KANIKA KUSHAL GOLECHHA,MUMBAI vs. INCOME TAX OFFICER, 19.2.2, MUMBAI

In the instant case, the Assessee did not file its return of income for the AY under consideration. Subsequently, an information was received from the ADIT (Inv.)-1, Jaipur to the effect that the account of the Assessee has been credited with Rs.97,36,495/- during the previous year, which is not commensurate with the Assessee’s profile.

1 On the basis of aforesaid information, the reasons for reopening of the case u/s 147 of the Act were recorded and consequently the case of the Assessee was reopened by issuing notice dated 29.03.2019 u/s 148 of the Act. The Assessee in response to the said notice though filed its return of income, however, did not e-verify the same. Therefore, the same was deemed as “invalid and not filed”, by the AO. Though various notices were issued to the Assessee, however, the Assessee remained non-compliant and therefore finding no option, the AO proceeded to complete the assessment proceedings, as ex-parte as per the provision of section 144 of the Act. 2.2 The AO by observing that there were credit entries of Rs.97,36,495/- Rs.1,76,935/- and Rs.1,90,20,346/- in IDBI Bank, HSBC Bank and ING Vaisya Bank Ltd. respectively, maintained by the Assessee also show caused the Assessee as to why the amount of Rs.2,89,33,746/- in total (97,36,495/- + Rs.1,76,935/- + Rs.1,90,20,346/-) should not be added to the income of the Assessee u/s 69A of the Act as unexplained money. 2.3 The Assessee somehow did not come up with any submission against the show cause notice, therefore the AO construed that the Assessee does not have anything concrete to say against the said addition of Rs.2,89,33,746/- and has also neither filed any return of income in response to notice u/s 148 of the Act nor furnished the relevant details/documents. Kanika Kaushal Golechha

4 The AO also observed that as per total turnover, the credit entries being Rs.2,89,33,846/-, exceeds Rs.60,00,000/- therefore it was mandatory upon the Assessee to get the books of accounts audited as mandated u/s 44AB of the Act, however, there is no document suggesting that the Assessee got the books of account audited, in contravention of the said section. 2.5 The AO thus of the aforesaid reasons and observations, ultimately made the addition of Rs.2,89,33,750/- as a round figure u/s 69A of the Act and added to the total income of the Assessee.

The Assessee, being aggrieved, challenged the said addition by filing first appeal before the Ld. Commissioner and filed its submissions and copies of invoices and details of the bank accounts maintained and copy of the bank statements along with copy of bank book providing details of each entry in the bank accounts and also claimed that return filed by the Assessee on dated 16.12.2019 in response to the notice u/s 148 of the Act, subsequently e-verified. The Assessee also filed copy of the acknowledgment of the ITR being Annexure-V before the Ld. Commissioner. The Assessee before the Ld. Commissioner also claimed that his father was diagnosed with DVT (Deep Vein Thrombosis) decease since 2011 and was advised complete bed rest by the doctor and during the period when the notices were issued by the AO u/s 142(1) of the Act, father of the Assessee was in critical condition and therefore the Assessee was unable to reply to the notices within the given opportunity. The Assessee further claimed before the Ld. Commissioner that the AO has made the addition on the basis of credits in IDBI Bank, HSBC Bank and ING Vaisya Bank amounting to Rs.2,89,33,746/- however, failed to appreciate that the Assessee was having current account in the name of M/s. Kanika Exports and therefore indulged in business transactions whereby the taxable portion is not gross receipts but profits from the business, which the Assessee had declared in the return of income filed on 16.12.2019. Kanika Kaushal Golechha

The Ld. Commissioner by considering the fact that the assessment is ex-parte u/s 144 of the Act, forwarded the submissions made by the Assessee to the AO for filling a detailed report u/r 46A of the Income Tax Rules, 1962 (in short “the Rules”).

The AO, vide letter dated 16.02.2024 submitted the report as under: “As per Form-35, the Assessee has not submitted any additional evidence. Neither NFAC has specified the details of additional evidence, if any, submitted by the Assessee. Therefore, no report is required to be submitted u/r 46A of the Rules”.

The Ld. Commissioner by considering the aforesaid peculiar facts and circumstances and the submissions made by the Assessee, assessment order and the remand report submitted by the AO, justified the addition of Rs.2,89,33,750/- being made by the AO and upheld the same more or less by observing and holding as under: - “That though several notices were issued to the Assessee by the AO, the Assessee neither responded to the notices nor filed any information to the show cause issued during the course of assessment proceedings. During the remand proceedings, the Assessee, though submitted the confirmations from the following parties for the advances received:

Aadinath Traders

Aezazbhai Anwarbhai Noorsamar : Rs.23,71,000/-

Swastik Gems

The Assessee, before us by filing various documents such as medical certificate, acknowledgment of documents submitted before the Ld. Commissioner, written submissions submitted before the Ld. Commissioner, bank statements along with bank book and confirmation of accounts along with invoices pertaining to Rockstar Trading and Kohinoor Gems and confirmation of accounts by M/s. Kanika Exports qua Aadinath Traders, Swastik Gems and Aezazbhai Anwarbhai Noorsamar, has claimed that the said documents were made available before the authorities below Kanika Kaushal Golechha however both the authorities below have sidelined the same on the reason best known to them. 8. On the contrary, the Ld. D.R. refuted the claim of the Assessee by relying on the orders passed by the Authorities below. 9. Heard the parties and perused the material available on record and given thoughtful consideration to the rival contention of the parties and the orders passed by the authorities below. Both the authorities below have specifically noted the fact for not filing substantive documents by the Assessee during the assessment and appellate proceedings. The Ld. Commissioner also specifically mentioned various facts including non-filing of documents, as noted above by us. And therefore the contention of the Assessee for filing the documents before the authorities below appears to be not tenable. However, it is a fact that in the absence of relevant documents, the issues involved remained to be adjudicated in its right and proper manner and the AO also did not consider the return filed by the Assessee on the reason that the same was not e-verified but the Assessee before the Ld. Commissioner claimed contrary. Even the documents produced by the Assessee before us prima-facie appears to be essential for proper and just decision of the case and no prejudice shall be caused to the Revenue, as it is mandate of the law as enshrined in Article 265 of the Act “that no tax can be levied except by authority of law”. Thus, without going into controversy “as to whether the documents submitted before us were also submitted before the authorities below as claimed by the Assessee and considering the peculiar facts and circumstances in totality for just and proper decision of the case and substantial justice, we are inclined to remand the instant case to the file of the Ld. Commissioner for decision afresh, suffice to say by affording reasonable opportunity of being heard to the Assessee and calling for remand report from the AO, if requires so. The Assessee is also directed to file the relevant documents before the Ld. Commissioner and make sufficient compliance. We clarify that in case of subsequent default, the Assessee shall not be entitled for any leniency. Kanika Kaushal Golechha

Thus, the case is accordingly remanded to the file of the Ld. Commissioner for decision afresh in the aforesaid terms.

In the result, the appeal of the Assessee is allowed for statistical purposes. Order pronounced in the open court on 29.09.2025. (PRABHASH SHANKAR) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER