NOOR MOHAMMED HASAN MOHAMMED KHAN,MAZHAR CHAWL V. WARD 26(2)(3), BANDRA KURLA COMPLEX

ITA 2780/MUM/2024

AI Insights

This case involves an appeal by Ms. Noor Mohammed Hasan Mohammed Khan against the order of the National Faceless Appeal Center (NFAC)/Commissioner of Income Tax (Appeals), which upheld the addition of Rs.15,95,000 as unexplained income under section 69 of the Income Tax Act, 1961. The Assessee argued that the Assessing Officer (AO) did not consider withdrawals from bank accounts when assessing unexplained cash deposits totaling Rs.26,88,000 during the demonetization period. The Ld. Commissioner had partially relieved the Assessee by reducing the addition but maintained a significant amount as unexplained due to lack of evidence for the sources of cash deposits. The Income Tax Appellate Tribunal (ITAT) decided to remand the case for a detailed examination of both deposits and withdrawals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470623 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 17-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 16-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHISHEK THARWAL
• Assessee Lawyers: J.R.BHATT
• Keywords: Set aside; Business income
• Section: 142(1); 250; 139(1); 22; 69; 139(4)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “H(SMC)”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.2780/M/2024 Assessment Year: 2017-18 Ms. Noor Mohammed Hasan Mohammed Khan, Room No.1, Mazhar Chawl, Kherani Road, N.M. Market, Sakinaka, Maharashtra- 400 072 PAN: AKWPK7946B Vs. Income Tax Officer, Ward 26(2)(3), Room No.317, 3rd Floor, Kautilya Bhavan, C-41 to C-43, G Block, Bandra Kurla Complex, Bandra (East) Maharashtra-400 051 (Appellant) (Respondent) Present for: Assessee by : Shri J.R. Bhatt, A.R. Revenue by : Shri Abhishek Tharwal, Sr.DR. Date of Hearing : 17 . 09 . 2024 Date of Pronouncement : 22 . 10 . 2024 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 31.01.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) under section 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2017-18. ITA No.2780/M/2024 Ms. Noor Mohammed Hasan Mohammed Khan 2 2. At the outset, we observe that there is a delay of 50 days in filing the instant appeal. The Assessee in the context of delay, by filing a petition along with the affidavit, has submitted that the appeal filed before the Ld. Commissioner was attended by his previous counsel, who had given his own email address i.e. [e-mail] in Form No.35. Therefore, the Assessee was under the impression that his CA should be attending the appellate proceedings before the Ld. Commissioner. However, it appears from the impugned order that the same has been passed as an ex-parte for not complying with the last notice dated 21.12.2023, whereby the Assessee was supposed to comply on 05.01.2024. Thereafter, the Assessee suffered from acute UTI and high fever and was advised complete bed rest, which resulting into non approaching the senior counsel and consequently delay of 50 days in filing the instant appeal which is neither intentional nor malafide but because of the bonafide reasons stated above and therefore interest of justice it is prayed that the lenient view may be taken and the delay may be condoned. The Ld. D.R. on the contrary refuted the claim of the Assessee qua condonation of delay. 3. We have considered the reason given for non appearance before the Ld. Commissioner and occurring of the delay due to medical reason as supported by filing the duly notarized affidavit by the Assessee before us. There is no reason/material to contradict the claim of the Assessee. Hence, we are inclined to condone the delay. Consequently, delay in filing the instant appeal is condoned. 4. Coming to the merits of the case, we observe that on verification of the bank statements pertaining to the three bank accounts mentioned below by the Assessee it was observed by the AO that during the year under consideration the Assessee had deposited the amount of Rs.26,88,000/- in total. ITA No.2780/M/2024 Ms. Noor Mohammed Hasan Mohammed Khan 3 Name of the Bank Account No. Cash deposited HDFC Bank 14712020000683 18,70, 500/- IDBI Bank 1130104000075031 1,55,000/- IDBI Bank 1130102000002875 6,62,500/- 5. The Assessing Officer (AO) therefore in order to verify the transactions, issued the show cause notice u/s 144A of the Act to the Assessee, in response to which the Assessee never responded nor filed any reply. Therefore, the AO by considering the peculiar facts and circumstances of the case observed that the Assessee has not filed any return of income either u/s 139(1) or u/s 139(4) of the Act or notice dated 12.03.2018 u/s 142(1) of the Act, treated the amount of Rs.26,88,000/- as unexplained money u/s 69 of the Act and added the same to the income of the Assessee. 6. The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner. As it appears from para No.4, the Assessee though submitted the relevant copy of bank statements before the Ld. Commissioner, however, thereafter virtually made no compliance. 6.1 Therefore the Ld. Commissioner proceeded with the case and observed that side ground No.2, the Assessee has claimed that the AO treated the cash deposit of Rs.26,00,000/- as unexplained income without considering the withdrawal from the said bank accounts and if at all considered then the above cash deposits might not have been construed as unexplained income of the Assessee. ITA No.2780/M/2024 Ms. Noor Mohammed Hasan Mohammed Khan 4 6.2 The Ld. Commissioner therefore in order to decide the claim of the Assessee perused the previous return as well as of the relevant assessment year under consideration and observed that the Assessee is into the business of sale of scrap in the name and style of M/s. Naimi Enterprises and claimed to have deposited the impugned cash, which is out of his business receipts and major part of which had been credited in the current account of the said proprietorship concern held with HDFC Bank. The claim of the Assessee that impugned cash deposits are out of business activity cannot be denied keeping in view the facts of the case and the entire cash deposits throughout the financial year 2015-16 cannot be treated as unexplained source of income. Moreover, the Assessee has offered the turnover of Rs.84,32,857/- out of it the Assessee has shown the profit of Rs.6,75,205/- which is 8% of the turnover after claiming of the expenditures and deductions deductable and for the A.Y. under consideration, the Assessee by filing a defective return of income has shown its turnover more than double of its previous year but the percentage of profit offered to tax remained same i.e. 8% of the turnover. 6.3 The Ld. Commissioner also observed that from the bank account’s statement, nothing suspicious can be interpreted, however, as the Assessee failed to file the evidence for evidence of cash sources which were deposited into his bank account either during the assessment proceedings or before him, the question of genuineness of cash sources were remained unanswered. 6.4 The Ld. Commissioner ultimately by considering the peculiar facts and circumstances of the case held that the Assessee during the monetization period in the assessment year under consideration has deposited the amount of Rs.15,95,000/- only, which were not explained and therefore the same are treated as income from unexplained source and the addition made by the AO to the extent of Rs.15,95,000/- is ITA No.2780/M/2024 Ms. Noor Mohammed Hasan Mohammed Khan 5 upheld and confirmed. In effect the Ld. Commissioner granted the part relief of Rs.10,93,000/- to the Assessee. 7. The Assessee, being aggrieved, is in appeal before us. The main claim of the Assessee is that it was claimed before the Ld. Commissioner that the AO has not considered the withdrawals from the bank accounts and if at all should have been considered then the cash deposits might not have construed as unexplained income of the Assessee. Though the Ld. Commissioner held that entire cash deposit throughout the financial year cannot be treated as unexplained source of income and from the bank statement submitted, nothing suspicious can be interpreted, however, the Ld. Commissioner still affirmed the addition of Rs.26,88,000/- to the extent of Rs.15,95,000/- deposited during the demonetisation period in the assessment year under consideration. The Ld. Commissioner has not taken into consideration the withdrawal amounts of the Assessee and therefore the order is void and liable to be set aside. 8. On the contrary, the Ld. D.R. refuted the claim of the Assessee. 9. We have heard the parties and perused the material available on record and given thoughtful considerations to the peculiar facts and circumstances of the case. The contention raised by the Assessee to the effect that while considering the amount deposited by the Assessee and/or considering the bank statements, the authorities below should have considered the cash withdrawal as well, while considering the deposits. Thus, we are remanding the case to the file of the Ld. Commissioner as both the parties agreed to, for consideration of the cash deposits and cash withdrawals simultaneously, made during the demonetization period, to the extent of the addition under consideration as affirmed by the Ld. Commissioner, and to determine the liability afresh. The Assessee is also directed to file the evidence of cash sources and the relevant bank details/statements. ITA No.2780/M/2024 Ms. Noor Mohammed Hasan Mohammed Khan 6 10. In the result, the appeal filed by the Assessee stands allowed for statistical purposes. Order pronounced in the open court on 22.10.2024. Sd/- Sd/- (GIRISH AGRAWAL) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "