Dharti Zinc, Sabarkantha V. ITO, Ward-3, Himatnagar

ITA 519/AHD/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9360 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Keywords: Source of fund; Reasonable cause
• Section: 133(6); 68

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD - BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA NO.519/AHD/2019 / ASSTT.YEAR : 2013-2014 DHARTI ZINC PLOT NO.35, GIDC, MOTIPURA HIMATNAGAR SABARKANTHA. VS. ITO, WARD-3 HIMATNAGAR. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI SANJAY THAKKAR REVENUE BY : SHRI JAGDISH, CIT-DR / DATE OF HEARING : 24/09/2019 / DATE OF PRONOUNCEMENT: 01/10/2019 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)- 2, AHMEDABAD DATED 12.10.2018 PASSED FOR THE ASSESS MENT YEAR 2013-14. 2. REGISTRY HAS POINTED OUT THAT APPEAL FILED BY T HE ASSESSEE IS TIME BARRED BY 101 DAYS. IN ORDER TO EXPLAIN THE DELAY, THE ASSESSEE HAS FILED AFFIDAVIT OF ITS PARTNER SHRI BHUPENDRAKUMAR RAMABH AI PATEL, AND ACCOUNTANT SHRI SANDIPKUMAR VINBHAI PATEL. IT IS D EPOSED IN BOTH THE AFFIDAVITS THAT FATHER OF SHRI SANDIPKUMAR VINUBHAI PATEL WAS DIAGNOSED WITH CANCER AND ADMITTED TO CIVIL HOSPITAL AT AHMED ABAD ON 24.3.2018. ON ACCOUNT OF SUDDEN ILLNESS OF HIS FATHER HE COULD NO T COME TO THE OFFICE AND FAILED TO HAND OVER APPEAL PAPERS TO SHRI KALPIT ME HTA, CA. ACCORDING TO ITA NO.519/AHD/2019 2 THE DEPONENT SHRI BHUPENDRAKUMAR R. PATEL, THIS FAC T CAME TO HIS NOTICE WHEN SHRI KALPIT MEHTA CALLED HIM ABOUT NON-FILING OF THE APPEAL AGAINST ORDER OF THE LD.CIT(A). 3. ON DUE CONSIDERATION OF THE ABOVE AFFIDAVITS, AL ONG WITH MEDICAL REPORT OF SHRI VINUBHAI MANIBHAI PATEL, FATHER OF S HRI SANDIPKUMAR V. PATEL, WE ARE SATISFIED THAT THE ASSESSEE WAS PREVE NTED BY REASONABLE CAUSE FOR NOT FILING APPEAL WITH THE TRIBUNAL WITHIN TIME LIMIT. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO DECIDE THE APPEAL ON MERIT. 4. NOW WE TAKE APPEAL OF THE ASSESSEE. GROUNDS OF A PPEAL TAKEN BY THE ASSESSEE ARE RUNNING INTO SIX PAGES. THUS, THEY ARE NOT IN CONSONANCE WITH THE RULE 8 OF THE INCOME TAX (APPELLATE TRIBUNAL) R ULES, 1963 - THEY ARE DESCRIPTIVE AND ARGUMENTATIVE IN NATURE. IN BRIEF , GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION OF RS.22,03,288/- AND RS.34,61,500/- WHICH WAS ADDED BY THE AO WITH AID O F SECTION 68 OF THE INCOME TAX ACT. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 27.09.2013 DECLARING NIL INCOME. THE ASSESSEE F IRM AT THE RELEVANT TIME WAS ENGAGED IN MANUFACTURING AND TRADING OF ZINC OX IDE. IT HAS ACHIEVED TURNOVER OF RS.10.46 CRORES AND GP AT 8.69%. ON SC RUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS TAKEN ADVA NCE OF RS.22,03,288/- FROM SIX PERSONS. THE DETAILS HAVE BEEN NOTICED ON PAGE NO.4 OF THE ASSESSMENT ORDER. HE FURTHER FOUND THAT THE ASSESSEE HAS DEPO SITED RS.34,61,500/- IN CASH ON DIFFERENT DATES IN THE BANK ACCOUNT WITH BANK OF BARODA, MOTIPURA BRANCH, HIMATNAGAR. THE LD.AO HAS CONFRONTED THE ASSESSEE FOR FURNISHING IDENTITY OF CREDITORS, GENUINENESS OF TRANSACTION, AND THEIR CR EDIT-WORTHINESS WITH REGARD TO THE LOAN OF RS.22,03,288/-, AND WITH REGARD TO C ASH DEPOSITS IN THE BANK ITA NO.519/AHD/2019 3 ACCOUNT, HE DIRECTED THE ASSESSEE TO EXPLAIN SOURCE OF SUCH DEPOSITS. IN RESPONSE TO THE QUERY OF THE AO, THE ASSESSEE HAS F ILED EXPLANATION QUA EACH CREDITOR, SUBMITTING THEREIN THAT THEY HAVE SUFFICI ENT SOURCE OF FUNDS OUT OF WHICH THEY HAVE GIVEN ABOVE LOAN TO THE ASSESSEE TH ROUGH ACCOUNT PAYEE CHEQUE. WITH REGARD TO CASH DEPOSIT, IT WAS SUBMIT TED THAT THE ASSESSEE HAS ACHIEVED TURNOVER OF RS.10.46 CRORES IN DAY-TO-DAY BUSINESS. IT REQUIRED CASH WHICH WERE USED FOR PAYMENT TO LABOURERS, REPAIR EX PENSES AND CERTAIN OTHER SMALL FACTORY EXPENSES. THEREFORE, THIS CASH WERE DEPOSITED THROUGH CASH BOOK. FOR SAMPLE CHECK, THE ASSESSEE SUBMITTED THE CASH BOOK. SOMEHOW, THE AO WAS NOT SATISFIED WITH THE EXPLANATION AND M ADE ADDITION. ON APPEAL, ACCORDING TO THE ASSESSEE, IT HAS SUBMITTED ITS REP LY THROUGH ONLINE PORTAL AND THE EVIDENCE TO THIS EFFECT IS FILED BEFORE US. THE LD.CIT(A) HAS OBSERVED THAT THE ASSESSEE DID NOT MAKE ANY SUBMISSION, AND THEREFORE, CONCURRED WITH THE AO. 6. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH RECORD. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY S UM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAIN ED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NA TURE AND SOURCE THEREOF, OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACTORY, THEN THE SUM SO CREDITED IN THE ACCOU NTS MAY BE TREATED AS INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 7. A PERUSAL OF THE RECORD WOULD INDICATE THAT OUT OF RS.22,03,288/-, A SUM OF RS.7,61,738/- WAS RECEIVED FROM BRIJESH S. PATEL . WHILE GIVING EXPLANATION, ASSESSEE SUBMITTED THAT HE WAS AN EMPL OYEE OF THE ASSESSEE, BUT CURRENTLY HE IS DOING JOB IN ANOTHER COMPANY; WHENE VER REQUIRED, THE ASSESSEE USED TO TAKE MONEY FROM THIS EMPLOYEE WHO WAS TRADI NG IN AGRICULTURE PRODUCE ALSO, AND THE ALLEGED CONFIRMATION WAS ALSO SUBMITTED. THE AO ITA NO.519/AHD/2019 4 EXPECTED THE ASSESSEE TO PRODUCE DEPOSITORS, BUT AS SESSEE FAILED TO PRODUCE. AO FURTHER NOTICED THAT HE WAS DRAWING A SALARY OF RS.15,000/- AND IT IS NOT POSSIBLE FOR HIM TO ADVANCE A SUM OF RS.7,61,738/-. THUS, THE AO WAS NOT SATISFIED WITH THE GENUINENESS OF THE TRANSACTION A S WELL AS CREDIT-WORTHINESS. SIMILAR ARE THE FACTS WITH REGARD TO OTHER DEPOSITO RS ALSO. ON APPEAL, THE STAND OF THE ASSESSEE WAS THAT IT HAS FILED EXPLANATION T HROUGH EMAIL ON THE PORTAL OF THE DEPARTMENT, BUT SOMEHOW THIS EXPLANATION DID NO T LAND IN THE OFFICE OF THE CIT(A). BEFORE US ALSO, COPY OF THE MAIL SENT ONLI NE HAS NOT BEEN PLACED ON RECORD. FROM THE RECORD, WE FIND THAT THE AO HAS S TARTED INQUIRY IN THE MONTH OF NOVEMBER, 2015, WHEN HE ISSUED NOTICE UNDER SEC TION 133(6) TO BRIJESH S. PATEL. THEREAFTER HE FIXED HEARING IN THE MONTH OF FEBRUARY 2016 AND PASSED ASSESSMENT ORDER ON 23.3.2016. IT APPEARS THAT THE RE WAS NO SUFFICIENT TIME BEFORE THE AO FOR CONDUCTING PROPER INQUIRY. THERE FORE, HE HAS SENT NOTICE IN A VERY SHORT SPAN OF TIME, AND AFTER REPLY OF THE A SSESSEE ON 23.2.106 MUCH TIME HAS NOT BEEN LEFT WITH THE AO FOR CONDUCTING I NQUIRY. THEREFORE, WITHOUT CONDUCTING FULL INQUIRY, HE MADE ADDITION. ON APPE AL, THE LD.CIT(A) HAD NOT GONE INTO ANY EXPLANATION OF THE ASSESSEE WHICH WER E SUBMITTED THROUGH ON- LINE, AND EVIDENCE TO THAT EFFECT HAS BEEN FILED BE FORE US. FACED WITH THE ABOVE, WE DEEM IT APPROPRIATE TO REMIT BOTH THE ISS UES TO THE FILE OF THE AO FOR RE-ADJUDICATION. NEEDLESS TO SAY, THE OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF THE AO AND WILL NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 1 ST OCTOBER, 2019 AT AHMEDABAD. SD/ - (AMARJIT SINGH) ACCOUNTANT MEMBER SD/ - (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01 /10/2019