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Facts
The Assessee, an individual engaged in finance, filed a return declaring a loss. Later, information was received about a sum of Rs. 1.79 Crores received in his bank account, claimed as a loan from a UAE company. The Assessee failed to provide documentary evidence for the loan's identity, creditworthiness, and genuineness, and the loan was not reflected in the balance sheet. Proceedings under Section 147 were initiated.
Held
The Tribunal held that the CIT(A) erred in passing the order without considering the submissions made by the Assessee on 7.6.2023. The CIT(A)'s order was deemed unsustainable in law due to the non-consideration of the Assessee's evidence and contentions. Therefore, the matter was set aside and remanded back to the CIT(A).
Key Issues
Whether the CIT(A) rightly dismissed the appeal without considering the Assessee's submissions and evidence, and if the addition made under Section 68 of the Act is sustainable without proper examination of the facts and the nature of the deposit.
Sections Cited
144, 147, 250, 68, 131, 148, 142(1), 151
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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI SANDEEP SINGH KARHAIL, JM
This appeal is filed by Sh. Dhansukh Durlabhdas Shah [Assessee / Appellant] against the appellate order passed by the Commissioner of Income Tax (Appeals),National Faceless Appeal Centre, Delhi [Ld. CIT(A)] dated 25.7.2023 for Assessment Year 2009-10, wherein the appeal filed by the Assessee against the assessment order dated 27.12.2016
The Assessee is aggrieved and has preferred appeal raising the following grounds:
A. NO COGNIZANCE BY THE LEARNED CIT(A) OF THE SUBMISSIONS MADE BY THE APPELLANT
1. The Appellant had made submission before the learned CIT (A) against the notices under section 250 of the Act vide letter dated 7th June, 2023
2. On the facts and circumstances of the case and in law, the learned CIT (A) when passing the order under section 250 of the Act states in Para 1. that the Appellant has not filed any response to the notice and hence the order is passed on the basis of the order of the Assessing officer
3. In doing so the Learned CM(A) has erred in passing the said order without cognizance of the submission made by the Appellant on the e-portal on 7th June 2023
4. In the view of the above, the said order passed by the learned CIT (A) is without proper examination of the submissions made by the Appellant and non-est and therefore should be set aside B. ADDITION TO THE TOTAL INCOME OF THE APPELLANT UNDER SECTION 68 OF THE ACT
The provisions of section 68 of the Act is limited to credits made in the books of accounts for which the assessee provides no explanation or unsatisfactory explanation
However, the Assessing Officer and the learned CIT (A) has erred in considering the statement of bank account as Books of Account maintained by the Appellant.
The statement of bank account cannot be construed as Books of Account and hence does not fall within the scope of section 68 of the Act.
8. In the view of the above, the addition of Rs. 1.80 Crores to the total income made by the Assessing Officer and confirmed by the learned CIT (A) in the said Order is not in compliance with the provisions of the Act and hence should be set aside C. REFUNDABLE DEPOSIT WRONGLY CONSIDERED AS INCOME
9. The Income Tax Officer 18(1)(3) ('the Assessing Officer') and learned CIT (A) have erred in considering refundable deposit received by the Appellant to the tune of Rs 1.80 Crores as income of the Appellant
The Assessing Officer and the learned CIT (A) has without the proper examination of the facts and circumstances of the case, made/confirmed an addition to the total income of the Appellant under section 68 of the Act
In the view of the above, the said order passed by the Assessing Officer/the learned CIT (A) are without appreciating the fact that the amount received by the Appellant was a refundable deposit which in no case can be considered as the income of the Appellant
In the view of the above it is amply clear that the said order passed by the Assessing officer and confirmed by the learned CIT(A) is bad in law and hence should be set aside.
D. GENERAL
All the above Grounds of Appeal are independent of and without prejudice to, each other
The learned CIT (A)'s Order being contrary to the law, evidence and facts of the case, should be set aside, quashed or modified on the grounds deduced above
The brief facts of the case shows that the Assessee is an individual engaged in the business of finance. The Assessee filed return of income on 28.9.2009 declaring loss of Rs.6,64,569/-which was revised on 28.9.2009 at a loss of Rs.10,05,124/-. The return was processed under section 143(1) of the Act.
Further information was received from Director General of Income Tax (Investigation) that the Assessee has received Rs.1,79,99,920/- on 19.2.2009 in his saving bank account maintained with HSBC. The Assessee claimed that this was loan taken by him from M/s. Planet International Holding Ltd.,UAE but Assessee could not produce documentary evidence regarding the credit worthiness and genuineness of the lender. On examination of the return of income of the Assessee, in the balance sheet there was no mention of this loan of Rs.1,80,00,000/-.Therefore, proceedings were initiated under section 147 of the Act by recording reason of satisfaction and after taking approval of PCIT-18, Mumbai and notice was served under section 148 of the Act on 31.3.2016. The Assessee did not file return of income in response to such notice. Notice under Section 142(1) was issued on 9.9.2016 asking the Assessee to furnish details to prove identity, credit worthiness and genuineness of the transaction on 22.9.2016,
6. The Ld. Authorised Representative, Shri Madhur Agarwal submitted that the Ld. CIT(A) has failed to consider the various submissions made by the Assessee and incorrectly held that the Assessee has not submitted any details. He produced before us e-proceedings response acknowledgement wherein the Assessee has submitted written submission containing 7 pages, bank statement of the Assessee as well as 8 judicial pronouncements. This was submitted on 7.6.2023 in response to notice issued by the Ld.CIT(A) on 30.5.2023. He further submitted that on 7.6.2023, Assessee also submitted one more judicial precedent. According to him the Ld. CIT(A) is incorrect in stating that Assessee has not submitted any evidences. He further submitted an application for permitting an additional ground raised in the appeal with respect to re- opening of the assessment as well as the validity of approval granted under section 151 of the Act. It was submitted that this additional ground is jurisdictional and therefore goes to the root of the matter and hence should be admitted. He further referred to his written statement placed before the Ld. CIT(A).
We have heard the rival contentions and perused the orders of the lower authorities. The Assessee as an individual has undoubtedly received Rs.1.80 crores in HSBC account from one party in UAE. The re-opening of the assessment was made and thereafter assessee has failed to produce documentary evidence with respect to the above loan to show identity and credit worthiness of the lender as well as genuineness of the loan to the satisfaction of the Ld. AO. Thus, it resulted in the addition. The Ld. AO also recorded statement of the Assessee under section 131 of the Act in which Assessee admitted to have received the above sum but could not explain the ingredient under Section 68 of the Act to the Ld. AO. Thus, the addition was made by the Ld. AO. The Ld. CIT(A) dismissed the appeal of the Assessee on merits as well as against the re-opening of the assessment considering the Assessee has not submitted any response. Before us, the Assessee has submitted e-proceedings acknowledgement wherein on 7.6.2023 the Assessee has submitted various submissions including written statement as well as several judicial pronouncements. The Ld. CIT (A) passed the appellate order on 25.7.2023 without considering any of the submissions made by the Assessee. As the appellate
In the result, the appeal of the Assessee is allowed as directed above for statistical purposes.
Order pronounced in the open court on 31.01.2024.