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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH & SHRI S. RIFAUR RAHMAN
Assessee by : Ms. Lajri Oswal Revenue by : Shri Bharat Andhale Date of Hearing – 28.07.2021 Date of Order – 27.09.21
O R D E R PER S. RIFAUR RAHMAN, A.M.
The present appeal preferred by the assessee challenging the impugned order dated 24th October 2019, passed by the learned Commissioner of Income Tax (Appeals)–29, Mumbai, pertaining to the assessment year 2005–06.
During the course of hearing, the Registry has pointed out a delay of 18 days in filing the present appeal before the Tribunal. While going through the record available before us, we find that the assessee has filed a letter dated 14th January 2020, requesting the Bench for 2 Dipen Vinod Shah condoning the delay in filing the present appeal. The reason for the delay in filing the present appeal is due to the ill–health of the assessee. In support of the application for condonation of delay, the assessee has also filed Affidavit duly sworn.
After considering the submissions of the learned Authorised Representative and averments made in the affidavit, we are of the opinion that the assessee is prevented from filing the appeal belatedly and we are satisfied that the delay in filing the appeal is due to reasonable cause. Consequently, we condone the delay of 18 days in filing the present appeal and admit the same for adjudication on merit.
4. The assessee has filed this appeal on the following grounds:– “1. The Ld. CIT(A)-29 erred in passing the order dated 24.10.2019 without giving any opportunity of being heard. The penalty levied under 271(1)(c) of the Act is not justified and the same may be deleted.
2. The Ld. CIT(A) failed to appreciate that the appellant wanted to co-operate in the proceedings and that it had filed an appropriate submission also, but the Ld. CJT(A) erred in assuming that the appellant was non-cooperative and recalcitrant and passed the order dated 24.10.2019 without giving any appropriate opportunity.
3. The Ld. CIT(A) erred in sustaining penalty on an addition of Rs.4,64,760/- u/s 68 of the Act. He failed to appreciate the fact that the unsecured loans taken from the parties are genuine and just because no documentary evidences were submitted, they cannot be treated as unexplained cash credit u/s 68 of the Act.
Without prejudice to the above, the initiation of penalty as well as the notice issued u/s 274 of the Act are bad in law and 3 Dipen Vinod Shah
consequently, the entire proceeding should be quashed. 5. The appellant craves leave to add, amend, alter, delete any ground of appeal.”
Facts in brief:- In this case, the assessee is an individual. For the year under consideration, the assessee filed his return of income on 26th October 2005, declaring total income at ₹ 5,74,463. The return of income was duly processed under section 143(1) of the Income Tax Act, 1961 (for short "the Act"). The case was selected for scrutiny under section 144 of the Act, determining total income at ₹ 17,37,530. The Assessing Officer on a perusal of the audit report found that the assessee has availed loans / deposits to the tune of ₹ 4,64,760. According to the Assessing Officer, the assessee has not filed any satisfactory evidence with regard to the loans / deposits availed. Therefore, the Assessing Officer added the entire amount of ₹₹ 4,64,760, to the income of the assessee as unexplained cash credit under section 68 of the Act. Further, the Assessing Officer calculated the interest @ 12% of ₹ 55,771, and actual claim of interest was ₹ 40,744. The Assessing Officer disallowed the sum of ₹ 40,744 on account of interest and was added back to the total income of the assessee. The Assessing Officer also initiated penalty proceedings under section 271(1)(c) of the Act separately for the unexplained cash credit under section 68 of the Act. The assessee being aggrieved by 4 Dipen Vinod Shah the order of the Assessing Officer, filed appeal before the first appellate authority. The learned CIT(A), however, dismissed the assessee’s appeal due to non–co–operative behavior of the assessee. The assessee again filed appeal against the initiation of penalty proceedings under section 271(1)(c) of the Act before the first appellate authority.
The learned CIT(A) observed that the addition of ₹ 4,64,760, made under section 68 of the Act on account of unexplained cash credit in the form of loans / deposits remained unexplained at the assessment state as well at the first appellate stage. He further observed that the assessee failed to submit any explanation to contradict the justification in levying the penalty. Accordingly, the learned CIT(A) directed the Assessing Officer to levy minimum penalty @ 100% of the tax sought to be evaded on ₹ 4,64,760. The assessee being aggrieved is in appeal before the Tribunal.
Considered the rival submissions and perused the material on record. On the issue of levy of penalty under section 271(1)(c) of the Act, we find that the Tribunal, for the year under consideration, in quantum proceedings, has restored the issue of addition made by the Assessing Officer at ₹ 4,64,760, on account of unexplained cash credit under section 68 of the Act to the file of the learned CIT(A) for denovo
5 Dipen Vinod Shah adjudication. The relevant observations of the Tribunal, vide order dated 4th March 2020, passed in Ramanlal K. Darji v/s ITO, ITA no.7103/Mum./2016, at Page–5 & 6 / Para–6, are reproduced below for ready reference:–
“6. Under these issues the assessee has challenged the addition in sum of Rs.4,64,760/- u/s 68 of the Act. On appraisal of the assessment order, we noticed that the AO on the basis of tax audit report LI/s 44AB of' the Act as observed that the assessee took the loan in sum of Rs.4,64.760/- from the following parties:-
(i) Bashir M. Ahmedi ₹ 4,500 (ii) Haishid R. Darji ₹ 2,50,010 (iii) Kantibhai R. Jariwalla ₹ 12,000 ₹ 1,25,750 (iv) M/s. Nesco Engg. Co. (v) M/s. Shyam nternational ₹ 22,000 ₹ 50,500 (vi) S.M. Shah ₹ 4,64,760 Total
The AO rejected the loan transaction and treated the same as unexplained cash credit u/s 68 of the Act. Needless to say that the assessment order has been passed u/s 144 of the Act. No opportunity of being heard was given 10 the assessee. The books of accounts have been rejected and the cash credo was added to the income of the assessee without giving an opportunity of being heard to the assessee in accordance with law. ftc assessee has confirmed the loan which lies at page 1 to 9 of the paper hook, I lie confirmation is on the record. The said documents were produced before the CIT(A) a well as AO also. The authority nowhere considered these documents. The rejecting the contentions without any reason nowhere seem justifiable. The explanation and confirmation given have assessee nowhere considered. The rejecting the claim of the assessee without any basis nowhere required to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the A.O. to decide the issue afresh by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, these issues are decided in 6 Dipen Vinod Shah favour of the assessee against the revenue.”
As it appears from the above, the Tribunal during quantum proceedings has restored the issue of addition made by the Assessing Officer at ₹ 4,64,760, on account of unexplained cash credit under section 68 of the Act to the file of the learned CIT(A) for deciding the issue denovo, which has not attained finality as on the date of passing of this order. In this view of the matter, since the quantum addition has not attained finality, the penalty proceedings before us are pre– mature in nature and hence, in our considered opinion, the issue of penalty needs to be restored to the file of the Assessing Officer. Consequently, we set aside the impugned order passed by the Assessing Officer and confirmed by the learned CIT(A) and restore the issue of penalty levied under section 271(1)(c) of the Act to the file of the Assessing Officer and direct him to re-consider the issue of penalty under section 271(1)(c) of the Act, based upon the decision of the learned CIT(A) on quantum addition. Thus, the grounds raised by the assessee are allowed for statistical purposes.