KAILASH BRICK TRADERS,CHANDIGARH V. INCOME TAX OFFICER, WARD 2(2), ROPAR, PUNJAB

ITA 1020/CHANDI/2024

AI Insights

The case involves Kailash Brick Traders, a partnership firm, which appealed against the order of the CIT(A) concerning the assessment year 2017-18. The firm was assessed a taxable income of Rs. 38,85,500, which included undisclosed business income and unexplained cash credits. The primary contention was the incorrect application of PAN numbers, leading to alleged double taxation and improper assessment. The Tribunal noted discrepancies in the PAN numbers used for assessment and the returns filed, leading to a decision to remand the case for a thorough re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 107979 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: ASHOK GOYAL; C.A
• Keywords: Set aside; Business income; Unexplained cash credit
• Section: 144; 250; 68; 69; 246A

Judgement Text

"आयकरअपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM &SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 1020/Chd/2024 िनधाŊरण वषŊ / Assessment Year : 2017-18 Kailash Brick Traders, S.Kumar Gupta and Associates SCO-35, 1st Floor, Sector-26 Madhya Marg, Chandigarh-160019 बनाम The ITO Ward 2(2), Ropar Punjab ˕ायीलेखासं./PAN NO: AAEFK9376R अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Ashok Goyal, C.A Shri Nikhil Goyal, Advocate & S. Siddharth Khurana, C.A राजˢ कीओरसे/ Revenue by : Shri Vivek Vardhan, Addl. CIT सुनवाई की तारीख/Date of Hearing : 20/01/2025 उदघोषणा की तारीख/Date of Pronouncement : 24/02/2025 आदेश/Order PER PARESH M. JOSHI, J.M. : This is an appeal filed by the Assessee under section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for sake of convenience and ease) before this Tribunal. The Assessee is aggrieved by the order bearing number ITBA/NFAC/S/250/2024- 25/1067258373(1) dated 02/08/2024 passed by the Ld. CIT(A) under section 250 of the Act. Which is hereinafter referred to as the “impugned order”. The relevant assessment year is 2017-18 and the corresponding previous year period is from 01/04/2016 to 31/03/2017. 2 2. Factual Matrix 2.1 That by an assessment order bearing Number ITBA/AST/S/144/2019-20/1022664738(1) dt. 19/12/2019 which is hereinafter referred to as the “ impugned assessment order” the assessable taxable income of assessee of Rs. 38,85,500/- was computed in terms of section 144 of the Act. The following are the components of the aforesaid income. Undisclosed business Income u/s 69 Rs. 3,00,000/- Unexplained cash credits u/s 69 as discussed above Rs. 24,00,000/- Unexplained cash credits u/s 68 as discussed above Rs. 11,85,500/- Total Undisclosed / unexplained income Rs. 38,85,500/- Assessed taxable income Rs. 38,85,500/- 2.2 The above assessment order pertains to PAN No. AAEFK9376R(Non operational PAN). 2.3 The assessee is a partnership firm and is having works of Brickkinl(Bhatta) at Village Togan, Dist: Ropar, Punjab-160047, For the year under consideration the assessee had two partners (1) Raj Kumar Dua (2) Promila Dua. That he assessee was running the above said business from the year 01/04/1992 but had to stop its operation on or after March 2017, on account of area of operation being 3 converted into residential and commercial by GMADA. The assesse claims is regular filer of ITR but inadvertently the assessee was allotted two(2) PAN No. being AADFK9113H(operational PAN) and AAEFK9376R which was (non operational PAN). The present proceedings under consideration was initiated by Income Tax Department under non operational PAN. 2.4 That the assessee being aggrieved by the aforesaid assessment order dt. 19/12/2019 preferred first appeal under section 246A before Ld. CIT(A) who by the “impugned order” has partly allowed the appeal. 2.5 That the assessee being aggrieved by the “impugned order” has filed the present appeal and has raised following grounds: 1. Whether Ld CIT(A) has erred in upholding the assessment order for AY 2017-18 against the PAN-AADFK.9113H contrary to the factual matrix wherein the Assessee has self-assessed income against PAN-AAEFK9376R after duly considering all credits'' 2. Whether the impugned order results in double taxation and is in violation of article 265 of the constitution of India.' 3. Whether service of notice under section I42( I) and 144 of the Income Tax Act. 1961 is a sinequa non to the initiation of proceedings for assessment and the non-service makes the assessment order void ab initio and liable to be quashed. 4. Whether in the facts and circumstances of the case addition of Rs, 2,05,320/- under section 69 of the Income Tax Act, 1961 is bad in law and the liability should be set aside? 5. Whether in the facts and circumstances of the case addition of Rs 35,85,500/- under section 68/69A of the Income Tax Act, 1961 is bad in law and the liability should be set aside? 4 3. Record of Hearing 3.1 The hearing in the matter took place on 20/01/2025 when the Ld. AR appeared for the assessee and Ld. DR appeared for the Revenue. The Ld. AR contended that the assessee is regular filer of ITR and that inadvertently two PAN Nos came to be issued to the assessee which were (1) AADFK9113H (operational PAN No.) (2) AAEFK9376R (non operational PAN No. ). The present proceedings for the year under consideration has been initiated by Revenue over non operational PAN number. 3.2 The Ld.AR has placed on record of this Tribunal a brief synopsis / argument of case pages 1 to 26 and a paper book containing pages 1 to 75, in support of his contentions. 3.3 The Ld AR interalia contended before us that the “impugned assessment order dt. 19/12/2019” is made in respect of non operational PAN No. and it was due to non operational PAN Number, Notice(s) issued were not attendedto and the assessment order came to be passed (supra). That there is cash deposit of Rs. 24,00,000/- prior to Demonetization and Rs. 11,85,500/- being cash deposit during demonetization period. Total cash deposit comes to 5 Rs. 35,85,500/- in PNB (Punjab National Bank). The account number is 1418002100014309. The business income of Rs. 3,00,000/- was determined too. The aggregate assessed taxable income was quantified at Rs. 38,85,500/-. That in the first appellate proceedings the assessee placed on record of CIT(A) a copy of return of income for A.Y. 2017-18 filed on 13/07/2017 under PAN No. AADFK9113H (operational PAN)wherein it is claimed that business named ‘M/s Kalash Bricks Traders’ and its income of the year under consideration is covered. The Ld. CIT(A) duly considered the submission of the assessee and in particular return filed for A.Y. 2017-18 (PAN No. AADFK9113H) wherein gross total income was declared by the assessee at Rs. 2,05,318/-. It was recorded by the Ld. CIT(A) that the assessee had two PAN Nos. (1) AAEFK9376R & (2) AADFK9113H and both belonged to them (the Assessee firm). Hence the Ld. CIT(A) basis ROI filed for A.Y. 2017-18(supra) took business income of Rs. 2,05,320/- against estimation made by Ld. AO of Rs. 3,00,000/-. The relief of Rs. 94,680/- was thus granted to the assessee. The Ld. CIT(A) with regard to addition of Rs. 24,00,000/- in PNB A/c No. 1418002100014309 held that said account belongs to assessee herein irrespective of PAN Nos (supra) wherein there is cash prior to 6 demonetization. Cash post demonetization is of Rs. 11,85,000/- which too belongs to assessee irrespective of PAN Nos. (supra). No relief on this count was granted. 3.4 The Ld. CIT(A) in the impugned order has observed that assessee has not submitted any explanation about nature and source of cash deposits (supra) in PNB Account No. (supra). The Ld. CIT(A) in final analysis concluded that both PAN Nos. (supra) belongs to M/s Kailaash Brick Traders the assesse herein and bank account concerned is not disputed. Form No. 35 is filed under PAN No. AAEFK9376R (non operational PAN No.). Therefore amount of Rs. 24,00,000/- prior to demonetization and Rs. 11,85,000/-post Demonetization stands unexplained in return of income filed for A.Y. 2017-18 on 13/07/2017 under PAN No. AADFK9113H & has sustained the additions. 3.5 Keeping in view the above background the Ld. AR has now contended that sum of Rs. 53,59,285/- as per ITR placed on record under operational PAN No. (AADFK9113H) total turnover stands duly disclosed which interalia includes all of the sales so made by the assessee from which cash under consideration was generated and 7 deposited by the assessee in its bank account during the year under consideration to the tune of Rs. 35,85,500/- (Rs. 24,00,000 + Rs. 11,85,500/-). The assessee has disclosed source of cash so made by it in ITR being sales hence addition made by Ld. AO and sustained by CIT(A) are all wrong as it amounts to double taxation. The addition of Rs. 2,05,320/- is too challenged as same stands offered for tax. In sum and substance it is contended that entire amount i.e Rs. 3,00,000/- as business income reduced to 2,05,318/- and so also sum of Rs. 35,85,500/- (cash deposit) are part and parcel of Rs. 53,59,285/- and stands disclosed. Hence orders of lower authorities are bad in law. 3.6 Per contra Ld. DR at the outset has brought to our notice that so called return for A.Y. 2017-18 placed on record in paper book from pages 1 to 47 pertains to PAN No. ABNPD1149B (verification clause of ITR)and that the same is verified by one Raj Kumar Dua in individual capacity and not on firm’s behalf as partner or managing partner nor firms name is written in the verification clause of ROI alongwith PAN numbers of the firm. It was further contended that besides two PAN Nos discussed the return of A.Y. 2017-18 is filed by one Raj Kmar Dua under PAN No. ABNPD1149B. The assessee has not placed on 8 record document relating to firm called “Kailash Brick Traders” like partnership deed, Dissolution Deed if any. The entire issue revolves around PAN Numbers and in the ultimate analysis it is noticed that in allthere are total 3 PAN Nos (supra). It was contended that the matter be remanded back to the file of CIT(A) for correct determination of income on real time basis as in PB nothing is shown save and except return of income for A.Y. 2017-18. No documents, papers etc. in support of the contention for purposes of real determination of income are there in paper book. Real nature of income is unexplainable and is required to be determined and computed finally in accordance with law. 4. Observations, findings & Conclusions 4.1 We now have to examine legality, validity and proprietary of the impugned order basis record of the case and rival contentions / submissions canvassed before us during the course of hearing. 4.2 We are of the considered view that how assessee Kailash Brick Traders have been issued two PAN Nos. i.e one operational PAN No. [AADFK9113H] and another non operational PAN No. [AAEFK9376R]. If two PAN No’s are issued to the assessee which is a known fact to 9 the assessee then nothing is placed on record to establish till date that out of two, one is cancelled / withdrawn. Be that as it may we are of the considered view basis contentions advanced before us now that it would be just, fair and convenient and in the interest of justice the entire issue be relooked by CIT(A) a fresh on denovo basis. We are restraining ourself’s from making any comments on merits of the case as we do not intent to prejudice the mind of anyone. Suffice to say we have minutely and carefully examined the Records of the case including ROI filed before the Ld. CIT(A) (page 1 to 47 of paper book). 4.3 In the premises drawn up by this Tribunal as aforesaid we set aside the impugned order and remand the case back to the file of CIT(A) to examine the issue afresh on denovo basis and pass a fresh order on merits of the case which should be a reasoned order one. The assessee is directed to produce all the relevant papers, documents pertaining to assessee firm for proper adjudication of first appeal which should be decided by Ld. CIT(A) as expeditiously as possible preferably with in six months from date of receipt of this order. 10 5. Order 5.1 The impugned order is set aside as and by way of remand back to the file of CIT(A) on denovo basis. 5.2 Appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 24/02/2025 Sd/- Sd/- िवŢम िसंह यादव परेश म. जोशी ( VIKRAM SINGH YADAV) (PARESH M. JOSHI) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ / JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "