SRIYANS ENTERPRISES LIMITED,KOLKATA vs. I.T.O., WARD - 5(1),, KOLKATA

On careful consideration of the above contention of the assessee, it is found that the delay is owing to the circumstances beyond the control of 4 the assessee for which the assessee could not file appeal before the Tribunal within the time. Accordingly, I condone the delay of 136 days in filing of the appeal and the appeal of the assessee is admitted for hearing. 4. Brief facts of the case are that the assessee filed its return of income as per provisions of section 139(1) of the Act for AY 2016-17 on 19.10.2016 declaring total income at Rs. 1,89,510/-. As per the information under the category "High Risk CRIU/VRU in accordance with the risk management strategy formulated by the CBDT that the assessee had high value of transaction in the form of investment in units of Mutual Fund amounting to Rs.2,96,50,000/- during the F.Y. 2015-16 relevant to A.Y. 2016-17. Accordingly, the case was reopened after recording reason for reopening and obtaining approval from competent authority and notice u/s.148 of the Act was issued on 27.07.2022. The assessee failed to file any return of income in response to the said notice u/s. 148 of the Act. The AO also issued notice u/s.142(1) of the Act on dated 12.01.2023 & 31.03.2023, however, the assessee only submitted part reply to the notices issued. The AO completed the assessment order u/s. 147 r.w.s 144B of the Act assessing total income at Rs.48,89,510/-. The AO made the single addition of Rs.47,00,000/-on account of unexplained investment u/s.69 of the Act. 5. Aggrieved by the said addition, the assessee preferred an appeal before the ld.CIT(A), however, the ld. CIT(A) dismissed the appeal of the assessee. 5 6. Now, the assessee is in further appeal before the Tribunal with the following grounds of appeal :- 1. For that, the Ld. Appellate Authority dismissed the appeal without discussing the points of determination, decision thereon and reason for such decision, which is a gross violation of section 250(6) of the I.T. Act, 1961

For that, the Ld. Appellant Authority is under legal obligation to discuss all the points of determination, the decision thereon, and the reason for such a decision before dismissing the appeal, which, in the instant case, the Ld. Appellate Authority failed to discharge such duty.

For that, the Ld. Appellate Authority was wrong and erroneous both on facts as well as in law in upholding the order passed by the Assessment Unit that, as the investment of Rs. Rs.47,00,000/- made in the mutual fund remained unexplained, said investment was treated as unexplained investments under section 69 of the Act exigible to tax under section 115BBE of the said Act.

For that an investment can be treated as an unexplained investment under section 69 of the said Act if the said investment is not recorded in the books of accounts maintained by the assessee.

For that, an investment can be considered as an unexplained investment under section 69 of the Act if all three conditions provided in the said provision exist: firstly, the investment is not recorded in books of secondly, no explanation about the nature and source of such investments is offered; and thirdly, the explanation offered is not satisfactory as per the opinion of the Assessing Officer. account;

For that, the authorities below were wrong and erroneous both on facts and in law in observing that the appellant tried to explain the sources of cash deposits in the bank account but had not given any explanation and justification on the sources of the investment made in the mutual fund for the reasons that cash generated from the sale was deposited in the bank account and investment in the mutual fund was made through the credit balance lying in the bank account, and nothing contrary in this regard was observed by the authorities below.

For that, the Ld. Appellate Authority had erred in law in upholding the finding of the Assessment Unit that the investment of Rs.47,00,000/- made in the mutual fund was treated as an unexplained investment under section 69 of the Act since it is an admitted fact that the said investments were duly recorded in books of account and part of the books of accounts. 6 8. For that, the appellate authority was unjust, unfair, unreasonable, and unlawful in upholding the order passed by the Assessment Unit since the appellant did not bring on record the complete facts about the purchases and sales related to its trading activity, whereas the same were neither asked by the Assessment Unit nor Appellate Authority.

For that, the authorities below had erred in law as well as on facts in treating the investment of Rs.47,00,000/- made in the mutual funds as an unexplained investment u/s 69 of the said Act because the appellant did not provide the source of purchases made for sale, whereas the final accounts the for the period under dispute explicitly provide amount relating to opening stock, purchase, sale, and closing stock.

For that, on the facts and circumstances of the case, the purported addition of Rs.47,00,000/-as unexplained investment to declared income is liable to be deleted in full.

For that, the demand of consequential tax u/s 115BBE and interest is also bad, illegal, arbitrary, without and/or in excess of juri iction and liable to be deleted in full.

For that, the authorities below did not allow proper and effective opportunity produce to the documents alleged as not produced.

For that, the appellant prays for relief and seeks permission to adduce fresh grounds of appeal and/or modify the same before or at the stage of hearing of the appeal.

Though the assessee has raised as many as 14 grounds of appeal, however, the only issue involved in the appeal of the assessee is with regard to the addition made by the AO u/s.69 of the Act treating the investments made by the assessee as unexplained. 7 8. Ld. AR submitted that the assessee is a company and it had made investments in mutual funds to an extent of Rs.2,96,50,000/- during the impugned assessment year. It was the submission that out of the said investment in the mutual funds, the Assessing Officer had called for the source of the investment in the mutual funds and the assessee had submitted that the sources were out of the sale proceeds received in cash which were deposited in the bank account of the assessee. It was the submission that the Assessing Officer did not accept the contention of the assessee that the mutual fund investment of Rs.47,00,000/- were out of the cash deposited by the assessee representing the sale proceeds. It was the submission that the assessee is a dealer of Supari, Papad, Jeera, Halsi, etc., the sale proceeds of which was received mainly in cash. It was the submission that all transactions are through the bank account of the assessee and investments in the mutual funds being out of sale proceedings, the same are liable to be allowed. 9. On other hand, ld. Sr.DR submitted that the profit declared by the assessee for the impugned assessment year is only Rs.1,89,510/- but the investment in the mutual fund is Rs.2,96,50,000/-. It was the submission that if the said investment is considered, then obviously purchases would go into the dispute, insofar as purchases during the year was Rs.3.48 crores. It was submitted by the ld. Sr. DR that it is an admitted fact that there are cash deposits in the bank account of the assessee and mutual funds investments were from the bank account of the assessee. It was also submitted that the assessee has not proved the source of 8 investments in the mutual funds at least to the extent of Rs.47 lakhs and if such Rs.47 lakhs is considered as source from the sale proceeds the question would arise as to how the purchases were paid for. It was the submission that no details were produced before the Assessing Officer or the ld. CIT(A) in this regard. Accordingly, ld. Sr. DR submitted that the order of the ld. CIT(A) and that of the ld. Assessing Officer is liable to be upheld. 10. I have considered the rival submissions and perused the material available on record. The paper book filed by the assessee shows the investments made by the assessee. The purchases are made from Giriraj Traders in respect of the products dealt with by the assessee. The total purchases and payments made is found at page 13 of the paper book which shows the purchases as Rs.3,48,86,450.60. After considering the VAT and freight charges, the total is shown at Rs.3,40,87,191.00. The payment made is shown at Rs.3,15,79,606.00. The balance payable is shown at Rs.25,07,585.00, the same reads as follows :- 9 11. Page 43 & 44 of the paper book show various transactions in regard to the HDFC bank account maintained by the assessee. The same reads as follows :- 10

There is evidence of nearly Rs.67,51,000 in respect of sale of certain flats. There is also entry in respect of commission received for certain flat purchased from Ayushman Commotrade. These evidences have not been considered by the Assessing Officer nor as the assessee been able to give any explanation regarding these transactions. These reconciliations in respect of HDFC Bank account has also not been examined by the Assessing Officer. The assessee has claimed that the investment in the mutual fund is only out of the sale proceeds received by the assessee of the products dealt with by the assessee. Admittedly, these advances received would also be available to the assessee if the said bank account is to be considered. This being so, for the purpose of examining the entire gamut of the transactions in the said bank account from which the purchases have been made and the mutual funds, the issues in this appeal are restored to the file of Assessing Officer for readjudication after affording sufficient opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to 11 promptly co-operate with the proceedings before the ld. AO, failing which the ld. AO shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on record. Thus, the grounds raised by the assessee are allowed for statistical purposes. 13. In the result, appeal of the assessee is allowed for statistical purposes.