SUNEEL MADHUKAR RAJE, DOMBIWALI V. DY CIT CIRCLE-3 , KALYAN

ITA 6598/MUM/2019

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 5526 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AIRIJU JAIKIRAN
• Keywords: Opportunity of being heard
• Section: 68; 143(3); 201

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “SMC” Bench, Mumbai Shri Shamim Yahya (AM) I.T.A. No. 6598/Mum/2019 (Assessment Year 2010-11) Suneel Madhukar Raje Flat No. 402, Sukhyanand CHS Nehru Road Saraswat Colony Dombivali East Maharashtra-421 201 PAN : AGPPR4605M Vs. DCIT, Circle-3 2 nd Floor, Rani Mansion, Murbad Road, Kalyan W Maharashtra 421 301. (Appellant) (Respondent) Assessee by None Department by Shri Airiju Jaikiran Date of Hearing 20.10.2021 Date of Pronouncement 27.12.2021 O R D E R This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals) [in short learned CIT(A)] for A.Y. 2010- 11. 2. The issue raised is that learned CIT(A) erred in passing the order without providing adequate opportunity of being heard. Without prejudice to the above it has been agitated that learned CIT(A) erred in upholding the addition in income on account of cash introduced as capital partnership firm of Rs. 8 lakhs under section 68 of the I.T. Act. 3. Brief facts of the case are the assessee is a partner in some of the firms. In course of assessment of the assessee the Assessing Officer after verifying the capital account of the assessee in the books of M/s. Gurukrupa Developers and M/s. Gurukrupa Enterprises, it was seen that the assessee had introduced cash of Rs. 10 lakhs on 1.4.2009. cash of Rs. 6,00,000/- on Suneel Madhukar Raje 2 25.12.2009 in M/s Gurukrupa Developers and M/s Gurukrupa Enterprises respectively. Accordingly, the assessee was asked to explain the source of such cash introduced in various firms. In response, the assessee had submitted copies of his balance sheets as on 31.03.2007, 31.03.2008, 31.03.2009 and details of withdrawals from NKGSB Bank for F.Y. 2006-07 and 2007-08 and it was also claimed by the assessee that the cash introduced of Rs. 16.00.000/- was out of cash in hand of Rs. 28,72,462/- during the year. The assessee was again asked to produced cash book and regular books of accounts for F.Y. 2007-08, 2008-09 and 2009-10 to substantiate his claim. However, the assessee failed to furnish the details and the explanation submitted by the assessee was not properly supported by the books of accounts and necessary documents. Therefore, the A.O. added 50% of the cash introduced, i.e. Rs. 8,00,000/-, was disallowed and added to the total income of the assessee u/s 68 of the I.T. Act, 1961. The Assessment Proceedings were completed on 25.03.2013 by assessing total income of the assessee at Rs. 23,78,460/- u/s 143(3) of the I.T. Act, 1961. 4. Upon assessee’s appeal learned CIT(A) held as under :- “I have carefully considered the facts of the case, findings of the A.O. and material placed on record. It is seen that the Appellant has been given innumerable opportunities since 2010 to represent his case and to file the necessary evidence and documents in the Appellate Proceedings. In spite of innumerable opportunities given to the Appellant, he has not provided any documentary evidence in support of cash introduced in various firms. Under the circumstances, the appeal is rejected and the addition of Rs. 8,00,000/- made u/s 68 of the I.T. Act, 1961 on account of unexplained credits is confirmed and grounds of appeal, raised as above, are dismissed.” 5. Against the above order assessee is in appeal before the ITAT. 6. I have heard learned Departmental Representative and perused the record. At the threshold I note that learned CIT(A) has dismissed the appeal of the assessee for non-prosecution, which is not sustainable in law. It is incumbent upon learned CIT(A) to pass the order on the merits of the case. Be as it may be I note that the Assessing Officer in this case has added sum Suneel Madhukar Raje 3 introduced in partnership firm by the assessee as unexplained income under section 68 of the I.T. Act. Section 68 postulates addition of unexplained cash credit, if there are sums found to be credited in the books of account and assessee does not satisfy the Assessing Officer about source thereof. In this case sum of Rs. 8 lakhs is appearing in debit by the assessee and it is not cash credit entry in books of account. Hence, technically addition under section 68 is not sustainable. Moreover if capital is introduced in partnership firm and is not substantiated by a said partner, the said contribution can be added as addition under section 68 of the Act in the hands of the said partnership firm. It is not clear from the facts on record that whether such addition has been done in the case of partnership firm. Be as it may in this case learned CIT(A) has passed an order dismissing the appeal for non-prosecution and the Assessing Officer has made addition wrongly under section 68 of the Act. I deem it appropriate to direct that addition in this case be deleted. 7. In the result, appeal by the assessee stands allowed. Pronounced in the open court on 27 .12.2021 Sd/- (SHAMIM YAHYA) ACCOUNTANT MEMBER Mumbai; Dated : 27 /12/2021 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai