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PER N.K. SAINI, VICE PRESIDENT
This is an appeal by the Assessee against the order dt. 22/03/2019 of Ld. CIT(A)-4, Ludhiana.
2. Following grounds have been raised in this appeal:
The CIT(A) has erred in making an addition of income as undisclosed income without considering the fact that the entire income of the assessee is from agriculture and has no other source of income.
2. On the facts and circumstances of case and in law, the CIT (Appeals) has erred in confirming the action of Assessing Officer of framing the total income at Rs. 19,69,647/- erroneously. 3. On the facts and circumstances of case and in law, the CIT (Appeals) has erred in confirming the action of Assessing Officer of treating 2% of the commodity transactions as undisclosed income by arbitrarily rejecting the fact that the assessee had in fact incurred a loss in regards to the same, and therefore erred in upholding the impugned order of the AO without appreciating the facts, legal position & merits of the case.
4. On the facts and circumstances of case and in law, the CIT (Appeals) has erred in disallowing a loss of Rs. 55,504/- stating that no return of income for the A.Y 2010-11 has been filed by the assessee.
5. The CIT (Appeals) has erred by initiating the penalty proceedings under section 271(1)(C) without appreciating the facts and bonafide intentions of the appellant. 6. The appellant craves leaves to amend or alter the grounds of appeal before the same are heard and disposed off.
7. It is prayed that the addition and penalty proceedings as initiated, shall kindly be deleted.
Facts of the case in brief are that the A.O. issued the notice under section 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) to the assessee on the basis of AIR/CIT information that the assessee had entered into commodity transaction amounting to Rs. 9,84,82,375/- and the profit margin @ 2% of the total commodity transaction made by the assessee was worked out at Rs. 19,69,647/-. As the attitude of the assessee was non cooperative the A.O. framed the assessment under section 144 of the Act and determined the income of the assessee at Rs. 19,69,647/-.
4. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted the written submissions through email as under:
“With due regards your honour is requested to please take the factual position mentioned below in your ready reference for the purpose of perusal of the assessment proceedings in the case of Paviter Singh bearing PAN BTEPS4094Jfor the Assessment Year 2010-2011 1. That I am an agriculturist having agriculture as my main source of Income alongwith petty bank interest income during the financial year 2009-2010 relevant to the assessment year 2010-2011.
That I was not in the position to submit the documents at the time of the Assessment proceedings for the assessment year 2010-2011.
3. That I have already submitted the copy of the ledger obtained very difficultly to your honour for the fair assessment of the assessment proceedings on dated 22/02/2019 so that the factual position can be shown and clearly understood for the financial year 2009-2010 relevant to the assessment year 2010-2011
That while scrutinising the copy of ledger alongwith MTM statement submitted to your honour it is exhibiting that there is loss as per MTM statement to the tune of INR 55504/- for the financial year 2009-2010 relevant to the assessment year 2010-2011
5. That I am enclosing herewith this request letter a detailed explanation in relations to the treatment of commodity transactions their taxability and quantum of calculation of the same alongwith other related terminology for making my position clear to your honour
That I am also enclosing herewith this request letter a chart showing total of all negative and positive values as per MTM statement for your quick reference sothat the clear position can be understood at my end for the financial year 2009-2010 relevant to the assessment year
Now your honour is kindly requested to please take the above in your ready reference and oblige me. I hope your honour will find the above documents in proper order and consideration will be give to the same
Plus Minus Figure Figure 6855 3975 2980 21100 4370 625 5505 7120 1625 11460 7600 10900 9070 11545 2465 1020 8295 4990 6655 25805 7660 8135 23350 31385 5895 2675 1713 3145 25093 6674 4030 3530 14353 11445 10810 250 6365 2696 22830 2688 2695 11835 6000 233 202 8647 476 1150 2960 750 10000 1750 3725 6675 750 19400 14440 8375 10000 17773 1875 1625 5480 200 2250 6500 50 17250 1750 2750 5050 11555 4925 24750 3250 5000 500 750 6250 11175 2000 11945 1000 1250 11750 2750 3750 250 250 4275 3750 1000 2000 1125 2250 5250 3500 8750 4500 500 6750 3750 4000 250 3750 6250 1750 6500 4250 3750 2000 4750 3750 250
8000 2750 500 6750 750 1500 9500 1750 2500 6750 349147 404651 55504
5. Ld. CIT(A) however did not find merit in the submissions of the assessee and sustained the addition by observing in para 6 of the impugned order as under:
I have carefully considered the facts of the case and submissions of the appellant. The assessee has not filed any return of income for the assessment year 2010-11. In the absence of any details filed by the assessee, the assessing officer has estimated profit from the commodity transactions at Rs. 19,69,650/-. As per the details filed during the appeal proceedings, the assessee has incurred loss of Rs.55,504/- from the commodity transactions. The assessee cannot be allowed any credit for loss incurred as no return of income for assessment year 2010-11 has ever been filed by the assessee. The assessee has not submitted his bank account or copy of account to show the investment made for trading in commodity transactions. Though, actual trading in commodity transactions would have resulted in loss as claimed however, investment part remains unexplained. The estimated addition of Rs. 19,69,650/- as undisclosed income will cover the undisclosed investment made by the assessee for commodity transaction. The addition of undisclosed income made by the assessing officer is thus upheld. 6. Now the assessee is in appeal.
Ld. Counsel for the assessee submitted that the A.O. without providing any opportunity of being heard to the assessee made the impugned addition and the Ld. CIT(A) without appreciating the fact in right perspective was not justified in sustaining the addition made by the A.O.
In his rival submissions the Ld. DR strongly supported the orders of the authorities below.
We have considered the submissions of both the parties and perused the material available on the record. In the present case it is an admitted fact that the A.O. made the impugned addition by passing the assessment order ex-parte and the Ld. CIT(A) also sustained the addition by observing that the assessee had not submitted his bank account or copy of account to show the investment made for trading in the commodity transaction. Accordingly the estimated addition made by the A.O. was sustained. It is well settled that nobody should be condemned, unheard as per the maxim, “audi alteram pertam”. In the present case the A.O. made the addition by passing the ex-parte order, we therefore by keeping in view the principles of natural justice deem it appropriate to set aside this case back to the file of the A.O. to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
(Order pronounced in the open Court on 07/01/2020)