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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 24.10.2023 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 26.12.2019 passed by learned ITO-5(3) [“AO”] u/s 144 of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:
“1. That the learned CIT(A) erred in passing an ex-parte order without proper service of notice. The order so passed without providing proper opportunity of being heard is illegal and wrong.
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2 WITHOUT PREJUDICE TO THE ABOVE, the learned CIT(A) erred in confirming the action of AO of passing order u/s 144 in spite of the fact that books of account and other documents were produced. 3. That the learned CIT(A) erred in confirming the addition of Rs.75,84,097/- made by AO by applying his theory and on whims only.”
The registry has informed that the present appeal is delayed by 66 days and therefore time-barred. Ld. AR for assessee submitted that the assessee makes a condonation request supported by an affidavit. Referring to same, Ld. AR explained that the assessee’s first-appeal was conducted under faceless mode and the notices of hearings of appeal as well as impugned ex-parte order passed by CIT(A) were sent to e-mail ‘abhi.parwal@gmail.com’ whereas the assessee supplied e-mail address ‘rtirole@yahoo.com/shailendrasolanki123@gmail.com’ in Form No. 35 of first-appeal filed to CIT(A). Ld. AR also filed a copy of one notice issued by CIT(A), at Page No. 465 of Paper-Book, to show that the notice was in fact issued by CIT(A) to ‘abhi.parwal@gmail.com’. Ultimately, the assessee got the impugned order after logging in to the Income-tax Portwal on 24.01.2024 and thereafter filed present appeal on 24.02.2024. Thus, the delay in filing appeal has occurred due to non-service of impugned order to the email specified by assessee. Ld. AR very humbly submitted that there is no deliberate lethargy, negligence, mala fide intention or ulterior motive of assessee in making delay and the assessee does not stand to derive any benefit because of delay. He further submitted that the sole reason of delay is as explained in the affidavit. Ld. DR for Revenue left the matter to the wisdom of Bench without making any objection. We have considered the explanation advanced by assessee and in absence of any contrary fact or material on record, the assessee is found to have a sufficient cause for delay in filing present appeal. We find that section 253(5) of the Act empowers the ITAT to admit an appeal after expiry of prescribed time, if there is a sufficient cause for not presenting appeal within prescribed time. It is also a settled position by Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387 that whenever
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substantial justice and technical considerations are opposed to each other, the cause of substantial justice must be preferred by adopting a justice- oriented approach. Thus, taking into account the provision of section 253(5) and the decision of Hon’ble Supreme Court, we take a judicious view, condone delay, admit appeal and proceed with hearing.
The brief facts are such that the assessee-individual is engaged in the business of trading of cement and sanitary items. For AY 2017-18, the assessee filed return declaring a total income of Rs. 8,12,790/- alongwith audited financial statements. The case of assessee was selected for scrutiny under CASS for the reason of large cash deposits in bank a/cs. The AO issued notices u/s 143(2)/142(1) in response to which the assessee filed online written submissions.
Finally, the AO passed following assessment-order u/s 143(3) making an addition of Rs. 75,84,097/- on account of unexplained bank deposits u/s 69A r.w.s. 115BBE and determining total income at Rs. 83,96,887/-:
“3. Accordingly, notice u/s 143(2) dated 10.08.2018 was issued and duly served to the assessee through E-mail. Notices u/s 142(1) of I.T. Act alongwith questionnaire were issued on 26.06.2019, 26.07.2019, 07.08.2019, 15.11.2019, 28.11.2019 and 19.12.2019 which were properly served to assessee through E- mail. 4. With reference to above notices the assessee filed online written submission on ITBA with reference to queries raised through above said notices, which are placed on record. Books of accounts and Supporting papers were produced. 5. During the course of assessment proceedings, notice u/s 142(1) dated 28.11.2019 was issued wherein it was specifically been asked to file details as required under SOP issued by the CBDT alongwith copies of cash books for the financial year 2015-16 and financial year 2016-17 and in his reply dated 30.11.2019 the assessee has furnished the chart of comparative figures of cash sales and cash deposited during the financial year 2015-16 and 2016-17, as under:- “Table at 5.1 to 5.3 of reply 5.(a) Produce certified true copy of all bank accounts statement/pass book from 01/04/2015 to 31/03/2017 alongwith bank reconciliation statement if bank balance as per books is not tally with balance as per bank statement/pass book
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with reasons thereof. Also furnish details of cash deposits in your all bank accounts in the below given format:-
5.1 (a) Total cash deposited in Bank in F.Y. 2015-16 4,04,62,580
(b) Total cash deposited in Bank From 01/04/2015 to 2,40,42,480 08/11/2015 (c) Total cash deposited in Bank From 09/11/2015 to 63,09,800 31/12/2015
