SHRI BALVANTRAY VITHALBHAI PARMAR,BHAVNAGAR vs. THE ITO, WARD-1(9), BHAVNAGAR

There was a delay of 26 days in filing of this appeal. The assessee has filed an affidavit explaining the reason for delay. It is submitted that the assessee is an uneducated person engaged in the business of distributing milk for Amul. In Form No.35 the assessee had mentioned an email address but an option was given that no notices/communication may be sent on the email. According to the assessee, the order received on email was not accessed by him as the email didn’t belong to him and the concerned person did not inform him in time. This led to delay in filing of this appeal. It is found that the email address mentioned in Form No.35 was vadilalbmehtaandco@gmail.com and the assessee had clearly indicated that no notices/communication may be sent on this email. Considering the fact that no physical copy of the order was sent to the assessee, the explanation of the assessee is accepted and delay in filing the present appeal is condoned.

The brief facts of the case are that assessee has filed his return of income for A.Y. 2017-18 on 16.02.2018 declaring total income of Rs.2,09,990/-. The case was selected for complete scrutiny under CASS. The AO found that the assessee had made cash deposits of Rs.1,40,76,060/- & Rs.11,40,100/- in his two bank accounts with Bank of Baroda. The assessee was required to explain the source of these cash deposits in the bank accounts. In reply, the assessee submitted before the AO that he had agency of milk distribution but no documentary evidences in respect of milk distribution and earning of commission income thereon was filed. Therefore, the AO treated the entire cash deposit of Rs.1,52,16,160/- made in the two bank accounts as unexplained and made the addition under Section 69A of the Income Tax Act, 1961 (in short ‘the Act’). The assessment was completed u/s.143(3) of the Act on 25.12.2019 at total income of Rs.1,54,26,150/-.

Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CIT(A) vide the impugned order and the appeal of the assessee was dismissed.

Now, the assessee is in second appeal before us. The following grounds have been taken by the assessee in this appeal:

Per contra, Shri Rignesh Das, Ld. Sr. DR submitted that the assessee neither made any proper compliance before the AO nor before the Ld. CIT(A). He, therefore, supported the orders of the lower authorities.

We have carefully considered the rival submissions. It is true that no proper compliance was made by the assessee before the AO in the course of assessment proceedings. Nevertheless, the assessee had explained that he was engaged in the agency business of milk distribution and had derived commission income only. A copy of the bank statement in which the cash deposits were made has been brought on record. It is found that the cash deposits were made almost on daily basis and the amounts after deposit were transferred to GCMMF Ltd. also on daily basis. Considering the fact that the cash deposits were immediately transferred to GCMMF Ltd., the addition of the entire cash deposits in the hands of the assessee cannot be held as correct. Even if no compliance was made by the assesse, nothing prevented the AO to make enquiry from GCMMF Ltd. about the amounts transferred and the nature of business activity carried out by the assessee.

The addition made by the AO was not examined by the Ld. CIT(A) on merits for the reason that no compliance was made by the assessee in spite of numerous opportunities provided by the Ld. CIT(A). It is found that the Ld. CIT(A) had allowed as many as 12 opportunities to the assessee but no compliance was made on any of the dates. The assessee cannot escape by merely passing on the blame to his Counsel. The non-receipt of any physical notice also cannot be taken a ploy for non-compliance before the Ld. CIT(A). Considering the recurring non-compliance made by the assessee before the AO as well as before the ld. CIT(A), we impose a cost of Rs.10,000/- (Rupees Ten Thousand only) on the assessee, which should be paid to the Income Tax Department within two weeks of receipt of this order. As the matter has not been examined on merits, we deem it proper to set aside the matter to the file of the Jurisdictional AO with a direction to allow another opportunity to the assessee to explain the source of cash deposits. The AO is also directed to make enquiry from GCMMF Ltd. to find out the exact nature of business activity of the assessee and the quantum of commission earned by the assessee.

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