M/S AUTO KING,ALLAHABAD V. ITO, WARD-1(1), ALLAHABAD

ITA 146/ALLD/2024

AI Insights

The case involves appeals by M/s Auto King against the orders of the ld. CIT(A), NFAC, which sustained additions made by the Income Tax Officer under sections 69A, 234A, 234B, and 234C of the Income Tax Act, 1961, for the assessment years 2015-16 and 2018-19. The primary contention was the incorrect mapping of the bank account to the assessee firm, which actually belonged to Mr. Aftab Alam, the proprietor. The ITAT noted that a detailed enquiry had previously established Mr. Alam as the beneficial owner of the account, and the Income Tax Department had acknowledged this in the assessment year 2017-18. However, due to non-compliance by the assessee in subsequent years, the ld. AO and ld. CIT(A) did not consider these findings, leading to the current appeals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 38878 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 25-09-2024
• Other Referred Cases: CIT vs. B.N. Bhattarchya (1997) 118 ITR 461 (SC), CIT vs. Multiplan India Private Limited 38 ITD 320 Delhi, Vipul Logistic and Warehousing (Pvt. Ltd.) vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A.K. SINGH
• Assessee Lawyers: S.K. JAISWAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 148; 250; 69A; 44AB

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SH. SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SH. NIKHIL CHOUDHARY, ACCOUNTANT MEMBER ITA Nos.145, 146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King, Sultanpur Khas, Mauaima, Allahabad vs. Income Tax Officer, Ward-1(1), Allahabad PAN:AAOFM6183C (Appellant) (Respondent) Assessee by: Sh. S.K. Jaiswal, C.A. Revenue by: Sh. A.K. Singh, Sr. DR Date of hearing: 14.11.2024 Date of pronouncement: 29.11.2024 O R D E R PER NIKHIL CHOUDHARY, A.M.: These two appeals have been filed against the orders of the ld. CIT(A), NFAC under section 250 of the Income Tax Act for the assessment years 2015-16 and 2018-19 vide separate orders dated 31.07.2024. As the issues involved in these two appeals are same, the same are taken up for disposal by way of common order. 2. The grounds of appeal in ITA No. 145/Alld/2024 are reproduced as under:- “1. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in dismissing appeal by holding that the appellant is not keen to pursue the appeal without giving an adequate and effective opportunity of being heard. 2. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in dismissing appeal in limine without giving any finding on the statement of facts as filed along with memo of appeal. ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 2 3. BECAUSE the learned Commissioner of Income Tax ()Appeals) has erred in law and on facts in sustaining addition of Rs. 5,13,10,200/- made on account of deposits in the bank account as unexplained money by invoking the provision of section 69A of the Income Tax Act, 1961. 4. BECAUSE the learned Commissioner of Income Tax (Appeals) has failed to appreciate the facts that Bank Account with Bank of Baroda don't belongs to the appellant firm. The aforesaid Bank Account belongs to Mr. Aftab Alam (PAN- AJPPA1596F) who is the proprietor of firm named as M/s Auto King. 5. BECAUSE Mr. Aftab Alam is regularly filing his return of income and he has fully and truly disclosed the aforesaid bank account in his financial statement of account filed along with return of income and audit report under section 44AB of the Income Tax Act, 1961 in Form No. 3CB and 3CD. 6. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining addition of Rs. 3,86,518/- made on account of - a) Contract receipts Tata AIG General Insurance Rs. 35,400/- b) Commission and Brokerage from MAGMA Fincorp Rs. 2,13,478/- c) Rent from Tata AIG General Insurance Rs. 50,000/- d) Commission and brokerage from Mahindra Rs. 87,640/- 7. BECAUSE the receipts of Rs. 3,86,518/- is fully and truly accounted for and credited to profit and loss account of M/s Auto Kind, the proprietary business entity of Mr. Aftab Alam and offered for taxation. 8. BECAUSE the PAN of the appellant firm was wrongly mapped in opening of Bank Account in the name of M/s Auto King as proprietary business entity of Mr. Aftab Alam who's PAN is AJPPA1596F. 9. BECAUSE the appellant denies for levy of interest under section 234A, 2348 and 234C of the Income Tax Act, 1961. 10. BECAUSE the order appealed against is contrary to the facts, law and principle of natural justice. 3. The grounds of appeal in ITA No. 146/Alld/2024 are reproduced as under:- ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 3 1. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in dismissing appeal by holding that the appellant is not keen to pursue the appeal without giving an adequate and effective opportunity of being heard. 2. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in dismissing appeal in limine without giving any finding on the Statement of facts as filed along with memo of appeal. 3. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining addition of Rs. 2,31,29,100/- made on account of deposits in the bank account as unexplained money by invoking the provision of section 69A of the Income Tax Act, 1961. 4. BECAUSE the learned Commissioner of Income Tax (Appeals) has failed to appreciate the fact that Bank Account with Bank of Baroda don't belongs to the appellant firm. The aforesaid Bank Account belongs to Mr. Aftab Alam (PAN- AJPPA1596F) who is the proprietor of firm named as M/s Auto King. 5. BECAUSE Mr. Aftab Alam is regularly filing his return of income and he has fully and truly disclosed the aforesaid bank account in his financial statement of account filed along with return of income and audit report under section 44AB of the Income Tax Act, 1961 in Form No. 3CB and 3CD. 6. BECAUSE the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining addition of Rs. 3,37,115/- made on account of commission and brokerage received from- a) Mahindra & Mahindra Financial Service Ltd. Rs. 2,95,415/- b) Kokak Mahindra Bank Ltd. Rs. 38,700/- c) Indusind Bank Ltd. Rs. 3,000/- 7. BECAUSE the brokerage and commission Rs. 3,37,115/- is fully and truly accounted for and credited to profit and loss account of M/s Auto Kind, the proprietary business entity of Mr. Aftab Alam and offered for taxation. 8. BECAUSE the PAN of the appellant firm was wrongly mapped in the Bank Account opened in the name of M/s Auto King as proprietary business entity of Mr. Aftab Alam who's PAN is AJPPA1596F. 9. BECAUSE the appellant denies for levy of interest under section 234A, 2348 and 234C of the Income Tax Act, 1961. ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 4 10. BECAUSE the order appealed against is contrary to the facts, law and principle of natural justice.” 4. The facts of the case are that the assessee is a partnership firm and was allotted a PAN No.AAOFM6183C in the name of M/s Auto King. Since it did not file a return for the assessment year 2015-16 or the assessment year 2018-19 and the ld. AO received information of the assessee indulging in various transactions, a notice under section 148A(b) was issued to the assessee and upon the failure of the assessee to respond, an order under Clause (d) of section 148A was passed by the ld. AO, that it was a fit case for issue of notice under section 148. Accordingly, notices under section 148 were issued for both assessment years by the ld. AO. The ld. AO records the fact that he gave several opportunities to the assesse to submit a response, but no response was received, therefore show cause notice was issued in both cases, for response on 11.02.2023. Upon the failure to receive a reply, the ld. AO proceeded to make additions of Rs.5,16,96,718/- in assessment year 2015-16 and Rs.2,34,66,215/- in assessment year 2018-19 respectively. Penalty proceedings under section 271AAC(1) of the Act for the assessment year 2018-19 and section 271(1)(c) of the Act for the assessment year 2015-16 were also initiated. 5. Aggrieved with these additions, the assessee filed appeals before the NFAC. However, the ld. CIT(A), NFAC records the facts that despite three notices issued by him on 2.07.2024, 11.07.2024 and 22.07.2024, no compliance was made by the assessee. He further pointed out that the National Faceless Appeal Centre had enabled a communication window in November, 2023 to facilitate filing of submissions by assessees, but assessee had not filed submissions at that time also. From all the above, he concluded that the assessee was not keen to pursue the appeal and had not brought any material / argument on record in support of the grounds taken in appeal and against the order of the ld. AO. Therefore, relying upon ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 5 the decision of the Hon’ble Supreme Court in the case of CIT vs. B.N. Bhattarchya (1997) 118 ITR 461 (SC) and the ITAT, Delhi Benches in the case of CIT vs. Multiplan India Private Limited 38 ITD 320 Delhi as also the decision of the ITAT, Delhi Benches in the case of Vipul Logistic and Warehousing (Pvt. Ltd.) vs. ITO , he dismissed the appeals of the assessee holding that no interference was called for in the AO’s order. 