Shri Minhaj Ahmad Warsi, Faizabad V. Income Tax Officer-1, Faizabad

ITA 611/LKW/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7747 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PINKI MAHAVAR
• Keywords: Income from undisclosed sources; Principle of natural justice; Reasonable cause; Set aside
• Section: 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT ITA NO. 611/LKW/2019 ASSESSMENT YEAR: 2010 - 11 MINHAJ AHMAD WARSI 2180, KATRA, RUDAULI FAIZABAD V. ITO - 1 FAIZABAD TAN/PAN: BDAPA6695M (APP ELLANT) (RESPONDENT) APPELLANT BY: SHRI SHUBHAM RASTOGI, C.A. RESPONDENT BY: SMT PINKI MAHAVAR, D.R. DATE OF HEARING: 29 01 20 20 DATE OF PRONOUNCEMENT: 29 01 20 20 O R D E R THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-1, LUCKNOW, DATED 22/8/2019 FOR ASSESSMENT YEAR 2010- 11, ON THE FOLLOWING GROUNDS: 1. THE LD. C.I.T.(A)-I, LUCKNOW DID NOT APPRECIATED THAT THERE WAS A REASONABLE CAUSE BEING MEDICAL REASONS AND THEREFORE, DUE COMPLIANCE COULD NOT BE MADE IN THE COURSE OF APPELLATE PROCEEDINGS. 2. THE C.I.T.(A] ERRED ON FACTS AND IN LAW IN UPHOLDING THE ISSUANCE OF NOTICE U/S 148 OF I. T. ACT DATED 13.03.2015 BY LD. A.O. SOLELY ON THE BASIS OF INFORMATION OF CASH DEPOSIT IN BANK ACCOUNT. THE LD. A. 0. DID NOT MAKE ANY INDEPENDENT INVESTIGATION OR ENQUIRY. HENCE THE NOTICE IS INVALID AND SUBSEQUENT ASSESSMENT IS ALSO INVALID. 3. THE REASONS RECORD FOR ISSUING NOTICE U/S 148 OF I. T. ACT, 1961 DO NOT MEET THE REQUIREMENTS FOR ISSUANCE OF NOTICE, ACCORDINGLY, REASONS ARE INVALID AND SUBSEQUENT ASSESSMENT ON THE BASIS OF THE REASONS IS ALSO INVALID. 4. THE LD. C.I.T.(A) DID NOT APPRECIATED THAT THE CASH DEPOSIT IN BANK ACCOUNT DO NOT CONSTITUTE INCOME WHEN IT WAS DEPOSITED AS PER BUSINESS TRANSACTION AND ALSO ITA NO.611/LKW/2019 PAGE 2 OF 5 WITHDRAWAL AS PER BUSINESS TRANSACTION FOR SALE AND PURCHASE OF OLD TYRES. 5. THE C.I.T. (A) DID NOT APPRECIATED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF SALE OF OLD TYRES AND HIS TOTAL SALE WAS RS.13,25,160/- WHICH WAS DEPOSITED IN BANK AND THE SAME WAS WITHDRAWAL TOWARDS THE PURCHASE OF OLD TYRES. THEREFORE, CASH DEPOSIT OF RS.10,05,000/- DURING THE YEAR IN PIECE MEALS CANNOT BE TREATED AS DEPOSIT FROM UNDISCLOSED SOURCE. 6. THE C.I.T. (A) DID NOT APPRECIATED THAT ASSESSEE IS NOT REQUIRED TO MAINTAIN BOOKS OF ACCOUNTS TOWARDS THE SALE AND PURCHASE OF OLD TYRES AS HIS INCOME AS PER SECTION 44AF OF I. T. ACT IS RS.132516/- THE SAME IS ALSO BELOW THE TAXABLE LIMIT, HENCE AS PER THE ADVICE OF ADVOCATE NO RETURN HAS BEEN FILED. 7. THE ADDITION UPHELD IS HIGHLY EXCESSIVE, CONTRARY TO THE FACTS, LAW AND PRINCIPLE OF NATURAL JUSTICE AND WITHOUT PROVIDING SUFFICIENT TIME AND OPPORTUNITY TO HAVE ITS SAY ON THE REASONS RELIED UPON BY LD. C.I.T.(A). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, DERIVING INCOME FROM TRADING OF OLD TYRES ON SMALL SCALE, DID NOT FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. ON THE BASIS OF SPECIFIC INFORMATION AVAILABLE WITH THE DEPARTMENT, TO THE EFFECT THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, I.E., 2010-11, THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.10,05,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH THE STATE BANK OF INDIA, RUDAULI, THE ASSESSING OFFICER INITIATED PROCEEDINGS UNDER SECTION 148 OF THE ACT AND COMPLETED THE ASSESSMENT UNDER SECTION 144/147 OF THE ACT, ASSESSING THE INCOME OF THE ASSESSEE AT RS.10,24,090/- ON THE BASIS OF CASH FOUND TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AT RS.10,05,000/- AND INTEREST THEREON AT RS.19,093/-. ITA NO.611/LKW/2019 PAGE 3 OF 5 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF THE ASSESSEE FOR WANT OF PROSECUTION. 4. BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DERIVES INCOME FROM TRADING OF OLD TYRES ON SMALL SCALE, FOR WHICH NO BOOKS OF ACCOUNTS HAVE BEEN MAINTAINED AND THE TURNOVER IS REFLECTED AS DEPOSITS IN THE SAVING BANK ACCOUNT WITH SBI, RUDAULI; THAT THE ASSESSEE IN RESPONSE TO THE NOTICE UNDER SECTION 148 OF THE ACT, COULD NOT FILE THE RETURN OF INCOME FOR THE REASONS BEYOND THE CONTROL OF THE ASSESSEE; THAT HOWEVER, IN COMPLIANCE TO NOTICE UNDER SECTION 142(1), SHRI R.S. GUPTA, THE A.R. OF THE ASSESSEE ATTENDED ON BEHALF OF THE ASSESSEE FROM TIME TO TIME AND FURNISHED WRITTEN SUBMISSIONS; THAT THE NET INCOME OF THE ASSESSEE, I.E., RS.1,32,516/- WAS BELOW THE TAXABLE LIMIT, AS PER COMPUTATION CHART FURNISHED WITH THE REPLY FURNISHED TO THE ASSESSING OFFICER; AND THAT THE EXPLANATION OF THE ASSESSEE THAT THE DEPOSITS WERE MADE OUT OF SALE OF GOODS HAS BLATANTLY BEEN REJECTED BY THE ASSESSING OFFICER, WHO TREATED THE SUM OF RS.10,05,000/- AS DEPOSITS AND INTEREST THEREON OF RS.19,093/- FROM UNDISCLOSED SOURCES. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE LD. CIT(A) HAD DISMISSED THE APPEAL OF THE ASSESSEE FOR WANT OF PROSECUTION; AND THAT THE ASSESSEE COULD NOT PUT IN APPEARANCE BEFORE THE LD. CIT(A) FOR THE REASON, COMPRISING SUFFICIENT CAUSE, THAT THE ASSESSEE WAS SUFFERING FROM JAUNDICE AND WAS ADVISED FOR BED REST FROM 5/6/2019 TO 6/8/2019, I.E., THE DATE FIXED BY THE LD. CIT(A), AS PER MEDICAL CERTIFICATE ISSUED BY Z.N. CLINIC, WHICH IS FILED ON RECORD. HE SUBMITTED THAT SINCE THE ASSESSING OFFICER HAS NOT AFFORDED ANY OPPORTUNITY TO THE ASSESSEE AND HAS PASSED THE ORDER UNDER SECTION 144 READ WITH 147 OF THE ACT AND ADDED RS.10,24,093/-, TAKING INTO ACCOUNT THE DEPOSITS MADE BY THE ITA NO.611/LKW/2019 PAGE 4 OF 5 ASSESSEE WITH THE SBI AS INCOME FROM UNDISCLOSED SOURCES, WITHOUT CONSIDERING THE WITHDRAWAL AND THE OPENING BALANCE IN THE SAID BANK ACCOUNT. HE ACCORDINGLY, PRAYED THAT IN THE INTEREST OF JUSTICE, THE MATTER BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. THE LD. D.R., ON THE OTHER HAND, HAS PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 6. HEARD. I FIND THAT THE ASSESSEE DID NOT FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER, ON THE BASIS OF SPECIFIC INFORMATION AVAILABLE WITH THE DEPARTMENT, TO THE EFFECT THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, I.E., 2010-11, THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.10,05,000/- IN HIS SAVING BANK ACCOUNT MAINTAINED WITH THE STATE BANK OF INDIA, RUDAULI, INITIATED PROCEEDINGS UNDER SECTION 148 OF THE ACT AND COMPLETED THE ASSESSMENT UNDER SECTION 144/147 OF THE ACT, BY ADDING THE TOTAL AMOUNT FOUND DEPOSITED IN THE BANK ACCOUNT AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. I FIND THAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS A TOTAL DEPOSIT OF RS.10,05,000/- BY THE ASSESSEE IN THE SAVING BANK ACCOUNT NO.00030248957588 WITH SBI, RUDAULI, FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, AS PER BANK STATEMENT OBTAINED BY THE ASSESSING OFFICER, AS RECORDED AT PAGE 4 OF HIS ORDER. AT THE SAME TIME, THERE WAS A TOTAL WITHDRAWAL OF RS.6,92,000/- DURING THE YEAR UNDER CONSIDERATION, AS RECORDED BY THE ASSESSING OFFICER AT PAGES 4 AND 5 OF HIS ORDER. THE OPENING BALANCE IN THIS ACCOUNT AS ON 1/4/2009, AS RECORDED BY THE ASSESSING OFFICER AT PAGE 5 OF HIS ORDER, WAS RS.3,66,032/-. THE SUBMISSION OF THE ASSESSEE WITH REGARD TO THE TOTAL DEPOSITS OF RS.10,05,000/- WAS THAT IT WAS ITA NO.611/LKW/2019 PAGE 5 OF 5 RECEIVED FROM THE SALE OF TYRES. HOWEVER, BEFORE THIS BENCH, THE ASSESSEE HAS NEITHER PRODUCED ANY BANK STATEMENT, NOR ANY EVIDENCE TO PROVE THE SALE TRANSACTION ENTERED INTO BETWEEN THE ASSESSEE AND THE PARTIES. WITHOUT THERE BEING ANY CONCRETE EVIDENCE/DOCUMENT, THIS ISSUE CANNOT BE DEALT WITH AND ADJUDICATED AT THIS STAGE. THEREFORE, IN THE INTEREST OF JUSTICE, I SET ASIDE THE ORDER OF THE LD. CIT(A), BEFORE WHOM, THE ASSESSEE COULD NOT COME PRESENT, HAVING BEEN SUFFERING FROM JAUNDICE, AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE SAME AFRESH AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE ISSUE ON CONSIDERING THE DEPOSITS, WITHDRAWAL AS WELL AS THE OPENING BALANCE IN THE BANK ACCOUNT AND ALSO THE RECEIPTS AND EXPENSES INCURRED BY THE ASSESSEE, DURING THE RELEVANT PERIOD. THE ASSESSEE, NO DOUBT, SHALL CO-OPERATE IN THE FRESH PROCEEDINGS BEFORE THE ASSESSING OFFICER. ALL PLEAS AVAILABLE UNDER THE LAW SHALL SO REMAIN AVAILABLE TO HIM. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2020. SD/ - [ A. D. JAIN ] VICE PRESIDENT DATED:29/01/2020 JJ:2901 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR