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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Soundararajan K
:Asst.Year2022-2023 Sri.Swaminathan Vijayan The Income Tax Officer Door No.19/441, Krishna v. Ward - 2 Mayuram, West Yakkara Palakkad. Palakkad – 678 001. PAN :AFNPV0669Q. (Appellant) (Respondent) Appellant by :Sri.B.Mohan, CA Respondent by :Smt.Leena Lal, Sr.AR Date of Date of Hearing : 10.03.2025 Pronouncement :14.03.2025 O R D E R
Per Soundararajan K, JM :
This appeal filed by the assessee is challenging the order of the National Faceless Assessment Centre / Commissioner of Income-tax (Appeals) [“CIT(A)” for short] dated 21.12.2024in respect of assessment year 2022-2023, and raised the following grounds:-
“1) The Honourable Commissioner of Income Tax (Faceless Appeals) erred in directing that the Total Income be estimated at 3% of Total Credits in Bank Accounts without making any provision/ allowance for expense against Gross Profit of 2% to 3% allowed by HPCL as stated by the Appellant in his arguments as an alternative argument: The Honourable Commissioner of Income Tax (Faceless Appeals) erred in twisting the arguments of the appellant which was 2% to 3%. Gross Profit is reasonable in Petroleum Production dealership business as 3% Net Profit in his Para 7(d), Page 12 of 13 of Assessment Order.
. Sri.Swaminathan Vijayan. 2) The Honourable Commissioner of Income Tax (Faceless Appeal) erred in not giving personal opportunity to the appellant during First Appeal Stages in spite of specific request made in the written submissions. 3) The Learned Assessing Authority also erred in not giving an effective opportunity for personal representation during Assessment Proceedings in so far as the first VC scheduled on 02-03-2024 was cancelled by Income Tax Department itself for technical reason and adjournment given for the rescheduled actual First VC on 05-03-2024 (that too within 2 days of cancellation of 02-03-2024 hearing) was rejected thereby violating principles of natural justice and therefore the Assessment Order has to be set aside on this point alone which point has not been considered by the First Appellate Authority. The rejection of grounds 2,3,4,5,6,7,8,9 & 10 in Para 7 (a) and (b), Page 10 of 13 by the First Appellant Authority is incorrect and the Appellate order along with Assessment Order has to be set aside on this ground alone. 4) The Learned Assessing Authority erred in stating virtually the opposite facts on debits to bank account, the first being "some payments are not proved to be that of HPCL" whereas in another part of the Appellate Order he states "The assessment order passed, the details submitted by the appellate and the facts of case are carefully perused. It is noticed that the debits in the bank accounts are in favour of HPCL". 5) The Learned Assessing Authority and Appellate Authority erred in not accepting the fact that the debits in bank account towards HPCL payments were in fact towards the Purchases accounted in another partnership firm M/S Sree Amman Agencies (PAN: ABHFS6436L) in which your appellant was earlier an partner and now only Manager, managing the affairs of the firm, due to dispute with earlier partners. 6) The Assessee has been made on a basis which was not reflected in the Show Cause Notice and hence the Assessment Order is Void Ab Initio. 7) The Assessment Order is also erroneous since it states the Assessee has done some unaccounted business with HPCL, a Leading Public Sector Company owned by the Central Government dealing in Petroleum Products through its outlet/dealership units in the whole of Union of India. The Assessing Authority and First Appellate Authority again made a mistake in not verifying/ asking M/S Sree Amman Agencies, Hindustan Petroleum Corporation Limited and State Bank of India, if at all they had any doubt about the Assessee's Arguments and also could have got the issue verified by its Verified unit before making such huge assessment in the hands of salaried employee of a Private Partnership Firm in fact State Bank of India has confirmed the transaction through their letter. 8) The Learned first appellate authority clearly did not understand the legal implication thereon by his averment in Para 7C Page 11 of 13 wherein he has alleged that the appellant has not submitted Sales Register, Purchase Register, Consumption Statement, Bank Account Statements of . Sri.Swaminathan Vijayan. the firm M/S Sree Amman Agencies, in which the appellant is only a Manager and not even a partner. It is as if trying to make the appellant do the impossible. 9) The Assessing Authority and First Appellate Authority in ignoring the 133(6) reply filed byM/S Sree Amman Agencies completely owning up the cash deposits in bank in their PAN and therefore both the Assessment order and Appellate Order may be set aside. 10) The Learned Assessing Authority and the Honourable Appellate Authority again erred in completely disregarding the previous Assessment Orders of the Appellant himself on the same point of dispute, without even asking for opinion of Technical Unit or even Verification by Verified unit and therefore the Assessment Order/Appellate Order may be completely struck down on this point also. 11) In view of all the above grounds, the appellant prays that the addition of Rs. 37,40,696/-under PGBP made to Total Income for AY 2022-23 be struck down by the Honourable ITAT.”
The brief facts of the case are that the assessee is an individual and working as Manager in the HPCL retailer M/s.Sree Amman Agencies. During the assessment year the AO had alleged that there are cash deposits made in the bank account of the assessee and on that basis proposed to add the said deposit as unexplained income u/s.69 of the Act. The assessee submitted that he is working as Manager in the said retail outlet and previously he was the partner in the retail outlet and therefore his personal bank account were utilized by the said partnership firm to transact the activities like the purchase and sales of petroleum products. The assessee also submitted that the partnership firm vide its resolution dated 1.04.2020 had also accepted that the bank account of the assessee would be used for the purpose of business of the firm. In the said resolution, the SB account of the assessee was also clearly mentioned. On that basis the Assessing Officer also issued summons u/s.133(6) of the Act to the firm and the firm also filed their reply in which they accepted that the firm business transaction were carried out . Sri.Swaminathan Vijayan. in the account of the assessee. The assessee also submitted that for effecting the purchase of petroleum product, the NEFT / RTGS were sent from the said account of the assessee to the HPCL and on that basis the petroleum products were supplied to the firm. The assessee also submitted the letter issued by the said bankers to the effect that the NEFT / RTGS were made on behalf of the firm periodically. The assessee also submitted that the entire purchases and sales of the firm were properly recorded in their books of account and they have also filed the return of income declaring the entire income obtained by way of sale of petroleum products. The assessee also submitted that the firm had also filed their GST return to the State Authorities and therefore the deposits are proved that they are the income of the firm and not the income of the assessee. The AO not accepted the various contentions and confirmed the assessment in which the AO had assessed the deposits as unexplained income u/s.69 of the Act.
As against the said order, the assessee filed an appeal before the learned CIT(A) and raised many grounds including the ground No.12 in which the assessee had submitted that the assessment made on the assessee as well as the on the partnership firm for the same very same income amounts to double taxation, which is not envisaged under the Income-tax Act. The assessee also submitted the required documents including bank account details and the other records which were submitted before the AO and prayed to allow the appeal. The ld.CIT(A) in his order in para 7(c), had not accepted the case of the assessee and gave the following findings:-
. Sri.Swaminathan Vijayan. “7 c. In Ground No. 11, 12, 13, 14 & 15, the appellant had appealed that the cash deposits made in his personal bank account are the sale turnover of the firm M/s. Sree Amman Agencies (petrol pump). The assessment order passed, the details submitted by the appellant and facts of case are carefully perused. It is noticed that the appellant had not submitted conclusive evidences to prove that the cash deposits & credits into his personal bank account pertained to the firm M/s. Sree Amman Agencies (petrol pump). The appellant had not even submitted the bank account statement of the firm to establish that there are no separate cash deposits in firms bank account. Further, mere mention of bank account number in current asset schedule does not prove that the cash deposited in appellants bank account are actually the turnover reported by the firm. Further, the appellant had not furnished sales register, purchase register, consumption statements of M/s. Sree Ammam Agencies, bank account statements of firms etc to establish that the cash deposited in personal bank account are actually the sale turnover of the firm from petrol pump business. Further, the debits in the bank accounts are in favour of HPCL However, as pointed out by the AO, in the absence of confirmation from HPCL it cannot be concluded that the debits in the bank account are on behalf of M/s. Sree Amman Agencies or not. There is a possibility that there could be payments on behalf of any other similar firm in which the appellant might have interest. Thus, the relief sought by the appellant cannot be granted. Hence, the appellant claim that the cash deposited in his personal bank account are sale turnover of the firm is not acceptable and all such grounds of appeal no. 11, 12, 13, 14 & 15 are dismissed.”
4. The ld.CIT(A) had observed that the assessee had not filed conclusive evidences to prove that the cash deposits and the credits into his personal bank account pertains to the firm. The ld.CIT(A) had further observed that other documents relating to the firm were not produced in support of his claim that the transactions were related to the firm.
5. Not satisfied with the above order of the ld.CIT(A), the assessee is in appeal before this Tribunal and filed the paper book containing 166 pages, enclosing therewith various documents including the purchase register and the stock register of the firm and audited financial statements of the firm, bank account statement of the firm, confirmation . Sri.Swaminathan Vijayan. given by the SBI Palakkad, copy of the sales register of the firm, copy of the resolution of the partners, copy of the reply filed by the firm to the notice issued u/s.133(6) and the copy of the confirmation letter from HPCL. The assessee also raised a specific ground that the documents were not verified by the authorities below and the authorities have failed to consider the reply filed by the firm to the notice issued u/s.133(6) of the Act in which the firm had accepted that the SB account of the assessee were used for the business transactions of the firm and the firm also deposited the collections into the bank account of the assessee and through which the amounts were transferred to HPCL by way of NEFT /RTGS while effecting the purchases and therefore contended that the very same income could not be assessed in the hands of the assessee as well as in the hands of the firm, otherwise it would be double taxation which is not permitted under the provisions of the Act. The ld.CIT(A) had observed in his order that, which is extracted above, had rejected the claim of the assessee for the reason that the relevant documents were not produced before the AO as well as before him. As against the said order, the assessee is in appeal before this Tribunal.
6. At the time of hearing the ld.AR submitted that the assessee had submitted all the details before the AO but unfortunately the AO as well as the ld.CIT(A) had not considered the same. The ld.AR further submitted that the very same modus operandi was carried out by the assessee in respect of the assessment years 2014-15 and 2017-2018 which was accepted by the AO and assessments were also made by accepting the fact that the cash deposits are nothing but the collections deposited by the firm into the bank account of the assessee. The ld.AR . Sri.Swaminathan Vijayan. further submitted that the ground in respect of the double taxation was raised but the ld.CIT(A) had not at all discussed the said ground and therefore, submitted that the order of the ld.CIT(A) is not a speaking order.
The learned Departmental Representative relied upon the order of the lower authorities and submitted that since the assessee had not furnished the documents, the authorities below had confirmed the assessment and prayed to dismiss the appeal.
We have heard the rival contentions and perused the materials available on record. We have also perused the documents filed in the paper book which establishes the fact that the various documents required by the AO were enclosed in the paper book but unfortunately some of the documents relating to the firm were not produced before the AO at the time of making the assessment. Therefore, the said documents relating to the firm were filed before us and ongoing through the same we are accepting the contentions made by the assessee to the effect that the bank account of the assessee were used by the firm to carry out the business transaction of the firm. We have also considered the fact that the firm had also included the incomes in their return of income which was also audited u/s.44AB of the Act and therefore the assessee’s contention that the deposits into the bank account of the assessee are nothing but the income of the firm has some force. It is pertinent to note that the similar dispute arose for the assessment years2014-15 and 2017-2018 but the AO accepted the case of the assessee and assessment was not made in the name of the assessee.
. Sri.Swaminathan Vijayan.
We have also considered the arguments made by the ld.AR that the double taxation ground raised by the assessee in ground No.12 was not adjudicated by the ld.CIT(A) while passing the order. There are various documents filed by the assessee to show that the deposits were made by the firm in the account of the assessee. As seen from the said proceedings, the complete documents were not made available to the AO as well as before the ld.CIT(A) and therefore they have no opportunity to decide the issue on merits, based on the documents submitted by the assessee. Further, we have also perused the reply filed by the assessee to the notice issued u/s.133(6) of the Act in which the firm had accepted the deposits into the bank account of the assessee is the income of the firm which was duly reported to the department in their return of income.
Considering the facts that the assessee is having all the documents to establish their case that the amounts deposited into his bank account are related to the firm but the said documents were not verified by the authorities below and therefore, in order to render substantial justice, we are setting aside the order of the authorities below and remit the issue to the file of the AO to decide the issue afresh by considering the various documents filed before us and also to consider the double taxation ground raised by the assessee after affording a reasonable opportunity of being heard to the assessee. We also made it clear that in the event that the assessee is able to demonstrate before the AO that the deposits are nothing but the deposits of the firm, it is needless to mention that the assessment made on the assessee becomes an illegal one.
. Sri.Swaminathan Vijayan. 11. With the above directions we remit the entire issue to the file of the Assessing Officer for adjudicating the issue afresh, in accordance with law. Needless to mention, the AO will afford reasonable opportunity of being heard to the assessee before passing any order.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on this 14th day of March, 2025.