Chimanbhai Chunibhai Gohil, Surat V. Income Tax Officer, Surat

ITA 638/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8691 (ITAT-SURAT)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 27-12-2023
• Assessment Year: misc
• Appeal Filed On: 14-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Business income
• Section: 144; 44AD; 69C; 142(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI DR. A. L. SAINI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.638/SRT/2023 Assessment Year: (2017-18) (Physical Hearing) Chimabhai Chunibhai Gohil, Plot No.43, Vivekanand Society, L. H. Road, Nr. Archana School, Surat– 395006, Vs. Income Tax Officer Ward – 3(3)(5), Surat, Room No.607, 6 th Floor, Aayakar Bhawan, Majurat Gate, Opp. New Civil Hospital, Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AJRPG3065B (Appellant) (Respondent) Appellant by Shri Sapnesh Sheth, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 28/12/2023 Date of Pronouncement 16/02/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short “the ld. CIT(A)”], National Faceless Appeal Centre (in short ‘the NFAC’), Delhi, dated 01.09.2023, which in turn arises out of an assessment order passed by Assessing Officer under section 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 07.12.2019. 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 learned Commissioner of Income Tax (Appeals), NFAC has grossly erred in passing ex-parte order without considering the full written submission filed by the assessee on 07.01.2023 along with all the necessary evidences substantiating the cash deposit of Rs.18,70,000/-. Page | 2 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in passing ex-parte order u/s 144 of the I.T. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in making addition of Rs.18,70,000/- u/s 69 of the IT Act. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in invoking provisions of section 115BBE of the Act and in thereby taxing entire unexplained money at 60% & levying surcharge at 25% which is not applicable on above amount. 5. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.” 3. The facts necessary for disposal of the appeal are stated in brief. The assessee before me is an individual and filed his return of income for assessment year 2017-18, showing total income of Rs.4,70,280/- on 01/03/2018. The case of the assessee was selected for scrutiny assessment and the notice u/s 143(2) of the Income Tax Act dated 30/09/2018 was issued and duly served upon the assessee. Subsequently notice u/s 142(1) of the Income Tax Act, 1961 along with questionnaire was issued on 29/08/2019 and was duly served upon the assessee. During the course of assessment proceedings notices were issued on various dates, wherein the assesse was requested to provide the details relevant to assessment proceedings; however, the assessee has failed to reply the notices. 4. As per material available on records, it was noticed by Assessing Officer that during the year under consideration the Page | 3 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil assessee had maintained bank account no. 05332020002578 with HDFC bank in which he had made cash deposit of Rs.18,70,000/- during the demonetization period in the financial year 2016-17. However, the assessee has not made any submission which may substantiate the source of cash deposit made by him. The assessee had filed the return of income for the A.Y.2016-17 on 26/10/2016 u/s 44AD of the Act being presumptive business income. The assessee had declared gross receipts of Rs.5,69,265/- and had cash on hand of Rs.1,41,153/-. The assessee had filed the return of income for the A.Y. 2017-18 on 28/02/2018 u/s 44AD of the Act being presumptive business income. The assessee had declared gross receipt of Rs.70,81,769/- and had declared gross profit of Rs.5,83,035/-. The assessee had not responded to the notices u/s. 142(1) and show-cause notices issued during e-assessment proceedings. The assessee failed to give any explanation about the nature and source of cash deposits. Hence, the cash deposits, appearing in HDFC bank account all totalling to Rs.18,70,000/- is deemed to be the income of the assessee and treated as unexplained in the hands of the assessee. The Assessing Officer also held that assessee’s said income should be taxable u/s 115BBE of the Act. 5. 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 Assessing Officer. The ld CIT(A) observed that all three limbs of section 69C of the Act, namely, (1). The assessee was found to be owner of the money, (2). Such money was not recorded in the books of accounts and; (3). Its nature and source are not identifiable, were not satisfied in the case of the assessee. Further the assessee has not furnished the necessary details/documentary evidences in support Page | 4 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil of his claim. Considering these facts, ld CIT(A) confirmed the addition made by the assessing officer. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before this Tribunal. 6. Shri Sapnesh Sheth, Learned Counsel for the assessee, pleaded that assessee submitted the following documents and evidences before the ld. CIT(A), viz: (1) Acknowledgement of written submission filed with CIT(A) on portal on 07.01.2023 (vide Pb.6 – 9), (2) Screen-shots of the adjournment applications filed before ld CIT(A) along with screen-shot of the submission made (vide Pb.10 – 13), (3) Acknowledgement of return of income along with computation of income for AY.2017-18, 2016-17 and 2015-16 (vide Pb.14 - 21), (4) Return of income for A.Y.2017-18, reflecting that the assessee has declared the details of cash deposits made by him (vide Pb.22 – 28), (5) Cash book for F.Y.2016-17 (vide Pb.29- 48), (6) Bank book for F.Y.2016-17 (vide Pb. 49 – 52), (7) Bank statement for F.Y.2016-17 (vide Pb.53 – 55), (8) Summary of Monthly sales/ purchases for F.Y.2016-17 (vide Pb. 56 – 59), (9) Sales bills on sample basis (vide Pb. 60 – 69), (10) Purchase bills on sample basis (vide Pb.70 – 86), (11) Ledger account of Mayur Pharmacy and Micky Produces along with confirmation of mayor Pharmacy (vide Pb. 87 – 89). The ld Counsel, argued that in order to prove the genuineness and creditworthiness of the cash deposited in bank account, the assessee submitted above plethora documents and evidences, however, ld CIT(A) has failed to consider them. The ld Counsel contended that assessee is a very small assessee and filed return of income in the status of individual u/s 44AD of the Act, and explained the sources of cash deposit in the bank account therefore, addition made by the assessing officer may be deleted. Page | 5 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil 7. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 8. I 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. I note that assessee submitted before ld CIT(A) the acknowledgement of return of income along with computation of income for A.Y.2017-18, 2016-17 and 2015-16, and return of income for A.Y.2017-18, showing that the assessee has declared the details of cash deposits made by him in his return of income. The Cash book for F.Y.2016-17 which shows sufficient cash in hand. The bank book for F.Y.2016-17 and Bank statement for F.Y.2016-17 explain the movement of cash deposit. The Summary of Monthly sales, explains that assessee`s has received cash by way of monthly sales. The Purchase bills submitted by the assessee shows the genuineness of the assessee business. The assessee also furnished Ledger account of Mayur Pharmacy along with confirmation of mayor Pharmacy. Hence, the assessee has explained the genuineness of the cash deposited. 9. Therefore, I note that assessee has submitted enough details and evidences to prove the genuineness of the transactions, however ld. CIT(A) did not consider them. I have gone through the documents and evidences submitted before ld. CIT(A) and noted that assessee has proved the source of cash. That is, the assessee has explained the Page | 6 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil source of cash deposit in bank account by filing bank statement, purchases and sales details. The assessee produced before me the cash book and cash summary which clearly states that generation of cash which was deposited in bank account. However, I note that cash deposited of Rs.18,70,000/- pertains to the demonetization period. That is, the assessee had maintained bank account no. 05332020002578 with HDFC bank in which he had made cash deposit of Rs.18,70,000/- during the demonetization period in the financial year 2016-17 relevant to assessment year 2017-18, and assessee has not explained before the Bench that similar deposits were made in the preceding previous years or subsequent years in the same period. The said cash was deposited during the demonetization period therefore, I am of the view that profit element embedded in the money so deposited in bank account should be taxable and not the entire amount. Therefore, I am of the view that to meet the end of justice the disallowance in the hands of the assessee should be made at the rate of 10% of cash deposited. Therefore, I direct the Assessing Officer to disallow 10% of Rs.18,70,000/- which comes to Rs.1,87,000/-. 10. In the result, appeal filed by the assessee is partly allowed in above terms. Order is pronounced on 16/02/2024 in the open court. Sd/- (Dr. A.L. SAINI) ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 16/02/2024 SAMANTA Page | 7 ITA.638/SRT/2023/AY.2017-18 Chimabhai Chunibhai Gohil 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