M/s. Shivamrut Home Services, Pune V. ITO, Ward5(5), Pune

ITA 807/PUN/2022

AI Insights

The case involves M/s Shivamrut Home Services, which appealed against the order of the National Faceless Appeal Centre (NFAC) that sustained an addition of Rs. 63,02,500 as unexplained cash credit under section 69A of the Income Tax Act, 1961. This addition was based on cash deposits of Specified Bank Notes (SBNs) during the demonetization period. The appellant argued that the sources of these deposits were fully explained and that the business of supplying milk, which was considered an essential service during demonetization, allowed them to accept SBNs. The Tribunal found that the first appellate authority had not adequately addressed the substantive grounds of merit and had dismissed the appeal without proper consideration.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136284 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 02-04-2023
• Assessment Year: misc
• Appeal Filed On: 09-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Principle of natural justice
• Section: 144; 250; 69A

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “बी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 4 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “B” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No. 807/PUN/2022 निर्धारण वर्ा / Assessment Year : 2017-18 M/s Shivamrut Home Services, 22/1, Sandesh Society, Market Yard, Pune – 411037 PAN: AAVFS3658M . . . . . . . अपऩलधथी / Appellant बनाम / V/s Income Tax Officer, Ward 5(5), Pune . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : Shri Mahavir Jain Revenue by : Shri M. G. Jasnani सपिवधई की तधरऩख / Date of conclusive Hearing : 03/04/2023 घोर्णध की तधरऩख / Date of Pronouncement : 03/04/2023 आदेश / ORDER PER G. D. PADMAHSHALI, AM; The present appeal is directed against the first appellate order of National Faceless Appeal Centre, Delhi [in short “NFAC”] dt. 12/09/2022 passed u/s 250 of the Income- tax Act, 1961 [in short “the Act”], which in turn arisen out of assessment order dt. 26/12/2019 passed u/s 144 by the Income Tax Officer Ward 5(5), Pune [in short “AO”] for the assessment year [in short “AY”] 2017-18. M/s. Shivamrut Home Services ITA No. 807/PUN/2022 A.Y. 2017-18 ITAT-Pune Page 2 of 4 2. During the course of physical hearing the Ld. AR adverting to the impugned order submitted that, both the tax authorities below erred in taxing the amount of specified bank notes [for short “SBN”] as unexplained cash credit u/s 69A of the Act by turning a blind eye to the principle of natural justice, hence the assessee brought up the matter before the Tribunal with the following grounds; “1] The Ld. CIT(A)/NFAC has erred in sustaining the addition of Rs. 63,02,500/- made by the AO U/S. 69A of the Act on account of cash deposit in the bank account during the period of demonetisation without appreciating the facts of the case. 2] The Ld. AO/CIT(A) has failed to appreciate that sources of Specified Bank Notes (SBNs) deposited into the bank are fully explained and therefore the additions made u/s. 69A on account of SBNs deposited is not justifiable. 2.1] The Ld. AO/CIT(A) ought to have considered the submission that the amount was deposited out of sufficient cash lying in hand as on date of cash deposit which was sourced out of cash sales proceeds. 2.2] The Ld. AO/CIT(A) failed to appreciate that the appellant was running a business of supply of milk which was covered under essential services as per RBI guidelines issued from time to time during M/s. Shivamrut Home Services ITA No. 807/PUN/2022 A.Y. 2017-18 ITAT-Pune Page 3 of 4 the demonetisation period and was therefore allowed to accept the SBNs even during the demonetisation period. 3] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.” 3. After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT, Rules 1963 perused the material placed on record; and without going into the merits of the case, we note that, in the event of failure on the part of assessee to make effective representation in establishing the nature and source of cash deposits made into its bank accounts, the Ld. AO framed the assessment on the basis of available material before him to the best of his judgement u/s 144 of the Act. We also note that, when the assessee carried the matter before the first appellate authority, the Ld. NFAC without adjudicating the substantive grounds of merit has perfunctory dismissed the appeal ex-parte resonating the findings of the Ld. AO which suffers from a well-reasoned speaking order in terms of section u/s 250 of the Act. M/s. Shivamrut Home Services ITA No. 807/PUN/2022 A.Y. 2017-18 ITAT-Pune Page 4 of 4 4. In the light of aforestated observations, we find force in the submission of the Ld. AR that, since the rights and liabilities under the impugned tax proceedings has not been conclusively dealt and determined, hence the case deserves to be remanded for de-nova adjudication. For the reason without going into the merits of the case and in the interest of justice, we set-aside the impugned order of Ld. NFAC and remand the matter back to the file of Ld. AO for fresh adjudication in conformity with the principle of natural justice preferably in three effective hearings. 5. Resultantly, the assessee’s appeal is ALLOWED FOR STATISTCIAL PURPOSE in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday 03 rd day of April, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 19 th day of April, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT -1, Pune (Mh) 4. The CIT(A)-NFAC, Delhi (India) 5. DR, ITAT, Bench ‘B’, Pune 6. ग र्डफ़ इल / Guard File. Ashwini आिेश नुस र / By Order वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.