6. Aggrieved with the summary disposal of his appeal, the assessee has come in appeal before us. Shri. S.K. Jaiswal, C.A. (hereinafter referred to as the ‘ld. AR’) appearing on behalf of the assessee submitted that the ld. CIT(A) had failed to appreciate that the bank account with the Bank of Baroda did not belong to the assessee firm but belonged to Shri. Aftab Alam (PAN-AJPPA1596F) who was a proprietor of the firm named as M/s Auto King. It was submitted that M/s Aftab Alam was regularly filing his return of income and he had fully and truly disclosed the aforesaid bank account in his financial statements of accounts filed along with the return of income and the audit report under section 44AB of the Income Tax Act, 1961 in Form Nos.3CB and 3CD. It was submitted that the PAN of the assessee firm was wrongly mapped to the bank account opened in the name of M/s Auto King, the proprietary business entity of M/s Aftab Alam. It was further submitted that the issue had been examined by the Income Tax Department in detail in A.Y. 2017-18, wherein the fact of deposit of cash of Rs.32,70,500/- into the said bank A/c No. 35590200000018 in Bank of Baroda, Mauaima, Allahabad had been investigated in the hands of the assessee. After enquiries with the bank, the Income Tax Department had ascertained that the PAN attached to this account was AJPPA1596F i.e. the PAN number of Mr. Aftab Alam. It was submitted that the PAN No. AAOFM6183C (which was the PAN of the firm) was used for opening of the current account in the Bank of Baroda in the name of M/s Auto King, but the return of income had been filed under the proprietorship of the firm and all the details were ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 6 shown in the audit report and ITR of M/s Aftab Alam in the audit report and ITR of the corresponding assessment year. It was submitted that Shri. Aftab Alam was doing business in the sale purchase of Tractor, Tractor parts, Tractor Trolly, E- Rickshaw and Farming appliances. The ld. AR submitted that these issues had been examined in detail in the assessment year 2017-18 and the ld. AO had come to a conclusion that the beneficiary of this account was M/s Auto King proprietor Shri. Aftab Alam, bearing PAN No. AJPPA1596F. The ld. AR submitted that once the Income Tax Department had already come to a conclusion regarding the beneficial owner of the said bank account, there was no reason to repeatedly issue notices to the assessee firm and seek its explanation in the matter. Accordingly, it was prayed that since the findings of the Income Tax Officer in the assessment year 2017-18 had not been considered by either the ld. AO or the ld. CIT(A), their orders were bad in law and therefore deserving of being quashed. 7. On the other hand, Shri. A.K. Singh, Sr. DR (hereinafter referred to as the ‘ld. Sr. DR’) submitted that owing to the fact that the PAN had been mapped to the concerned bank account, the notice had been issued in the name of the assessee firm and thereafter, it was due to the repeated non-compliance of the assessee that the facts, as determined the by the ld. AO in assessment year 2017-18, were not in the knowledge of either the ld. AO or the ld. CIT(A) when they were passing their orders. It was, therefore, prayed that rather than quashing the order, the ITAT may be pleased to remand the matter back to the ld. AO to reconsider his findings in the light of the findings rendered by the ld. AO in A.Y. 2017-18. It was also prayed that the assessee may be directed to cooperate in such assessment proceedings to assist in finding the true position. 8. We have duly considered the facts and circumstances of the case. It is observed that a detailed enquiry took place in the assessment year 2017-18, and ITA Nos.145,146/Alld/2024 A.Ys. 2015-16 & 2018-19 M/s Auto King 7 after such a detailed enquiry was conducted, the ld. AO was satisfied that the beneficiary of the said bank account was not the assessee firm, but rather one of its partners, Shri. After Alam, who ran a proprietary concern by the same name. It appears that these facts were not considered by the ld. AO, or the ld. CIT(A), because the assessee did not make compliance before them. Considering that the matter is required to be examined after taking into account the findings rendered in the earlier assessment order, we deem it fit in the interest of justice, to restore the matter back to the file of the ld. AO to examine the additions made by him in the background of the findings rendered by the ld. AO in the assessment year 2017-18. We also direct the assessee to make full compliance before the ld. AO so as to enable him to arrive at the true position regarding its tax liability for the transactions alleged to be made by it. As both appeals are remanded to the file of the ld. AO for de novo assessment, the appeals of the assessee held to be allowed for statistical purposes. 9. In the result, the appeals are allowed for statistical purposes. Orders pronounced on 29.11.2024 at Allahabad U.P. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [NIKHIL CHOUDHARY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 29/11/2024 Sh Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT DR , ITAT, 4. CIT, 5. The CIT(A) By order Sr. P.S. "