Thus ordered accordingly. 5. Resultantly, the appeal of the appellant assessee is allowed for statistical purpose in above terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday 28 th day of March, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 11 th day of May, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT -2, Pune 4. The CIT(A)-NFAC, Delhi (India) 5. DR, ITAT, Bench ‘A’, Pune 6. ग र्डफ़ इल / Guard File. आिेश नुस र / By Order, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.