5.2 a) Total cash deposited in Bank in F.Y. 2016-17 2,51,40,970
(b) Total cash deposited in Bank From 01/04/2016 to 1,89,74,970 08/11/2016 (c) Total cash deposited in Bank From 09/11/2016 to 20,95,000 31/12/2016 5.3 (a) Percentage increase between 5.2(a) and 5.1(a) -37.87%
(b) Percentage increase between 5.2(b) and 5.1(b) -21.08%
(a) Percentage increase between 5.2(c) and 5.1(c) -66.78%
Table at point no.8
Please furnish month wise cash sales and cash deposits from 01/04/2016 to 08/11/2016 in the below format:-
Month wise Op. cash Cash Sales Cash Cash Closing in hand deposited in withdrawal cash in Bank from the hand bank
April 2016 45615 5949008 3472900 27200 2320884
May 2016 2320884 6781130 4188300 4520369 0 June 2016 4520369 7996790 4464160 43000 7655538
July 2016 7655538 104352 1607000 5000 6029064
Aug. 2016 6029064 106361 1672220 0 4231165
Sep. 2016 4231165 1655497 1817000 0 3860536
Oct. 2016 3860536 109350 125893 347530 2929779
Nov. till 2929779 300003 494460 0 2700912 08/11/2016 Total 23002491 18974970 422730
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Table at point no.9
Please furnish month wise cash sales and cash deposits from 09/11/2016 to 31/03/2017 in the below format:-
Month wise Op. cash Cash Sales Cash Cash Closing in hand deposited in withdrawal cash in Bank from the hand bank
09/11/2016 2700912 156601 874000 22000 1967470 to 30/11/2016
Dec 2016 1967470 1713497 1221000 0 2505541
Jan 2017 2505541 143932 260000 0 2997905
Feb 2017 2997905 203127 1319000 0 1810412
Mar. 2017 1810412 935247 2492000 0 71441
Total 3154404 6166000 22000
From the perusal of the above charts, it appeared that the assessee has claimed to have made cash sales amounting to Rs. 2,61,56,895/- out of total sales shown at Rs. 6,21,34,642/-, Total cash deposited in banks have been shown at Rs. 4,04,62,580/- during the financial year 2015-16 and Rs.2,51.40.970/- during the financial year 2016-17.
In the same reply at point no. 15, the assessee has stated that copy of daily cash book for F.Y.2015-16 is enclosed at Pg. No. D1-D44 and that of F.Y.2016-17 is enclosed at Pg. No. D45-D71. But, no such attachments were filed by him.
Similarly, he has been asked to furnish details of sales above Rs.1,00,000/- and purchases above Rs. 25,000/-. In response to the said query letter at point no. 18 and 19 he has replied that the details shall be filed in next date of hearing.
That even after lapse of 15 days no further compliance was made by the assessee and thus, looking to the non-co-operative approach on the part of assessee summons u/s 131 was issued on 16.12.2019 requiring him to produce details of sales, purchase, daily cash transactions details on 18.12.2019. But, the assessee opted for not to appear in response to the said summons. Keeping in view of principles of natural justice a show cause notice was issued on 19.12.2019 fixing date of hearing for 23.12.2019 for making compliance. But, as usual the assessee has not made compliance and thus, sources of cash deposits during the assessment year in question to the tune of Rs.2,51,40,970/- was remained to be proved.
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However, looking to the total turnover of Rs.6,21,34,642/- and cash sales of Rs.2,51,40,970/- availability of cash cannot be denied. But, at the same time from the perusal of table furnished at point no. 8, it is surprising to note that even after availability of huge cash in hand in various months, the assessee has withdrawn small amounts from his banks in the months of April-2016, June-2016, July-2016 and October-2016, which creates suspicion on the availability of cash in hand as claimed by him. The suspicion converts in belief by the fact that assessee was reluctant in furnishing details of sales/purchase and VAT, by which the claim of assessee regarding making of turnover in cash and looking to the provisions of section 40A(3) purchases may not be made by parties in cash and thus, availability of cash as claimed by him remained to be proved. Thus, looking to these circumstances and fact that opening cash in hand as shown by assessee as on 01.04.2016 of Rs.45,615/-, which increases upto Rs.76,55,538/- as on 30.06.2016 and cash withdrawals of Rs.5,000/- has been shown by the assessee of Rs.5,000/- during July, 2016 clearly proves that the cash in hand as on 30.06.2016 was not actually available with him. That subsequent to June, 2016, the cash in hand scaled down to Rs.71,441/- as on 31.03.2017, which means that the assessee has utilized an amount of Rs.75,84,097/- out of cash in hand shown as available as on 30.06.2016 in subsequent period of assessment year in question. But, in view of discussions in aforesaid para the source of such cash in hand remained to be verified and not proved by the assessee. Therefore, the above amount of Rs.75,84,097/- so utilized by the assessee are herewith treated as Unexplained Money under Section 69A of the IT Act, Since the addition has been made u/s 69A of the IT Act, the tax is chargeable@ rates prescribed u/s 115BBE of the IT Act.” 5. Aggrieved, the assessee carried matter in first-appeal but could not participate in the hearings fixed by CIT(A) since, as shown by Ld. AR, the notices of hearing were issued to a different e-mail id that the e-mail id supplied by assessee. The CIT(A) passed ex-parte order dismissing assessee’s first-appeal due to non-prosecution and at the same time approving AO’s order. Now, the assessee has come before us assailing the orders of lower-authorities.
