HARBIRSING Y. BHAVRA,THANE vs. ITO-4(5), THANE

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ITA 1485/MUM/2020Status: DisposedITAT Mumbai27 July 2022AY 2015-167 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, acknowledging the assessee's explanation regarding his employer's demise and the subsequent discovery of the transactions. The matter was restored to the Assessing Officer for fresh adjudication.

What were the facts?

The assessee's appeal concerns an addition of ₹32,65,863/- made by the Assessing Officer as unexplained credits under Section 68. The assessee claimed ignorance of transactions in bank accounts opened in his name by his deceased employer, who also handled his tax affairs.

What were the issues?

Whether the cash credit appearing in the assessee's balance sheet can be treated as unexplained income when the assessee claims ignorance due to his employer's actions. Whether sufficient cause existed for the delay in filing the appeal.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC” MUMBAI

Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL

For Appellant: Mr. Shashank Mehta, AR
For Respondent: Mr. Ajeya Kumar Ojha, Sr. DR
Hearing: 29/06/2022Pronounced: 27/07/2022

PER OM PRAKASH KANT, AM

1.

1. This appeal by the assessee is directed against order dated 20/09/2019 passed by the Ld. Commissioner of Income-tax (Appeals)-3, Thane [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following ground:

Harbirsing Y. Bhavra 2 ITA No. 1485/M/2020

1. In the facts and circumstances of the In the facts and circumstances of the case and in law, the Ld. case and in law, the Ld. CIT(A)-3, Thane has erred in confirming addition of 3, Thane has erred in confirming addition of 3, Thane has erred in confirming addition of ₹32,65,863/ ₹32,65,863/- u/s 68 of the Act as unexplained credits in the u/s 68 of the Act as unexplained credits in the books of accounts. books of accounts.

2.

At the outset, the the outset, the Ld. counsel of the assessee submitted that of the assessee submitted that appeal has been filed with the delay. The impugned order has been appeal has been filed with the delay. The impugned order has been appeal has been filed with the delay. The impugned order has been passed on 20/09/2019 and therefore appeal before the passed on 20/09/2019 and therefore appeal before the passed on 20/09/2019 and therefore appeal before the Tribunal was due on or before 19/11/2019, whereas this appeal is been filed was due on or before 19/11/2019, whereas this appeal is been filed was due on or before 19/11/2019, whereas this appeal is been filed on 12/03/2020 i.e. appeal has i.e. appeal has been filed with the delay of 113 days. been filed with the delay of 113 days. The Ld. counsel referred to the affidavit of the assessee wherein he referred to the affidavit of the assessee wherein he referred to the affidavit of the assessee wherein he submitted that Income Income-tax affairs of the assessee were used to be tax affairs of the assessee were used to be handled by his employer handled by his employer. Mr. Rafiq Khan, who passed away on passed away on 02/12/2019 and only a 02/12/2019 and only after his demise, documents were provided to documents were provided to the assessee in the last week of January 2020 and thereafter on the assessee in the last week of January 2020 and thereafter on the assessee in the last week of January 2020 and thereafter on professional advice, he filed the appeal before the professional advice, he filed the appeal before the Tribunal Tribunal. The Ld. DR did not controvert the facts narrated by the assessee in the did not controvert the facts narrated by the assessee in the did not controvert the facts narrated by the assessee in the affidavit. In the circumstances, we were of the opinion the circumstances, we were of the opinion the circumstances, we were of the opinion that there

Harbirsing Y. Bhavra 3 ITA No. 1485/M/2020 exist a sufficient cause for not filing the appeal by the assessee exist a sufficient cause for not filing the appeal by the assessee exist a sufficient cause for not filing the appeal by the assessee within the prescribed period and therefore within the prescribed period and therefore delay in delay in filing of the appeal is condoned and the appeal is admitted for adjudication. appeal is condoned and the appeal is admitted for adjudication. appeal is condoned and the appeal is admitted for adjudication.

3.

