M/s. Vasant Traders, Surat V. Income Tax Officer, Ward 3(1)(5), Surat, Surat

ITA 801/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8848 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-01-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 23-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHISH P BHOOLA
• Keywords: Unexplained cash credit; Additional evidence
• Section: 131; 68; 148; 271(1)(c); 144; 133(6); 274

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ.अ.सं./ITA No.801/SRT/2023 (AY 2011-12) (Hearing in Physical Court) M/s Vasant Traders 7/2627, Shop No.5-6, Municipal Shopping Centre, Opp. Asarawala Hospital, Khadi Sheri, Saiyedpura, Surat-395003 PAN No. AAEFV 7806 M Vs Income Tax Officer, Ward- 2(1)(5), Surat, Aaykar Bhavan, Anavil Business Centre, Adajan, Surat- 395009 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Ashish P Bhoola, C.A राजˢ की ओर से /Revenue by Shri Vinod Kumar, Sr-DR Date of institution of appeal 24.11.2023 सुनवाई की तारीख/Date of hearing 25.01.2024 उद्घोषणा की तारीख/Date of pronouncement 05.02.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of National Faceless Appeal Centre, Delhi [ for short to as “NFAC)/Ld. CIT(A)”] dated 20.11.2022 for the assessment year 2011-12, which in turn arises out of assessment order passed by National Faceless Assessment Centre, Delhi / Assessing Officer under section 144 r.w.s. 147 of Income Tax Act, 1961 (‘the Act’) on 21.12.2018. The assessee has raised the following grounds of appeal: “1. Addition of Rs.1,27,61,000/- on account of entire credit entries in bank: (a) On the facts and in the circumstances of the case, the learned Commissioner of Incometax (Appeals) has erred inn not accepting the submission of the appellant that the partnership firm has been ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 2 dissolved and the business of the firm was taken over by M/s Vasant Traders (A sole proprietorship concern with Mr. Dilip Vasantlal Sheth PAN: AEDPS0835A) and the bank account under consideration has already been reflected in the books of accounts of sole proprietorship concern. (b) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in simply relying on the remand report of the AO and conveniently ignoring the evidence produced by the appellant including photo copy of firm dissolution deed, letter dtd. 24.06.2008 submitted to VAT Dept. regarding change in status, Tax Audit Report of proprietorship for FY 2010-11,VAT Audit Reports of proprietorship for FY 2009-10 & 2010-11, certificate from bank regarding error in PAN linking at the time of migration to CBS, Certificate from bank mentioning old account number before CBS migration & new account number after CBS migration, bifurcation of sales into cash & credit sales, cash flow statement & reconciliation of debtors with credit sales & cash realization from debtors of M/s Vasant Traders Proprietorship concern. 2. Miscellaneous: (a) The learned Commissioner of Income tax (appeals) has erred in not deleting the penalty u/s 271(1)(c) r.w.s. 274 for concealment of income as the additions on the basis of which penalty was invoked was not warranted for in view of submission made by the appellant. (b) The appellant craves to add, alter, delete or amend any other grounds of appeal during the course of appeal proceedings.” 2. Brief facts are that assessee is a partnership firm and no return of income was filed for the assessment year under consideration 2011-12 The Assessing Officer was having information by way of ITD/ITA data that assessee has made cash deposits of Rs.1.27 crores in its bank account with Bank of Maharashtra, Surat. The Assessing Officer issued notice under section 133(6) of the Act to the assessee for seeking clarification about the deposits in the said bank account. The assessing officer recorded that no response was made by assessee. The Assessing ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 3 Officer after recording reasons that income of assessee has escaped assessment within scope of Section 147 of the Act issued notice under section 148 was on 27.03.2018. Dilipbhai Vasantial Seth, the erstwhile partner of assessee firm filed reply dated 17.04.2018 and contended that firm has already dissolved with effect from 01.04.2008. Hence, no return of income is required to be filed for assessment year 2011-12. The assessee requested for reasons recorded. The Assessing Officer noted that reasons recorded was supplied. The assessee was asked to submit source of cash deposits and copy of dissolution deed for closure of firm. The Assessing Officer noted that required documents were not furnished by assessee. The Assessing Officer rejected the objection filed against reopening by a speaking order dated 30.11.2018, relevant part of rejecting objection is recorded on page-2 of the assessment order. The Assessing Officer again issued show cause notice to assessee as to why the amount deposited in bank account should not be treated as unexplained cash credit. The assessee filed its reply on 14.12.2018. In the reply, assessee reiterated that partnership firm is dissolved with effect from 01.04.2008, and stated that copy of his affidavit has already been given. The assessee further submitted that copy of account ownership certificate from bank was also issued that such bank account is of other assessee. The assessee submitted that impugned bank account No.20102501515 in Bank of Maharashtra, Surat is not belonged firm but belongs to individual assessee and they have not conducted any business in the name of firm during the year under consideration, there in no question of deposit of cash of Rs.1.27 crores. ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 4 On considering reply of assessee, the Assessing Officer issued summons under section 131 to Shri Dilipbhai Vasantial Seth, who was main partner of the firm requiring to attend office. In response to summon, Dilipbhai Vasantal Seth appeared. His statement was recorded. In the statement, Dilipbhai Vasantal Seth stated that his individual PAN is AEDPS0835A and he has been filing return of income since last 20 years. In assessment year 2011-12, he was doing business of edible oil trading. The firm M/s Vasant Traders (partnership firm) was incorporated in 2004. The bank account No.20102501515 was opened in assessment year 2009-10, which was opened in his own name for his proprietor concern. On asking specific requirement regarding PAN, his individual PAN was disclosed. The assessee confirmed that such PAN was disclosed while opening bank account. The assessee reiterated that partnership firm was dissolved in 2008, however, on asking specific question i.e., the same bank account was disclosed in firm and PAN of firm was mentioned. The assessee replied that he does not know anything. On asking about date of dissolution of firm and original thereof, the assessee stated that he will produce the same. The Assessing Officer on considering the statement of assessee held that cash deposits of Rs.1.27 crores in his regular business transaction in the proprietary concern is not acceptable. The Assessing Officer treated the said transaction in the name of firm by holding that Bank Authority also confirmed that the said account was in the name of M/s Vasant Traders having PAN of assessee-firm. The Assessing Officer on the basis of such fact treated the amount of Rs.1.27 crores ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 5 as unexplained cash credit while passing assessment order under section 144 r.w.s. 147 of the Act on 21.12.2018. 3. Aggrieved by the addition made in the assessment order, the assessee filed appeal before Ld. CIT(A). The case of assessee migrated before NFAC/Ld. CIT(A). Before Ld. CIT(A) the assessee filed brief statement of fact along with Form-35. In the statement of fact, assessee submitted that partnership firm was dissolved with effect from 01.04.2008 and no business activities were conducted since then. The assessee-firm was not having any income liable to tax and assessee-firm had not filed any return of income for the relevant assessment year. During the year under consideration, as per AIR and CIB information on ITD application available with the Assessing Officer that the assessee had made cash deposits amounting to Rs.1.27 crores in its bank account No.20102501515 maintaining with the Bank of Maharashtra, Surat. The said account was reflected in the books of accounts of proprietary concern with similar name viz., Vasant Traders (Prop. Mr. Dilipbhai Vasantial Seth) when the software of bank was migrated to CBS system, PAN of partnership firm was erroneously migrated in the said account instead of PAN of the proprietor viz., AEDPS0835A. A letter was obtained from the bank by the assessee. The assessee intimated about dissolution of the partnership firm to the VAT Department. As more than 10 years have been passed from the date of dissolution of partnership firm, so copy of dissolution deed could not be traced. Despite informing all the facts, the Assessing Officer has not considered the explanation of assessee and made addition of Rs.1.27 crores under ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 6 section 68 of the Act. The assessee also filed detailed written submission before Ld. CIT(A). 4. The assessee also furnished certain additional evidence to substantiate the contention that partnership firm was dissolved and intimation to VAT Department was made. The assessee also filed VAT and audit reports. All such additional evidence was forwarded to the Assessing Officer to give his remand report. The Assessing Officer filed his remand report. as certain part of contents reproduced on pages 4-6 of order of Ld. CIT(A). In the remand report, the Assessing Officer reported that assessee (ex-partner of assessee) was given ample opportunities and personal hearing during assessment proceedings. The assessee failed to produce sufficient materials in support of its claim. The additional evidence furnished at this stage is not to be admitted. In absence of original resolution deed, the closure of business activities and dissolution of partnership firm cannot be accepted and impugned bank statement is not shown in the individual return of assessee for assessment years 2010-11 and 2011-12. Similarly, bank account was also not shown in the audit report. 5. The Ld. CIT(A) on considering the remand report of Assessing Officer held that remand report of Assessing Officer is self-explanatory. The assessee failed to discharge its onus on nature of source of cash deposits and only on such observation of Ld. CIT(A) confirmed the action of Assessing Officer. Further aggrieved, the assessee-firm has filed present appeal before the Tribunal through its erstwhile partner. ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 7 6. We have heard the submissions of the Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Senior Departmental Representative (Ld. Sr-DR) for the Revenue. The Ld. AR for the assessee submits assessee was a partnership firm, which was dissolved with effect from 01.06.2008 and there were no business activities since then. Thus, no return of income for assessment year 2011-12 was filed. During assessment, assessee (ex-partner) explained all the facts before the Assessing Officer. The Assessing Officer has not accepted the explanation of assessee due to similarity in the name of proprietorship, the fact remained same that partnership firm dissolved with effect from 01.04.2008. The assessee also filed copy of dissolution deed, copy of original dissolution was not traced out due to laps of period for more than 10 years. The Assessing Officer insisted for filing original dissolution deed, which was not traced. The Assessing Officer simply made the addition by holding that credit in bank account No.20102501515 as unexplained on the ground that original dissolution deed was not produced and such bank account is not reflected in the balance-sheet having its old PAN i.e., AEDPS0835A. The banker of assessee has given certificate certifying about the old PAN and the new PAN. In the impugned bank account, wherein credit was reported in ITD/ITD data, the PAN of individual assessee is mentioned as AADPS0835A as proprietary concern. The assessee has duly disclosed all the transactions in the audited balance-sheet of the proprietary concern. The Ld. AR of the assessee submits that the banker of the assessee has also certified about the bank details along ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 8 with PAN. The mistake was committed by bank authority, the account No.20102501515 is account of proprietary of M/s Vasant Traders and PAN of partnership firm was inadvertently mentioned in the account, copy of certificate of bank is furnished. The Ld. AR of the assessee submits that he has shown all the transactions in the bank, in its books of account. The Ld. AR of the assessee while making his submissions carried us through the details of bank account disclosed in the books of assessee in his audit report to sunsbtatiate that all financial transaction in the bank account is duly considered while preparing profit and loss account of his proprietary concern for AY 2011-12. And as such no addition is liable to be sustained against the assessee-firm. 7. In alternative and without prejudice submissions, the ld AR for the assessee submitted that case of re-opened against the non-existent entity and the assessment passed against non-existent entity and the same is void and ab-initio and assessment order deserve to set-aside. The Ld. AR of the assessee submits that even otherwise the assessee has a good case on merit and prayed in primary submissions. 8. On the other hand, the ld Sr-DR for the revenue supported the order of lower authorities. The Ld. Sr-DR for the Revenue submits that all the contentions of assessee was considered by lower authorities while passing assessment order as well as while confirming the addition by First Appellate Order/ Ld CIT(A). 9. We have considered the rival contentions of both the parties and gone through the order of lower authorities carefully. We find that the Assessing Officer made the addition on the basis of information that ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 9 bank account No.20102501515 contains the PAN of Vasant Traders (firm). We find that during assessment, the assessee submitted that the partnership firm stand closed on 01.04.2008. The ex-partner of assessee-firm filed his affidavit and contended that original dissolution deed in not traceable as more than 10 years have passed. The Assessing Officer insisted for producing original dissolution deed. In the absence of dissolution deed, the Assessing Officer treated the transaction in the bank account as unexplained cash credit. The ld CIT(A) confirmed the action of assessing officer by taking view that source of deposits in the bank account is unexplained as the assessee ailed to discharge his onus to explain the nature and source. We find that before Assessing Officer as well as ld. CIT(A), the assessee categorically contended that in bank account of proprietorship, the PAN of erstwhile partnership firm was inadvertently migrated at the time of data migration. The assessee in the statement of fact also categorically contended that such PAN of firm was wrongly mentioned by its banker. We find that banker of assessee has given certified that while migrating the data of PAN was inadvertently mentioned as AAEFV7806M instead of PAN of proprietary concern of Mr. Dilipbhai Vasantlal Sheth. We find that such evidence was furnished by assessee before Ld.CIT(A). No verification of fact was conducted by Ld.CIT(A) either of their own or through Assessing Officer. On perusal of books of account of proprietary concern of Dilipbhai Vasantlal Sheth, we find that such bank account was duly disclosed in the audit report and all the transactions are considered by while filing return of income in the ITA No.801/SRT/2023 (A.Y 11-12) M/s Vasant Traders 10 proprietary concern. Thus, we find that the Assessing Officer was not justified in making addition of Rs.1.27 crores without verification of all facts. This ground of assessee’s appeal is allowed. Considering the fact that we have allowed the appeal of assessee on primary submissions of ld AR for the assessee, hence adjudication on alternative submissions have become academic. 10. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 05/02/2024. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 05/02/2024 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order // True Copy // Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat True copy/