Sureshbhai Nathabhai Godhani, Surat V. Income Tax Officer, Ward-5, Navsari, Navsari

ITA 576/SRT/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 3737 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-02-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 21-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD KUMAR
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences; Unexplained cash credit; Onus to prove; Reopening of assessment; Source of fund
• Section: 148; 143(3); 142(1); 143(2); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.576/SRT/2023 Assessment Year: (2010-11) (Physical Hearing) Sureshbhai Nathabhai Godhani, College Shopping Center, Vansada Road, Tal – Chikhli, Navsari – 396251, Gujarat Vs. The ITO, Ward – 5, Navsari èथायीलेखासं./जीआइआरसं./PAN/GIR No: AMBPP5393G (Appellant) (Respondent) Appellant by Shri Sapnesh Sheth, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 28/02/2024 Date of Pronouncement 11/03/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2010-11, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], Surat, National Faceless Appeal Centre (in short ‘the NFAC’), dated 18.07.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 25.10.2017. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the leaned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre has erred in confirming the action of the assessing officer in reopening assessment by issuing notice u/s 148 of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as on the subject, the learned CIT(A), NFAC has erred in confirming the action of assessing officer 2 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani in making addition of Rs.22,31,000/- as unexplained cash credit u/s 68 of the I.T. Act, 1961. 3. It is therefore prayed that above addition made by assessing officer and confirmed by commissioner of Income-tax (Appeals) may please be deleted. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.” 3. Brief facts qua the issue are that assessee`s case was re-opened u/s 147/148 of the Act, as per the information supplied through AIR; wherein it was reflected that the assessee during the year relevant to assessment year (A.Y.) 2010-11 had deposited cash of Rs.22,31,000/- in saving bank account maintained with Bank of Baroda. The case was re- opened after recording the reasons for re-opening and taking necessary approval from the concerned authority. A notice u/s 148 of the I.T. Act dated 22.03.2017 was issued and duly served upon the assessee. In response, the assessee submitted his reply dated Nil enclosing acknowledgment of return of Income filed on 15.10.2010 for the A.Y.2010-11 in form ITR-4 declaring total income at Rs 4,78,110/- to treat the said return as filed in response to notice u/s 148 of the Act. Subsequently, a notice u/s 143(2) dated 17.08.2017 was issued and served upon the assessee. 4. On verification of the details available with assessing officer, it was noticed by the assessing officer that assessee had deposited cash amounting to Rs.22,31,000/- in his saving bank account maintained with Baroda Gujarat Gramin Bank. Explanation in respect of the source of cash deposit was sought from the assessee with supporting evidence by issue of notice u/s 142(1) of the Act dated 17.08.2017. In spite of availing ample time, assessee did not submit any detail or any single evidence in respect of the source of deposited cash. Hence, showcause 3 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani notice dated 06.09.2017 and 22.09.2017 were issued to the assessee which is reproduced as under: “2. In connection with the assessment proceedings for the A.Y. 2010-11, you are requested to submit details as per the above referred notice/letter. It is noticed that no reply has been received from your side till date. You are once again provided this opportunity of being heard and requested to furnish the following documents: (i) During the year under consideration, as per the record you have deposited cash of Rs. 22,31,000/- in your saving bank account maintained with Baroda Gujarat Gramin Bank. You are requested to explain the source of above cash deposit along with supporting evidences otherwise show cause as to why above amount of Rs. 22,31,000/- deposited in your bank account should not be treated as unexplained cash credit and added to your total income. (ii) From further verification of bank details it is noticed that there are several credit entries which requires an explanation from you. You are requested to explain the details of transactions and justify the nature of above receipts otherwise show cause as to why above receipts should not be treated as unexplained money/income/investment and added to your total income. (iii) You are once again advised to submit the details urgently and not to take the assessment proceedings lightly. You are requested to submit above details without any delay. Further, your attention is invited to the fact that you are being provided this last opportunity of being heard. Your reply should reach this office on or before 10.10.2017 otherwise your case will be finalized as per the material available on record. This letter may be treated as notice u/s 142(1) of the IT. Act.” 5. In response to the above show cause notice, neither the assessee attended the office of the assessing officer nor submitted the details called for. Therefore, assessing officer noted that it is clear that the assessee has nothing to defend in this matter. Assessee simply submitted copy of acknowledge of return of income for the relevant assessment year and nothing else. The Assessee could not submit any single evidence to substantiate the source of deposited cash. The Assessee even does not bother to submit the computation of income for the year under consideration. The Assessee could not discharge the onus to prove the genuineness of the cash deposit in spite of availing ample time. Therefore, it is clear that the cash deposit was out of unaccounted 4 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani sources of Income. Hence, the amount of Rs.22,31,000/- was treated income of the assessee for the year under consideration and the same was added to the total income of the assessee u/s 68 of the Act. 6. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the Assessing Officer, observing as follows: “6. I have considered the submission of the appellant made on ground No.1 and find evidentiary value in the submission. On perusal of the bank statement submitted by the appellant, it is seen that the appellant has made cash deposits of small amounts like 10,000/- and Rs.5,000/- on various dates. No explanation was provided by the appellant as to why he has deposited the small amounts on various dates and not deposited the same in one go. Further, the distance between the Baroda Gujarat Gramin Bank, Chikhli Branch and ICICI Bank, Navsari Branch is about 30 KMs. No satisfactory explanation is provided by the appellant as to why he has frequently withdrawn such small amounts in cash from one bank and deposited the same in other bank located with 30 Kms. In this digital age of net banking transfers, when any amount of money can be transferred at the click of a button within a few minutes, it is beyond reason as to why an individual would withdraw small amount of money from one bank at regular intervals and travel 30 KMs across the city to deposit in another account. By this logic, then appellant would be doing this job only for most of the month which seems illogical. This can only happen when two transactions are separate and not linked to each other. From preponderance of probability, it appears that appellant's meagre withdrawal from ICICI Bank, Navsari Branch is for household & other expenses and this cash deposit in Baroda Gujarat Gramin Bank are a separate source of income which the AO has brought to tax. If at all amount is to be transferred, it can be done alone in a single instance through NEFT/RTGS, rather than visiting the bank every second day. The appellant has not been able to give any convincing or cogent explanations about the cash deposits amounting to Rs.22,31,000/-. I have also perused the assessment order of the AO and reasoned explanation given by him for adding the amount of Rs.22,31,000/- in the total income of the appellant. The AO during the course of assessment proceedings has noticed that the appellant has deposited cash amounting to Rs.22,31,000/- in his saving bank account Explanation was sought from the appellant with supporting evidence vide notice issued u/s 142(1). But the appellant has not submitted any evidence to the AO. Thereafter, the AO issued showcause notice to the 5 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani appellant dated 06.09.2017 and 22.09.2017. The relevant part of the showcause notice is reproduced below:- “i. During the year under consideration, as per the record you have deposited cash of Rs.22,31,000/- in your saving bank account maintained with Baroda Gujarat Gramin Bank. You are requested to explain the source of above cash deposit alongwith supporting evidence otherwise showcause as to why above amount of Rs.22,31,000/- deposited in your bank account should not be treated as unexplained cash credit and added to your total income. You are once again advised to submit the details urgently and not to take the assessment proceedings lightly. You are requested to submit the above details without any delay. Further, you attention is invited to the fact that you are being provided this last opportunity of being heard. Your reply should reach this office on or before 10.10.2017 otherwise your case will be finalized as per the material available on record. This letter may be treated as notice u/s 142(1) of the Act." In response to the above showcause, the appellant neither attended nor submitted any details. The appellant has not submitted any evidence to substantiate his claim before the AO. Therefore, the AO added the amount of Rs.22,31,000/- on account of cash deposit. In view of the above, it is clear that there is not enough evidence submitted by the appellant to discharge the onus. Coming to the substantive part of addition, it is seen that appellant has not furnished any corroborative evidence to discharge its claim and there are glaring gaps in the meagre submissions. The AO has done considerable due diligence to establish his ciaim. 6.1 In view of these facts, the addition made by the AO amounting to Rs.22,31,000/- is sustained and this ground No.1 of appeal is dismissed. 7. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 8. Shri Sapnesh Sheth, Ld. Counsel for the assessee, pleaded that against the show cause notice issued by the Assessing Officer, the assessee submitted the details of cash deposited in the bank account and the cash flow chart was also submitted. The assessee is doing job work and on that account, the assessee has shown the debit and credit entries in the books of accounts and therefore Ld. Counsel contended that 6 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani assessee has explained the sources of the cash deposits, hence addition may be deleted. 