RAMEL AJIT SINGH,NAVI MUMBAI vs. COMMISSIONER OF INCOME-TAX (APPEALS), INCOME TAX DEPARTMENT

Aggrieved by the additions in the assessment order, the assessee filed appeal before ld.CIT(A). Before ld.CIT(A) the assessee filed his detailed written submissions. The submissions of the assessee are recorded in Para No. 4 of order of ld.CIT(A). The assessee in his submissions submitted that he is carrying on bussing of Auto Garage in thename of “Raju Auto Garage” and doing repair and maintenance of auto and automobiles and bikes. He filed (AY: 2014-15) RAMEL AJIT SINGH return of income under section 139 of the Act declaring taxable income of Rs.1,91,350/- by showing total business receipt of Rs.4,72,300/- from his business. During assessment, due to Covid-19 pandemic he was unable to upload return in response to notice issued on 18.11.2021 and 15.12.2021.

The ld.CIT(A) after considering the submissions of assessee, gave his finding in Para Nos. 5 & 6 of his order. The ld.CIT(A) in Para No. 6.2 of his order recorded that assessee is contesting the addition made by the Assessing Officeron the ground that addition is made without considering the fact that assessee was having gross income of Rs.8,42,400/- from his business out of which cash was deposited in various bank accounts. In the written submissions, the assessee stated that assessee disclosed gross total receipt from “Raju Auto Garage” of Rs.4,72,300/- and net taxable income of Rs.1,99,750/-, so there is no question of unexplained cash credit under section 68 of the Act which the Assessing Officer made. The assessee prepared revised working after receipt of notice but unable to upload due to technical ground. The assessee has filed unsigned balance sheet as on 31.03.2014 and computation of total income as on 31.03.2014. The ld.CIT(A) in Para No. 6.4 of his order further noted that in the computation of total income filed during appeal, assessee disclosed taxable income of Rs. 3,03,353/- whereas in the return of income filed on 20.02.2015 assessee (AY: 2014-15) RAMEL AJIT SINGH disclosed total income of Rs.1,91,350/-. In the computation of total income filed during the Appellate Proceedings for the year ended,the assessee has shown income from business of Rs.2,58,240/- i.e., net business income from Automobile industry as Rs.2,58,240/-. The ld.CIT(A) held that the assessee has not filed any evidence in support of gross business income of Rs.8,42,400/- and no cash flow statement explaining the source of the cash deposited in the bank account, on the basis of such observations, ld.CIT(A) upheld the addition made by the Assessing Officer. Further, Aggrieved the assessee has filed present appeal before the Tribunal.

We have heard the submissions of Learned Authorised Representative (Ld.AR) of the assessee and Learned Senior Departmental Representative (Sr.DR) for the revenue. Ld.AR of the assessee also filed short written synopsis on our directions. During the hearing of the appeal, the ld AR of the assessee fairly submitted that impugned order by ld CIT(A) was passed on 17.12.2022, however, this appeal before Tribunal was filed on 09.01.2025, thus there is delay of two year and thirty days. The assessee has already filed application for condonation of delay in the form of affidavit. The ld AR of the assessee submits that delay in filing appeal is neither intentional or deliberate. The assessee is a man of small means and was not aware of technicalities of tax laws and was dependent on his consultant. His consultant took time to file appeal before Tribunal. The assessee is really interested in persuing his case on merit and would suffer prejudice if the delay in filing appeal is not condoned. In support of his submission, the ld AR of the assessee relied on (AY: 2014-15) RAMEL AJIT SINGH the decision of Mumbai Tribunal in Mizuho Corporate Bank Vs ADIT in dated 26.03.2014.

On merit of the case, the ld AR of the assessee submits that the assessee was engaged in the repairing of two wheelers and Auto in the name of “Raju Auto Garage” in Navi Mumbai, copy of trade licence under Shop & Establishment Act, issued by Municipal Corporation Navi Mumbai is placed on record. During the year under consideration, the assessee earned gross receipt of Rs.8,42,400/- from repairs and maintenance of Auto and two wheelers, though, while filing return of income under section 139 on 20.02.2015, the assessee has shown gross income of Rs.1,99,750/-. Case of assessee was reopened on the basis of information about cash depositswith Himachal Mitra Mandal Co-op Credit Society which was more than the income reported. It was informed that an amount of Rs.5,87,678/- deposited inHimachal Mitra Mandal Co-op Credit Society. The Assessing Officer treated such deposited as unexplained cash deposits under section 68 of the Act. On the service of draft assessment order, the assessee filed his objections / explanation and also furnished bank statements, computation of total income, profit andloss account and balance sheet. The assessee also filed revised computation of total income. In the revised computation of total income, the assessee has shown gross business receipt of Rs. 8,42,400/- from his automobile work and after debiting expenses of Rs. 5,84,160/-, the assessee has offered business income, copy of revised computation of total income is filed on record. In the revised statement of total income, the assessee has shown business (AY: 2014-15) RAMEL AJIT SINGH income of Rs.2,58,240/-, income from house property of Rs.33,600/- and from other sources at Rs.26,289/- i.e., total of Rs.3,18,129/-. The assessee after claiming deduction under Chapter VI-A of Rs.14,776/- offered taxable income at Rs.3,03,353/-. The assessee also paid tax of Rs.16,240/-. Revised computation of income and tax receipt is also placed on record. The total deposit with Himachal Mitra Mandal Co-op Credit Society was only Rs.3,80,445/-only, which was part of receipt of two-wheeler and auto repair and maintenance business. The assessee while filing revised computation, in response to notice under section 142(1) of the Act included the said receipt and has paid tax thereon. Thus, before finalizing the assessment order, the assessee has paid more tax than the liability. Once the assessee has already considered all the receipts in computing the total tax liability and has paid the tax thereon, therefore no addition on account of cash deposits to be made.

On the other hand, Learned Senior Departmental Representative (Sr.DR) for the revenue supported the orders of lower authorities. Against the plea of condonation of delay, the ld Sr DR for the revenue submits that the assessee is relying on self-serving story. The delay in filing appeal is inordinate and may not be condoned. On merits of the addition, the Sr.DR for the revenue submits that no supporting documents to substantiate the cash deposit with Himachal Mitra Mandal Co-op Credit Society were furnished. Since the assessee failed to substantiate the cash deposits therefore, the Assessing (AY: 2014-15) RAMEL AJIT SINGH Officer added such deposit under section 68 of the Act. The assessee took the plea of business receipt, no evidence of such business activity was filed by the assessee. The assessee filed revised computation of total income without filing revised return of income. The Assessing Officer has no power to accepted revised computation of income in absence of revised return of income.

We have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. Firstly, we shall consider the plea of ld AR of the assessee on condonation of delay. The ld CIT(A) passed the impugned order on 17.12.2022. However, the present appeal was filed before tribunal was filed on 09.01.2025. We find that registry of Tribunal, while issuing the defect memo to the assessee, specific defect with the regard to delay in filing appeal was not issued, though, it was pointed out that date of communication/ service of order is not correctly not filled. In response to such defect the assessee filed his response and accepted that communication of impugned order as on 17.12.2022. Thus, in such circumstance, the assessee has filed application for condonation of delay in filing present appeal. Before us, the ld AR of the assessee vehemently urged that the assessee is a man of small means and was not aware of technicalities of tax laws and was dependent on his consultant. His consultant took time to file appeal before Tribunal. The assessee is really interested in persuing his case on merit and would suffer prejudice if the delay in filing appeal is not condoned. Though, we find that the arguments taken by the assessee are not (AY: 2014-15) RAMEL AJIT SINGH much convincing, yet keeping in the principal laid down by Hon’ble Apex Court in Land Acquisition Collector Vs Mst Katiji & Others 167 ITR 471 SC, that when technical consideration and cause of substantial justice and pitted against each other, cause of substantial justice deserve to be preferred. It is also settled that while considering the plea of condonation of delay, the conduct of the party is also important, if the parties conduct is bonafide and/ or not melafide. Thus, considering the facts of the present case, we find that the assessee is interested in pursuing his case and there is no melafide intention of the assessee in filing the appeal belatedly, hence delay in filing appeal is condoned. Now adverting the merits of the case.

We find that case of assessee was reopened on the basis of information with the Assessing Officer that there were cash deposits of Rs.5,87,678/- with Himachal Mitra Mandal Co-op Credit Society. The assessing officer after recording reasons of reopening and serving notice under section 143(2)/ 142 proposed to make addition of such cash deposits by taking view that the assessee has not offered any explanation about the nature and source of such deposits. On service of draft assessment order, the assessee submitted that there were total cash deposits in Himachal Mitra Mandal Co-op Credit Society of Rs.3,80,445/-. Apart from such deposits, the assessee also earned interest from Himachal Mitra Mandal Co-op Credit Society of Rs. 19,905/-, income from house property of Rs.33,600/- and deposit in Bank of India of Rs. 13,580/- and deposit in State Bank of India of Rs.97,705/-, thus aggregating of total receipt of Rs.5,45,234/-. On considering such plea, the Assessing (AY: 2014-15) RAMEL AJIT SINGH Officer took his view that the assessee shown taxable income of Rs.1,91,350/- , therefore, Rs.3,53,884/- (Rs.54,5,234/- – Rs.1,91,350/-) is undisclosed income of assessee. Though, taxing the entire deposits or total receipt is not proper, as all receipt cannot be income, when the assessee took the plea that he was doing some business activities. We find that the Assessing Officer while making addition of Rs. 3,53,884/- has accepted that cash credit in Himachal Mitra Mandal Co-op Credit Society was of Rs. 3,80,445/- only.

We find that before ld.CIT(A) the assessee apart from other submissions, assessee submitted that he hadalready filed revised computation of income and paid tax of Rs.16,240/-. The assessee in revised computation of income has considered business receipts from automobile work of Rs.8,42,400/- which includes Rs.3,80,445/- cash deposit in Himachal Mitra Mandal Co-op Credit Society. The assessee claimed expenses of Rs.5,84,160/- in the automobile business thereby offered business income of Rs.2,58,240/-. The assessee also offered income from house property of Rs.33,600/- and other income on account of interest from FD in savings bank of Rs.26,289/- and after claiming deduction under Chapter VI-A of Rs.14,776/- offered taxable income of Rs.3,03,350/- on which self-assessment tax was paid at Rs.16,240/-. We find that ld.CIT(A) not accepted such plea of assessee by taking view that assessee has not filed any evidence of gross business income of Rs.8,42,400/- and no cash flow statement about cash deposits is filed. As

It is settled position under income tax proceedings that the Assessing Officer has no authority to accept revise computation of income without filing revised return by the assessee, however, such restriction is not applicable on the discretion and power of appellate authorities. The ld CIT(A) not accepted the revised computation of income by simply taking view that the assessee has not filed any evidence of gross business income. Considering the overall facts and circumstances of the case and the fact that the assessee is engaged in the repairing of two wheelers in the name of “Raju Auto Garage”, copy of trade licence under issued by Municipal Corporation Navi Mumbai is available on record. It is pertinent to mention here that both the Assessing Officer and the ld CIT(A) have not rejected the gross receipts declared by the assessee.

Rather, the assessee himself offered amount of cash credit in the undisclosed bank account for taxation. In the result, the ground of appeal related with the reopening is dismissed.

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