Shri Vasarambhai Vajsurbhai Ratan, Gandhinagar V. The ITO, Ward-3, , Surendranagar

ITA 96/RJT/2020

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6602 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 30-04-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 07-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH KR. PANDEY
• Assessee Lawyers: BAKUL GANTARA
• Keywords: Unexplained investment; Onus to prove
• Section: 69; 148; 144; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER & SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER Vasaraambhai Vajsurbhai Ratan, Sector – 25, Behind Matangi School, Sahakar Colony, Block – 47, Nr. Kh Circle – 6, Gandhinagar PAN: ADYPR4274Q Vs The ITO, Ward – 3, Surenderanagar (Appellant) (Respondent) Appellant by : Shri Bakul Gantara, AR Respondent by : Shri Ashish Kr. Pandey, Sr.DR Date of hearing : 01/05/2024 Date of pronouncement : 07/06/2024 आदेश/ORDER PER DINESH MOHAN SINHA, JM: This appeal is filed by the assessee against the order dated 28.06.2019 passed by the Learned Commissioner of Income Tax (Appeals) - 7, Ahmedabad, [in short, ‘the Ld. CIT(A)’], for the Assessment Year 2011-12. 2. The appeal filed by the assessee is barred by 265 days. The Learned Authorized Representative (Ld. AR) of the assessee stated that the order of Ld. CIT(A) was made 28/06/2019. The same was sent by the post and delivered to Shri Jivabhai Ratan within few days. The recipient was the elder brother of the assessee, upon whom it is an improper Service of the ITA No. 96/RJT/2020 Assessment Year: 2011-12 I.T.A No. 96/RJT/2020 Vasarambhai Vajsurbhai Ratan 2 Notice/order. The Elder brother is residing in the vicinity in the same Village). The assessee was, serving as Police Officer in Government Police Department as Wireless PSI at Gandhinagar as stated in affidavit. It is stated in the affidavit that the said order was hand delivered to the assessee on 20/02/2020. The appeal was filed on 08/06/2020. The COVID-19 Lock Down started from dated 24-03-2020 and his led to restriction in the movement. The assessee went to the office of the Advocate, Shri S. N. Divetiya on 27.05.2020 to sign the appeal. The appeal was filed at ITAT, Ahmedabad on 29-05-2020. The ITAT, Ahmedabad physically returned the file on 03-06-2020 with the oral instruction to file at Rajkot, which the assessee took back the same to submit at ITAT, Rajkot and filed on 08-06- 2020. It is also submitted in the affidavit that M/s Thobhani Gorasiya & Associates, CA Could not fetch the desired result at the first appeal Stage, the assessee would naturally preferred to go to another Consultant and therefore the matter went to Shri S.N. Divetiya. The assessee has explained the reason in filing the appeal of 265 days and prayed to condone the delay. 3. At the outset. Learned Authorized Representative (Ld. AR) of the assessee submitted that delay in filing the appeal is neither deliberate nor by any negligence of the assessee. Therefore, the delay caused due to genuine and bona fide reasons is required to be condoned in the interest of justice and equity. 4. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue objected the prayer of the assessee for condonation of delay. The Ld. Sr. DR argued that assessee has failed to explain sufficient cause/reasons: hence delay should not be condoned. I.T.A No. 96/RJT/2020 Vasarambhai Vajsurbhai Ratan 3 5. We have heard both the parties. We note that delay in filing the appeal before this Tribunal was due to Covid and the order was not properly served on the assessee during Covid-19 period, which was going on 24/03/2020 and movement in public was restricted. The assessee was in Government Service and was transferred to Gandhinagar, Gujarat. The petitioner was in a way to file the appeal and he went to the office of the ITAT Ahmedabad from where he was instructed to go to ITAT Rajkot for filing the appeal. In this situation, the assessee should not be penalized for not filing the appeal in time. We find that there is a reasonable cause for not filing the appeal in time. Hence, the delay of 265 days is hereby condoned and admit the assessee's appeal for hearing on merits. The delay in filing the appeal is not deliberate and there is no negligence on the part of the assessee and there is a bonafide reason. 6. The facts of the case in brief are that the information received from Ld. DIT (Inv.) Unit about the sale of securities in Vas Infrastructure Ltd amounting to Rs.452890. The assessee being a government servant and in a regular assessment, the Assessing Officer must have other information as regards of the assessee's income. The transactions in other securities are also ignored. Naturally, the Department had all such information could easily be collected from open sources. For the AY.2011-12, the assessee has not filed the return and because the assessee do not have taxable income that the report of DDIT (Investigation) Unit 6(2), Mumbai. The Department found that the assessee had sold the shares of Vas Housing Finance Corporation Ltd. to the tune of Rs.4,52,890/ which was considered to be taxable income of the assessee during the year through Marvadi Stock Broking in the official stock exchange and accordingly a notice u/s 148 of the Act was I.T.A No. 96/RJT/2020 Vasarambhai Vajsurbhai Ratan 4 issued on 29.03.2018. Thereafter, several reminders were issued and the order u/s 144 of the Act was framed order dated 30.11.2018 of assessment at income of Rs.4,52,890/- under section 69A of the Income Tax Act, 1961 (in short "the Act") being the sale proceeds of Vas Housing Finance Corporation. The assessee had uploaded its return on 18.12.2018 vide Acknowledgement No.390421770181218 showing the details of the said transaction. It is a fact that assessee has made transaction amounting to Rs.4,52,890/- with the Vas Housing Finance Corporation Ltd. This fact was never denied by the assessee. It is also fact that assessee has failed to justify the source of above amount with documentary evidence. The preliminary onus to prove the source of transaction amount is on the assessee. However, the assessee failed to discharge the preliminary burden of proof. It is settled law that the onus is lying on the assessee to explain the nature and sources of investments. It is the primary duty of the assessee to explain the source of investment by him with supporting documentary evidence. However, in the present case there is no evidence at all in this case. The assessee failed to discharge the onus that cast upon the assessee. Therefore, the Ld.AO made an addition of Rs.4,52,890/- as unexplained money u/s.69A of the Act, while passing an order u/s.144 r.w.s.147 of the Act, dated 30/11/2018. 7. The assessee filed the appeal before Ld.CIT(A) and in the order u/s.250 of the Act, 1961, the Ld.CIT(A) confirmed the additions made by Assessing Officer by undermentioned observations: "That, the AO was correct in making the addition of Rs. 4,52,890/-. This is not the fit case where profit/loss is in doubt, but when transactions are itself in penny stock and sources of payment and receipts are in doubt, entire investments value/sale need to be taxed as I.T.A No. 96/RJT/2020 Vasarambhai Vajsurbhai Ratan 5 undisclosed income. Thus, addition made by Ld.ITO for Rs.4,52.890/- is confirmed. 8. The Learned Authorized Representative (Ld. AR) of the assessee submitted on the CG of Vas Housing Finance Corporation Ltd. (VHFCL), the sales value or the gross realization ought not to be considered as the income. Logically in share market transactions, there is always an element of the cost of the purchases and therefore, the same should be deducted from the income and only the surplus/deficit can only be considered as real income. It is a well-known fact that during the first appeal stage the Ld. CIT(A) is possessing the co-terminus powers, the assessee was provided with all the details and all the calculations. So far as applicability of Section 69A of the Act is concerned, it is noted that the said provision is applicable only to the unexplained money, bullion, jewellery or valuable articles and not to the investments. For unexplained investment the provision applicable is that of Section 69 of the Act. Therefore, the whole assessment based on the application of Section 69A of the Act being the application of inappropriate provision of law and thus is bad in law. 9. The Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue supported the orders of the lower authorities and stated that entire addition made by AO may be sustained. 10. We have heard both the parties and perused all the relevant material available on record. We note that the assessee has made transaction with Vas Housing Finance Corporation Ltd. for Rs.4,52,890/- and contended that the entire amount of Rs.4,52,890/- cannot be treated as income of the assessee. Therefore, Ld. Counsel for the assessee argued that a suitable disallowance to cover the discrepancy may be made by this Bench. We also I.T.A No. 96/RJT/2020 Vasarambhai Vajsurbhai Ratan 6 note that the decision of Hon’ble Jurisdictional High Court in the case of Commissioner of Income-tax vs. President Industries, reported at [2002] 258 ITR 654 (Guj.), wherein the Hon’ble Court held that 30% disallowance should be made in case of ‘on-money’. Since the Ld. AR for the assessee agreed to disallow @ 50% of the transaction value of Rs.4,52,890/-, therefore, we deem it fit and proper that disallowance @50% of the addition would cover discrepancy, if any. The Ld. DR stated that it is assessee’s ‘on- money’ which was injected in the transaction with Vas Housing Finance Corporation Ltd. However, we note that maximum addition on ‘on-money’ was at the rate of 30% as held by Jurisdictional High Court of Gujarat in the case of President Industries (supra); however, the assessee has agreed to make disallowance @ 50% of Rs.4,52,890/-. Therefore, we direct the AO to make disallowance in the hands of the assessee at Rs.2,26,445/- (50% of Rs.4,52,890/-). Thus, assessee’s appeal is partly allowed. 11. In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on 07-06-2024 Sd/- Sd/- (ARJUN LAL SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot True Copy Dated 07/06/2024 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Rajkot 6. Guard file. By order/आदेश से, Assistant Registrar/Sr.PS/PS ITAT, Rajkot