SIDDIQ HUSSAIN DELVI,BENGALURU V. INCOME TAX OFFICER, WARD-1(2)(2), BENGALURU

SA 83/BANG/2024

AI Insights

The case involves Shri Siddiq Hussain Delvi, a trader dealing in furnishing decors, who filed a stay petition against an outstanding tax demand of Rs. 17,46,504 for the assessment year 2018-19. The Income Tax Officer had treated cash deposits made during the demonetization period as unexplained money under section 69A of the Income Tax Act, leading to an ex-parte order. The assessee appealed to the CIT(A), which was also decided ex-parte. The Tribunal found that the assessee had a prima facie case, considering the payment of 20% of the tax dues and the regular filing of VAT returns, and thus granted the stay and directed the release of the bank attachment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 32779 (ITAT-BANGALORE)
• Appeal Type: Stay Application
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITHVIRAJ K
• Assessee Lawyers: PHANI KUMAR S
• Keywords: Application of stay
• Section: 144; 69; 69A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE – PRESIDENT AND SHRI SOUNDARARAJAN K., JUDICIAL MEMBER S.P. No. 83/Bang/2024 (in ITA No. 2374/Bang/2024) Assessment Year : 2017-18 Shri Siddiq Hussain Delvi, No. 127 L No, 1st Floor, 6th Street, OPH Road, Shivaji Nagar, Bengaluru – 560 051. PAN: AVEPS6232P Vs. The Income Tax Officer, Ward – 1(2)(2), Bengluru. APPELLANT RESPONDENT Assessee by : Shri Phani Kumar S, CA Revenue by : Shri Prithviraj .K, JCIT-DR Date of Hearing : 03-01-2025 Date of Pronouncement : 09-01-2025 ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER This is the stay petition filed by the assessee in respect of the outstanding due of Rs. 17,46,504/- excluding the interest for the A/Y2018- 19. 2. The assessee is a trader dealing in furnishing decors like curtains, bed linen under the name and style of M/s. Sana Creations. The assessee filed their return of income declaring an income of Rs. 11,27,810/-. Thereafter, the case was selected for scrutiny and made an ex-parte order u/s. 144 of Page 2 of 4 S.P. No. 83/Bang/2024 (in ITA No. 2374/Bang/2024) the Act in which the cash deposits made during the demonetization period was treated as unexplained money u/s. 69A of the Act. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and the Ld.CIT(A) had also decided the appeal without granting a reasonable opportunity. The Ld.CIT(A) had relied on the ex-parte order of the AO and the grounds of appeal filed by the assessee and submitted that the assessee had not attached / uploaded any submission nor submitted evidences / documents /explanation in support of the facts. Therefore it seems that the Ld.CIT(A) had passed an ex-parte order. As against the said order of the Ld.CIT(A), the assessee is in appeal before this Tribunal and submitted that if one more opportunity is granted, the assessee would appear before the authorities and explained the facts in detail. The assessee also filed a stay petition in S.P.No. 83/Bang/2024 seeking a stay of balance of outstanding amount of Rs. 17,46,504/-. 3. At the time of hearing the assessee submitted that on 03/03/2020, he had paid a sum of Rs. 4,36,626/- being the 20% of the tax amount. In spite of the said payment, the AO had issued a notice u/s. 226(3) of the Act on 23/09/2024 to the banker HDFC Bank and consequently, the assessee was not able to operate his bank account for doing day-to-day business activities. The assessee further submitted that the attached amount Rs. 5.75 Lakhs still remain frozen and also enclosed the said bank statement along with the stay application. The Ld.AR also submitted that during the month of July, 2024, he has performed the wedding of his only daughter and therefore his entire savings was spent. The Ld.AR further submitted that he is regular in filing the VAT returns and for the period October, November and December, he got Rs. 29.71 Lakhs together with the realization of sales made during the preceding 3 months of July to September, 2016 and contended that the cash deposits into the bank account of Rs. 50,25,000/- over a period of 45 days is not abnormal and therefore submitted that the assessment made u/s. 69 of the Act is not correct. The Ld.AR further submitted that because of the non-submission of Page 3 of 4 S.P. No. 83/Bang/2024 (in ITA No. 2374/Bang/2024) the records, the ex-parte assessment as well as the ex-parte appellate order were passed. In these circumstances, the Ld.AR prayed that the stay may be granted for the balance outstanding amounts and also prayed to direct the AO to release the bank attachment made on 23/09/2024.The ld AR further submitted that the assessee would cooperate in completing the appeal at the earliest. 4. We have heard the arguments of both sides and perused the records and documents filed in the stay application. 5. We have perused the copy of the DD taken in the name of Income Tax Officer for a sum of Rs. 4,36,626/-. We have also perused the attachment notice issued on 23/09/2024 in which the assessee’s bank account was attached. We have also perused the bank statements filed by the assessee and the wedding invitation of his daughter. We have also considered the merits of the case since the assessee is a dealer in furnishing decors like curtains, bed linen under the name and style of M/s. Sana Creations and also regularly filed their monthly VAT returns disclosing the actual sales effected by him during the months. Therefore, there is a reasonable explanation available to the assessee to show that the cash deposited during the demonetization period is nothing but the sale proceeds obtained during the months of October to December, 2016. But unfortunately, the assessee has not appeared before the authorities and therefore the best judgment assessment was made. 6. We find from the above said facts, that the assessee is having a prima facie case and also by considering the payment of Rs. 4,36,626/- being the 20% of the outstanding tax dues, we are inclined to grant the stay for the balance outstanding dues for a period of 180 days or till the appeal is disposed off whichever is earlier. In view of the stay granted by us we also direct the assessing officer to release the bank attachment made vide his notice dated 23/09/2024 in DIN & Notice No. ITBA/RCV/S/226(3)_1/2024- Page 4 of 4 S.P. No. 83/Bang/2024 (in ITA No. 2374/Bang/2024) 25/1068979414(1) issued to the HDFC Bank Ltd immediately on receipt of this stay order. 7. In the result, the stay petition filed by the assessee is allowed. Order pronounced in the open court on 09th January, 2025. Sd/- Sd/- (PRASHANT MAHARISHI) (SOUNDARARAJAN K.) Vice – President Judicial Member Bangalore, Dated, the 09th January, 2025. /MS / Copy to: 1. Appellant 2. Respondent 3. CIT 4. DR, ITAT, Bangalore 5. Guard file 6. CIT(A) By order Assistant Registrar, ITAT, Bangalore "