SHRI BALVANTRAY VITHALBHAI PARMAR,BHAVNAGAR V. THE ITO, WARD-1(9), BHAVNAGAR

ITA 748/AHD/2023

AI Insights

This case involves an appeal by Shri Balvantray Vithalbhai Parmar against the order of the National Faceless Appeal Centre (NFAC), which confirmed the addition of Rs.1,52,16,162 as unexplained money under Section 69A of the Income Tax Act, 1961. The assessee, engaged in milk distribution for Amul, had made substantial cash deposits in his bank accounts, which were treated as unexplained by the AO due to lack of documentary evidence. The Tribunal noted the assessee's illiteracy and reliance on a consultant, which led to non-compliance in earlier proceedings. The Tribunal decided to set aside the matter for a detailed examination of the cash deposits' source and the assessee's business activities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25328 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: MOHIT BALANI
• Keywords: Set aside; Peak credit
• Section: 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 748/Ahd/2023 (Ǔनधा[रण वष[ / Assessment Year : 2017-18) Shri Balvantray Vithalbhai Parmar 4700, Kharazapa Ramji Tempte Area, Mahuva, Bhavnagar, Gurarat - 364290 बनाम/ Vs. Income Tax Officer Ward-1(9), Bhavnagar èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : CXGPP0758K (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Shri Mohit Balani, A.R. Ĥ×यथȸ कȧ ओर से/Respondent by : Shri Rignesh Das, Sr. DR Date of Hearing 19/12/2024 Date of Pronouncement 03/01/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi, (in short ‘the CIT(A)’), dated 05.07.2023 for the Assessment Year 2017-18. 2. There was a delay of 26 days in filing of this appeal. The assessee has filed an affidavit explaining the reason for delay. It is submitted that the assessee is an uneducated person engaged in the business of distributing milk for Amul. In Form No.35 the ITA No. 748/Ahd/2023 [Shri Balvantray Vithalbhai Parmar vs. ITO] A.Y. 2017-18 - 2 – assessee had mentioned an email address but an option was given that no notices/communication may be sent on the email. According to the assessee, the order received on email was not accessed by him as the email didn’t belong to him and the concerned person did not inform him in time. This led to delay in filing of this appeal. It is found that the email address mentioned in Form No.35 was [e-mail] and the assessee had clearly indicated that no notices/communication may be sent on this email. Considering the fact that no physical copy of the order was sent to the assessee, the explanation of the assessee is accepted and delay in filing the present appeal is condoned. 3. The brief facts of the case are that assessee has filed his return of income for A.Y. 2017-18 on 16.02.2018 declaring total income of Rs.2,09,990/-. The case was selected for complete scrutiny under CASS. The AO found that the assessee had made cash deposits of Rs.1,40,76,060/- & Rs.11,40,100/- in his two bank accounts with Bank of Baroda. The assessee was required to explain the source of these cash deposits in the bank accounts. In reply, the assessee submitted before the AO that he had agency of milk distribution but no documentary evidences in respect of milk distribution and earning of commission income thereon was filed. Therefore, the AO treated the entire cash deposit of Rs.1,52,16,160/- made in the two bank accounts as unexplained and made the addition under Section 69A of the Income Tax Act, 1961 (in short ‘the Act’). The assessment was completed ITA No. 748/Ahd/2023 [Shri Balvantray Vithalbhai Parmar vs. ITO] A.Y. 2017-18 - 3 – u/s.143(3) of the Act on 25.12.2019 at total income of Rs.1,54,26,150/-. 4. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed. 5. Now, the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal: “1. Learned CIT(A) has erred in law and on the facts of the case in passing the impugned order, ex-parte. 2. Learned CIT(A) has erred in law and on the facts in confirming the action of AO in making an addition of Rs.1,52,16,162/- as unexplained money u/s.69A of the Act. 3. Alternatively, and without prejudice, the addition may kindly be limited to the peak credit amount. 4. Learned CIT(A) has erred in law and on the facts of the case in confirming the action of learned AO in invoking the provisions of S. 115BBE of the Act. 5. Learned CIT(A) has erred in law and on the facts in confirming the action of AO in charging interest u/s.234A/B/C/D. 6. Learned CIT(A) has erred in law and on the facts in confirming the action of AO in initiating penalty u/s.271AAC of the Act which is wholly unsustainable in law and on facts of the case.” 6. Shri Mohit Balani, the Ld. AR appearing for the assessee explained that the assessee had submitted before the AO that he was holding agency for milk distribution and that the cash ITA No. 748/Ahd/2023 [Shri Balvantray Vithalbhai Parmar vs. ITO] A.Y. 2017-18 - 4 – deposits in the bank accounts represented the total sale proceeds of his business. It was further submitted that the assessee was only deriving commission income from the milk distribution business. However, the AO did not accept the explanation of the assessee and the entire cash deposits, which represented the turnover of the assessee, was added to the income of the assessee. The Ld. AR further submitted that no proper compliance could be made by the assessee before the Ld. CIT(A), as a result of which the appeal of the assessee was dismissed and the matter was not examined on merits by the ld. CIT(A). The Ld. AR explained that the assessee was an illiterate person and was dependent upon his consultant who failed to make proper compliance before the Ld. CIT(A). Therefore, the ld. AR requested that the matter may be set aside to the file of the AO with a direction to allow another opportunity to the assessee to explain the cash deposits. 7. Per contra, Shri Rignesh Das, Ld. Sr. DR submitted that the assessee neither made any proper compliance before the AO nor before the Ld. CIT(A). He, therefore, supported the orders of the lower authorities. 8. We have carefully considered the rival submissions. It is true that no proper compliance was made by the assessee before the AO in the course of assessment proceedings. Nevertheless, the assessee had explained that he was engaged in the agency business of milk distribution and had derived commission income only. A copy of the bank statement in which the cash deposits were made has been brought on record. It is found that the cash ITA No. 748/Ahd/2023 [Shri Balvantray Vithalbhai Parmar vs. ITO] A.Y. 2017-18 - 5 – deposits were made almost on daily basis and the amounts after deposit were transferred to GCMMF Ltd. also on daily basis. Considering the fact that the cash deposits were immediately transferred to GCMMF Ltd., the addition of the entire cash deposits in the hands of the assessee cannot be held as correct. Even if no compliance was made by the assesse, nothing prevented the AO to make enquiry from GCMMF Ltd. about the amounts transferred and the nature of business activity carried out by the assessee. 9. The addition made by the AO was not examined by the Ld. CIT(A) on merits for the reason that no compliance was made by the assessee in spite of numerous opportunities provided by the Ld. CIT(A). It is found that the Ld. CIT(A) had allowed as many as 12 opportunities to the assessee but no compliance was made on any of the dates. The assessee cannot escape by merely passing on the blame to his Counsel. The non-receipt of any physical notice also cannot be taken a ploy for non-compliance before the Ld. CIT(A). Considering the recurring non-compliance made by the assessee before the AO as well as before the ld. CIT(A), we impose a cost of Rs.10,000/- (Rupees Ten Thousand only) on the assessee, which should be paid to the Income Tax Department within two weeks of receipt of this order. As the matter has not been examined on merits, we deem it proper to set aside the matter to the file of the Jurisdictional AO with a direction to allow another opportunity to the assessee to explain the source of cash deposits. The AO is also directed to make enquiry from GCMMF Ltd. to find out the exact nature of business activity of ITA No. 748/Ahd/2023 [Shri Balvantray Vithalbhai Parmar vs. ITO] A.Y. 2017-18 - 6 – the assessee and the quantum of commission earned by the assessee. 10. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced on 03/01/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 03/01/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "