BOMBAY TYRES,MUMBAI vs. INCOME TAX OFFICER -15(1)(1), MUMBAI

5. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming addition towards cash deposit in bank account of Rs.3,18,43,590/- as unexplained credit u/s.69A of the Act.

6. Considering the facts and circumstances of the case and in Law, the NFAC has erred in confirming the addition u/s.69A of the Act when the conditions prescribed u/s. 69A have not been fulfilled.

2.1. The sole issue involved in the present appeal through ten grounds of appeal raised by the assessee is in respect of addition made on account of deposit of cash in the bank account of the assessee, whereby

3. There is a delay of 460 days noted by the registry in filing the present appeal before the Tribunal for which an affidavit and petition for condonation of delay is placed on record. In the petition for condonation of delay, the explanation given by the assessee is that ld. CIT(A) had directed the ld. AO to look into the facts and pass the necessary order in respect of ground numbers 2, 3, 4 and 6, raised by the assessee in the first appeal. According to the assessee, since the matter was remanded back to the ld. AO, he, based on professional advice from a Chartered Accountant proceeded to attend the proceedings before the ld. AO to give effect to the order of the ld. CIT(A) instead of going ahead with filing the appeal before the Tribunal, against the direction of the ld. CIT(A). The order giving effect was passed by ld. AO on 30.01.2025, wherein ld. AO did not accept the submissions of the assessee and continued with the addition made in respect of deposit of cash in the bank account of the assessee. With the said order giving effect passed by ld. AO, assessee did not receive the notice of demand u/s. 156 as well as the computation sheet forming part of the said order because of which appeal could not be filed though assessee had paid the appeal filing fees on 23.03.2025 itself. Assessee pursued the matter with the ld. AO for obtaining the copy of notice of demand and computation sheet by writing email. Assessee submits that the jurisdictional assessing officer was approached by the Chartered Accountant for the issuance of notice of demand as well as computation sheet in respect of the order giving effect passed on 30.01.2025 for 3.1. Assessee based on conflicting advices of the professionals could not file the appeal before the Tribunal against the first appellate order and waited for the order giving effect passed by ld. AO on the direction given by ld. CIT(A) in the remand to the ld. AO. All this resulted in lapse of time within which the appeal could have been filed before the Tribunal. Assessee contends that it is on account of conflicting advices of the professionals which resulted into the present delay though assessee has acted in good faith and has taken necessary actions as early as possible when the correct position was brought before him. According to him, the delay is neither intentional nor due to negligence. It is, thus prayed by the assessee to condone the delay and take up the matter for adjudication on merits. We have considered the submissions made by the assessee and have corroborated the same with the factual position. Considering the same, we find it appropriate to condone the delay in the interest of justice and fair play and take up the matter for adjudication on the merits of the case.

Bombay Tyres AY 2017-18 4.1. Through this letter, it is noted that assessee furnished correct factual position about the PAN, i.e., AAGCB1604E which does not belong to him since he is running a sole proprietorship business in the name of M/s. Bombay Tyres. Assessee is an individual and has his PAN with the number AYSPS1288G against which he has been filing the returns regularly. Assessee, further contended that there is no company called Bombay Tyres and PAN AAGCB1604E is a “Company PAN” which does not belong to him, as the fourth alphabet ‘C’ in the PAN represents the status of the person as a “Company” holding this PAN.

4.2. Negating the submissions made by the assessee, ld. AO called for bank statement from the branch manager of Federal bank, Vashi branch by issuing notice u/s. 133(6) from whereby he noted that there are total credits of Rs.7,14,06,056/- in the said bank statement which included cash deposit of Rs. 3,18,43,590/-. He concluded that the said deposit of cash in the bank account is unexplained money u/s. 69A which was added to the income. He also computed notional profit at the rate of 8% of the total credits of Rs. 3,95,62,466/- appearing in the bank statement and thus, made an addition of Rs. 31,64,997/- as business income. Accordingly, assessment was completed at total assessed income of Rs. 3,50,08,587/- u/s. 144 r.w.s.144A.

4.3. In the first appeal, assessee again brought out the fact about correct PAN belonging to the assessee and M/s. Bombay Tyres being a proprietary concern of the assessee and the PAN used by the ld. AO while passing the ex parte assessment order does not belong to the assessee but is a “Company PAN” for which no such company in the name of Bombay Tyres exists on the MCA website. Taking note of this submission, ld. CIT(A) observed that the Assessing Officer ought to have Bombay Tyres AY 2017-18 ascertained the facts mentioned in the letter dated 26.02.2018 which has been overlooked. Accordingly, he directed the Assessing Officer to ascertain the facts mentioned by the assessee in the said letter. He thus, gave his finding that in case the facts stated by the assessee are found to be true, the Assessing Officer is directed to find the taxpayer having PAN AAGC B1604E and initiate action as per law. Thus, the first appeal was allowed for statistical purposes. Aggrieved, assessee is an appeal before the Tribunal.

5.1. It was further explained that transactions in the Federal Bank, Vashi Branch, bearing account number 13690200027434 are in fact account of Shri Rohit Rajagopal Soman that is, the proprietor of M/s.

Bombay Tyres AY 2017-18 Bombay Tyres having PAN AYSPS1288G. According to him, the transactions in the said bank account have already been assessed to tax in the hands of the assessee in his individual capacity for which the assessment order was passed u/s. 147 r.w.s.143(3) dated 19.04.2023. In the said reassessment order, there are no additions in respect of the deposit of cash in the bank account of the assessee with Federal Bank though there are additions and disallowances on other aspects for which the assessee is in appeal before the ld. CIT(A). Ld. Counsel further contended that, inadvertently Bombay Tyres has been allotted a PAN AAGCB1604E with the address being 23 Arera Corner, Sector 17, Vashi, Navi Mumbai and the status indicates “Company”. According to him assessee has never applied for such a PAN in the name of Bombay Tyres as a company and in fact, it was not necessary for him to have another PAN as he has been filing his return of income regularly which has also been assessed by the PAN AYSPS1288G. The issue of a duplicate PAN allotment has been brought to the knowledge of ld. AO which has not been taken into account even though all the transactions mentioned against the PAN have been subjected to tax and leads to duplication of the transactions already reported in the return of income filed in the individual capacity.

5.2. It was also pointed out from the return of income filed by the assessee in his individual capacity that the details about his bank account with Federal Bank were duly disclosed and reported in the return. Since, assessee proceeded with order giving effect proceedings before the ld. AO based on the remand made by ld. CIT(A), he has referred to the submissions made before the ld. AO in the remand proceedings to explain the factual position and demonstrate that the transactions in the Federal Bank account have been duly reported and Bombay Tyres AY 2017-18 accounted for, which has been subjected to income tax in the hands of the individual assessee with the proprietary concern M/s. Bombay Tyres. Summary of Federal Bank account transactions with its reconciliation is extracted below:

5.3. From the above, it is noted that total deposit of cash in the said bank account is of Rs.3,26,48,850/- part of which is against cash sales and the balance against receipt from debtors. Also, there are credit sales which totals up to Rs. 6,33,12,040/- along with cash sales. The same has been disclosed and reported in the audited profit and loss account for which the net profit has been reported in the return. The opening and closing balances of the said bank account are reconciled and thus, it is evidently demonstrated that the total credits in the said bank account have been accounted and reported for income tax purposes in the return filed by the assessee in his individual capacity.

5.4. Further, reference was made to a letter issued by the Federal Bank dated 26.11.2024, whereby the bank certified that total amount of Rs. 3,26,61,240/- was credited in the account number 1369020027434 as cash deposit in the year under consideration. The said letter is placed at page 14 of the paper book. Ld. Counsel also referred to another letter issued by the Federal Bank dated 01.01.2025 which certifies that assessee having PAN AYSPS1288G with the proprietary concern of M/s. Bombay Tyres is maintaining a current account with the bank with the above stated account number which was opened on 14.03.2014 and closed on 13.04.2017. The said letter is placed at page 13 of the paper book.

5.5. Thus, what emerges from all of the above corroborative documentary evidences placed by the assessee before the ld. AO in the remand proceedings that though reference to two different PAN, one Bombay Tyres AY 2017-18 with the status of company in the name of Bombay Tyres which in fact is a proprietary concern of the assessee i.e., Shri Rohit Rajgopal Soman and the other which is the PAN of the individual that is the proprietor of Bombay Tyres, yet the reference is made to one single bank account maintained with Federal Bank, Vashi branch with account number 13690200027434. Accordingly, what needs to be looked into is whether the transactions entered into the said bank account have been correctly and actually been accounted for and reported for the purpose of income tax in the return filed by the assessee either in individual capacity or with the company status.

5.6. From the above, it is evidently established that the entire credit transactions in the said bank account have been adequately and duly accounted for and reported by the assessee in his individual capacity under the name and style of his proprietary concern M/s. Bombay Tyres which has been assessed by the department u/s. 147 r.w.s.143(3) vide order dated 19.04.2023 wherein no addition has been made on this account. Having established the factual position in respect of the bank account for which the entire issue has been raised by the Revenue in respect of deposit of cash, the assessment made by the ld. AO by referring to a PAN with company status in the name of Bombay Tyres which according to the assessee does not exist in the form of a company on the MCA portal as well as no CIN has been allotted in the name of Bombay Tyres, the addition so made ex parte by passing an order u/s. 144 alleging the deposit of cash in the said bank account as unexplained money is uncalled for. Accordingly, the addition made by the ld. AO u/s. 69A in respect of deposit of cash in the Federal Bank