SAWITA SHAH,PURNIA V. ITO, WARD-3(1), PURNIA

ITA 605/PAT/2024

AI Insights

The case involves Sawita Shah, who runs a Customer Service Point (CSP) center, and the Income Tax Officer, Ward 3(1), Purnia. The dispute arose from an assessment order under section 143(3) of the Income Tax Act, 1961, which added Rs. 2,25,000 as unexplained income to Shah's taxable income for the assessment year 2017-18. This amount was allegedly the difference between total deposits and withdrawals in her bank account during the period of demonetization. The assessee argued that this was her previous year's savings, used as working capital for her business, and not unexplained income. The Ld. Addl./Jt. CIT(A) upheld the addition, leading to the current appeal. The Tribunal found that the initial appeal was not adequately represented and thus remitted the case back for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33458 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT Vs. B.N. Bhattacharya, M/s. Chemipol V/s. Union of India, Nandramdas Dwarkadas, Dr. P. Nalla Thampy Vs. Shankar, New India Assurance Vs. Srinivasan, Whirlpool of India Ltd. V DCIT, Chadha Finlease Ltd. V. ACIT, CIT Vs. Gold Leaf Capital Corporation Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ASHWANI KR. SINGAL
• Assessee Lawyers: RAKESH KUMAR
• Keywords: Set aside; Initiation of penalty proceedings
• Section: 143(3); 68; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “PATNA BENCH” PATNA BEFORE SHRI SONJOY SARMA, JUDICIAL MEMBER AND SHRI RAKESH MISHRA, ACCOUNTANT MEMBER ITA No. 605/Pat/2024 (Assessment Year 2017-18) Sawita Shah, W/o Kamal Kishor Gupta Sudi Tola, Ansari Thakur Tola, Dalmapur, Baisi, Purnia, Bihar - 854315 (PAN: GNZPS0882J) Vs Income Tax Officer, Ward 3(1), Purnia (Appellant) (Respondent) Present for: Appellant by : Sh. Rakesh Kumar, Adv. Respondent by : Sh. Ashwani Kr. Singal, JCIT Date of Hearing : 16.12.2024 Date of Pronouncement : 01.01.2025 O R D E R PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Addl./JCIT(A)-2, Guwahati [hereinafter referred to as “the Ld. Addl./JCIT(A)”], dated 02.08.2024 which has been passed against the assessment order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) dated 12.09.2019. 2. The grounds of appeal raised by the assessee are reproduced as under: “1 For that the Ld. CIT (A) AddI/JCIT(A)-, Guwahati has erred in sustaining the order of the A.O. and thereby affirmed the additions made by the A.O. amounting to Rs.2,25,000/- against the weight of facts and evidences and contrary to the law and circumstances of the case. 2. For that the Ld. CIT (A) AddI/JCIT(A)-, Guwahati has erred in overlooking the submitted by the appellant along with the Paper, Documents and evidences 2 ITA No. 605/Pat/2024 Sawita Shah, AY: 2017-18 assailing the addition so made which is wrong, illegal and unjustified on the facts and in the circumstances of the appellant's case. 3. For that the Ld. CIT (A) AddI/JCIT(A)-, Guwahati has erred in affirming the addition of alleged excess deposit in Bank amounting Rs. 2,25,000/- is actually appellants previous years savings which she had invested in the business of CSP to smooth flow of the business, under section 68 previous year savings treated as unexplained income in the case of the appellant which is bad in fact and law of the case. 4. For that the Ld. CIT (A) Addl/JCIT(A)-, Guwahati has erred in sustaining the order of the A.O. and ignoring of the fact the amount deposited is Rs.2, 25,000/- which is under the basic exemption limit provided by the law and is savings of previous year. As Amount is itself under basic limit the case is not suited as income escaped case which is unjustified. 5. For that the Ld. CIT (A) AddI/JCIT(A)-,Guwahati has erred in not adjudicate the deposited Rs. 1000/- in saving bank account from the appellant has clearly shows appellant does not have anything else except Rs.2,25,000/- which she has invested in business which is bad in law and fact of the appellant's case. 6. For that the Ld. CIT (A) AddI/JCIT (A)-,Guwahati has erred in affirming charging of interest is wrong, illegal and unjustified on the facts and in the circumstances of the appellant's case. 7. For that the whole order is bad in fact and law of the case and is fit to be deleted. 8. For that the other grounds, if any, shall be urged at the time of hearing of appeal.” 3. Brief facts of the case are that the assessee, Sawita Shah runs a CSP centre. The Assessee had deposited Rs. 13,38,600/- in her Bank account during the period of Demonetization. The case was selected and notices were issued to the appellant, in response to which the appellant herself appeared from time to time and discussed all the facts with the Ld. AO. The appellant contended that she was running a CSP centre, the amount deposited was in the normal course of business but the Ld. AO made an addition of ₹2,25,000/- as unexplained income. In the order the Ld. Assessing Officer has said that the total amount deposited and total amount withdrawn is having a difference of Rs. 2,25,000/- and hence excess deposit was treated as unexplained income. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. Addl./Jt. CIT(A), who vide order dated 02.08.2024 dismissed the appeal. 3 ITA No. 605/Pat/2024 Sawita Shah, AY: 2017-18 4. Rival contentions were heard and the record and the submissions made have been examined. The Ld. AR requested that the matter may be remitted back to the Ld. Addl./Joint CIT(A) as proper representation was not made. The Ld. DR did not oppose the request of the assessee. 5. We have considered the submissions of the assessee. The Ld. Addl./Joint CIT(A) has confirmed the addition after discussing the provisions of section 250(6) of the Act, the decisions in CIT Vs. B.N. Bhattacharya 118 ITR 461, M/s. Chemipol V/s. Union of India [Central Excise Appeal No. 62 of 2009], Nandramdas Dwarkadas, AIR 1958 MP 260 (Bombay), Dr. P. Nalla Thampy Vs. Shankar 1984(Supp) SCC 63 and New India Assurance Vs. Srinivasan (2000) 3 SCC 242, Whirlpool of India Ltd. V DCIT (ITA No. 2006/Del/2011 dated. 19/12/2001 of the ITAT, Delhi Bench), Chadha Finlease Ltd. V. ACIT (ITA No. 3013/Del/2011 order dated 20.12.2011), CIT Vs. Gold Leaf Capital Corporation Ltd. (ITA No. 7898 of 2009, order dated 02.09.2011 of the Delhi High Court) and as no reply was filed, dismissed the appeal. The relevant extract from the order of the Ld. Addl./Joint CIT(A) is as under: “4.2 Ground of Appeal No. i, ii, iii & iv: 1. For that the order of assessment passed by the Assessing Officer, WARD 3(1), PURNEA is against the weight of facts and evidences and contrary to the law and circumstances of the case. 2. For considering of alleged excess deposit in Bank amounting Rs. 2,25,000/- is actually Assesse’s Previous years savings which she had invested in the Business of CSP to smooth flow of the business. Under section 68 previous year savings can't be treated as Unexplained income. 3. Amount deposited is Rs.2,25,000/- which is under the Basic exemption limit provided by the law and is savings of previous year. As Amount is itself under Basic limit the case is not suited as Income escaped case. 4. Apart from this the Assesse has only deposited Rs.1000/- in saving Bank which clearly shows Assesse does not have anything else except Rs.2,25,000/- which she has invested in Business. 4.2.1 Verdict: The contention of the appellant has been gone through along with assessment order. It is noticed from the assessment order that the assessing officer has discussed the issue at length. He has proceeded to make addition amounting to Rs 225000/- u/s. 69A on basis of difference between the receipt from the 4 ITA No. 605/Pat/2024 Sawita Shah, AY: 2017-18 customer and the amount deposited. The relevant portion of the assessment order is reproduced hereunder for the sake of ready reference: \"However, on perusal of the above table, it was clearly visible that the following amount was calculated as difference of actual receipt by the assessee from his customers as well as amount deposited in the bank account, details of which are as under: In this way, it was found that the assessee has made excess deposit of Rs.2,25,000/- in his bank account during the period of demonetization in demonetized currency and the assessee could not offer any valid explanation in this regard.\" During the course of appellate proceedings the appellant has furnished no reply/explanation/submission to substantiate her claim that the impugned amount of Rs 225000/- was available with her in preceding financial year. Further, it is claimed by the appellant that under section 68 previous year savings can't be treated as unexplained income. On perusal of assessment order it is noticed that the assessing officer has specifically has mentioned that the addition is being made u/s 69A of the Act. Hence the aforesaid contention of the appellant is not found correct. In the light of foregoing discussing and factual aspect of the case, the addition made by the assessing officer is confirmed. 4.3 Ground of appeal v: For the initiation of Penalty proceedings under section 270A is quite wrong, most illegal and arbitrary particularly so when the appellant has made deposits in the bank out of its previous years saving. 4.3.1 Verdict: The contention of the appellant has been gone through. The same being premature in nature, no adjudication is made at this juncture. 5. In the result, appeal is DISMISSED.” 5.1. In the Statement of Facts filed along with the appeal memo on Form No. 36, the assessee has submitted as under: “The Appellant, Sawita Shah runs a CSP centre. The Assessee has deposited Rs.13,38,600/- in her Bank account during the period of Demonetization. The Case was selected and issued Notices to appellant, in response appellant herself appeared time to time and discussed all the facts with the authority. As appellant was running CSP centre amount deposited was in the normal course of business. Under the circumstances of the case and law, the Ld. Assessing officer has made the assessment order vide Order No- ITBA/AST/S/91/2019-20/1020957014(1) DAT ED-12/09/2019 and made an addition of Rs 2,25,000/- as unexplained income. In the order the Ld. Assessing Officer has said that the total Amount deposited and total amount withdrawn is having a difference of Rs. 2,25,000/- and hence excess deposit is treated as unexplained income. However looks like that the Ld. Assessing Officer has not understood the nature of business as in the CSP; firstly CSP agent has to pay amount to the customer later on such amount gets credited in her account. So for the smooth flow of business CSP agents have to invested some own money as working capital in the business. Such 2,25,000/- is the money invested by appellant to run the CSP. Hence actually, the previous year Basic savings of the appellant which she had invested in the business as working capital has treated as unexplained which is not only wrong but also illegal and 5 ITA No. 605/Pat/2024 Sawita Shah, AY: 2017-18 harassment to the appellant. Appellant is just running a small business in which she has invested her all savings and now from CSP earning and surviving. That the appellant has aggrieved against the order passed by the ITO ward,3(1), Purnia and filed appeal before the CIT (A) Addl/JCIT(A)-,Guwahati and CIT (A) AddI/JCIT(A)-,Guwahati has passed an Ex-Party Order and confirmed income as above in the hands of appellant without consideration facts of the case which is already stated and submitted paper and document as evidence by the appellant before the Ld. Assessing Officer.” 6. Thus, the appeal was dismissed on account of lack of proper representation. Therefore, in the interest of justice, we consider it imperative to set aside the order of Ld. Addl./Jt. CIT(A) and remit the matter of appeal to him to be decided de novo after affording an opportuning of being heard to the assessee and considering the submissions of the assessee. The assessee shall not seek unnecessary adjournment and shall file all evidences in support of the claim before the Ld. Addl./JCIT(A). Hence, the appeal is allowed for statistical purposes. 7. Further, the assessee has raised 8 grounds of appeal and they all relate to the addition of Rs. 2,25,000/-. Hence, Ground Nos. 1 to 5 are allowed for statistical purposes and Ground Nos. 6, 7 and 8 are either consequential or general in nature and do not require separate adjudication. Thus, the appeal is allowed for statistical purposes. 8. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the court on 1st January, 2025. Sd/- Sd/- (Sonjoy Sarma) (Rakesh Mishra) Judicial Member Accountant Member Dated: 1st January, 2025 AK, PS 6 ITA No. 605/Pat/2024 Sawita Shah, AY: 2017-18 Copy to: 1. The Appellant: 2. The Respondent. 3. The Jt./Addl. CIT(A) 4. The CIT, 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata 1. Date of Dictation………………………………………. 2. Date on which the typed order is placed before the dictating Member and other Member…………………………………………….. 3. Date on which the order came back to Sr. PS…………………………………… 4. Date on which the file goes to the Bench Clerk………………………………… 5. Date on which the file goes to the O.S………………………………… 6. Date on dispatch of the order……………………………………… "