Before us, Ld. AR for assessee firstly referred Para No. 4 of
assessment-order to show that the AO has clearly acknowledged that the
assessee filed Written-Submission on ITBA Portal with reference to queries
raised by AO’s notices and that the books of account and supporting papers
were produced. Then he referred next Para No. 5 wherein the AO has re-
produced detailed charts submitted by assessee showing summary of cash
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movements during the financial year [“FY”] 2016-17 relevant to AY 2017-18
under consideration with a comparative analysis with figures of immediately
preceding FY 2015-16 as well as monthwise summary of cash movements
for the FY 2016-17. Referring to same, Ld. AR successfully showed that
there was a decline in % deposits in current year as compared to preceding
year and that the pattern of monthwise deposits in current year is quite
normal without showing any abnormality. Ld. AR submitted that the
assessee is engaged in cement and sanitary goods wherein almost entire
purchase is made through cheques but sales is made in cash as well as
through cheques. He submitted that the entire deposit in bank a/c has
come from sales of business. He submitted that all cash transactions
including cash-deposits in bank a/c are duly accounted for in assessee’s
cash-book produced/filed to AO. Ld. AR submitted that the AO has,
however, mentioned a factually wrong noting in later part of assessment-
order that in Point No. 15 of letter dated 30.11.2019, the assessee
mentioned about enclosing Cash-Book for FY 2015-16 and FY 2016-17 at D-
11 to D44 and D-45 to D-71 respectively but no such attachment was filed.
Ld. AR has filed following screen short taken from ITBA system of
department at Page No. 469 of Paper-Book to show that the impugned Cash-
Books described as “D1-D71.pdf” were in fact filed to AO.
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Ld. AR further submitted that the AO has, in concluding para of assessment-order, himself accepted “However, looking to the total turnover of Rs.6,21,34,642/- and cash sales of Rs.2,51,40,970/- availability of cash cannot be denied.” But despite such acceptance, he has made addition on mere suspicion because the assessee could not furnish sales book, purchase book and VAT returns. Ld. AR submitted that the assessee could very well file these documents before CIT(A) but, however, could not file because the notices of hearing were not sent by CIT(A) on the email supplied by assessee. Ld. AR submitted that the assessee has now filed details of purchase, sales and VAT returns as additional evidences in Paper-Book.
Ld. DR for revenue strongly contended that the assessee has not filed
necessary documents before AO which is a fact. Further, the assessee has
now filed those documents in the form of additional evidences which are for
the first time before ITAT, hence the additional evidences are required to be
examined by AO. He submitted that the order of first appellate authority is
also ex-parte. Therefore, this matter has to be remanded back to AO for
examination and fresh adjudication.
We have considered rival submissions of both sides and carefully perused the documents held on record including the orders of lower- authorities. Admittedly, the addition in present case has been made by AO on account of unexplained cash deposits in bank a/c. In Para 4 of assessment-order, the AO has noted that the assessee produced books of account. Further, in Para 5, the AO has re-produced charts filed by assessee showing movement of cash flows by way of opening balance, cash sales, cash deposits in bank, cash withdrawals from bank, etc. A cursory look of those charts clearly reveals a normal pattern of deposits in bank a/cs and there is no abnormal or exceptional deposit. Taking note of same, the AO
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has himself accepted in assessment-order that considering the turnover and cash-sales of assessee, the availability of cash cannot be denied. However, the AO has ultimately made an addition of Rs. 75,84,097/- for the reason that the assessee did not furnish the details of purchase, sales and VAT returns. Ld. AR for assessee has now filed these details by way of additional evidences in Paper-Book. Therefore, in the situation, we agree to the request of Ld. DR for revenue that the additional evidences, filed for the first time before ITAT, have to be looked into by AO. Accordingly, we set aside the order passed by AO and remand this matter back to the file of AO for the limited purpose of verification of entries of purchases and sales recorded in cash-book and reconciliation of turnover/sales with the audited financial statements of assessee. The AO shall, after verification, pass order afresh without being influenced by his previous order in any manner. Ordered accordingly.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 05/08/2024 Sd/- Sd/-
(VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore िदनांक /Dated : 05/08/2024 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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