ITO, WARD 1(5), KOLHAPUR, KOLHAPUR vs. TATYA SAHEB KORE SAH DUDHSAKHAR VAHATUK SANSTHA LTD, KOLHAPUR

Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the additions of Rs. 1,91,53,010 and Rs. 34,64,506/- by admitting and relying upon additional evidence such as trial balance, statement of accounts and return of income under a different PAN, which were not produced before the Assessing Officer, in violation of Rule 46A of the Income- tax Rules, 1962. 2. Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not affording the Assessing Officer a reasonable opportunity to examine and verify the additional evidence or to furnish a remand report, as mandated under Rule 46A(3).

Whether, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in concluding that the income had already been offered to tax under another PAN, without proper verification and without establishing a clear nexus between the receipts reflected in TDS data and the income declared in the return filed under the other PAN.

The appellant craves leave to add, alter, amend or withdraw any of the above grounds of appeal during the course of appellate proceeding before the Hon'ble Tribunal.”

The brief facts of the case are that, the Income Tax Department has received information that the assessee has received contract income to the tune of Rs.19,05,35,332/- and also made time deposits of Rs. 34,64,506/- and the assessee has not filed the return of income for the A.Y. 2017-18. The Assessing Officer (A.O) has reason to believe that income has escaped assessment and fallowed the due process of law and issued notice u/sec 148 of the Act. Subsequently, the A.O has issued notice u/sec 142(1) of the Act on various dates and a show cause notice and there was no compliance. The A.O find that the assessee has not made submissions with supporting sources and evidences on the disputed issue of time deposits and contract income received in spite of providing adequate opportunities of hearing and finally the A.O considering the information available on record has invoked the provisions of section 144 of the Act and has issued notice u/sec133(6) of the Act on the bank and obtained bank statement and similarly on the contractor and has obtained the requisite details. Finally the A.O made addition of (i) unexplained time deposits u/sec69A of the Act of Rs.34,64,506/- and (ii) estimated business income @10% on the total contract receipts, which works out to Rs.1,91,53,010/- and assessed the total income of Rs.2,26,17,516/-and passed the order u/sec147 rws1444 r.w.s144B of the Act dated 23.02.2023. 4. Aggrieved by the order, the assessee has filed the appeal with the CIT(A). In the appellate proceedings, the CIT(A) considered the grounds of appeal, statement of facts, findings of the A.O and the assessee submissions with supporting additional evidences in respect of the claims of the assessee and deleted the additions and allowed the assessee appeal. Aggrieved by the order of the CIT(A), the Revenue has filed the appeal with the Hon’ble Tribunal.

At the time of hearing, the Ld.DR submitted the CIT(A) has erred in admitting the additional evidences furnished by the assessee without providing fair opportunity to verify and examine the evidences by the assessing officer and CIT(A) has also erred in observing that the income has been offered to tax under PAN without proper verification facts and therefore deleting the additions is in violation of Rule 46A of the I T rules. Further the CIT (A) has erred in overlooking the factual aspects that the assessee could not file nor explained the transactions of contract receipts and also the time deposits made in the bank with evidences in spite of providing adequate opportunities by the A.O in the assessment proceedings and the Ld.DR prayed for allowing the Revenue appeal. Per contra, the Ld.AR supported the order of the CIT(A) and factual paper book.

We heard rival submission and perused the material record. The Ld. DR submitted that the CIT(A) has erred in deleting the additions based on the additional evidences filed by the assessee in the appellate proceedings for the first time and the assessing officer was not provided opportunity to examine and verify the evidences and thereby violated the provisions of rule46A of the IT rules and CIT(A) has erred in observing that the income has been offered to tax under PAN without proper verification facts. Further the assessee could not file nor explained the transactions of contract receipts and the time deposits in the bank with evidences in spite of providing adequate opportunities by the A.O in the assessment proceedings. We find the assessee has not submitted any information before the assessing officer and the A.O has issued notice u/sec 133(6) of the Act on the contract company who has hired tankers from the assessee for transportation milk from one place to another and obtained the financial transaction details and the A.O has also issued notice u/sec133(6) of the act on the bank and obtained the details of time deposits. The Ld.AR submitted that the assesse has submitted the information for the first time before the CIT(A). We find the CIT(A) has considered submissions and evidences filed by the assessee in support of the claims and deleted the additions dealt at Page 9 Para 7.1to 7.5 of the order read as under: “7.1 Ground No 1 to 3 are all directed against the AO making additions of Rs 1,91,53,010as contract income of the appellant and Rs 34,64,506as interest on deposit with Shri Warana Sahakari Bank Ltd.I have carefully perused the facts of the case, evidences on record and the submission of the appellant. The appellant is a Co-operative Society duly registered under the Co-operative Societies Act. The appellant submitted that due to a purely inadvertent and bona fide error, the appellant came to be allotted two Permanent Account Numbers, the particulars of which are as under:

2 The appellant submitted that PAN AAACT6631R was obtained due to an initial incorrect selection of status as "Company" at the time of application. Subsequently upon realizing thatPAN status as Company disentitled the appellant from claiming benefits under Section 80P, the appellant immediately applied for a fresh PAN with correct status resulting in allotment of PAN AAAAJ3488N The appellant submitted that from the moment PAN AAAAJ3488N was allotted all business activities, maintenance of books of account, banking transactions, and filing of income-tax returns were carried out exclusively under PAN AAAAJ3488N.

3 The appellant submitted that before obtaining the correct PAN, it had opened a bank account, and circulated PAN AAACT6631R to vendors, contractees, and customers. The appellant submitted that after receipt of PAN AAAAJ3488N, it intimated all concerned parties to update the PAN in their records. However, appellant submitted that due to factors beyond the appellant's control, certain parties failed to update the PAN in their TDS systems, and continued to deduct and report TDS under the incorrect PAN AAACT6631R.

4 I find that no business activity was carried out under PAN AAACT6631R and the entire contract receipts of Rs1,91,53,010 have already been accounted for and offered to tax in the correct PAN. Therefore, the impugned addition amounts to taxing the same income twice, which is impermissible. Further, the time deposits of Rs 34,64,506 has been made out of regular business receipts and is fully recorded in the books maintained under PAN AAAAJ3488N.

5 In view of the facts and discussion, the AO is directed to delete the addition y Rs.1.91.53.010 made towards contract receipts and Rs 34.64.506 made towards alleged unexplained time deposits as such was offered to tax in the return filed under PAN allotted under the status of Co-operative Society.

Whereas, the assessee in the appellate proceedings has filed the details and evidences pertaining to contract receipts, time deposits along with the trial balance, statement of accounts and income tax return filed under different PAN dealt at Page 3 Para 5 of the CIT(A)order, which is not disputed. Prima facie the CIT(A) has accepted these evidences in violation of rule 46A of the I T rules and deleted the additions. The CIT(A) has not provided fair opportunity to the assessing officer to examine and submit the comments/remand report. We considering the facts, circumstances and submissions set aside the order of the CIT(A) and restore the disputed issues to the file of the Assessing officer to adjudicate a fresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And the grounds of appeal of the revenue are allowed for statistical purposes.

In the result, the appeal filed by the revenue appeal is allowed for statistical purpose. ITA No. 2012/PUN/2026, A.Y. 2018-19

As the facts and circumstances in this appeal is identical to ITA No.2011/PAN/2026 for the A.Y 2017-18 (except variance in figures) and the decision rendered in above paragraphs 6 to 8 would apply mutatis mutandis for this appeal also. Accordingly, the grounds of appeal are allowed for statistical purpose.

In the result, the two appeals filed by the Revenue are allowed for statistical purposes.

The Pr. CIT concerned. 4. तिभागीयप्रतितिति, आयकरअिीिीयअतिकरण, “B” बेंच, पुणे/ DR, ITAT, “B” Bench, Pune. गार्डफ़ाइि / Guard File. 5. ////