RAJIV SHARMA,DATIA V. .J.O. WARD-1(3), GWALIOR

ITA 13/AGR/2022

AI Insights

This case involves an appeal by Rajiv Sharma against the order of the Commissioner of Income-tax (Appeals), which had dismissed his appeal as un-admitted due to non-payment of tax on the returned income. The original assessment by the Income-tax Officer included significant additions to Sharma's income based on unexplained cash deposits and peak credit balance in his bank accounts, which Sharma contested. The Tribunal found that the CIT(A) erred in dismissing the appeal without considering the provisions of Section 87A, which may exempt Sharma from tax liability on his declared income, and directed a fresh examination of the appeal's admissibility and merits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474820 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Keywords: Set aside; Business income
• Section: 143(3); 142(1); 143(2)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 13/Agr/2022 Assessment Year: 2016-17 Rajiv Sharma, Village and Post Davani Seondha, Datia-475682, (Madhya Pradesh). PAN: DQQPS1493L v. Income-tax Officer, Ward 1(3), Gwalior. (Appellant) (Respondent) Assessee by : None Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 26.12.2024 Date of Pronouncement : 26.12.2024 ORDER This appeal in ITA No.13 /Agr/2022 for the assessment year 2016- 17 has arisen from the appellate order dated 18.10.2021(DIN& Order No. ITBA/NFAC/S/250/2021-22/1036449130(1)) passed by learned Commissioner of Income-tax(Appeal), NFAC, Delhi, which in turnhas arisen from the assessment order dated 14.12.2018 passed by Assessing Officer u/s. 143(3) of the Income-tax Act, 1961 (Order No. ITBA/AST/S/143(3)/2018-19/1014283456(1). ITA No. 13/Agr/2022 2 2. The brief facts of the case are that the assessee filed his return of income for the impugned assessment year , declaring income of Rs. 2,53,370/- . The return of income was processed by Revenue u/s 143(1). The case of the assessee was later selected for Limited Scrutiny under CASS to examine whether the cash deposits has been made from disclosed sources. Statutory notices u/s 143(2) and 142(1) were issued by the AO during assessment proceedings . The assessee participated in assessment proceedings. The assessee claimed before the AO that the assessee in the business activity of sale of food grains in Mandi of the farmers who come to Mandi to sell their produce. The AO observed that the assessee has offered for taxation business income on presumptive basis u/s 44AD. The AO also observed that the assessee has deposited cash of Rs. 1,17,21,300/- in his bank account maintained with PNB, Seondha A/c No. 0866000100124105 and there is also interest income of Rs. 18,522/- received by the assessee from this bank account maintained with PNB. The assessee statement on oath was also recorded by the AO. The assessee submitted that he has taken the amount from the account holder of Kisan Credit Card holders of PNB , and he used to deposit cash in bank account and then transfer the same ITA No. 13/Agr/2022 3 to KCC account holders for the purpose to adjust NPA accounts of the farmers and KCC accounts. Thereafter, the KCC holders used to withdraw the same amount in cash from his bank account and used to return back the same amount to the assessee. The assessee also submitted that the assessee has good relations with local people and PNB locally, and as the NPA’s account and KCC accounts of the bank customers were NPA and recovery was not being made, the assessee approached the ban for recovery of the amounts outstanding as he is well known and was contesting Sarpanch Election locally. Not being satisfied with the Reply, the AO made the additions to the tune of Rs. 6,10,746/- to the income of the assessee being maximum credit balance (peak balance) available in the bank account as unexplained money. The AO also made additions to the tune of Rs. 18,522/- as interest income earned from the aforesaid PNB bank account which was not declared by the assessee in the return of income filed with Revenue. The AO made further additions to the tune of Rs. 9,15,000/- being unexplained cash deposits in the bank account maintained with SBI, Seondha A/c No. 32238192088. Thus, the AO computed and assessed income to the tune of Rs. 17,97,638/- in the hands of the assessee, as ITA No. 13/Agr/2022 4 against returned income of Rs. 2,53,370/- declared by the assessee in the return of income. 3. Still Aggrieved, the assessee filed first appeal with ld. CIT(Appeals), and contested/challenged the two additions out of three additions as were made by the AO to the income of the assessee, viz. Rs. 6,10,746/- and Rs. 9,15,000/-. The assessee, however, did not contested/ challenged the additions to the tune of Rs. 18,522/- as were made by the AO towards interest income earned from PNB account. Ld. CIT(Appeals) dismissed the appeal of the assessee as being un- admitted on the ground that the assessee has not deposited tax on the returned income The ld. CIT(A)relied upon the provisions of section 249(4) while dismissing the appeal of the assessee as being un- admitted. 4. Aggrieved, the assessee has filed second appeal with the Tribunal and has raised as many as three grounds of appeal in which the assessee has challenged the two additions as were made by the AO viz. Rs. 6,10,746/- and Rs. 9,15,000/- The assessee has also challenged vide Ground No. 3 in Memo of appeal filed with ITAT that the ld. CIT(A) erred in stating in his decision that the assessee has not paid tax on ITA No. 13/Agr/2022 5 returned income when the income was not taxable, and hence no appeal shall be admitted. When this appeal was called for hearing before the Bench(SMC), None appeared on behalf of the assessee, while the department is represented by Sh. Shailendra Srivastava, Sr. DR.Ld. Sr. DR relied upon the appellate order passed by ld. CIT(A). 5. I have considered the contentions of the ld. Sr. DR , and perused the material on record. The brief facts of the case are that the assessee filed his return of income for the impugned assessment year , declaring income of Rs. 2,53,370/- . The case was later selected for Limited Scrutiny under CASS to examine whether the cash deposits has been made from disclosed sources. The brief facts leading to the additions as were made by the AO are stated by me in the preceding para’s of this order, and the same are not repeated. The AO made the additions to the tune of Rs. 6,10,746/- to the income of the assessee being maximum credit balance (peak balance) available in the bank account(PNB)maintained by the assessee as unexplained money. The AO also made additions to the tune of Rs. 18,522/- as interest income earned from the aforesaid PNB bank account which was not declared by the assessee in the return of income filed with Revenue. The AO made ITA No. 13/Agr/2022 6 further additions to the tune of Rs. 9,15,000/- being unexplained cash deposits in the bank account maintained by the assessee with SBI, Seondha A/c No. 32238192088. Thus, the AO computed and assessed income to the tune of Rs. 17,97,638/- in the hands of the assessee, as against returned income of Rs. 2,53,370/- declared by the assessee in the return of income. The assessee challenged two additions(Rs. 6,10,746/- and Rs. 9,15,000/-) before ld. CIT(A), out of three additions as were made by the AO. Thus, the assessee did not contested/challenged the addition of Rs. 18,522/- as was made by the AO towards interest received in PNB Bank account maintained by the assessee. The ld. CIT(A) dismissed the appeal of the assessee as being not maintainable being un-admitted as the tax on the returned income was not paid by the assessee before filing its appeal with ld. CIT(A), by invoking provisions of Section 249(4). The ld. CIT(A) issued deficiency letters to the assessee to rectify the defect by making payment of due taxes on returned income, but the assessee did not comply. I have observed that so far as returned income of Rs. 2,53,370/- is concerned, there is no tax payable by the assessee keeping in view provisions of Section 87A. But, there is an un-contested addition to the tune of Rs. ITA No. 13/Agr/2022 7 18,522/- being interest income from PNB bank account , which was not disclosed by the assessee in the return of income filed with Revenue . The said income of Rs. 18,522/- is an admitted income by the assessee, as the same was not challenged/contested by the assessee before ld.CIT(A) as well before us, and if the same is taken into account, there will be tax liability to be discharged as the said amount of interest income is an uncontested income. The provisions of Section 87A limit the deduction to Rs. 2,000/- for the relevant period. The ld. CIT(A) cannot insist on the payment of taxes on the disputed/ challenged additions to the tune of Rs. 6,10,746/- and Rs. 9,15,000/- , while admitting the appeal. The aforesaid two additions of Rs. 6,10,746/- as well Rs. 9,15,000/- are challenged by the assessee before ld. CIT(A) as well ITAT. Deductions are also available on interest income as is referred to in Section 80TTA, subject to compliances of the conditions as are provided in the statute .Thus, in the interest of justice , it will be fit and appropriate to restore the matter back to the file of ld. CIT(A) for taking decision afresh on the admissibility of the appeal. The assessee is directed to file computation of income after taking into account admitted income, and discharge the tax burden accordingly. The ITA No. 13/Agr/2022 8 assessee is also directed to comply with the directions/notices issued by ld. CIT(A), otherwise ld.CIT(A) shall be free to decide the matter ex- parte on the admissibility of the appeal. I clarify that I have not commented on the merits of the admissibility of appeal by ld. CIT(A) nor on the issues arising in the appeal. The appellate order of ld. CIT(A) is set aside and the matter is now restored to the file of ld. CIT(A) to adjudicate denovo, firstly on the admissibility of the appeal of the assessee and once the first hurdle is crossed, then to adjudicate the appeal on the merits of the issues arising in the appeal in accordance with law. All the contentions are kept open. The appeal of the assessee is allowed for statistical purposes. I order accordingly. 6. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 26.12.2024 on the conclusion of the hearing in the presence of ld. Sr. DR. Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated:26.12.2024 "