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Income Tax Appellate Tribunal, KOLKATA BENCH “B” KOLKATA
Before: Shri N.V.Vasudevan & Shri Waseem Ahmed
आदेश /O R D E R
PER Waseem Ahmed, Accountant Member:-
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XXX, Kolkata dated 27.10.2014. Assessment was framed by ITO Ward-46(1), Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) vide his order dated 26.03.2013 for assessment year 2010-11. The grounds of appeal raised by the assessee are reproduced as under:- “That having regard to the facts and circumstances of the case the Ld. CIT(A) has failed to examine the record and to derive requisite satisfaction as to nature of earning of income by the appellant from entry operation.
2. That having regard to the facts and circumstances of the case the Ld. CIT(A) has failed to appreciate that the appellant has disclosed all the material facts as to his A.Y. 2010-11 Abinash Sharma Vs. ITO Wd-46(1) Kol. Page 2 activities as an entry operator and earning of income in the nature of commission @ 0.25 paisa per hundred rupees by providing accommodation entries to the parties, it is his trading activity.
3. That having regard to the facts and circumstances of the case the Ld. CIT(A) has acted arbitrarily ignoring the vita points regarding entry operation furnished by the appellant or placing reliance upon guess work. It is not the case that the appellant had not complied with the requirements of the AO it is only the case that the details of beneficiaries could not be furnished.
4. That having regard to the facts and circumstances of the case the Ld. CIT(A) has failed to consider the fact that the details of beneficiaries are also not known to the appellant, this is the type of business called entry operation’.
5. That having regard to the facts and circumstances of the case the Ld. CIT(A) is not correct in confirming the order of the AO treating the entire deposit to bank as undisclosed income of the appellant without considering the fact that every deposit was followed by a withdrawal subsequently. Making the addition of aggregate deposit in the bank account without giving the benefit of withdrawals made by the appellant from time to time is not justified.
The assessee craves leave to add/alter any of the grounds of appeal before or at the time of hearing.”
Shri Rajeeva Kumar Ld. Advocate appeared on behalf of assessee and Shri Saurabh Kumar, Ld. Departmental Representative represented on behalf of Revenue.
Ground No. 1 to 5 are inter-related and therefore these are being taken up together for the sake of convenience. The issue raised is that Ld. CIT(A) erred in confirming the order of Assessing Officer by treating the entire amount of deposit for ₹4,31,67,103/- as income of assessee.
Briefly stated facts are that assessee is an individual had derived income from other source. During the course of assessment proceedings and on the basis of AIR information AO observed that assessee has deposited cash in its bank account maintained with Axis Bank during the year under consideration for ₹3,23,61,000/-. The AO accordingly sought clarification from the assessee about the source of cash deposited in his bank. The assessee in compliance thereto submitted that he is engaged in the activity of money laundering by way of accepting cash and issuing cheque to the concerned parties. Assessee further submitted that during the year under consideration he has accepted cheques as well as cash amounting to ₹4,31,67,103/- in aggregated from various parties. The assessee also submitted that he has earned income from such activity @ 0.25% of the cash / A.Y. 2010-11 Abinash Sharma Vs. ITO Wd-46(1) Kol. Page 3 cheques deposited in bank. Thus, assessee has earned income from the money laundering activity for ₹1,07,917/- only. However, assessee failed to furnish details of the parties on whose behalf cash / cheques were deposited in his bank account and subsequently cash/ cheque issued to them as desired by AO. Accordingly, AO in the absence of information about the parties has treated the entire deposits of ₹4,31,61,103/- as income and added it to the total income of assessee.
Aggrieved, assessee preferred an appeal before Ld. CIT(A) who confirmed the order of AO by observing as under:- “2.3 In my view the sums represented by said cash/cheque deposits are undisclosed incomes and the appellant has tried to fully avoid the tax on the gross transaction by claiming himself as entry operator. Mere claims made by the appellant cannot substitute for true facts. Without verification at the beneficiaries ends, claims are mere words without basis and can be treated as convenient excuses. 2.4 The Assessing Officer's action of abrupt addition without making attempts to logically pursue the matter at beneficiaries ends, appears harmful to the interest of revenue. Though technically AO is right in making the addition, he ends up harming the revenue by choosing not to pursue the beneficiaries through his own enquiries as liability or collection may not be realized if matching assets are not found with the appellants. Such short-sighted actions of not logically following up towards the beneficiaries, promotes the activities of entry operators who thus facilitate large scale tax evasion at huge cost to the revenue. 2.5 The said Deposits of cash and cheaue represent undisclosed money. Withdrawals from the said bank a/c. In cheues or otherwise may be for investment or capital expenditurees. The appellant has failed to demonstrate that deposits do not represent undisclosed income of the appellant. The claim that he only earned commission of 0.25% are not based on evidence or on materials which can be verified. I, therefore, see no reason to alter the additions made by the AO. The grounds is not allowed.:”
Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us.
At the outset, Ld. AR for the assessee submitted that Ld. CIT(A) has passed ex parte order though assessee attended the hearing before him. Accordingly, Ld. AR prayed before us to remit the matter back before Ld. CIT(A) for fresh adjudication in accordance with law. Ld. DR present was duly heard. He fairly submitted that the matters needs to be restored to the Ld. CIT(A) for fresh consideration.
6. We have heard the rival contentions of both the parties and perused the material available on record. At the outset, it was observed that the order A.Y. 2010-11 Abinash Sharma Vs. ITO Wd-46(1) Kol. Page 4 passed by Ld. CIT(A) was ex parte though Ld. AR for the assessee claimed to have attended the hearing before Ld. CIT(A). However, Ld. AR for the assessee before us failed to substantiate its claim that hearing before Ld. CIT(A) was attended by assessee or his authorized representative. However, in the interest and fair play we are inclined to give one more opportunity to assessee to appear before Ld. CIT(A). While doing so, the Ld. CIT(A) should give a due and fair opportunity of hearing to the assessee and shall decide the matter by way of a speaking order in accordance with law. Hence, this ground of assessee’s appeal is allowed for statistical purpose.