9. The Ld. Counsel also challenged the reopening of the assessment under section 148 of the Act and stated that the reasons were not provided by the Department so the issue of reopening cannot be argued. The ld Counsel also stated that it is a matter of cash deposit, therefore entire cash deposits should not be treated, as a profit of the assessee. Therefore, a fair percentage of profit may be added in the hands of the assessee. 10. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the Revenue submitted that assessee has failed to explain the source of the cash deposits and whatever the evidences submitted by the assessee were self-serving evidences. Besides, the assessing officer never submitted any evidence and explanation before the assessing officer, hence the matter may be remitted back to the file of the assessing officer for fresh adjudication. 11. On reopening of assessment under section 147 of the Act, the ld. Sr. DR submitted that the Assessing Officer can reopen the assessment based on the information available with him, therefore reassessment proceedings are valid. 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. The Ld. Counsel for the assessee claimed that before the lower authorities, the assessee submitted the relevant portion of audited profit and loss account and balance sheet, which is 7 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani placed at paper book page nos.5 to 7 of assessee`s paper book. We have gone through the assessment order and noted that no such evidences were submitted before the assessing officer, so far this issue is concerned. The ld Counsel stated that assessee is doing job work and such job work was explained by way of submitting audited profit and loss account and balance sheet, during the assessment stage. However, we note that there is no any evidence in the paper book of the assessee about submission of these documents before assessing officer. Besides, the assessee has not challenged the reopening proceedings under section 147 of the Act, before lower authorities, that is, neither before the assessing officer nor before ld CIT(A). Before us, Ld. Counsel also challenged the reopening of the assessment under section 148 of the Act and stated that the reasons were not provided by the Department so the issue of reopening cannot be argued, however, ld Counsel stated that it is a matter of cash deposit, therefore entire cash deposits should not be treated, as a profit of the assessee, therefore, a fair percentage of profit may be added in the hands of the assessee. However, to ascertain the profit element, before us, the ld Counsel did not explain the nature of assessee`s business and comparative instances of profit element involved in assessee`s business, hence it is not possible to determine the profit element involved in assessee`s bank transactions. 13. We note that assessee has submitted before us audited profit and loss account and balance sheet, which was not available before the assessing officer to verify the job work and cash deposit in bank account nor assessee has explained the entries in bank account to the assessing officer. Before the ld CIT(A), the assessee has merely explained that assessee used to withdraw cash from one bank account and used to deposit in another bank account, which was not accepted by ld CIT(A). 8 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani Considering these facts and circumstances, we are of the view that the matter may be remitted back to the file of the assessing officer for fresh adjudication. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. The assessee is also directed to file the relevant details and documents, if any, before the assessing officer, as and when required by the assessing officer. For statistical purposes, the appeal of the assessee is treated as allowed. 14. In the result, appeal filed by the assessee is allowed for statistical purposes, in above terms. Order is pronounced on 11/03/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 11/03/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat 9 576/SRT/2023/AY.2010-11 Sureshbhai Nathabhai Godhani IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.576/SRT/2023 (Ǔनधा[रण वष[ / AY: (2010-11) Sureshbhai Nathabhai Godhani, College Shopping Center, Vansada Road, Tal – Chikhli, Navsari – 396251, Gujarat Vs. The ITO, Ward – 5, Navsari èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AMBPP5393G (अपीलाथȸ /Appellant ) (Ĥ×यथȸ/Respondent) CORREIGENDUM PER DR. A. L. SAINI, AM: 1. Learned Counsel for the assessee brought to our notice by letter dated 13.03.2024 that there is typographical error in the order of Tribunal, dated 11.03.2024 vide ITA No.576/SRT/2023 for Assessment Year 2010-11. We rectify the typographical error in para no.13 of the order of Tribunal, as follows: “13.......Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to adjudicate the issue afresh on merits ....” 2. Except to the above, there is no change in the order of Tribunal, dated 11.03.2024. Sd/- Sd/- (PAWAN SINGH) (Dr. A. L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat/Ǒदनांक/ Date: 14/03/2024 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat