WASEEM AHMED SIDDIQUI,HYDERABAD vs. ITO, WARD-4(1) , HYDERABAD

Assessee is into the business of transport operating vehicles. He filed the return of income for the assessment year 2017-18 on 22/10/2017 declaring total income of Rs 11,18,300/-. During the course of scrutiny proceedings, it was found that the assessee made cash payments to credit cards in amounts of Rs. 20,000/- to 40,000/- on various dates. Credit card statements were filed with the learned Assessing Officer. Assessee is having three business credit cards, namely, Citi Bank, HSBC and SBI. Such were used for petrol and towards incurring the travelling expenses, food expenses, repairs and maintenance of tyres and vehicles. Assessee paid the credit card due amount of Rs 9,94,200/- outstandings through business receipts received through freight. According to the assessee, his income tax return shows gross receipts of Rs.3,45,14,860/-, out of which a sum of Rs. 2,21,75,507/- was received in bank and the remaining balance of Rs. 1,23,39,352/- was received through cash from which the assessee has paid the credit cards payments. The learned Assessing officer, however, treated these payments of Rs 9,94,200/- for all three credit cards for the entire financial year as ‘income’ under section 69A of the of the Income Tax Act, 1961 (for short “the Act”).

Assessee, being aggrieved by such an action of the learned Assessing Officer, preferred appeal before the learned CIT(A) and pleaded that the learned assessing officer has not given an opportunity to him when partial information was submitted and awaiting for the notice for further submission of information, that the learned assessing officer has erred in passing the order under section 69A of the Act, as the assessee was into the business and all the books of accounts have been produced and explained. The learned assessing officer failed to consider the proofs submitted like credit card statements, bank statements and copy of return of income along with form 26AS and did not consider the written submissions made before him.

Assessee, however, filed the appeal with a delay of 101 days and submitted before the learned CIT(A) that the reason for this delay was due to the fact that the assessee was involved in transport operations working in remote areas and did not have access for the internet. Assessee prayed to condone the delay in the interest of justice.

On a consideration of the material before him in the light of the plea taken by the assessee, learned CIT(A) noticed that the assessee is residing at Hyderabad which is not a remote locality. Further, the assessee possessed a mobile number and e-mail address as mentioned in Form 35. Further according to the learned CIT(A), since the assessee made cash payments to credit card purchases, and the credit card cannot be used in a remote area where internet facility is not available, the delay in filing of appeal is not liable for condonation. He, therefore, dismissed the appeal without referring to the merits of grounds of appeal.

6. Assessee, therefore filed this appeal contending that the travel of the assessee in connection with business to various parts of the country is the reason for his non-access to the e-mails or digital banking transactions for the day-to-day business which is the reason for the delay in filing the appeal and payments of credit card dues in cash. Learned AR submitted that when the learned CIT(A) does not dispute the nature of business of the assessee and the requirement of travel for such purpose, there is no suspicion surrounding the delay in filing of the appeal. To decide a case on merits that too in the absence of any mala fides on the part of the assessee to file the appeal with delay, the learned CIT(A) should not have refused to condone the delay.

Learned AR further submitted that the gross receipts of the assessee during the year were to the tune of Rs. 3,45,14,860/-, out of which a sum of Rs. 2,21,75,507/- was received in bank and the remaining balance of Rs. 1,23,39,352/- was received through cash and due to the availability of huge cash in hand while in travel, the assessee has paid the credit cards payments in cash. This fact is evident from the figures stated above because the cash receipts were to the tune of Rs. 1.23 crores whereas the cash payments for credit cards were only to the tune of Rs. 9,94,200/-.

Learned DR submitted that the learned CIT(A) was right in refusing to condone the delay, because the very fact of assessee using the credit cards while on travel itself shows that the internet was available at such places and, therefore, the reason attributed for the delay was rightly disbelieved. Further, according to the learned DR, the onus is on the assessee to prove that the cash that was available for payment of the credit card dues was only out of the business receipts. Since the assessee failed to prove the same with cogent evidence, the authorities below are justified in sustaining the addition.

I have gone through the record in the light of the submissions made on either side. Insofar as the condonation of delay is concerned, the plea taken before the learned CIT(A) was that while working in remote areas, the assessee did not have access to the internet facility and, therefore, the delay may be condoned. Learned CIT(A), however, went by the logic that when the assessee uses credit card at such places which pre-supposes the availability of internet facility, the assessee could have filed the appeal within time. I failed to understand this logic. Using the internet at a place at some point of time cannot be used to deny the condonation of delay. Filing of appeal requires the internet facility and also the consultation of the counsel apart from the fact that it does not automatically mean that the assessee had the internet facility during the period of limitation to file the appeal. Having regard to the nature of business of the assessee and the period of delay sought to be condoned on the reason of non-access to the internet facility, there is nothing to disbelieve the statement of the assessee. Firstly, the assessee does not stand to gain by filing the appeal with any delay and secondly, no rights are crystalised in favour of any party due to afflux of time. The reason pleaded by the assessee constitutes sufficient reason and on that score, it could have been accepted.

Be that as it may, coming to the merits of the case, there is no dispute from the Revenue that income tax return of the assessee for this year show gross receipts of Rs. 3,45,14,860/-, out of which a sum of Rs. 2,21,75,507/- was received in bank and the remaining balance of Rs. 1,23,39,352/- was received through cash. It is not in dispute that the Books of accounts of assessee are audited. When such an amount of cash is available with the assessee and out of which the assessee claims to have paid a sum of Rs. 10 lakhs towards the credit card payments, I am unable to understand the reason to suspect the same. It was open for the learned Assessing Officer to verify, if he so required, from the cash book as to whether or not the amounts paid on each occasion supported by the availability of cash in hand. Instead of undertaking such an exercise, the learned Assessing Officer required the assessee to produce evidence. The best evidence is only the cash book or the cash flow statement.

Assessee produced the copies of cash flow statement, details of cash withdrawals, bank statements. In view of the smallness of the amount involved and the exercise that has to be undertaken if I remand the matter, I deem it just and proper to put a quietus to the issue here itself on verification of the documents. I have carefully gone through the copies of cash flow statement, details of cash withdrawals, bank statements, and find that as on the various dates of the credit card payments, there was sufficient cash balance in the hands of the assessee. The undisputed business receipts of the assessee in cash during the year are to the tune of Rs. 1.23 crores whereas the credit card payments in cash are only to the tune of Rs. 10 lakhs, less than 10%. In these circumstances, I accept the contention of the assessee and direct the learned Assessing Officer to delete the addition.