Briefly stated facts of the case are that the assessee e iefly stated facts of the case are that the assessee e iefly stated facts of the case are that the assessee e-filed his return of income on 18/02/2017 declaring total income of of income on 18/02/2017 declaring total income of of income on 18/02/2017 declaring total income of ₹2,96,900/-. The case was selected for scrutiny any statutory notices case was selected for scrutiny any statutory notices case was selected for scrutiny any statutory notices under the Income-tax tax Act, 1961 (in short ‘the Act’) were were issued and served upon the assessee. The assessee was asked to explain cash on served upon the assessee. The assessee was asked to explain cash on served upon the assessee. The assessee was asked to explain cash on hand of ₹32,65,863/ 863/-appearing in the relevant column of the appearing in the relevant column of the balance sheet filed along with return of income led along with return of income led along with return of income, however, no response was filed by the assessee, despite several opp response was filed by the assessee, despite several opp response was filed by the assessee, despite several opportunities provided and therefor fore, in absence of source of the cash on hand e of source of the cash on hand, the Assessing Officer treated the same as unexplained cash credit in the same as unexplained cash credit in terms of section 68 of the terms of section 68 of the Act. The assessee, filed further appeal . The assessee, filed further appeal before the Ld. CIT(A) however no before the Ld. CIT(A) however no compliance was made of the was made of the various notices issued to the assessee for providing opportunity of various notices issued to the assessee for providing opportunity of various notices issued to the assessee for providing opportunity of Harbirsing Y. Bhavra 4 ITA No. 1485/M/2020 hearing, thus Ld. CIT(A) dismissed the appeal of the assessee and hearing, thus Ld. CIT(A) dismissed the appeal of the assessee and hearing, thus Ld. CIT(A) dismissed the appeal of the assessee and upheld the addition made by the upheld the addition made by the Assessing Officer.

4.

Before us the Ld. counsel Ld. counsel of the assessee submitte of the assessee submitted a paper book containing pages 1 to 42 which consist of copy of the return of book containing pages 1 to 42 which consist of copy of the return of book containing pages 1 to 42 which consist of copy of the return of income filed and bank statement of the assessee in respect of bank income filed and bank statement of the assessee in respect of bank income filed and bank statement of the assessee in respect of bank accounts maintained in Central Bank of India ined in Central Bank of India (A/c No. ined in Central Bank of India ( ( 1182571864); Bassin Catholic Cooperative Bank ( sin Catholic Cooperative Bank (A/c No. SB sin Catholic Cooperative Bank ( 26335); Bank of India ( 335); Bank of India (A/c No. ending with 227) and Syndicate 227) and Syndicate Bank (A/c No. 54752200086488). The Bank (A/c No. 54752200086488). The Ld. Counsel Ld. Counsel submitted that bank statements have been filed for the first time before the bank statements have been filed for the first time before the bank statements have been filed for the first time before the Tribunal.

5.

We have heard rival submiss We have heard rival submission of the parties on the ion of the parties on the issue-in- dispute and perused the relevant material on record. The dispute and perused the relevant material on record. The dispute and perused the relevant material on record. The Ld. counsel submitted that assessee was not aware of the business submitted that assessee was not aware of the business submitted that assessee was not aware of the business

Harbirsing Y. Bhavra 5 ITA No. 1485/M/2020 which was carried out by his employer using his bank statement. which was carried out by his employer using his bank statement. which was carried out by his employer using his bank statement.

The relevant part of his affidavit is reproduced as under: The relevant part of his affidavit is reproduced as under: The relevant part of his affidavit is reproduced as under:

1.

That I was employed with Mr. Rafiq Habib khan. Mr. Rafiq That I was employed with Mr. Rafiq Habib khan. Mr. Rafiq That I was employed with Mr. Rafiq Habib khan. Mr. Rafiq Habib khan had opened various Bank Accounts in my name to Habib khan had opened various Bank Accounts in my name to Habib khan had opened various Bank Accounts in my name to undertake some basic transactions. Being my employer, I had undertake some basic transactions. Being my employer, I had undertake some basic transactions. Being my employer, I had no objections then as I was under the honest impression that no objections then as I was under the honest impression that no objections then as I was under the honest impression that Mr. Rafiq Habib khan Mr. Rafiq Habib khan had opened these accounts to route some had opened these accounts to route some basic transactions. Mr. Rafiq Habib khan solely used to operate basic transactions. Mr. Rafiq Habib khan solely used to operate basic transactions. Mr. Rafiq Habib khan solely used to operate these accounts these accounts 2. That all these transactions undertaken by Mr. Rafiq Habib That all these transactions undertaken by Mr. Rafiq Habib That all these transactions undertaken by Mr. Rafiq Habib khan solely and I was not aware about any of these khan solely and I was not aware about any of these khan solely and I was not aware about any of these transactions. transactions. 3. That Mr. Rafi That Mr. Rafiq Habib khan also used to handle my Income Tax q Habib khan also used to handle my Income Tax Matters. I was under the honest impression that Mr. Rafig Matters. I was under the honest impression that Mr. Rafig Matters. I was under the honest impression that Mr. Rafig Habib khan was carefully handling all the income tax matters Habib khan was carefully handling all the income tax matters Habib khan was carefully handling all the income tax matters on timely basis. on timely basis. 4. That Mr. Rafiq Habib khan passed away on December 02, That Mr. Rafiq Habib khan passed away on December 02, That Mr. Rafiq Habib khan passed away on December 02, 2019. Only after hi 2019. Only after his demise, I was made aware regarding these s demise, I was made aware regarding these transactions and very few documents were provided to me only transactions and very few documents were provided to me only transactions and very few documents were provided to me only in the last week of January, 2020. That, only after the receipt of in the last week of January, 2020. That, only after the receipt of in the last week of January, 2020. That, only after the receipt of the documents, I learnt that Mr. Rafiq Habib khan had the documents, I learnt that Mr. Rafiq Habib khan had the documents, I learnt that Mr. Rafiq Habib khan had undertaken such huge transactio undertaken such huge transactions and I had no idea about ns and I had no idea about the magnitude of these transactions. the magnitude of these transactions. 5. Hence, this affidavit is being made in support of my contention Hence, this affidavit is being made in support of my contention Hence, this affidavit is being made in support of my contention that the transactions reflected in the bank accounts and that the transactions reflected in the bank accounts and that the transactions reflected in the bank accounts and Harbirsing Y. Bhavra 6 ITA No. 1485/M/2020

figures mentioned in the Income Tax Return do not belong to figures mentioned in the Income Tax Return do not belong to figures mentioned in the Income Tax Return do not belong to me. 5.1 The Ld. counsel Ld. counsel of the assessee submitted that assessee is of the assessee submitted that assessee is willing to appear before the willing to appear before the Assessing Officer and explain the source and explain the source of cash balance appearing in the balance sh of cash balance appearing in the balance sheet and therefore one et and therefore one more opportunity might be provided to the assessee. We find that more opportunity might be provided to the assessee. We find that more opportunity might be provided to the assessee. We find that assessee has not been represented either before the assessee has not been represented either before the assessee has not been represented either before the Assessing Officer or before the Ld. CIT(A). The main reason for non or before the Ld. CIT(A). The main reason for non or before the Ld. CIT(A). The main reason for non- compliance has been explained by the assessee as his income tax compliance has been explained by the assessee as his income tax compliance has been explained by the assessee as his income tax affairs were being looked after by his employer who expired on affairs were being looked after by his employer who expired on affairs were being looked after by his employer who expired on 02/12/2019. In view of facts and circumstances and in the interest 9. In view of facts and circumstances and in the interest 9. In view of facts and circumstances and in the interest of substantial justice, we set aside the order of the Ld. CIT(A) and of substantial justice, we set aside the order of the Ld. CIT(A) and of substantial justice, we set aside the order of the Ld. CIT(A) and Assessing Officer and restore the matter to the file of the and restore the matter to the file of the and restore the matter to the file of the Assessing Officer for deciding the issue for deciding the issue-in-dispute afresh. The asses dispute afresh. The assessee is directed to cooperate before the operate before the Assessing Officer and file detailed and file detailed books of accounts including narration of bank statements et books of accounts including narration of bank statements et books of accounts including narration of bank statements etc.

Harbirsing Y. Bhavra 7 ITA No. 1485/M/2020 required for verification issue in dispute involved. The ground of the required for verification issue in dispute involved. The ground of the required for verification issue in dispute involved. The ground of the appeal of the assessee is accordingly allowed for statistical appeal of the assessee is accordingly allowed for statistical appeal of the assessee is accordingly allowed for statistical purposes.

6.

In the result, the appeal of the assessee is allowed for statistical In the result, the appeal of the assessee is allowed for statistical In the result, the appeal of the assessee is allowed for statistical purposes.

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