R K CARGO HANDLING PVT. LTD.,GANDHIDHAM V. .THE ITO, WARD-2, GANDHIDHAM-KUTCH

ITA 190/RJT/2024

AI Insights

The case involves R.K. Cargo Handling Pvt. Ltd., which appealed against the order of the Learned Commissioner of Income Tax (Appeals) confirming an addition of Rs. 45,00,000 as unexplained income under section 68 of the Income-tax Act, 1961. The addition was initially made by the Assessing Officer following the discovery of unexplained cash deposits during the demonetization period. The CIT(A) dismissed the appeal, not admitting additional evidences submitted by the assessee during the appellate proceedings. The Tribunal found that the CIT(A) erred in not considering the additional evidences and not providing an adequate opportunity of being heard, thus remitting the matter back for fresh adjudication.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470484 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: M.S.Gill vs The Chief Election Commission, A.K. Kraipak vs UOI
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: R.K. DOSHI
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Unexplained cash credit; Principle of natural justice
• Section: 143(3); 143(2); 250; 201; 68

Judgement Text

"ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 1 आयकर अपीलीय अिधकरण, राजकोट Ɋायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA No.190/RJT/2024 िनधाŊरण वषŊ / Assessment Year: (2017-18) R. K Cargo Handling Pvt. Ltd. Office No.120, 1st Floor, Gokul Park, Plot No.356, Ward 122-B, Gandhidham-356 201 बनाम Vs. Income Tax Officer, Ward-2, Gandhidham, Income Tax Office, Plot No.32, Sector-3, Near IFFCO Colony, Gandhidham-370201 Öथायीलेखासं./जीआइआरसं./PAN/GIR No. AADCR 1736 N (अपीलाथȸ/Appellant) .. (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri R.K. Doshi, AR राजèव कȧ ओर से/Revenue by : Shri Abhimanyu Singh Yadav, Sr-DR सुनवाई कȧ तारȣख/Date of Hearing : 24/09/2024 घोषणा कȧ तारȣख/Date of Pronouncement : 23/12/2024 आदेश/Order Per Dr. Arjun Lal Saini, A.M Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2017-18, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [in short ‘Ld.CIT(A)/NFAC’], under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), dated 31.01.2024, which in turn arises out of an assessment order passed by the Assessing Officer u/s 143(3) of the Act dated 01.12.2019. 2. Grounds of appeal raised by the assessee, are as follows: ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 2 “1. The order of the learned CIT(A) u/s 250 is bad in law and contrary to the facts of the case. 2. The learned CIT(A) has erred in confirming the addition of Rs.45,00,000/- to the returned income as unexplained money u/s 68 of the Act. 3. The learned CIT(A) has erred in not accepting the source of cash deposit aggregating to Rs.45,00,000/- made in the bank account during the demonetization period. 4. The learned CIT(A) has erred in confirming the addition made by the AO and also erred in not accepting the explanation of the appellant. 5. The learned CIT(A) has erred in not considering the evidences submitted. 6. The learned CIT(A) has passed the order without providing adequate opportunity of being herd to the appellant. 7. The order of the learned CIT(A) is unjustified, illegal and against the principles of natural justice.” 3. The facts necessary for disposal of the appeals are stated in brief. The assessee, before us, is a private limited company and filed its return of income on 18.10.2017, declaring Nil income. This case was subsequently selected for scrutiny and notice u/s 143(2) of the Act was issued on 22.09.2018 and duly served upon the assessee-company. The assessee-company has not done any business activity during the year under consideration. Further, on perusal of ITR for AY 2016-17, it is also perused that the assessee-company had gross receipt of Rs.8,89,950/- and net taxable income of Rs.8,440/- only and the cash balance as on 31.03.2016 was shown as nil. On further verification of bank statement of HDFC Bank account No.02168020001136, it was perused by the assessing officer that the assessee has made cash deposit of Rs.45,00,000/- in SBNs during the demonetization period. Further, on verification of the submissions of the assessee-company, it was noticed by the assessing officer that the assessee-company has submitted that the source of cash deposit of Rs.45,00,000/- during the demonetization period was cash-in-hand, which was withdrawn from HDFC Bank OD account No. 02168020001136, during FY 2015-16 and the assessee-company has also submitted the copy of bank ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 3 statement for FY 2015-16 and FY 2016-17. On further perusal of bank statement, by the assessing officer, of aforesaid account for F.Y. 2015-16, no cash withdrawal is reflected in bank statement. Remarks on most of the debit entries are ‘Cheque Paid – Gandhidham’. The assessee has also not submitted any proof showing that these cheques were self-cheque for cash withdrawal by the company form OD account and reasons for withdrawal of cash without any business activity. In absence of any documentary proof, the assessee-company’s contention of cash withdrawal from bank OD account for holding huge cash-in- hand, was not accepted by the assessing officer. Therefore, vide letter dated 24.11.2019, assessee-company, was show- caused why the cash deposit of Rs.45,00,000/- should not be treated as unexplained deposit in bank account and added to the total income of assessee. 4. In response to show cause notice issued, assessee has neither furnished any reply nor furnished any documentary evidences of source of cash deposits during the year under consideration, before the assessing officer, therefore, in absence of any documentary support, the source of cash deposit cannot be treated as explained. Therefore, assessing officer made addition of Rs.45,00,000/- as unexplained income. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before Ld. CIT(A) who has dismissed the appeal of assessee. The learned CITA also did not admit the additional evidences submitted by the assessee during the appellate proceedings, the findings of the ld CIT(A), in this respect are as follows: 5.1. From the record, it is apparent that the appellant has not furnished any documentary evidence of regarding source of cash deposit before the AO. The appellant has filed certain documents in the appellate proceedings, however, this constitutes additional evidence and the appellant has not submitted or brought on record as to what prevented it from producing all these docs/ explanation before the AO during the assessment proceedings. It was incumbent upon the appellant to state a reasonable/ credible reason of its ability to produce evidence before the AO rather as held by the AO that no documentary evidence was produced by the appellant during the assessment proceedings. ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 4 ………………….. 5.2.4. In view of the above facts, the Assessing Officer's action treating the addition of Rs. 45,00,0007- as unexplained credits is confirmed and the appeal on this ground is dismissed.” 6. Aggrieved by the order of Ld.CIT(A) assessee is in further appeal before us. 7. The Ld. Counsel for the assessee submitted the assessee is a private limited company, regularly assessed to tax. The assessee had filed detailed written submission before Ld.CIT(A) (Page 1 to 8 of paper book). The appellant also furnished copy of written submission along with supporting made by him before AO (Page 19 to 68 and page 94 to 147 of the paper book). The Ld.CIT(A) has not considered the evidences submitted by by assessee. The Ld CIT(A) has erred in not providing adequate opportunity of being heard to the assessee. The Ld. Counsel of the assessee submitted that during the assessment proceedings, the learned Assessing Officer did not consider submission, specific evidence and facts of the case, which are vital for the proper adjudication of the issue. The Ld. Counsel of the assessee prays that addition made by the assessing officer may be deleted, as the assessee has submitted entire documents and evidences before the lower authorities. 8. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee has not properly explained the genuineness of cash transaction, there was no cash in hand to deposit the money in the bank account, hence the appeal may be dismissed. Besides, certain additional evidences were not admitted by the CIT(A) during the appellate proceedings. Therefore, assessee has to explain that what was prevented to the him to submit this evidences before the assessing officer. 9. We have heard both the parties and carefully gone through the materials available on record. We note that Ground No. 5 and 6 raised by the assessee, reads as follows: ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 5 5. The learned CIT(A) has erred in not considering the evidences submitted. 6. The learned CIT(A) has passed the order without providing adequate opportunity of being herd to the appellant. 10. We note that during the appellate proceedings, the ld CIT(A) did not admit the additional evidences submitted by the assessee. The assessee had also explained before the Bench that there was a sufficient cause for non-submission of these evidences and documents before the assessing officer, as these additional documents and evidences were not available when the assessment proceedings were going on. As soon as the additional evidence were available, these were submitted by the assessee, for the first time, before the ld CIT (A), therefore ld CIT( A) ought to have admitted these additional evidences and adjudicate the issue in accordance with law. 11. We find that assessee has explained the sufficient cause for non-submission of these evidences and documents before the assessing officer, therefore, justice should not be denied to the assessee. In these circumstances, non-admission of additional evidences is against the principle of natural justice. We note that the Hon’ble Supreme Court in M.S.Gill vs The Chief Election Commission 1978 AIR SC 851 held “The dichotomy between administrative and quasi-judicial function vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. Therefore, we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the ld. CIT(A) to adjudicate the issue afresh on merits, by admitting additional evidences, and by taking report ITA No.190/Rjt/2024 (AY-17-18) R.K.Cargo Handling Pvt. Ltd. 6 from the assessing officer in respect of additional evidences. For statistical purposes, the appeal of the assessee is treated as allowed. 12.In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 23/12/2024 Sd/- Sd/- (DINESH MOHAN SINHA) (DR. ARJUN LAL SAINI) Æयाियक सदÖय/JUDICIAL MEMBER लेखा सदÖय/ACCOUNTANT MEMBER राजकोट /Rajkot िदनांक/ Date: 23 /12/2024 DKP Outsourcing Sr.P.S आदेश कì ÿितिलिप अúेिषत/ Copy of the order forwarded to :  अपीलाथê/ The Appellant  ÿÂयथê/ The Respondent  आयकर आयुĉ/ CIT  आयकर आयुĉ(अपील)/ The CIT(A)  िवभागीय ÿितिनिध, आयकर अपीलीय आिधकरण, राजकोट/ DR, ITAT, RAJKOT  गाडªफाईल/ Guard File By order/आदेश से, सहायक पंजीकार आयकर अपीलीय अिधकरण, राजकोट Date Initial 1. Draft dictated on 24/09/24 Sr.PS 2. Draft placed before author 24/09/24 (dictation pad has been enclosed along with original file) Sr.PS 3. Draft proposed & placed before the second member /09/24 JM 4. Draft discussed/approved by Second Member. /09/24 JM 5. Approved Draft comes to the Sr.PS/PS /09/24 Sr.PS/ PS 6. Kept for pronouncement on /09/2024 Sr.PS 7. File sent to the Bench Clerk /09/24 Sr.PS 8. Date on which file goes to the H.C. 9. Date on which file goes to the SPS 10. Date of dispatch of Order. "