Vimlaben Sureshbhai Mehta, Valsad V. Income Tax Officer, Ward - 4, , Valsad

ITA 889/SRT/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 3908 (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 M.UPADHYAY
• Keywords: Condonation of delay; Corroborative evidences; Peak credit; Period of limitation; Time period of passing order
• Section: 144; 142(1); 143(2); 154; 69A; 73

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.889/SRT/2023 (Ǔनधा[रणवष[ / Assessment Year: (2017-18) (Physical Court Hearing) Vimlaben Sureshbhai Mehta Flat No.403, 4 th Floor, ‘A’ Wing Amardham, Tithal Road, B/h Shila Park, Valsad-396001 Vs. Income Tax Officer, Ward-4, Valsad, Room No.208, Palak Arcade, Shanti Nagar, Tithal Road, Valsad-396001 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ABBPM 1597 N (अपीलाथŎ /Appellant) (ŮȑथŎ/Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Rajesh M. 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 21.07.2023, which in turn arises out of an assessment order passed by the Assessing Officer under section 144 of the Income-Tax Act, 1961 (hereinafter referred to as 'the Act') dated 30.09.2019. 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 confirm A.O’s addition of Rs.7,43,240/- made by the A.O on account of total credits in savings bank account with Oriental Bank of Commerce, Valsad ignoring the fact that the said bank account is duly considered by the appellant while filing of ROI for A.Y 2017-18. 2. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to direct the A.O to examine transactions of Rs.47,500/- appearing in s/b account with Oriental Bank of Commerce, Valsad dated 27/03/2017 specifically appearing as NEFT LIC of Page | 2 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta India which is outside the scope of levy of income tax as LIC receipts are exempt from tax. 3. Ld. CIT[A], NFAC, Delhi has erred in law and on facts to upheld A.O’s action to levy income tax @ 60% u/s 115BB of the Act”. 3. The appeal filed by the assessee for Assessment Year 2017-18, is barred by limitation by 73 days. The assessee has moved a petition requesting the Bench to condone the delay. The contents of the petition for condonation of delay are reproduced below: “I, the undersigned, Vimlaben Sureshbhai Mehta, aged about 65 years, occupation -business and household, residing at Flat No.403, 4 th Floor, Amardham, “A” Wing Tithal Road, Behind Seela Park Valsad-39601 taken oath and declare as under: [1] That the order of the Ld.CIT[A], NFAC, Delhi is dated 21/7/2023 and appeal is filed on dated 22/12/2023 i.e., after 133 days from the date of CIT[A] appeal order. The limitation period available to me is 60 days. Thus there is a delay of 73 days in filing of appeal. [2] That after receipt of order, I have handed over copy of appeal order and other relevant documents to my A.R. Shri Rupesh Prajapati for taking necessary remedial action, if required. He has consulted some other tax experts in the matter. Thereafter he has forgotten to take follow-up the matter. In the 2 nd week of December, 2023, I reminded him regarding appeal order of the Ld.CIT[A], NFAC, Delhi. He told me that the time for filing of appeal has been lapsed and now it is not possible to file appeal. He has handed over papers and documents to me. I consulted Shri Rajesh M. Upadhyay on dated 20/12/2023 at his Valsad office who advised met to file appeal with a condonation petition. On the same date, he prepared appeal memo, affidavit, condonation petition etc., I made payment of appeal fees of Rs.10,000/- by following his advice. As a result, the appeal can be filed in the office of the Honourable ITAT, Surat. [3] The above affidavit is prepared to produce before the Income Tax Appellate Tribunal, Surat in the matter of condoanation of delay in filing of 2 nd appeal for A.Y 2017-18. All contents of affidavit are true, correct and binging upon me. I have been explained that filing of false affidavit amounts to an offence under the law.” 4.Therefore, Ld. Counsel contended that due to mistake committed by first Tax Consultant, namely, Shri Rupesh Prajapati, who has not taken the immediate action to file the appeal before the Tribunal. Later on, there was Page | 3 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta communication gap between assessee and her advocate, hence delay of 73 days has occurred in filing the appeal before this Tribunal. The ld Counsel contended that assessee has explained the sufficient cause/ reason of delay, therefore, in the interest of justice, such delay in filing the appeal may be condoned. 4. On the other hand, Learned Sr-DR for the Revenue, argued that assessee has explained to fail sufficient cause/ reason for delay. In the affidavit for condonation of delay, the assessee made general statements, which should not be considered for condonation of delay. Therefore, such delay should not be condoned, and for that Ld. Sr-DR relied on the Civil Appeal No.7696 of 2021 of Hon’ble Apex Court in the case of Majji Sannemma & Sanyasirao vs. Reddy Sredevi & Ors. 5. We have heard both the parties on this preliminary issue. We note that the reasons given in the affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing this appeal. Having heard both the parties and after having gone through the affidavit as well the delay condonation, application, we are of the considered opinion that in the interest of justice, the delay deserves to be condoned. We, accordingly, condone the delay. 6. In respect of ground No.1 raised by the assessee, which relates to addition of Rs.7,43,240/- made by the assessing officer (A.O.) on account of total credits in savings bank account with Oriental Bank of Commerce, Valsad, the ld Counsel for the assessee stated that assessing officer has ignored the fact that the said bank account was duly considered by the assessee, while filing of return of Income (ROI) for assessment year (A.Y.) 2017-18. Although, the order was passed by the assessing officer under Page | 4 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta section 144 of the Act, however, said bank account was on the record of the Assessing Officer. Therefore, addition of Rs. Rs.7,43,240/- may be deleted. 7. Alternatively, the ld Counsel also argued that peak credit in the bank account may be added in the hands of the assessee. 8. On the other hand, Ld Sr-DR for the Revenue, argued that to disclose the bank account in the return of income is not sufficient, the assessee has to explain the entries mentioned in the bank account during the assessment stage. The assessment order was framed u/s 144 of the Act, and assessee has not explained the entries in the bank statement, therefore Assessing Officer did not get opportunity to examine the entries in the bank statement. Besides, during the appellate proceedings, assessee was given substantial relief by ld CIT(A), therefore, further relief should not be granted to assessee, hence appeal of the assessee may be dismissed. 9. We have heard both the parties. We note that just to disclose the bank account in the return of income is not sufficient, the assessee should reply to the Assessing Officer in response to notice issued u/s 142(1) of the Act, and should explain the entries in bank statement, which the assessee has failed to do so. We note that, on this issue, Ld.CIT(A) has partly deleted the addition made by the Assessing Officer observing as follows: “10.2 The legal point raised by the appellant assessee is considered with reference to facts on record, with reference to the savings account of the assessee. Admittedly, the assessee is a partner of a partnership firm under the name and style of Relief Medical Stores, although, in the affidavit filed during the appellate proceeding, she mentioned her occupation as ‘household’. The ‘return of income’ field by the assessee does not show any indication of any business carried out by her. All the figures in the profit and loss account and the balance sheet is filed up as ‘NIL’, since the only income assessable under the head ‘Profits and Gains of Business’ applicable in her case are share of profit, remuneration of partner and interest from partnership firm. Page | 5 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta 10.3 In this backdrop, it is not clear, what the appellant is meaning by her ‘books of account’, maintained by her. It is important to note that although there is whisper made by the assessee that the credits into the saving bank account are recorded in the books of account, neither during the assessment proceeding, nor during the appellate proceeding, the appellant came forward to submit a copy of the so-called books of account / extracts thereof where all the transactions are entered. The appellant even did not make any narrative description or explanation of the credit entries into the bank. Therefore, the averment made by the appellant that ‘all the entries are recorded in the books of account’ cannot be accepted as such., On the contrary, the fact remains that she mentioned precious little, in fact nothing, regarding the nature and source of credit entries into the bank accounts. Therefore, the legal objection, challenging the action of ethe Assessing Officer is rejected being unsustainable. The additions made are therefore, being considered on merit. 11. While adjudicating on the addition made by the Assessing Officer on credits into the savings bank account on merit it is seen that the major plank of the assessee is that the savings account has been disclosed in the return of income. Elsewhere in her submission dated 25.03.2022, the assessee mentioned as follows: “OBC a/c no. 03324 is my S/b account. The said bank account is reflected by me in my ROI for A.Y 2017-18 that filed on dt. 28/2/2018. In my case, notice u/s 143[2] was not issued. As stated by the A.O a notice u/s 142[1] was first issued on dt. 2/2/2018. Notice u/s 142[2] was avoided by the AO on incorrect ground that I have filed ROI. In fact, I have filed RO with same ITO,Wd-4, Valsad, who has made my assessment for A.Y 2017-18.Secondly, all transactions of the said bank account are covered by me in ROI filed for A.Y 2017-18. There is not a single unaccounted or undisclosed transaction. Therefore, addition of Rs.7,91,936/- is incorrect, illegal and strongly objected.” 11.1 In this submission while the appellant has alleged that the Assessing Officer avoided issue of notice u/S 133(2, the Assessing Officer, in his remand report, had explained the circumstances in which the return filed by the assessee was being viewed as ’invalid’ in the system. In the circumstances, he could not issue a notice u/s 143(2) of the Act in absence of a valid return of income. However, the point remains that specific query was raised during the assessment proceedings regarding cash deposit during the demonetization period. In absence of reply from the assessee, the AO, under power vested on him u/s 133(6) of the Income Tax Act, collected evidence directly from the bank and formed adverse opinion about all the credit entries. 11.2 During the appellate proceedings, the appellant has submitted copy of the saving bank account as well as the summary thereto. It is seen that the credit entries include interest amounts credited into the saving bank account. The assessee is seen to have disclosed saving bank interest amounting to Rs.1246/- in the return of income. It is found that above interest amount is the same as the amount disclosed in the ‘return of income’. Page | 6 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta 11.3 Another objection about the addition of the credit entries raised by the appellant assessee that the OBC account No.00430 is a saving account and so many credits are by “SWEEP’ transfer. It has been specifically alleged that the Ld. AO ahs taxed all credit entries and overlooked debit entries. The submission has been considered. However, on scrutiny of the bank account it is seen that the debits appearing in the SBI account pertain to auto sweeps following deposit of cash. Therefore, since the source of the credits themselves are questionable, I am constrained to conclude that any sweep transfer of those sums, cannot be considered for ‘netting off’ the credits in the account. 11.4 Further, in her submissions during the appellate proceedings, the assessee has not explained the source of the credits into her savings bank account, whether during demonetization, before and after demonetization or credits through the mechanism of FTGS / NEFT or Cheque. 11.5 However, among all such credits, there is also a credit entry of an amount of Rs.47,500/- as LIC NEFT. While the same cannot be unexplained money U/s 69A of the Act, its taxability in terms of provisions of Income Tax Act, 1961 has not ben explained by the assessee. Therefore, the treatment of credit entries other than cash deposit are to be done as follows:- Total credit entries through TRGS/NEFT – 4,20,986 Less: interest - (1246) Less: LIC credit -(47500) Balance: - Rs.3,72,240 11.6 The above amount of Rs.3,72,240/- addition out of addition of Rs.4,20,986/- is confirmed as unexplained money u/s 69A of the Act. The cash deposit amounting to Rs.371000/- is also confirmed in absence of complete inability of the assessee to explain the nature and source of such deposits. However, while giving effect to the appellate order, the AO will examine the taxability of the LIC NEFT amounting to Rs.47500/- in terms of provisions of the Act, by calling for relevant explanation of the assessee and the assessee will provide necessary cooperation to the Assessing Officer in this regard. 11.7 Regarding the current account No 13901131000430 with OBC, the assessee explained that the same belongs to the partnership firm M/s Relief Medical Stores of which she is a partner. In the ex-parte assessment completed on 30.09.2019, the Assessing Office added an amount of Rs.68,31,653/- only under section 69A of the Act. The above amount comprised cash deposit during the demonetization period cash deposit before and after demonetization and amounts received through TRGS, NEFT or cheque. 11.8 With reference to this addition, the Assessing Officer made the following specific comments in remand: “As a partner of the firm, assessee, is in the knowledge that OBC bank account No.1390131000430 is a current account and in the name of M/s Relief Medical Stores. This account number is also mentioned in the show cause notice and the assessee did not contest this fact during the course of assessment proceeding and at the time of issue of show cause notice. Further, the information of the said bank account is received in insight Page | 7 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta portal under the assessee’s PAN i.e, the said bank account is linked with the assessee’s PAN and not with the PAN: AAIFR4430R of the firm. No clarification is given by the assessee that why the firm bank account is linked with her PAN where the firm has its separate PAN. In view of the above facts, the submission of the assessee is not acceptable. As such the assessee’s appeal may be decided on merits.” 11.9 In her rejoinder, the appellant made the following specific submissions:- “So far as account no.00430 with OBC bank is concerned, it is to submit that it is a current account held and operated by a partnership firm namely M/s Relief Medical Stores. The firm is assessed under PAN- AAIFR4430R with ITO, Wd-3, Valsad. The firm is in the business of retail medical stores at Halar Road, Valsad. The firm is maintaining regular books of account in the normal course of its business. Books are audited and auditor’s report is uploaded well within the time allowed under the law. All transactions of the said bank accounts are recorded in the books of partnership firm. It is not a case of the AO that the aid bank account is undisclosed bank account. The bank has also issued a certificate to the aid effect. A detailed application u/s 154 was filed with the AO with a proposal that, “I do not have any objection if appropriate action, as per law, have been taken in the case of the firm for the year AY 2017-18”. Nothing was considered and no contrary evidences brought on record by the AO. In light of these facts, addition of Rs.68,31,653/- is also very strongly objected. The appellant has also annexed a copy of certificate from the bank dated 16.03.2020 wherein, it has been clarified that the current account No.13901131000430 is in the name of M/s Relief Medical Stores (PAN AAIFR4430R). In the certificate issued at the request of the appellant, it has further been stated that saving and current accounts are separate.” 11.10 The observation of the Assessing Officer and the submissions have been duly considered. The crux of the issue remains that the bank account is not in the name of the assessee individual and is in the nature of partnership firm of which she is a partner. In the appellate proceedings, additional facts and evidences have been brought into record which was not there before the Assessing Officer at the time of completion of assessment. As already stated, on remand, the Assessing Officer has contended that no clarification is given by the assessee why the firm bank account is linked with her PAN where the form has its separate PAN. 11.11 While the above observation maybe factually correct, the assessee individual cannot be saddled with tax liability for credit entries of a bank account which does not legally belong to her. In other words, credit entries into bank account belonging to the partnership firm cannot be treated as unexplained investment in the hands of the individual partner under section 69A of the Act. 11.12 With this limited observation, the addition u/s 69A amounting to Rs.68,31,653/- is deleted. However, submission of the assessee that the amount has been duly reported in the return of the partnership firm is not commented Page | 8 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta upon and deletion of this amount does not tantamount to any decision regarding taxability or otherwise of the credits in the hands of the partnership firm. 11.13 In view of the above, the Assessing Officer may pass on this information to the Assessing Office having jurisdiction over the partnership firm as per provisions of the Act and as per Standard Operating Procedure put in place by the department. With the above observation, the addition to the extent of Rs.7,43,240/- is confirmed, addition of Rs.47,500/- is to be examined by the AO, while addition amounting to Rs.68,31,653/- is being deleted.” 10. Considering the above facts, we note that saving bank account with Oriental Bank of Commerce, Valsad was duly considered by the assessee while filing her return of income for A.Y 2017-18. However, entries in the bank statement has not been examined by the Assessing Officer. As the order was passed by the Assessing Officer u/s 144 of the Act and assessee never explained the entries in the bank statement before Assessing Officer, therefore, we are of the view that one more opportunity should be given to the assessee to explain the entries in the bank statement. Hence, we set aside the order of ld CIT(A) on this issue and remit the issue back to the file of the Assessing Officer to adjudicate the issue afresh. 11. In the result, ground No.1 raised by the assessee is allowed for statistical purposes. 12. In respect of ground No.2 Ld. Counsel argued that ld CIT[A], has erred on facts to direct the Assessing Officer to examine transactions of Rs.47,500/- appearing in saving bank account (s/b account) with Oriental Bank of Commerce, Valsad dated 27/03/2017 specifically appearing as NEFT to LIC of India which is outside the scope of levy of income tax, as LIC receipts are exempt from tax. However, ld DR for the Revenue argued that assessment order was framed by the Assessing Officer u/s 144 of the Act and assessee never explained this issue before the Assessing Officer. Page | 9 ITA No. 889/SRT/2023 A.Y.17-18 Vimlaben S Mehta 13. We have heard both the parties. We note that above issue had never been examined by the Assessing Officer, as the order was framed by the Assessing Officer u/s 144 of the Act. We note that Assessing Officer is not clairvoyant (jasush), unless the assessee explained the Assessing Officer that amount of Rs.47,500/- appearing in saving bank account (s/b account) with Oriental Bank of Commerce, was paid by assessee by NEFT to LIC of India, the AO cannot understand. Therefore, we remit this issue back to the file of the Assessing Officer to examine the entry in bank statement and adjudicate the issue in accordance with law. The assessee is also directed to file the relevant bank statement before the Assessing Officer with supporting evidence, if any, and explain the entry in the bank statement. 14. In the result, ground No.2 raised by the assessee is allowed for statistical purposes. 15. In the result, appeal of the assessee is allowed for statistical purposes. 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