Arochem Industries, Vapi V. Income Tax Officer, Ward 1 , Vapi

ITA 772/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8777 (ITAT-SURAT)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 08-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 144; 69C; 142(1); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT (SMC) BENCH BEFORE SHRI DR. A. L. SAINI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.772/SRT/2023 Assessment Year: (2017-18) (Physical Hearing) Arochem Industries, Plot No.154, G.I.D.C, Vapi - 396195, Gujarat. Vs. The ITO, Ward -1, Vapi èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAEFA9359E (Assessee) (Respondent) Assessee by Ms. Chaitali Shah, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 11/01/2024 Date of Pronouncement 09/02/2024 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 14.09.2023, which in turn arises out of an assessment order passed by Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 31.03.2022. 2. The grounds of appeal raised by the assessee are as follows: “On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in not admitting the appeal u/s 249(4) when no tax was payable as advance tax. 2. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in making addition of Rs.17,82,600/- on account of unexplained money u/s 69A of the Act. 3. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the addition by taking the rate @ 77.25% by attracting S.115BBE instead of taxing at normal tax slab. Page | 2 ITA No.772/SRT/2023/AY.2017-18 Arochem Industries 4. It is therefore prayed that above additions made by the assessing officer may please be deleted. 5. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. Succinct facts qua the issue are that during the assessment proceedings, on verification of information available on record, the assessing officer observed that assessee has deposited cash amounting Rs.17,82,600/- in its bank account maintained with Bank of Baroda bearing a/c No.03900100007455. The assessing officer issued notice to the assessee to explain the cash deposited in the said bank account number. In response to the notice u/s 142(1) of the Act, the assessee replied that on enquiring with the bank it has found that it is a saving account in the name of Mr.Anup S. Gandhi, who is the brother of partner Nilesh S. Gandhi. Mr. Anup Gandhi is not at all involved in business of Arochem Industries. It is the bankers mistake that they have put PAN of Arochem Industries instead of Anup S. Gandhi. However, assessing officer rejected the contention of the assessee and noted that the assessee failed to furnish any details regarding source of above cash deposits amounting Rs.17,82,600/- made by it in its bank account maintained with Bank of Baroda. Therefore, Assessing Officer made addition of the above amount of Rs.17,82,600/- treating the same as unexplained money under section 69C of the Income Tax Act, 1961 and the same was added to the total income of the assessee for the assessment year 2017-18. 4. On appeal, ld CIT(A) confirmed the addition made by the assessing officer, therefore, assessee is in appeal before this Tribunal. 5. Ms. Chaitali Shah, Learned Counsel for the assessee, begins by pointing out that the assessee under consideration was not in existence, during the assessment year (AY).2017-18, therefore it was not required to file its return of income. The Ld. Counsel stated assessee-firm was Page | 3 ITA No.772/SRT/2023/AY.2017-18 Arochem Industries converted into a Private Limited Company namely, Arochem Industries Private Limited, on 12.03.2014, hence in the assessment year (AY).2017- 18 it was not in existence, therefore it was not required to file its return of income. The disputed bank account is a saving bank account in the name of Mr. Anup S. Gandhi, however, PAN number of the assessee-firm was wrongly mentioned in the said saving bank account number. Based on these facts, the addition made by the assessing officer may be deleted. 6. 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. 7. I have heard the rival arguments made by both the sides and perused the material available on record. Admittedly, the Assessing Officer during the assessment proceedings, wrongly made addition in the hands of assessee-firm, as the assessee-firm, was not in in existence, during the assessment year (AY).2017-18. The assessee was partnership firm engaged in the business of manufacturing of Chemicals. It was converted into a Private Limited Company namely Arochem Industries Private Limited, under part IX of the companies Act 2013 on date 12.03.2014. On receiving the notice u/s 148, the assessee filed a written submission before the assessing officer stating this fact and that since the firm had ceased to exist after conversion, it was not required to file its return of income for AY.2016-17 and 2017-18. During the course of assessment, the AO informed that there were cash deposits to the tune of Rs.17,82,600/- made by assessee in savings account with Bank of Baroda Account No.03900100007445, during the year under consideration. The AO had himself called for the details regarding this bank account and he found that it was a savings account in the name of Anup S Gandhi. However, the Page | 4 ITA No.772/SRT/2023/AY.2017-18 Arochem Industries PAN mentioned in this savings account as per the records of the bank, was of the assessee-firm Arochem Industries. Now, Mr. Anup S. Gandhi is the brother of partner of the assessee- firm Mr. Nilesh S. Gandhi. But Mr. Anup was not at all involved in the business of Arochem Industries and had nothing to do with the assessee-firm. Actually Arochem Industries was banking with Bank of Baroda C P Tank Branch for the last three decades, and so since Anup was a member of Gandhi family, the bankers may have put the PAN of Arochem Industries while opening his savings bank account. It is absolutely illogical and impossible to believe that the partnership firm could have a savings bank account considering the guidelines of RBI. So it is the banker’s mistake that they used the PAN of the assessee- firm to open this savings bank account in the name of Anup S Gandhi. The transactions in this account do not belong to the assessee-firm and so cannot be considered as the transactions of the assessee firm just because the bankers recorded wrong PAN number. Based on these factual position, I delete the addition of Rs.17,82,600/-. 8. In the result, the appeal of the assessee is allowed. Order is pronounced on 09/02/2024 in the open court. Sd/- (Dr. A.L. SAINI) ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 09/02/2024 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 // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat