ITO WARD-1, KHANNA V. SMT. HARINDER KAUR, PROP. M/S GURU NANAK FILLING STATION, LUDHIANA

ITA 403/CHANDI/2023

AI Insights

The case involves the Income Tax Department (Revenue) appealing against the order of the CIT(A) which had deleted a substantial addition made by the Assessing Officer regarding unexplained cash deposits in the bank account of Smt. Harinder Kaur, the proprietor of M/s Guru Nanak Filling Station. The Assessing Officer had initially made an addition of Rs. 7,17,11,655 based on these deposits, suspecting them to be unexplained. However, the CIT(A) after considering the submissions and evidence provided during the appellate proceedings, including detailed financial records and explanations regarding the nature of the deposits, reduced the addition to Rs. 6,09,261, which represented a discrepancy in the capital account. The Tribunal's decision to dismiss the Revenue's appeal was based on the thorough examination of the evidence and the procedural fairness observed during the appellate proceedings.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472640 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 05-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 22-06-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT SHARMA
• Assessee Lawyers: SUDHIR SEHGAL
• Keywords: Bonafide belief; TDS
• Section: 144; 139(1); 44AB

Judgement Text

" आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER & SHRI PARESH M. JOSHI, JUDICIAL MEMBER आयकर अपील सं./ ITA No. 403/CHD/2023 Ǔनधा[रण वष[ / Assessment Year : 2017-18 The ITO, Ward-1, Khanna Vs. बनाम Smt. Harinder Kaur, Prop. M/s Guru Nanak Filling Station, Village Kot Sekhon, G.T. Road, Khanna, Ludhiana 141401 èथायी लेखा सं./PAN No: AIGPK21554R अपीलाथȸ/ APPELLANT Ĥ×यथȸ/ REPSONDENT ( PHYSICAL HERING ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Sudhir Sehgal, Advocate राजèव कȧ ओर से/ Revenue by : Shri Rohit Sharma, CIT DR सुनवाई कȧ तारȣख/Date of Hearing : 05.09.2024 उदघोषणा कȧ तारȣख/Date of Pronouncement : 15.10.2024 आदेश/Order Per Krinwant Sahay, A.M.: The appeal in this case has been filed by the Revenue against the order dated 25.04.2023 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. 2. Grounds of appeal taken by the Revenue are as under: - 403-Chd-2023 – Harinder Kaur, Ludhiana 2 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 7,17,11,655/- made by the AO on account of cash deposits made by the assessee in her bank account and making addition of Rs. 6,09,261/- to the Net Profit declared at Rs. 6,49,953/- shown in the Trading & P/L Account enclosed with the submission furnished during appellate proceedings and therefore total-income at Rs. 12,59,214/- (Rs. 6,49,953/- + Rs. 6,09,261/-) without appreciating the fact that the assessee failed to submit any explanation w. r. t. these cash deposits before the Assessing Officer. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred not appreciating the fact that during the course of assessment assessee has deliberately defy the notices issued by the then AO to complete the assessment proceedings which were served upon the assessee not only through email but also physically. 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the ITR for the A.Y. 2018-19 was filed by the assessee on 31.10.2018 and assessment for the year-under consideration i.e. A.Y. 2017-18, was completed on 25.12.2019 i.e. almost more than one year after the date of filing of ITR for the A.Y. 2018-19. 4. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating the fact that the Auditor audited assessee's books of account and certified the same in his Audit 403-Chd-2023 – Harinder Kaur, Ludhiana 3 Report dated 10.01.2023. As per section 44AB of the Act, the Audit Report has to be submitted before the specified date i.e. the due date for furnishing the return of income u/s 139(1) of the Act. 5. It is prayer that the order of the Ld. CIT(A) is set aside and the order of the AO is restored. 6. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed off. 3. During the proceedings before us, the ld. Counsel for the Assessee has filed a written submission. Brief facts, as per the written submission filed by the Counsel of the Assessee are as under:- 1. The assessee is running a Petrol Pump and maintaining proper books of accounts and stock records and the returns for the earlier years have been filed in time upto Assessment Year 2016-17. Though, no return was filed for the Assessment year under consideration, due to serious dispute with his Counsel but returns of A.Y. 2018-19 onwards have been filed in time. There is no dispute in the returns upto A.Y. 2016-17 or later returns, with the Department and the returned income have been accepted. For the assessment year 2017-18, assessee was under a bonafide belief that the return for the assessment year 2017-18 must have been filed by the Counsel on the basis of audited books of accounts, and in fact, nobody attended the proceedings before the Assessing Officer, since all the notices of hearing were being sent on the email of the Counsel with 403-Chd-2023 – Harinder Kaur, Ludhiana 4 whom the assessee had serious dispute and the then Counsel of the assessee did not intimate about the date of hearing to the assessee. The Assessing Officer vide order dated 25.12.2019 passed an order u/s 144 and made an addition of cash deposits in the regular bank account of the assessee to the tune of Rs. 7,17,11,655/- and invoked the provisions of Section 115BBE of the Income Tax Act, 1961. 2. The assessee filed an appeal before the ld. CIT(A) and the ld. CIT(A) issued many notices which were complied with and also the video conference was made with the new counsel of the assessee. During the course of hearing before thelLd. CIT(A), the assessee filed following documents in order to substantiate the deposit of cash in the regular bank account of the assessee as under: a) The copy of the computation of income, Audit report, Balance Sheet, Trading and Profit & Loss Account, TDS details and the capital account of the proprietor for the A.Y. 2017-18. b) The copy of account of M/s Indian Oil Corporation in the books of the appellant for the relevant A.Y. 2017-18. c) The account information of the assessee downloaded from the login of the assessee maintained with the official portal of the Indian Oil Corporation, depicting the transactions of the whole year. 403-Chd-2023 – Harinder Kaur, Ludhiana 5 d) The copy of the Daily stock register of Petrol maintained by the appellant for the relevant assessment year. e) The copy of the Daily stock register of HSD maintained by the appellant for the relevant assessment year. f) Copy of the Cash Transactions, 2016 of Punjab National Bank. g) Copy of the Cash Transactions, 2016 of Corporation Bank. h) Copy of the two Bank a/c's namely Punjab National Bank, VPO Bija and Corporation Bank, Ludhiana. 4. Such submissions were forwarded to the AO concerned and by way of first remand report dated 15.12.2022, the ld. Assessing Officer contended before the ld. CIT(A) that the assessee was given sufficient opportunities and, as such, he has deliberately ignored the assessment proceedings and did not even file the ITR, Audit Report and objected to the admission of documents, as submitted by the assessee. 5. Such remand report have been reproduced by the CIT(A) in his order. The assessee replied to such remand report vide letter dated 9.12.2022 reproduced by the CIT(A and contended that all the notices had been sent on his earlier counsel's email and explained the reasons for non-attendance. Further, it was 403-Chd-2023 – Harinder Kaur, Ludhiana 6 contended that the Assessee was not in the knowledge that the earlier counsel have not filed her return of income with the Assessing Officer concerned for the Assessment Year 2017- 2018. 6. Thereafter, the Ld. CIT(A) asked the Assessing Officer vide letter dated 02.01.2023 to give his comments on merits. On the basis of submissions made by the assessee, the Assessing Officer called the assessee and proceedings were attended by the new Counsel of the assessee who filed all the required details including copies of account of the assessee, the books of the IOC and also produced the purchase bills, computerized ledger accounts of Sale, Purchases, Stock Register of Diesel and Petrol, bank statement. On the instructions of the Assessing Officer during remand proceedings, the assessee furnished audit report along with enclosures. The AO noticed that there was a difference of Rs. 6,09,261/- on account of capital balance in the account of the proprietor, namely Smt. Harinder Kaur. After considering the voluminous record and taking into the consideration the fact, that in the case of petrol pump, the sales are mainly by way of cash, which is deposited in the regular bank accounts of the assessee, which have been reflected in the books of accounts. The Assessing Officer only suggested the addition of Rs. 6,09,261/- while sending the remand report and did not make any adverse comments. The remand report of the Assessing Officer giving all such facts have been given in the order of the ld. CIT(A) and there are further comments of the ld. CIT(A) in which, the only confirmed addition is of the amount of Rs. 6,09,261/-. Certain further 403-Chd-2023 – Harinder Kaur, Ludhiana 7 clarifications was sought by the CIT(A) and rejoinder to the remand report has been discussed by the CIT(A) in the order and finally, the CIT(A) has given analysis in the order and findings have been given after considering the facts that the cash was also deposited in the regular bank accounts of the assessee in the Financial Year 2015-16 as well. 7. During the course of hearing, the ld. DR vehemently argued that the assessee had deliberately not appeared during the course of assessment proceedings, and in fact, as per the grounds of appeal, the ld. DR fairly agreed that the Department is aggrieved against the non-cooperation by the assessee of not appearing before Assessing Officer. The Assessee did not even file any details before the Assessing Officer and even the return of income for the Assessment Year 2017-18. He argued that the Ld. CIT(A) order be set-aside and the order of the AO be restored. 8. In rejoinder, the ld. Counsel of the assessee argued that the facts on record demonstrate that the proprietor lady was solely dependent upon her counsel for filing her return and audit and on account of the serious dispute with the counsel, she did not know about the hearing before the Assessing Officer. When she came to know of it after the order was passed by the Assessing Officer, the new Counsel was engaged and the appeal was filed before the ld. CIT(A). Complete information with regard to the details required by the Assessing Officer during remand proceedings were submitted. The counsel of the assessee personally appeared a number of 403-Chd-2023 – Harinder Kaur, Ludhiana 8 times before the Assessing officer during remand proceedings and all the records as desired was produced and examined by the Assessing Officer. No omission or defect was detected in the voluminous record produced before the ld. CIT(A) and only there was a difference in the capital account to the tune of Rs. 6,09,261/-, for which, the assessee did not file appeal and, thus, it was pleaded that since; the cash deposits were out of the sales made out of the petroleum products by the Assessing Officer, thus, the Ld. CIT(A) has rightly deleted the addition. 9. The Counsel of the assessee filed an Affidavit in order to support his above submissions regarding the serious dispute with the CA and reasons for non-representation during assessment proceedings which was placed on record and reads as under: “e-Stamp Certificate No.IN-PB50645182474656W AFFIDAVIT I, Harinder Kaur W/o Sh. Avtar Singh Prop. Guru Nanak Filling Station, Villi. Kot Sekhon, G.T. Road, Khanna do hereby solemnly state and affirm as under:- 1. That I had been filing the return of Income upto Asstt. Year 2016-17 on the basis of audited books of accounts in time and there has been no default. Similarly, the returns for Asstt. Year 2018-19 and 2019-20 have been filed in time and in all such assessments, there has been no dispute. 2. That upto Assessment Year 2017-18, I had engaged CA from Khanna namely Sh. H.N. Narang, who have 403-Chd-2023 – Harinder Kaur, Ludhiana 9 been engaged in the Audit of Accounts and also filing my returns regularly and was also looking after my Income Tax matters. 3. That there was some serious dispute with my CA, H.N. Narang in the early 2017 and I was under a bonafide belief that he' would audit my books of accounts for Asstt. Year 2017-18 and would have also filed the return of income, since earlier years also he had been looking after my interest. 4. That all the notices were being sent by the Assessing Officer for Asstt. Year 2017-18 on his mail.id i.e. of Sh. H.N .Narang and, as such, I was not aware of any notices being sent by the department in my case and which is evident from the email id. 5. That, in fact, my email id was updated by new counsel later on, who was engaged for looking after my Income tax matters from Asstt. Year 2018-19 onwards and i.e. I could not represent before the Assessing Officer during assessment proceedings for Asstt. Year 2017-18, as such, proceedings were not in my knowledge and neither the return for Asstt. Year 2017-18 was filed, since all the bills, vouchers and all the records required for filing the return of income for Asstt. Year 2017-18 were with Sh. H.N. Narang only. I have given these submissions before the Ld. CIT(A), which part of my Paper Book from pages 97 to 99. 6. That when the case was remanded back from Worthy CIT(A), then, I had filed the audited balance sheet set and produced all the records as called for by the Assessing Officer, which is evident from my letter, dated 25.01.2023, filed to the Ld. CIT(A) at pages 122 to 124 mentioning about the r• mand proceedings and also furnished copy of the reply submitted to the Assess ;ng Officer as per page 125 of the Paper Book and then all 403-Chd-2023 – Harinder Kaur, Ludhiana 10 details from page 125 onwards were filed to Assessing Officer as per my Paper Book. 7. That earlier I could not file the return of income or appear before the Assessing Officer as per facts mentioned above and, as such, there was a reasonable case in not appearing before the Ld. Assessing Officer/filing of requisite details. DEPONENT VERIFICATION:- That the contents of the above affidavit are true to the best of my knowledge and belief and nothing has been concealed therein. DEPONENT 4. We have considered the findings of the AO, and the findings given by the ld. CIT(A). Arguments of the ld. DR and the ld. Counsel of the assessee have also been considered. It is a fact that the ex- parte order was passed by the Assessing Officer as the assessee could not make any representation, for which, a detailed sworn Affidavit have been filed before us and it is also a fact that neither the return of income nor the audit report had been furnished for the assessment year under consideration and all such records were produced and submitted, including the purchase & sale vouchers, stock records, copies of accounts of the IOC from the books of accounts of the assessee in the remand stage. We have gone through 403-Chd-2023 – Harinder Kaur, Ludhiana 11 the remand reports of the Assessing Officer and also of the ld. CIT as reproduced in the order of CIT(A), there appears to be no dispute from the side of the department regarding the relief given by the CIT(A) during the course of appellate proceedings. The only argument is that, since the assessee deliberately did not cooperate with the assessing officer during assessment proceedings. Therefore, the order of the CIT(A) should be set- aside. 5. The relevant findings given by the ld. CIT(A) on this issue in his appeal order is as under:- “5.4. All the facts of the case, Grounds of appeal, statement of facts, online submissions of the appellant and the case laws cited and the assessment order are considered. The appellant has stated that during the course of remand proceedings, the appellant has filed various details and documents which substantiate its claim regarding the sources of cash deposited during the year under consideration. The documents filed include the complete set of audit report in Form No. 3CD, complete balance sheet, profit and loss account along with all the annexures, complete bank accounts, copies of ledger accounts, copies of purchase bills, copy of bank book and copies of accounts of all the expenditure, for the relevant assessment year. The copy of complete day to day stock register of Petrol & HSD respectively, as maintained by the appellant during the year under consideration was also filed. The appellant has explained during the remand proceedings that the cash deposited by the appellant during the relevant assessment year 403-Chd-2023 – Harinder Kaur, Ludhiana 12 were the proceeds from the sale of petrol and HSD made in the regular course of her business. The appellant has argued that almost 98% of the amount being deposited either in cash or via banking channel in the said bank account are transferred to the account of Indian Oil Corporation for the payment of Petrol and HSD being purchased from them during the relevant assessment year. 5.4.1. With regard to the month-wise cash deposited for the financial year 2015-2016 and 2016-2017, the appellant has submitted that the appellant has been regularly depositing cash out of the regular sales of Petrol, HSD and other petroleum products and thus, no adverse inference can be drawn from the same. …… It can be seen that the appellant has monthly cash deposit which have doubled in and May, comparatively for FY 2015-16 and FY 2016-17. Therefore, the figures of November cannot be read as an exception as can be seen in the chart above. 5.4.2. In the second remand report, the AO has noted that as per Audited Balance sheet and Profit and Loss A/c for the year ending 31.03.201\" during the F.Y. 2016- 17 relevant to the A.Y. 2017-18, the appellant was running a petrol [ ump namely \"Guru Nanak Filling station\", village Kot Sekhon, Khanna. During the year under consideration, the appellant had made sales of Rs.7,27,66,486/- and also made purchases of Rs.7.04,15.717/-. As per audited Profit and Loss account, the appellant declared Net Profit of Rs.12,59,214/-. However, the Trading & P/L A/c enclosed with the submissions furnished during appellate proceedings, revealed that the Net Profit declared at Rs.6,49,953/-. Also, as per the capital a/c of Smt. Harinder Kaur the closing balance as 31.03.201 7 was of Rs. 53,50,517/- but as per audited account the capital shown as on 31.03.2017 was of Rs.59,59,778/- 403-Chd-2023 – Harinder Kaur, Ludhiana 13 i.e. showing the difference of an amount of Rs.6,09,261/- . It is seen that the increase in the capital account is due to the increase in Net profit. In the rejoinder to the second remand report, the appellant has not explained the differences in the Net Profit as pointed out by the AO. The explanation of the appellant with regard to the cash deposit is accepted except for the difference in the Net Profit as declared in the return filed and the figure declared in the Audit Report. 5.4.3. In view of the above discussion, the addition is restricted to the amount of Rs. 6,06,260/-…..” 6. After considering the findings given by the ld. CIT(A) on these issues in his appeal order. We have considered the arguments made by the ld. DR during the appellate proceedings. We have also considered the written submission filed by the Counsel of the Assessee and his arguments. We find that there is no dispute between the assessee and the Department with regard to the quantum of the addition as sustained by the CIT(A). The ld. CIT(A) had rightly admitted the additional evidence and sought the remand report twice from the Assessing Officer. The Assessee's counsel appeared before the Assessing Officer and explained each and everything, which is evident from the remand reports. Thus, once there is no dispute about the quantum of income, as finally assessed, after considering the two detailed remand reports of the Assessing Officer. The CIT(A), as mentioned supra, no useful purpose would be served in setting-aside the order of the CIT(A). We 403-Chd-2023 – Harinder Kaur, Ludhiana 14 have also considered the Affidavit as filed by the assessee, which gives the detailed facts and the reasons for not appearing before the Assessing Officer. Accordingly, in view of the above facts, Revenue’s appeal is dismissed 7. In the result, the appeal filed by the Revenue is dismissed. Order pronounced on 15.10.2024. Sd/- Sd/- (PARESH M. JOSHI) (DR KRINWANT SAHAY) Judicial Member Accountant Member “आर.क े.” आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "