Nanubhai Ukabhai Ahir, Vapi V. Income Tax Officer, Ward - 6, Vapi

ITA 669/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8533 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-01-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAYRAJ DHAKAN
• Keywords: Principle of natural justice; Corroborative evidences; Onus to prove; Condonation of delay; Set aside
• Section: 147; 148; 144; 69A; 43

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 Nos.669/SRT/2023 Assessment Year: (2010-11) (Physical Hearing) Nanubhai Ukadbhai Ahir, Ahir Street, At & Post Karwad Via Vapi, Tal Pardi, Valsad– 396195. Vs. Income Tax Officer, Ward – 6, Vapi, Room No.808, 8 th Floor, Fortune Square-II, Daman Road, Chala, Vapi- 396191 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABDPA 7518 F (Appellant) (Respondent) आयकर अपील सं./ITA Nos.670/SRT/2023 Assessment Year: (2010-11) Rajeshbhai Nanubhai Ahir, Ahir Street, At & Post. Karwad, Degam Road, Taluka Vapi, District Valsad – 396191. Vs. Income Tax Officer, Ward – 7, Vapi, Room No.810, 8 th Floor, Fortune Square-II, Daman Road, Chala, Vapi- 396191 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ANEPA 6461 E (Appellant) (Respondent) Appellant by Shri Jayraj Dhakan, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 24/01/2024 Date of Pronouncement 23/02/2024 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned two appeals filed by the assessees, pertaining to Assessment Year (AY) 2010-11, are directed against the separate orders 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 22.08.2023 and 12.09.2022 respectively, 2 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. which in turn arise out of separate assessment orders passed by the Assessing Officer u/s 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 28.09.2017 and 29.09.2017 respectively. 2. The appeal filed by the assessee for the Assessment Year 2010- 11, is barred by limitation by 327 days. The assessee has moved a petition requesting the Bench to condone the delay. The said delay in filing the appeal is in ITA No.670/SRT/2023 (Rajeshbhai Nanubhai Ahir). The contents of the petition for condonation of delay are reproduced below: “I, Rajeshbliai Nanubhai Ahir -aged 47 years residing at AT Post Ahirwas Karvad, Ahir Faliya Road, Pardi, Valsad - 396191, Business - Agriculturist, Education - 10 th , do hereby solemnly affirm and state as under: 1. That Assessment order u/s 144 r.w.s. 147 was passed on 29/09/2017. The sole addition made is towards cash deposits in bank accounts. In assessment order addition is made in hands of assessee-son on protective basis and in hands of assessee's father Shri Nanubhai P. Ahir on substantive basis. 2. Against the assessment order, we've preferred an appeal before CIT(A). The CIT(A) passed ex-parte order on 12.09.2022 3. The appeal should have been filed before 11.11.2022. Since appeal is presented on. 05.10.2023, it was late by 327 days. We, therefore seek your honour's indulgence in terms of S. 253(5) of income tax act. We explain reasons that caused delay in presenting appeal as under; 4. My wife Smt Padmaben Rajeshbhai Ahir, Age about 43 years becoming sick every now and then since couple of years and we are consulting general practitioner cum family doctor for same. The frequency to fall ill became increased and we are advised to go for whole body PET CT scan to measure important body functions and more particularly to check sign of heart disease, brain disorders or cancer and the PET CT scan were performed in somewhere in February 2023 and cancer were diagnosed in left lung measuring 17 cms CC x 9 cms T. Since then we require to travel out of city most of time to attend hospital. At present her treatment is going on at Kokilaben D Ambani Hospital, Mumbai. Necessary papers to prove the bonafide of the appellant is attached herewith. 3 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. 5. Due to repetitive hospitalization visits I am not in fit mental condition to understand or take necessary action on appellate order passed by ld CIT(A) and license we could not file appeal in time. 6. It was during first appellate proceeding of joint owner of bank account, Shri Nanubhai Ahir (father of assessee), when counsel asked for status of appeal of assessee we came to know (somewhere in first week of March 2023) our appeal is dismissed by ld.CIT(A) for want of non-prosecution and appellant communicated only appellate order to counsel. The counsel requested certain instruction, details and documents to prepare Form 36 which appellant failed to provide due to his pre occupation in medical treatment of my wife - Mrs. Padmaben R Ahir. It is mentioned that challan of Rs. 10,000/-for captioned appeal is paid on April 3, 2023 vide Challan No. 07574. 7. Due to above facts, there is a delay of 327 days (approx. as correct date of receipt of order is not known to assessee) in filing appeal for which I pray your honour to condone the same and decide the appeals on merits.” 3. The Ld. Counsel for the assessee submitted that assessee has explained the sufficient cause/reason to condone the delay in the affidavit/petition for condonation of delay, therefore based on the reasons given in the affidavit for condonation of delay, the delay of 327 days may be condoned and appeal may be heard on merit. 4. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue opposed the prayer of the assessee for condonation of delay and stated that assessee has failed to explain the sufficient reasons of delay, hence delay should not be condoned. 5. We have heard both the parties on this preliminary issue. The assessee explained the reasons of delay, stating that his wife was felling severe illness; and for that assessee furnished before us medical documents and Doctor’s certificate, which clearly demonstrates that assessee’s wife was felling severe illness and assessee was alone to attend his wife’s care and due to continuous tension environment in the family, the assessee could not pay attention on taxation matters, hence, 4 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. delay has occurred. We note that reasons given in the above stated affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing. 7. We note that these are two appeals, vide ITA No.669/SRT/2023 for AY.2010-11 (Nanubhai Ukadbhai Ahir), in this case, the Assessing Officer has made substantive addition. However, the Assessing Officer also made protective addition in ITA No.670/SRT/2023 for assessment year (AY).2010-11 (Rajeshbhai Nanubhai Ahir). In ITA No.669/SRT/2023 (substantive addition), the grounds of appeal raised by the assessee are as follows: “1. That on facts and circumstances of case as well as law on subject the learned CIT(A) erred in confirming the action of Assessing Officer of making addition u/s 69A of Rs.16,50,000/- being cash deposited in bank accounts. 2. That on facts and circumstances of case as well as law on subject the learned CIT(A) erred in confirming the action of Assessing Officer of making addition of Rs. 1,943/- being interest income on saving account. 3. On facts and circumstances of case as well as law on subject learned CIT(A) erred in upholding order of AO in assessing total income at Rs. 16,51,973/-. 4. On facts and circumstances of case as well as law on subject the Assessing officer erred in reopening the assessment. 5. On the facts and circumstances of the case as well as law on subject AO erred in framing assessment u/s 144 of the act. 6. Appellant craves leaves to add, alter or delete any ground(s) either before or in the course of hearing of appeal.” 8. In ITA No.670/SRT/2023 (protective addition) Revised Grounds of Appeal raised by the assessee are as follows: 5 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. “1. During course of hearing of captioned appeal, we are directed to revise/redraft the 2 nd grounds of appeal. Accordingly, the second grounds to Form- 36 may be substituted/revised as under: 2(a) – That on facts and circumstances of case as well as law on subject the learned CIT(A) erred in confirming the action of Assessing Office in making protective addition of Rs.18,51,736/- being amount credited in bank account. 2(b) -That on facts and circumstances of case as well as law on subject the learned CIT(A) erred in confirming the action of Assessing Officer in making substantive/independent addition of Rs.2,08,118/- being amount credited in bank account. 2. It is stated that other grounds (i.e., Grounds No.1,3,4,5) remain same.” 9. The relevant material facts, as per assessee`s appeal in ITA No.669/SRT/2023 (substantive addition), as culled out from the material on record, are as follows. Based on the information available with the Department, the Assessing Officer noted that during the assessment proceedings that the assessee has deposited cash amounting to Rs.16,50,000/- in his savings bank account maintained with Kotak Mahindra Bank, Vapi and the assessee has not filed his return of income, therefore assessee’s case for A.Y.2010-11 was reopened after recording reason and getting prior approval from the Appropriate Authority. Notice u/s.148 of the Act was issued by Assessing Officer on 23.03.2017, which was duly served upon the assessee. The assessee did not respond to the above said notice u/s 148 of the Act. Due to change of incumbent, notice u/s.142(1) r.w.s 129 of the Act was issued on 23.06.2017 along with questionnaire and duly served upon the assessee. In response to the aforesaid notices, the assessee, attended from time to time and submitted the details. On verification of bank statement of bank account No. 1000/3349 maintained with Sardar Bhiladwala Pardi Peoples Co-op. Bank Ltd., Chanod Branch, it was noticed by the Assessing Officer that during the F.Y.2009-10 relevant to A.Y.2010- 6 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. 11, the assessee has deposited cash aggregating to Rs.16,50,000/- on various dates in the said bank account. During the course of assessment proceedings, the assessee was asked to explain the source of the said cash deposited with supporting evidence. The assessee merely explained that cash so deposited was held by assessee from previous years. As the assessee's explanation is not accompanied with evidence and the reason for keeping of huge amount in home, which was not explained, hence the contention of the assessee was not accepted by Assessing Officer. Therefore, the assessee was requested to show cause vide notice dated 21.09.2017 as to why Rs.16,50,000/-, being cash deposited in bank account should not be treated as his unexplained money u/s 69A of the Act and treated as his income and taxed accordingly. 10. The assessee did not respond to the above said show cause notice nor filed any details/evidence to explain the sources of the above said cash amount deposited in his saving bank account maintained with Sardar Bhiladwala Pardi Peoples Co-Op. Bank Ltd, Chanod Branch. In absence of any reply and details, the above said cash amount deposited in saving bank account remained unexplained. It was a fact that the assessee has deposited cash aggregating to Rs.16,50,000/- in the bank account maintained with Sardar Bhiladwala Pardi Peoples Co-Op. Bank Ltd, Chanod Branch, during the year under consideration. This fact was never denied by the assessee. It was also fact that the assessee has failed to justify the source of above said amounts cash deposited with supporting documentary evidence. The preliminary onus to prove the source of the said cash amount deposited in bank account is on assessee. It is a settled law that the onus is lying on the assessee to explain the sources of cash deposit. It is the primary 7 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. duty of the assessee to explain the sources of the above said cash amount deposited to his above mentioned bank account with supporting documentary evidence. Mere stating that cash deposited was held from previous year is not enough. The assessee has to establish the contention with supporting evidence. The assessee should have to explain the reason for keeping such huge amount in home so long time though he held bank account. However, the assessee has not explained the same with supporting evidence. Therefore, the assessee failed to discharge the preliminary onus that cast upon him. The Assessing Officer noted that according to the provisions of Section 69A of the I.T. Act, if “the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offer no explanation about the nature and source of acquisition of the money, bullion, jewellery of other valuable articles, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year”. Therefore, AO held that in the instant case, an amount of Rs.16,50,000/- was deposited in above mentioned bank accounts held by the assessee and the assessee failed to explain the sources of said cash amount with supporting evidence. As such, the alleged amount of Rs.16,50,000/- was treated as income of the assessee within the meaning of provisions of section 69A of the Act and therefore Assessing Officer made the addition of Rs.16,50,000/- in the hands of the assessee. 8 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. 11. During the course of assessment proceedings, on verification of bank statement of bank account No. 1000/3349 maintained with Sardar Bhiladwala Pardi Peoples Co-Op. Bank Ltd., Chanod Branch, it was noticed by assessing officer that during the year under consideration, the assessee has earned interest income of Rs.1,943/- on saving bank account. As the assessee had not filed his return of income for the A.Y.2010-11, the same has not been offered for taxation. Therefore, undisclosed interest income of Rs.1,943/- was to be treated as income of the assessee and taxed as “income from other sources. 12. Aggrieved by the above two additions made by the Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has dismissed the appeal of the assessee, observing as follows: “5. Adjudication; All grounds of appeal are related to addition of cash deposits Rs. 16,50,000 in bank account and interest earned from this. There is no dispute on the amount of cash deposits. The appellant has admitted that he is a farmer and earned income of Rs.3,51673 during corresponding to the relevant assessment year. He also Sahakari Khand Udyog Mandali Ltd that he has supplied sugarcane for the following amounts in previous years; The appellant's contentions are that, 1. He has withdrawn cash of Rs.2,37,000 on various dates which should be taken as source of subsequent cash deposits, 2. He has opening cash balance in hand of Rs. 10,85,063 which is due to cash withdrawn in preceding financial year, i.e. F.Y.2008-2009 and 3. During the period of April to June 2009 assessee has received agriculture income to the tune of Rs.3,51,673. If all these inputs are taken into account, there is sufficient source for cash deposit of Rs. 16,50,000. 5.1 From the cash book prepared and submitted by the appellant during appeal proceedings, it is seen that he incurred expenses for labour, tractor, YEAR SUGARCANE(MT) AMOUNT 2004-2005 169.540 264652 2005-2006 335.800 490268 2006-2007 605.350 611404 2007-2008 235.410 288613 2008-09 277.100 546164 TOTAL 22,01,100 9 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. vehicles, mobile phone, travelling and conveyance etc. apart from fertilizers, pesticides etc.. All these shows that, the appellant is incurring day to day expenses like any other middle class farmer. By his own admission, his only income is from agriculture, i.e. by selling sugarcane, fruits etc.. In 2009-10, as claimed above he received cash of Rs.3,51,673 till June 2009 from sale of agricultural produce and in subsequent months he received Rs.2,25,937 from the same source. Major income was Rs.1,66,537 received from Shree Valsad Sahakari Khand Udyog Mandali Ltd on 05.10.2009. It is peculiar that most of debit entries in cash book are cash receipts of Rs.19,000 and above but suspiciously below Rs.20,000. It is also peculiar that a farmer is showing monthly expenses for printing and stationary and staff welfare expenses. However, by taking a liberal view, even if the cash book is admitted to be genuine, it is clear that the appellant is having day to day expenses commensurate to his income. 5.2 Keeping this in view, it is odd that the entire cash withdrawals of Rs.2,37,000 from bank account during 2009-10 was re-deposited as cash into the same account. Which means absolutely nothing was spent on day to day expenses which the appellant himself shows in the cash book. Another contention of the appellant is that, he had opening cash balance in hand of Rs.10,85,063 which is due to cash withdrawn in preceding financial year, i.e. F.Y.2008-2009. As per his own submission mentioned above he received only Rs.5,46,164 from sale of sugarcane during FY 2008-09. Then how could he withdrew cash of Rs.10,85,063? He could not submit bank account statement to prove this withdrawal. Even if he had other income, still as per cash book he have substantial expenses. Another contention is that from April to June 2009 assessee has received agriculture income to the tune of Rs.3,51,673. Apparently, entire income was deposited as cash into bank account and he incurred absolutely no daily expenses. All these arguments of the appellant are beyond normal behaviour. This is a clear instance where the decisions in the cases of CIT v. Durga Prasad More (1971) 82 ITR 540 and Sumati Dayal v. CIT (1995) 214 ITR 801 can be applied where the Supreme Court has laid down Human Probability test as one of the important test in order to check genuineness of the transactions entered into the books of account of the assesses. The Apex court stated that, taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. Hence it is held that the appellant failed to satisfactorily explain the source of Rs. 16,50,000 cash deposited in the bank account and the assessing officer is correct in treating this amount as unexplained cash under section 69A. Obviously the interest earned from this deposit also should be treated as income from other sources. As a result, the appeal is dismissed.” 13. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 10 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. 14. The Ld. Counsel for the assessee submitted before the Bench, the following documents and evidences, viz: (1) SBPP bank statement 01.04.2008 to 31.03.2009 (vide Pb.37 – 39), (2) SBPP bank statement 01.04.2009 to 31.03.2010 (vide Pb.40), (3) Agriculture activity evidence (vide Pb.41 – 48), (4) Assessment order for AY. 2008-09 (vide Pb.49- 53), (5) Cash book for year under consideration (vide Pb.54 – 58), (6) Acknowledgment of details filed with AO during remand (vide Pb.62). The ld Counsel submitted that these above documents and evidences were submitted by the assessee, first time, before the ld CIT(A) and ld CIT(A) sent these documents to the Assessing Officer for his examination and to submit remand report thereon. 15. The Ld. Counsel further submitted that substantive addition was made by assessing officer, (in respect of cash deposited in the bank account) in the hands of the father Sh. Nanubhai P. Ahir vide ITA No.669/SRT/2023 and protective addition was made in the hands of son, namely, Rajeshbhai Nanubhai Ahir, vide ITA No.670/SRT/2023. The Ld. Counsel argued that the cash was deposited by the assessee out of agricultural income and the assessee furnished the necessary evidences for agricultural activities, therefore considering the size of the landholding, the addition made by the Assessing Officer may be deleted. The ld Counsel further stated that if substantive addition gets deleted then protective addition should also be deleted in the hands of son namely, Rajeshbhai Nanubhai Ahir. 16. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue has argued that during the appellate proceedings the assessee submitted addition evidences which were sent 11 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. to Assessing Officer for remand report, however, ld CIT(A) did not remind the Assessing Officer to send the remand report, and pass the order without providing sufficient opportunity to the Assessing Officer, which is against the principle of natural justice. At least one reminder should be sent to the Assessing Officer to submit the remand report, however, ld CIT(A) failed to do so. 17. Learned Senior Departmental Representative, further argued that in appeal Number, vide ITA No.670/SRT/2023, Rajeshbhai Nanubhai Ahir, there is ex-parte order by ld CIT(A). There are no findings on merit in this case by ld CIT(A). If the order of ld CIT(A) is an ex-parte order then this Tribunal always send the matter back to the file of the ld CIT(A) for fresh adjudication on merit. 18. We have heard the rival parties and have gone through the material placed on record. For the sake of clarity and also being pertinent, we reproduce, para 3 of order of ld CIT(A), that is, relevant portion to the extend useful for our analysis, is reproduced below: “3.....It is seen from the appeal records that appellant`s submissions were rent to the assessing officer for remand report, but no such report was put forward by the assessing officer” From the above it is vivid that ld CIT(A) did not take effort, at least to send the reminder letter to the Assessing Officer to submit remand report before him. We note that the Hon’ble Supreme Court in M.S.Gill vs The Chief Election Commission 1978 AIR SC 851 held “The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems 12 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. It is a settled principle of law that justice not only to be done, it is seen to be done. Therefore, we find merit in the arguments advances by ld DR for the Revenue to the effect that at least one reminder should be sent to the assessing officer to submit the remand report, however, ld CIT(A) failed to do so. Therefore, we are of the view that assessing officer did not get sufficient opportunity to submit remand report, hence it is against the principle of natural justice. 19. We also find merit in the arguments of ld DR for the Revenue that if the order of ld CIT(A) is an ex-parte order and there is no adjudication on merit, then this Tribunal always send the matter back to the file of the ld CIT(A) for fresh adjudication on merit. 20. Considering the above facts and circumstances, we are of the view that both these appeals, one relates to father Sh. Nanubhai P. Ahir vide ITA No.669/SRT/2023 wherein substantive addition was made and second relates to protective addition, which was made in the hands of son, namely, Rajeshbhai Nanubhai Ahir, vide ITA No.670/SRT/2023, should be remitted back to the file of ld CIT(A) for fresh adjudication. We also direct the ld CIT(A) that these both appeals should be decided together, as substantive addition and protective addition are involved on same issue. The independent issues involved in these appeals should also be adjudicated by ld CIT(A) in accordance with law. We direct the assessee to submit relevant documents and details before ld CIT(A), as and when called by ld CIT(A), during the 13 ITA No.669 & 670/SRT/2023/AY.2010-11 Nanubhai Ukadbhai Ahir & Ors. appellate proceedings. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) in both the cases and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits. For statistical purposes, both the appeals of the assessee are treated, as allowed. 21. In the combined result, both appeals filed by the assessee are allowed for statistical purposes, in above terms. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order is pronounced on 23/02/2024 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 23/02/2024 SAMANTA /Dkp (Outsourcing Sr.PS) 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