Jayesh Kantilal Kansara L/H Rashmiben J. Kansara, Valsad V. Assistant Commissioner of Income Tax, Valsad Circle, , Valsad

ITA 888/SRT/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 3848 (ITAT-SURAT)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD KUMAR
• Assessee Lawyers: RAJESH UPADHYAY
• Keywords: Set aside; Business income; Unexplained cash credit
• Section: 148; 143(3); 142(1); 292BB; 143(2); 68

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.888/SRT/2023 (Ǔनधा[रणवष[ / Assessment Year: (2017-18) (Physical Court Hearing) Jayesh Kantilal Kansara L/h. Rashmiben J. Kansara Darji Street, Dharampur, Valsad-396050 Vs. Assistant Commissioner of Income Tax Valsad Circle, Room No.208/Palak Arcade, Shanti Nagar, Tithal Road/Valsad-396001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AKNPK 0903 H (अपीलाथŎ /Appellant) (ŮȑथŎ/Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Rajesh Upadhyay, AR राजèव कȧ ओर से /Respondent by: Shri Vinod Kumar, Sr-D.R सुनवाई की तारीख/ Date of Hearing : 22/02/2024 घोषणा की तारीख/Date of Pronouncement : 11/03/2024 आदेश / ORDER PER DR. A. L. SAINI, AM: Captioned appeal filed by the assessee, pertaining to assessment year 2017-18, is directed against the order passed by the National Faceless Appeal Centre, Delhi (in short “NFAC/Ld CIT(A)”) dated 20.11.2023, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income-Tax Act, 1961 (hereinafter referred to as 'the Act') dated 29.12.2019. 2. The grounds of appeal raised by the assessee are as follows: “1. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to upheld A.O’s action to issue notice for assessment as well as to carry out and finalize assessment proceedings upon the deceased Shri Jayesh Kantilal Kansara. 2. Ld. CIT[A], NFAC, Delhi has erred in law and on fact to upheld AO’s addition of Rs.59,56,500/- u/s 68 of the Act ignoring the fact that the said amount is a part of appellant’s turnover on which profit is already taxed by the AO consequently it amounts to double taxation. Page | 2 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara 3. Ld. CIT[A], NFAC, Delhi has erred in law and on facts in upholding AO’s addition of Rs.59,56,500/- on irrelevant ground that Essar Oil Ltd. is only a limited company and not a public sector oil marketing company, so, not eligible to collect OHD during demonetization period by ignoring and overlooking the fact that the appellant had sold petrol and diesel to the customers on retail basis. Amount of cash sale is deposited in bank and in turn payment was made to Essar Oil Ltd. Ld. CIT[A] has further erred in holding that the appellant has accepted OHD during demonetization period from his retail customers. 4. Ld. CIT[A], NFAC, Delhi has erred in law and on facts in upholding AO’s action to charge Income Tax at maximum rate @ 60% u/s 115BBE of the Act overlooking the facts that the sum of Rs.59,56,500/- is a part of total turnover amounting to business receipts and the AO has also taxed net profit on the said sum of Rs.59,56,500/-. Consequently, Section 68 and Section 115BBE cannot be invoked to the facts of appellant’s case.” 3. Facts of the case which can be stated quite shortly are as follows. The assessee before us is an Individual and filed his return of income for the assessment year (A.Y.) 2017-18 on 29.9.2017, declaring total income at Rs.18,27,790/-. Subsequently, the assessee`s case was selected for scrutiny by issue of notice u/s 143(2) of the Act on 24.09.2018. Then after, notice u/s 142(1) along with questionnaire was issued to the assessee through ITBA portal. In response to the notices issued, the details/submissions were furnished by the assessee online electronically in ‘E-proceeding’ through E- filing portal. During the year under consideration, the assessee was engaged in the business of running petrol pump as a retailer of M/s Essar Oil Ltd. On perusal of information contained in the data base of the system (SFT-14), it came to notice that cash deposit during the demonetization period has been made by the assessee at Rs.2,04,15,500/-. The details of such cash deposit are as under: Sr.No Name of the bank Account No. Amount in Rs. 1 SBI Bank 35654316557 1,91,15000 2 Bank of Baroda 13490200000382 13,00,500 Total 2,04,15,500 During the course of the assessment proceedings, the assessee was asked to furnish details explaining source of the cash deposit made during the demonetization period. In this regard, the assessee furnished Specified Bank Page | 3 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara Notes (SBN) certificate issued by the bank and submitted that there is cash deposit in SBN notes of Rs.71,06,000/- in the SBI Bank by the assessee. Further, the assessee has also deposited SBN notes of Rs.13,00,500/- in Bank of Baroda during demonetization period. Thus, the assessee has made a total cash deposit in SBN of Rs.84,06,500/-(Rs.71,06,000 + Rs.13,00,500) in the said banks. It may be noticed from the cash book as furnished by the assessee that opening cash-in-hand as on 09.11.2016 has been reported at Rs.24,81,407/- only whereas there was cash deposit in SBN notes of Rs.84,06,500/- during the demonetization period. In this connection, it was stated that during the demonetization period, petrol pump operated under the authorization of public sector oil marketing companies were authorized to sale diesel and petrol on receipt of SBN and not the Pvt. Sector oil marketing companies. 4. Therefore, the assessee was requested to furnish details of SBN in the said opening cash-in-hand and to explain as to why the cash deposit in SBN over and above the SBN available in cash-in-hand, as mentioned above, should not be added to the total income as unexplained income for the year under consideration. In this respect, a show cause notice was issued to the assessee on 22.12.2019, the relevant part of the said show cause notice is reproduced on page no.3 to 4 of the assessment order. 5. In response to the said show cause notice, the assessee made submission, before the Assessing Officer, which is reproduced below: “The total sales in respect of trading relating to petrol, diesel and other oils for the period 9.11.2016 to 30.12.2016 is Rs.2,10,45,271.36 reflecting only cash sales and Rs.24,70,507.34 reflecting closing OHD on 08.11.2016. As per the details mentioned above, we had some closing cash-in-hand of OHDN on 08.11.2016 as we as retail sale of petrol and diesel and the same is deposited in Bank of Baroda Rs.13,00,500/- and in State Bank of India of Rs.71,06,000/- as per above notice, we have deposited old not of Rs.500/- & Rs.1000/- and also Page | 4 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara tender money of Rs.500 reflected by closing cash on hand of OHD on 08.11.2016 as we are retail sale of petrol and diesel i.e. my business receipt only. 6. However, Assessing Officer rejected the contention of the assessee and observed that assessee has submitted that he has deposited cash in SBN in the bank account from opening cash on hand as on 09.11.2016 and from his business receipts. The assessee has not given details of SBN in the opening cash in hand of Rs.24,70,507/-. However, considering the amount of cash in hand, SBN in the said cash in hand is estimated at Rs.24,50,000/-. As regards the balance cash deposit of Rs.59,56,500/-, (Rs.84,06,500 - Rs.24,50,000) the assessee has claimed that he has made said cash deposit from his business receipts. However, as per Gazette Notification No.2653 dated 08.11.2016, SBN were continued as legal tender during the demonetization period for purchase of petrol, diesel and gas at the stations operating under the authorization of Public Sector Oil and Gas Marketing Companies. Accordingly, the claim of cash deposit in SBN made by the assessee from his business receipts is not supported by the Gazette Notification, as mentioned above. The assessee has not reported any other business in his accounts to explain that he was also engaged in any other business which was eligible to accept SBN during the demonetization period. Therefore, Assessing Officer made addition of Rs.59,56,500/- and added to the total income of the assessee, as unexplained cash credit u/s 68 of the Act and charged as per section 115BBE of the Act. 7. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before NFAC/Ld.CIT(A), who has confirmed the action of the Assessing Officer. The ld CIT(A) noted that the claim of the assessee that the amount of Rs.59,56,500/- deposited in bank accounts in OHD was from the sale of petrol and oil made during the demonetization Page | 5 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara period is not correct as the assessee was legally not authorized to do so. Therefore, ld CIT(A) upheld the addition made by the Assessing Officer. 8. Aggrieved by the order of NFAC/Ld.CIT(A), the assessee is in appeal before us. 9. At the outset, Shri Rajesh Upadhyay, Ld. Counsel for the assessee submitted that Assessing Officer framed the assessment on the dead person inspite of the fact that information of death of the assessee was intimated during assessment proceedings. Notwithstanding of this fact, the Assessing Officer framed the assessment on dead person. Therefore, assessment order itself is bad-in-law and should be quashed. 10. On merit, ld Counsel submitted that out of closing cash-in-hand of OHDN on 08.11.2016 as retail sale of petrol and diesel were the source of the cash deposit in Bank of Baroda at Rs.13,00,500/- and in State Bank of India of Rs.71,06,000/-. The ld Counsel stated that this amount was deposited out of retail sale of petrol and diesel, hence no addition should be made in the hands of the assessee. 11. On the other hand, Ld. Sr-DR for the Revenue, argued that no doubt the legal representative of the assessee, had informed to the Assessing Officer, during assessment stage, that the assessee had died. However, such information was provided to the Assessing Officer by way of letter only but assessee did not take effort to change PAN and Income Tax data base. Therefore, there was no mistake on the part of the Assessing Officer to frame the assessment on the dead person. Page | 6 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara 12. On merit, Ld Sr-DR for the Revenue submitted that during demonetization period, the sale has been booked in the specified denomination notes and the assessee has failed to demonstrate that to whom petrol has been sold, that is, the name of customers and PAN and addresses were not kept by the assessee to show to the Assessing Officer. Hence, assessee has failed to prove the genuineness of petrol or diesel sale during demonetization period. Therefore, said assessee`s income should be taxed at higher rate @ 60% u/s 115BBE of the Act. 13. We have heard both the parties and perused the materials available on record. We note that during assessment stage, assessee’s legal heirs have informed the Assessing Officer that assessee had died. Vide Assessee’s CA reply dated 18.06.2019 with letter of authority and death certificate of the deceased assessee (page no. 33 to 36 of paper book). We note that the assessee`s case was selected for scrutiny by issue of notice u/s 143(2) of the Act on 24.09.2018, and after that legal heirs have informed the Assessing Officer on 18.06.2019 that assessee had died. Despite of this fact on record, the Assessing Officer framed the assessment order on 29.12.2019, which is against the settled position of law. Hence the assessment order framed by the Assessing Officer should be quashed on this score only. For that reliance can be placed on the judgment of Hon’ble Delhi High Court in the case of Dharamraj vs. Income Tax Officer W.P.(C) 9227/2021 dated 17.01.2022 wherein, which was held as follows: “7. We have considered the submissions made by the learned counsels for the parties. 8. The issue of the validity of a notice and proceedings held subsequent thereto against a dead person is no longer res integra. This Court in Savita Kapila vs. Assistant Commissioner of Income-Tax, in W.P.(C) No.3258/2020 has held as under: ”AN ALTERNATIVE STATUTORY REMEDY DOES NOT OPERATE AS A BAR TO MAINTAINABILITY OF A WRIT PETITION WHERE THE ORDER OR NOTICEE OR PROCEEEDINGS ARE WHOLLY WITHOUT JURISDICTION. IF THE ASESSNIG OFFIE HAD NO JURISDICTION TO INITIATE ASSESSMENT PROCEEDINGS. THE MERE FACT THAT SUBSEQUENT ORDRS HAVE BEEN PASSSED WOULD NOT RENDER THECHALLENGE TO JURISDICTION INFRUCTUIOUS. Page | 7 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara 24. Further, the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. If the assumption of jurisdiction is wrong, the assessment order passed subsequent would have no legs to stand. If the notice goes, so does the order of assessment it is trite law that if the Assessing Office had no jurisdiction to initiate assessment proceedings, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. xxxxx THE SINE QUA NON FOR ACCOUNTING JURISDICTION TO REOPEN AN ASSESSMENT IS THAT NOTICE UNDER SECTION 148 SHOULD BE ISSUED TO A CORRRECT PERSON AND NOT TO A DEAD PERSON. CONSEQUENTLY, THE JURISDICTIONAL REQWUIREMENT UNDER SECTION 148 OF THE ACT, 1961 OF SERVICE OF NOTICE WAS NOT FULFILLED IN TEHE PRESENT INSTANCE. 26. In the opinion of this Court the issuance of a notice under Section 148 of the Act is the foundation for reopening of an assessment. Consequently, the sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. [See Sumit Balkrishna Gupta v. Asst. Commissioner of Income Tax, Circle 16(2), Mumbai & Ors., (2019) 2 TMI 1209-Bombay High Court]. 27.xxxx Consequently, in view of the above, a reopening notice under Section 148 of the Act, 1961 issued in the name of a deceased assessee is null and void. xxxxxx AS IN THE PRESENT CASE PROCEDEDINGS WHERE NOT INITIATED/PENDING AGAISNT THE ASSESSEE WHEN HE WAS ALIVE AND AFTER HIS DEATH THE LEGAL REPRESENTATIVE DID NOT STEP INTO THE SHOES OF THE DECEASED ASSESEE, SECTION 159 OF THE ACT, 1961 DOES NOT APPLY TO THE PRESENT CASE. 30. Section 159 of the Act, 1961 applies to a situation where proceedings are initiated/pending against the assessee when he is alive and after his death the legal representative steps into the shoes of the deceased assessee. Since that is not the present factual scenario. Section 159 of the Act, 1961 does not apply to the present case. 31.xxxx THERE IS NO STATUTORY REQUIREMENT IMPOSING AN OBLIGATIONUPON LEGAL HEIRS TO INTIMATE THE DEATH OF THE ASSESSEE. 32. This Court is of the view that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department. After all, there may be causes where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant. In Alamelu Veerappan (supra) [2008 (6) TMI 760 – Madras High Court] it has been held “nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the Page | 8 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. xxxx 34. Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the Revenue. SECTION 292B OF THE ACT, 1961 HASBEENHELD TO BE INAPPLICABLE, VIS-À-VIS, NOTICE ISSUED TO A DEAD PERSON IN RAJENDER KUMAR SEHGAL [2018(12) TMI 697 (DELHI)], CHANDRESHBHAI JAYANTIBHAI PATEL [2019 (1) TMI 353 – GUJARAT HIGH COURT] AND ALAMELU VEERAPPAN [2018 (6) TMI 760 – MADRAS HIGH COURT] 35. This Court is of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, Section 292B of the Act, 1961 does not apply to the present case. IN RAJINDER KUMAR SEHGAL (SUPRA) A COORDINATE BENCH OF THIS COURT HAS HELD THAT SECTION 22BB FO THE ACT, 1961 IS APLICABLE TO AN ASSESSEANDNOT TO A LEGAL REPRESENTATIVE. xxxxx 38. This Court is also of the view that Section 292BB of the Act, 1961 is applicable to an assessee and not to a legal representative. Further, in the present case one of the legal heirs of the deceased assessee, i.e., the petitioner, had neither cooperated in the assessment proceedings nor filed return or waived the requirement of Section 148 of the Act, 1961 or submitted to jurisdiction of the Assessing Officer. She had merely uploaded the death certificate of the deceased assessee. xxxxx 40. Consequently, the applicability of Section 292BB of the Act, 1961 has been held to be attracted to an assessee and not to legal representatives.” 9. The above judgment was followed by this Court in W.P.(C) No.2678/2020 titled Mrs. Sripathi Subbaraya Manohara L/H Late Sripathi Subbaraya Gupta vs. Principal Commissienr of Income Tax 22, N. Delhi & Anr. 10. In the present case also, as the notice under Section 148 of the Act was issued against a dead person, the same is null and void and all consequent proceedings/orders, including the assessment order and the subsequent notifies, being equally tainted, are liable to be set aside. 11. Consequently, the impugned notice dated 30.03.2019 issued under Section 148 of the Act is set aside along with all consequential proceedings/notices/assessment orders.” 14. In the assessee`s case under consideration, we note that during assessment stage, assessee’s legal heirs have informed the Assessing Officer about the death of the assessee, inspite of this, the Assessing Officer framed the assessment order on 29.12.2019, which is which is bad in law and should be quashed. Therefore, respectfully following the judgment of Hon’ble Delhi High Court in the case of Dharamraj (supra), we quash the assessment order framed under section 143(3) of the Act, dated 29.12.2019. Page | 9 ITA No. 888/SRT/2023 A.Y.17-18 Jayesh K Kansara 15. As the assessment itself is quashed, all other issues on merits of the additions, in the impugned assessment proceedings, are rendered academic and infructuous. 16. In the result, appeal of the assessee is allowed. Order is pronounced on 11/03/2023 by placing record on notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER स ू रत /Surat Ǒदनांक/ Date: 11/03/2024 Dkp Outsourcing Sr.P.S 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