RAHUL RAMESHCHANDRA JAIN ,MUMBAI vs. ITO WARD 22(3)(6), MUMBAI

Brief facts of the case qua other grounds of appeal are that the assessee is an individual, filed his return of income for A.Y. 2017-18 declaring income of Rs. 4,88,110/-. Initially, the return was processed under section 143(1). Later on, the case was reopened under section 147 of the Income Tax Act. The case was reopened on the basis of information that the assessee purchased immovable property and that there was difference vis a vis the value declared by assessee on sale deed and value determined by Stamp Valuation Authority at the time of registration of transaction of sale. During assessment, the assessing officer noted that assessee has shown purchase consideration of immovable property at Rs. 35.00 lakhs, however, the Stamp Valuation Authority (SVA) determined the value of property at Rs. 64,75,500/-. On show cause, the assessee made request to refer the matter to Departmental Valuation Officer (DVO) for estimation of fair market value of asset on the date of sale. The assessing officer made reference to DVO. The DVO furnished his report dated 24.09.2023, wherein he determined / estimated value of property at Rs. 36,12,000/-. The assessing officer accepted the report of DVO and accordingly made addition of difference of Rs. 1,12,000/- as deemed income under section 56(2)(vii)(b).

The assessing officer further noted that assessee has made cash deposit in ICICI Bank of Rs. 11,30,000/- which was not matching with his income profile. Thus, a show cause notice was issued to assessee to explain the source of cash deposits and as to why such amount should not be treated as unexplained under section 69A r.w.s. 115BBE. In response to such show cause, the assessee has claimed that deposit represents the earlier cash withdrawal from State Bank of India and redeposit from earlier savings and part from sale proceed from business. The cash deposit in ICICI Bank of Rs. 11,30,000/- was declared in income tax return. The submission of assessee was not accepted by assessing officer. The assessing officer prepared the summary of cash deposit and withdrawal in bank account with ICICI Bank and State Bank of India on page 7 of assessment order and held that there was total cash in hand with assessee of Rs. 99,071/- on 31.03.2016. The assessee was also allowed credit of sale proceed of business of Rs. 3,01,842/- and remaining of Rs. 7,29,087/- was treated as unexplained.

Aggrieved by the additions in the assessment order, the assessee filed appeal before ld. CIT(A). Before ld. CIT(A), the assessee filed detailed statement of fact. On the addition under section 56(2)(vii)(b), the assessee stated that there difference value declared by assessee and value determined by DVO is less than 10%, therefore, no addition is warranted as per proviso to section 50C, 43CA as well as proviso to section 56(2)(vii)(b). On the addition of unexplained cash deposit, the assessee stated that he actively engaged in the business of trading and dealing in electronic items on online platforms as a commission basis. Such business model involves ordering products online like Flipkart Internet Private Limited based on the requirements of friends and relatives. The assessee made payment by using credit card and internet banking facility. The assessee acted as an intermediary. The assessee also placed order on Snapdeal or Shoopclues and booking of Air Tickets. The assessee earned commission. The payment from friends and relatives were received in cash and deposited in his bank. The assessee furnished details of products purchased by assessee on behalf of friends and relatives and flight tickets books from his friends and relatives and the details of cash deposit with the invoices raised by online platforms.

The ld. CIT(A) on considering the submission of assessee, on the issue of addition under section 56(2)(vii)(b) held that once the benefit of sub-section (2) of section 50C is given to the assessee, he is not eligible for benefit of third proviso of section 50C. On the addition of unexplained credit, the ld. CIT(A) held that assessee has claimed to have received Rs. 10,97,720/- from his friends and relatives for purchases of online goods and air ticket but assessee has shown turnover of Rs. 3,014,842/-, thus, benefit to that extent has already been given by assessing officer. No confirmation of such parties is filed by the assessee. The details in the chart furnished by assessee cannot be relied as no evidence is furnished by assessee which may substantiate those purchases and bookings were made from Flipkart through this account and confirmed the addition. Further, aggrieved the assessee is filed present appeal before Tribunal.

I have heard the submissions of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr.

On the other hand, ld. Sr. DR for the revenue supported the order of ld. AO / ld. CIT(A).

I have considered the rival submissions of both the parties and find that during the assessment, the assessing officer made reference to the DVO. The DVO determined / estimated the value of immovable property at Rs. 36,12,000/-. Thus, the assessing officer made addition on account of difference between the value declared by the assessee and value determined by DVO. I find that once the assessee is given benefit of sub-section (2) of section 50C, the assessee is not eligible for the benefit of third proviso to section 56(2)(vii)(b). The assessee has not challenged valuation report of DVO. Thus, the assessee is not eligible for any other relief. In my view, the assessee has already got substantial relief on the basis of report DVO. In the result ground no. 1 of the appeal is dismissed.

Ground no. 3 relates to addition of Rs. 7,29,087/-. The ld. AR of the assessee submits that ld. CIT(A) confirmed the action of assessing officer by taking view that assessee has not filed confirmation of parties that is friends and relatives for whom the assessee has acted as an intermediary. The ld. AR submits that during the relevant financial year, the assessee made purchases of mobile phone, flight ticket or certain electronic gadgets or personal articles of his friends or relatives. The assessee furnished complete details of such items. The assessee furnished details in the form of chart. Due to paucity of time, the assessee could not furnished confirmation of his friends and relatives. Now he has filed copy of affidavit, email communication by online platforms, tax invoices and the details of payment. Such document filed in the form of paper book running from page no. 1 to 486. The assessee is also filed application for admission of additional evidence under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1962. The ld. AR of assessee submits that all such evidences are relevant for adjudication of issue involved in the appeal. The assessee could not furnish all such evidences due to shortage of time. The ld. AR of assessee prayed for admission of such additional evidence and prays that such evidence may be admitted and on considering such evidence addition may be deleted.

On the other hand, ld. Sr. DR for the revenue supported the finding of lower authorities on addition of unexplained credit. The ld. Sr. DR for the revenue submits before assessing officer, the assessee has not taken such plea that he was acting as an agent for his friends and relatives, however before ld. CIT(A), the assessee raised such plea. The assessee failed to produce supporting evidence as has been held by ld. CIT(A). The assessing officer already allowed benefit of total turnover of assessee as well as cash in hand.

Before Tribunal, the assessee has filed voluminous documents along with the details of various items, various invoices along with the details of identity of his friends and relatives. Considering the veracity of all such evidences which is essential for effective adjudication of grounds of appeal, such evidences taken on record. Considering the fact that such evidences filed for the first time and primary evidence in the form of bank statement or details of credit cards are still not filed on record to show the patron of debit and credit entry to substantiate the plea of assessee. Hence this issue is restored back to the file of jurisdictional assessing officer to verify the facts and evidence and allow appropriate relief to the assessee in accordance with law. In the result, ground no. 3 of appeal of assessee is allowed for statistical purpose.

In the result, the appeal of assessee is partly allowed.