Bhailalbhai Mafatlal Pujara, Mehsana V. The Income Tax Officer, Ward-5, Mehsana

ITA 885/AHD/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8624 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 05-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIV.KMANGLA
• Assessee Lawyers: SHRISUCHITPATEL

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’SMC’’BENCH,AHMEDABAD BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And MsMADHUMITAROY,JUDICIALMEMBER आयकरअपीलसं./ITANo.885/AHD/2023 धििाधरणवरध / Asstt.Year:2017-2018 BhailalbhaiMafatlalPujara, 100SivamGate, DayanandComplex, Becharaji, Mehsana-384210. PAN:AETPP7146K Vs. IncomeTaxOfficer, Ward-5, Mehsana. (Applicant)(Respondent) Assesseeby:ShriSuchitPatel,AR Revenueby:ShriV.KMangla,Sr.DR सुिवाईकीतारीख/DateofHearing:13/02/2024 घोरणाकीतारीख/DateofPronouncement:21/02/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals),Gandhinagar, arisinginthematterofassessmentorderpassedunders.144oftheIncomeTax Act,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2017-2018. ITAno.885/AHD/2023 A.Y.2017-18 2 2.ThefirstissueraisedbytheassesseeisthattheLd.CIT(A)erredin rejectingtheadmissionoftheadditionalevidencefiledbeforehimwhichwerenot submittedduringtheassessmentproceedingsduetounavoidablereason. 3.Thefactsinbriefarethattheassesseeinthepresentcaseisanindividual andisengagedinthebusinessofdealinginagriculturalproduce.TheAOduring theassessmentproceedingsfoundthattherewerecashdepositsinthebank accountduringthedemonetizationperiodamountingtoRs.41,74,900/-the sourceofwhichwasnotexplained.Therefore,theAOmadetheadditionon accountofcashdepositsofRs.41,74,900/-treatingthesameasunexplained moneyu/s69AoftheActandaddedtothetotalincomeoftheassessee. 3.1Besidestheabove,theAOalsofoundthattherewerealsocashdepositsof Rs.95,69,800/-otherthanthedemonetizationperiodinthebankaccountofthe assesseewhichisnotcommensuratetothegrossturnovershownbytheassessee amountingtoRs.58,83,700/-onlyinthereturnofincome.AssuchtheAOtreated thedifferenceamountofRs.36,86,100/-(Rs.95,69,800–58,83,700)asgross businessreceiptoftheassessee.Thus,theAObyapplyingtherateofprofit specifiedu/s44ADoftheAct,being8%ofdifferenceamountofcashdepositand grossturnover,workoutstoRs.2,94,888/-asunreportedincomeandaddedthe sametothetotalincomeoftheassessee. 4.AggrievedassesseecarriedthematterbeforetheLd.CIT(A).Theassessee beforetheLd.CIT(A),filedtheadditionaldocumentswiththeprayerfor admissionunderrule46AofIncomeTaxRules.TheLd.CIT(A)alsocalledforthe remandreportfromtheAOwhoopposedtoadmittheadditionalevidence.Butthe AOintheremandreporthasalsomadecommentsontheadditionalevidenceon themeritofthecase.However,Ld.CIT(A),rejectedtheapplicationofthe assesseefortheadmissionofadditionalevidenceunderrule46Aofincometax rulesbyobservingasunder: ITAno.885/AHD/2023 A.Y.2017-18 3 8.Decision:Ihavecarefullyconsideredthefactsofthecase,submissionsoftheappellant, theobservationsoftheAOintheassessmentorderandremandreport Beforeproceedingtothegroundsofappealitisrelevanttomentionthatadditional evidencewassubmittedwitharequesttoadmitit.ItwasforwardedtotheAOforhis commentson22.06.2023.TheAOinhisreporthasstatedthatadditionalevidence submittedu/r46Abenotadmitted.IaminclinedtoagreewiththecontentionoftheAOas appellantdidnothavesufficientcausethatpreventedhimfromproducingitbeforetheAO. Thereforethebasicconditionforadmittingadditionalevidenceu/r46Aisnotsatisfied 5.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 6.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to495and contendedthatoncetheremandreporthasbeencalleduponbytheLd.CIT(A) fromtheAOwhointurnsuppliedthesame,theninsuchasituationtheLd. CIT(A),oughttohaveacceptedtheadditionaldocumentsfordecidingtheissueon meritofthecaseafterconsideringtheadditionaldocuments. 7.Ontheotherhand,theLd.DRvehementlysupportedtheorderofthe authoritiesbelow. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Thereisnoambiguitythattheadditionaldocuments werefiledbytheassesseebeforetheLd.CIT(A),whichwerealsoforwardedtothe AOforhiscomments.Theprovisionofrule46A(1)oftheIncomeTaxRules prescribesthesituationunderwhichtheadditionaldocumenthavetobeadmitted bytheLd.CIT(A).However,theprovisionofsubrule(2)of46AoftheIncome- TaxRulesgivespowertotheLd.CIT(A)toadmittheadditionalevidencefiledby theassesseeafterrecordingthereasoninwritingfortheadmissionofadditional evidence.Inotherwords,theLd.CIT(A),wasgivenpowerundersubrule(2)of rule46AofIncomeTaxRulefortheadmissionoftheadditionalevidencefiledby theassessee.However,fromthefindingsoftheLd.CIT(A),itistranspiredthat theLd.CIT(A),withoutapplyinghisownmindandwithoutexercisingthepower ITAno.885/AHD/2023 A.Y.2017-18 4 grantedunderthestatuehasdismissedtheapplicationfortheadmissionofthe additionalevidenceonthebehestoftheAOwhichiscontrarytotheprovisionof law.Assuch,weareoftheviewthattheLd.CIT(A)wastoexercisehispower withintheprovisionoflawforadmissionoftheadditionaldocumentsinsteadof gettingguidedbythecommentoftheAOintheremandreport. 8.1Wehavealsoperusedthebankstatementfiledbytheassesseeandon verificationofthebankentriesofthedemonetizationperiod,wenotethatsuch cashdepositswereprimarilyusedformakingpaymenttoGujaratAgroIndustries whichisaStateGovernmentOrganizationanddealingintheagriculturalproduce. Thus,primafacieitappearstousthatthecashdepositsduringdemonetization periodwasrepresentingbusinesstransactionsandthereforeweareoftheview thatthesamecannotbemadesubjecttotaxundertheprovisionsofsection69A oftheAct.Wearemakingthisobservationthatthecashdepositsduring demonetizationperiodrepresentthebusinesstransactiontoarriveatanopinion thattheassesseehasverymeritoriouscasewhichcouldnotbedismisseddueto technicallapsesasheldbytheHon’bleGujaratHighCourtinthecaseofS.R. KoshtiVs.CITreportedin276ITR165whereitwasheldasunder: 20.Awordofcaution.TheauthoritiesundertheActareunderanobligationtoactin accordancewithlaw.TaxcanbecollectedonlyasprovidedundertheAct.Ifanassessee, underamistake,misconceptionoronnotbeingproperlyinstructed,isover-assessed,the authoritiesundertheActarerequiredtoassisthimandensurethatonlylegitimatetaxes duearecollected.ThisCourt,inanunreporteddecisionincaseofVinayChandulal Satiav.N.O.Parekh,CIT[Spl.CivilApplicationNo.622of1981dated20-8-1981],haslaid downtheapproachthattheauthoritiesmustadoptinsuchmattersinthefollowingterms: 9."TheSupremeCourthasobservedinnumerousdecisions, includingRamlalv.RewaCoalfieldsLtd.AIR1962SC361,StateofWest Bengalv.Administrator,HowrahMunicipalityAIR1972SC749andBabutmalRaichand Oswalv.LaxmibaiR.TarteAIR1975SC1297,thattheStateauthoritiesshouldnot raisetechnicalpleasifthecitizenshavealawfulrightandthelawfulrightisbeing deniedtothemmerelyontechnicalgrounds.TheStateauthoritiescannotadoptthe attitudewhichprivatelitigantsmightadopt." 8.2Fromtheabove,itisrevealedthattheincomeoftheassesseeshouldnot beoverassessedeventhereisamistakeoftheassessee.Assuchthelegitimate ITAno.885/AHD/2023 A.Y.2017-18 5 deductionforwhichtheassesseeisentitledshouldbeallowedwhiledetermining thetaxableincome. 8.3WealsonotethattheHon’bleGujaratHighCourtinthecaseofVareli textileindustryversusCITreportedin154Taxman33hasalsoobservedasunder: 10.Itisequallywell-settledthatwhereacauseisconsciouslyabandoned(asinthe presentcase)thepartyseekingcondonationhastoshowbycogentevidencesufficient causeinsupportofitsclaimofcondonation.Theonusisgreater.Oneof thepropositionsofsettledlegalpositionistoensurethatameritoriouscaseisnotthrown outonthegroundoflimitation.Therefore,itisnecessarytoexamine,atleastprima facie,whethertheassesseehasorhasnotacaseonmerits. 8.4Inviewoftheaboveandintheinterestofjusticeandfairplaywedeemit fittodirecttheLd.CIT(A),toadmittheadditionalevidencefiledbytheassessee underrule46AoftheIncomeTaxRuleandadjudicatetheissueonmeritafresh aspertheprovisionsoflaw.Hence,thegroundofappealoftheassesseeis allowedforthestatisticalpurposes. 8.5Comingtotheremaininggroundsofappealraisedbytheassessee,we notethatthemainissuerelatingtotheadmissionofadditionaldocumenthas beenset-asidetothefileoftheLd.CIT(A),accordinglyweareinclinedtoset- asideallotherissueraisedbytheassesseetothefileofLd.CIT(A),forfresh adjudicationaspertheprovisionsoflaw.Hence,alltheremaininggroundsof appealareallowedforthestatisticalpurposes. 9.Intheresult,theappealfiledbytheassesseeisallowedforthestatistical purposes. OrderpronouncedintheCourton21/02/2024atAhmedabad. Sd/-Sd/- (MADHUMITAROY)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated21/02/2024 Manish