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Income Tax Appellate Tribunal, ‘A’ BENCH, BENGALURU
O R D E R
Per PAVAN KUMAR GADALE, JM :
The assessee has filed the appeal against the order of the CIT(A), Bangalore-6, passed u/s 143(3) and 250 of the Income-tax Act,1961 ['the Act' for short], dated 17/01/2017 for the assessment year 2013-14.
The assessee has raised the following grounds of appeal:
1. “The order of the learned CIT (A) insofar as it is prejudicial to the interest of the appellant and to that extent, is bad and unsustainable in the eye of law.
Page 2 of 6 2. The order of CIT(A) to the extent that it confirms the addition of Rs.1,75,73,000/- is illegal, opposed to all known principles of taxation and hence the same is required to be deleted at once.
3. CIT(A) grossly erred in upholding addition of Rs.1,75,73,000/ - made by the AO without application of mind since, in the first place the AO had no answer as to from where that amount was picked up by her since the appellant is very clear that no such amount is ever reflected in his accounts nor did he report earning of such an amount, during the year.
CIT(A) ought to have appreciated that the entire money deposited into the Bank account of the appellant was the sale proceeds of petroleum products in his capacity of a petroleum products dealer and hence, ought to have deleted the addition in enterity.
Without prejudice, the CIT(A) ought to have appreciated that the appellant had made deposits of the entire earnings from his petroleum business into the said bank account and the AO having blindly adopted some amount according to her whims and fancy, was unsustainable in law, more so for the reason that appellant had got his books audited and Bank pass book or Bank account is not a "book" for S.68 of the Act.
The AO having made addition based on her imaginations but not according to the Rules 86 procedures prescribed under the Act, both AO 86 CIT(A) are personally liable for unnecessarily dragging the appellant into litigation and hence the appellant prays for costs to be imposed for their action including cost of litigation 86 institution fees.
7. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.”
The assessee also raised the following additional grounds of appeal:
1. “The impugned order of the learned Assessing Officer, as partially upheld by the learned Commissioner (Appeals) is void as no notice under section 143(2) was served on the Appellant directly.
Page 3 of 6 2. Without prejudice, the impugned proceedings are void as the notice purported to be issued by email on 02.03.2016 was null and void ab initio, being barred by limitation.”
At the time of hearing, on verification of assessment records produced by the learned DR on the disputed issue of service of notice u/s 143(2) of the Act. The learned AR after verification of facts has withdrawn the additional ground of appeal and made an endorsement accordingly on the memorandum of grounds of appeal. Hence, the additional grounds of appeal are dismissed as withdrawn.
4. The brief facts of the case are that the assessee filed the Return of income electronically on 23/6/2014 with total income of Rs.3,32,170/-. Subsequently the case was selected for scrutiny through CASS as there was a mismatch in the sales turnover reported in Audit report and Income-tax return (ITR) and cash deposits in assessee’s savings bank account. Hence, notice u/s 143(2) of the Act was issued through e-mail and further notice u/s 142(1) was also issued on various dates But finally on 10/12/2015 AO issued notice to the assessee to furnish details of Return of income for assessment years 2012- 13 and 2013-14 along with profit and loss account, balance- sheet, bank pass-book and bills/ vouchers. Whereas, the Page 4 of 6 assessee has sent only details of copies pertaining to assessment year 2013-14 with incomplete Audited reports. Since there is no proper compliance, the AO found that the assessee has made cash deposits in the financial year 2012-13 to the extent of Rs.1,75,73,000/- and since there are no proper explanations in regard to nature of deposits the AO applied Best judgment assessment provisions u/s 144 of the Act and made addition u/s 68 and assessed the total income of Rs.1,79,05,170/- and passed order dated 24/03/2016.
5. Aggrieved by the order, the assessee has filed an appeal with the CIT(A) and in the appellate proceedings, assessee has filed the details which could not be furnished before the assessing authority. Whereas the CIT(A) considering the statements filed by the assessee and the bank account and the material furnished, sustained the addition in respect of cash deposits and turnover to the extent of Rs.1,23,25,000/- and partly allowed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed the appeal before the Tribunal.
6. At the time of hearing, the learned AR submitted that the assessee has a good case on merits and the CIT(A) has not considered the information which was filed in the appellate proceedings and is ready to reconcile the cash deposits with bank statements and filed written submissions and details and Page 5 of 6 prayed for an opportunity to substantiate the case before the lower authorities.
Contra, learned DR objected to the submissions as information was not filed before the AO in spite of opportunities and the AO is deprived to verify and examine the material filed and prayed for dismissal of the appeal.
We heard the rival submissions and perused material on record. The sole disputed issue is with respect to sustenance of addition by the CIT(A) after granting partial relief. The learned AR submitted that the assessee has filed the statement of account of HDFC and Bank of India and reconciled the deposits of intra bank transactions and withdrawals. Whereas these aspects were not brought to the knowledge of the AO as the assessment was completed us 144 of the Act. Therefore, considering the submissions of the learned AR and the facts and the material filed on record, we are of the substantive opinion that the revenue shall not be at loss if an opportunity is provided to the assessee to substantiate the cash deposits with sources relying on material filed. Accordingly, we restore the entire disputed issue to the file of the AO to verify and examine/reconcile the statement of deposits and withdrawals and the bank statement and further the assessee should also be provided adequate opportunity of hearing to substantiate its Page 6 of 6 case and co-operate in submitting information for early disposal of the case and the grounds of appeal of the assessee are allowed for statistical purposes.
In the result, the assessee’s appeal is allowed for statistical purposes.