Bhulabhai Nathubhai Patel , Surat V. Income Tax Officer, Ward-2(3)(1), Surat, Surat

ITA 67/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7942 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 27-03-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 18-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 144; 142(1); 133(6); 250; 13

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.67/SRT/2024 Assessment Year: (2017-18) (Hybrid Hearing) Bhulabhai Nathubhai Patel, 322, Kochal Faliya, Puna, Tal: Choryasi, Surat – 394327, Gujarat Vs. The ITO, Ward – 2(3)(1), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AQBPP0962F (Appellant) (Respondent) Appellant by Shri P. M. Jagasheth, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 28/03/2024 Date of Pronouncement /04/2024 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)”], Surat, National Faceless Appeal Centre (in short ‘the NFAC’), dated 07.11.2023, which in turn arises out of an assessment order passed by Assessing Officer u/s 144 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 10.10.2019. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of Rs.25,02,500/- on account of cash deposited during the demonetisation period in bank account without considering the facts of the case and treated as alleged unexplained income. 2 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 2. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in not considering the cash book given by us for explanation of cash deposited in bank. 3. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition on the basis that the assessee has not filed ROI and hence no validity of cash book. 4. On the facts and in the circumstances of the case as well as the law on the subject, the learned Commissioner of the Income Tax (Appeals) has erred in confirming the action of the Assessing Officer in not considering the reply that the cash deposited from earlier withdrawal made from bank. 5. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Officer has erred in making addition of Rs.5,39,704/- on account of cash deposited excluding demonetisation period and credit entries appearing in the bank accounts treated as alleged unexplained income. 6. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Office has erred in applying taxed rate of 60% as provided u/s. 115BBE of the Act on alleged addition on account of credits in bank account treated as unexplained income. 7. On the facts and in the circumstances of the case as well as the law on the subject, the learned Assessing Office has erred in initiating penalty proceedings u/s.271AAC of the Act and issuing notice u/s.271AAC of the Income Tax Act. 8. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal deem it proper. 9. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.” 3. The appeal filed by the assessee for assessment year (AY). 2017- 18, is barred by limitation by 13 days. The assessee moved a petition for condonation of delay, requesting the Bench to condone the delay. The contents of petition for condonation of delay are reproduced below: “I have filed an appeal under section 253(1) of the Income Tax Act, 1961 on 19.01.2024 vide ITA No.67/SRT/2024 against the order of the Commissioner (Appeals) relating to AY.2017-18 made on 07.11.2023. Though this appeal should have been filed in the office of the Tribunal on or before the 06.01.2024 counting the period of sixty days from the date of communication of the order but it could not be so filed because I am a farmer and my age is 3 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 69 years old and not more educated. Hence, I don’t have any knowledge about the Income Tax Proceedings and time limit in appeal filing. The order was passed by NFAC, Delhi and uploaded on online portal. When I have visited to the my ‘AR’ office and checked the portal, then we found that order of NFAC, Delhi had been passed and uploaded on portal, thereafter we download the same and filed appeal on 19.01.2024 before the Hon. ITAT, Surat, hence, the Appeal was delayed by 13 days. Hence, due to this reason, necessary arrangement could not be made for filing of appeal before Hon'ble ITAT, Surat in time. In view of the above fact, it is clear that is the delay in submission of the appeal is due to good and sufficient reasons, therefore, pray that the delay in filing the appeal should be condoned and the appeal should be treated as filed within the allowed time.” 4. Based on this above contents of petition for condonation of delay, the Ld. Counsel for the assessee, submitted that assessee has explained the sufficient cause/reason to condone the delay, hence, this minor delay may be condoned in the interest of justice. 5. Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue, opposed the prayer of assessee to condone the delay and stated that delay should not be condoned on flimsy reasons as stated in the petition for condonation of delay. 6. We have heard both the parties on this preliminary issue. We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others, reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows: “4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.” 4 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 7. When we weigh this aspect then the side of justice becomes heavier and casts a duty on us to deliver justice. We note that the reasons given in the 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. 8. The relevant material facts, as culled out from the material on record, are as follows. The assessee before us is an Individual. During the assessment proceedings, the assessing officer, on the basis of data analytics and information gathered during the phase of online verification under ‘Operation Clean Money’, the Income Tax Department gathered a list of assessees who had deposited substantial Cash in bank accounts during the demonetization period (9 th November, 2016 to 30 th December, 2016), but have not filed Income Tax Return for A. Y. 2017-18. On perusal of the details available in the AIMS module of ITBA, it was noticed by the assessing officer that the assessee had maintained the following bank accounts wherein he has made substantial cash deposits during the demonetization period (9th November, 2016 to 30th December, 2016) as per following details: Bank Name A/c. No. & Name Cash deposits made during demonetization period (i.e. from 09.11.2016 to 30.12.2016) Axis Bank, Magob Branch, Surat 911010006731834 Bhulabhai Nathubhai Patel 25,02,500/- Total 25,02,500/- Accordingly, notice u/s. 142(1) of the Act was issued on the assessee, on 19.12.2017 calling the assessee to prepare a true and correct return of income in respect of which the assessee is assessable under the Income Tax Act, 1961, during the previous year relevant to assessment year 5 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 2017-18. As per provisions of Section 142(1) of the Act, the assessee was required to furnish the said return of income as required to be furnished as per the conditions and manner prescribed in Rule 12 of the Income Tax Rules, 1961, on or before 18.01.2018. However, the assessee has failed to comply with the terms of the notice issued u/s. 142(1) of the Act. 9. The Assessing Officer, during the course of assessment proceeding, in order to verify the transaction reported, issued notices u/s 133(6) of the I.T. Act, 1961, to the concerned bank on 29.04.2019. The bank authorities responded to the notice u/s 133(6) of the Act. On perusal of bank statement, it was observed by the assessing officer that assessee has deposited cash amounting to Rs.25,02,500/-, during demonetization period (i.e. during the period between 09.11.2016 to 30.12.2016) in the same accounts. In addition to that, other cash deposits / credits have also been observed in the said bank account during the F.Y. 2016-17. The details of credit entries in the said bank account are summarized as under: Bank Name A/c. No. & Name Cash deposits Made during demonetization period,(i.e. from 09.11.2016 to 30.12.2016) Cash deposits during the F.Y. (excluding demonetization) Other credits (excludin g cash) Total credits (Cash + cheques /transfer in) Axis Bank, Magob Branch, Surat 911010006791834 Bhulabhai Nathubhai Patel 25,02,500/- 4,50,000/- 34,351/- 29,86,851/- Bank of Baroda, Surat 36060100000902 Bhulabhai Nathubhai Patel — — 55,353/- 55,353/- Total 25,02,500/- 4,50,000/- 89,704/- 30,42,204/- 10. In response to notices u/s 142(1) of the Act, the assessee has submitted that the assessee failed to file the return of income for AY 6 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 2017-18 due to unavoidable circumstances and filed the bank statement from 01.04.2014 to 31.03.2017 of Axis Bank offline. In this letter, the assessee contended that the cash deposit was out of the earlier withdrawals of cash in February, 2015. 11. However, the assessing officer rejected the above reply of the assessee and held that the assessee failed to furnish any documentary evidences regarding the nature of business, nature of credit / debit entries in the bank account, supporting details with respect to cash balance / opening balance. The assessee had made cash deposits amounting to Rs.25,02,500/- including other credit entries appearing in bank account of Rs.5,39,704/- thereby total amounting to Rs.30,42,204/- (Rs.25,02,500 + Rs.5,39,704) appearing in Axis Bank and Bank of Baroda bank accounts of the assessee in the F.Y. 2016-17 relevant to AY 2017-18 remain unexplained. Therefore, the total deposits in the bank account to the tune of Rs.30,42,204/- was treated as unexplained / unaccounted income of the assessee and the same is taxed u/s 115BBE of the Act. 12. 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. The ld CIT(A) noted that assessee was failed to furnish documents and evidences before the AO and the assessee has not filed the Return of Income for the year under consideration. Therefore, the addition made to the tune of Rs.30,42,204/- by the AO was upheld. 13. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 7 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 14. 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 submitted before us that following documents and evidences, which were submitted before the assessing officer viz: (i) Notices for E- proceedings and reply submitted in respect of notice u/s 142(1) of the Act during the course of assessment proceedings (vide Pb.1 to 4), (ii) Copies of Bank statements of Axis Bank for the period of 01.04.2014 to 31.03.2017 (vide Pb.5 to 10), (iii) Ledger account of Cash book for the period of 01.04.2014 to 31.03.2017 (vide Pb. 11 to 15), (iv) Acknowledgment of return of income (ROI) and Form ITR-2 for AY.2015-16 (vide Pb.16 to 29), (v) Submission by assessee in respect of show cause notice of AO dated 24.09.2019 (vide Pb. 30 to 31), (vi) Notices for E-proceedings and reply submitted in respect of Hearing notice u/s 250 of the Act during the course of First Appellate Proceedings (vide Pb.32 to 33), (vii) Submission before the CIT(A) filed on 30.05.2022 (vide Pb. 34 to 37) etc. 15. The Ld. Counsel for the assessee argued that the money belongs to the previous year which was deposited during the demonetization period, therefore, the addition, if any, may be made in the previous year and not in the current year under consideration. Therefore, addition made by the assessing officer may be deleted. 16. The Learned Counsel for the assessee submitted before us that during the preceding previous year, that is, in the previous year 2014– 2015, the assessee has earned the capital gain. To substantiate this, , the assessee submitted the bank statement for the preceding previous year 8 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel and we have examined the entries in the bank statement (vide bank statement page no.9 to 15 of paper book) and noted that this is the money pertaining to preceding previous year 2014–15, which was earned by the assessee by way of capital gain and deposited in the bank account. The assessee submitted copy of Income Tax return for assessment year 2015-16 wherein the assessee shown Rs. 23,99,005/- as income from capital gain. The said capital gain money was deposited in the bank account, and later on, out of the said money so deposited, the assessee has withdrawn the cash amount. Later on, the unused cash amount was re-deposited in bank account during the demonetization period. 17. On the other hand, learned Senior Departmental Representative (ld. Sr. 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. 18. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. In our considered view, it was wholly erroneous on the part of the authorities below to make addition in the hands of the assessee in respect of the income which pertains to preceding previous year 2014-15. 19. We note that in the previous year 2014–2015, the assessee has earned the capital gain to the tune of Rs.23,99,005/- which was deposited in the bank account. The assessee has withdrawn the cash amount from bank and the unused amount of cash was redeposited in the bank account during the demonetization period. To substantiate these facts, the assessee has submitted before us return of income for the 9 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel assessment year 2015-16 relevant to the previous year 2014-15. The assessee has also submitted the bank statement wherein we found that there is deposit on account of capital gain and there was a cash withdrawal. The unused cash was re-deposited in the bank account during the demonetization period. The assessee has also submitted the other documents and evidences before the assessing officer in response to notice under section 142(1) of the Act. During the appellate proceedings also the assessee has narrated the same facts and submitted details and documents before the ld CIT(A), however, we note that both the authorities did not appreciate the documents and evidences submitted by the assessee. We note that in holding a particular receipt as income from undisclosed sources, the faith of the assessee cannot be decided by the revenue on the basis of surmises, suspicious and probabilities of Northern Bengal Jute Co. Ltd. vs CIT, 70 ITR 407 (Cal). The overwhelming numbers of documentary evidences were submitted by the assessee before both the lower authorities, and these documents cannot be brushed aside on the basis suspicious. 20. We note that assessing officer had not specifically identified any specific defects in the purported evidences and documents submitted by the assessee, and also taking note of the fact that the assessing officer has not held that the documents and evidences so submitted by the assessee are bogus. Considering these facts, in our opinion the ends of justice would be met, if a net profit rate of 10% is adopted on the cash deposit of Rs.25,02,500/- during demonetization period, which comes to Rs.2,50,250/-. Therefore, we direct the assessing officer to make the addition in the hands of assessee to the tune of Rs.2,50,250/- and should be taxed under normal provisions of the Act and not u/s 115BBE of the Act. 10 67/SRT/2024/AY.2017-18 Bhulabhai Nathubhai Patel 21. In the result, appeal of the assessee is partly allowed, in the above terms. Order is pronounced on /04/2024 in the open court. (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: /04/2024 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 Assistant Registrar/Sr. PS/PS ITAT, Surat