ANIL FIREWORKS FACTORY,VIRUDHUNAGAR vs. ACIT, CIRCLE-1, VIRIDHUNAGAR

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ITA 1479/CHNY/2023Status: DisposedITAT Chennai09 April 2024AY 2017-18Bench: SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL (Accountant Member)5 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the CIT(A) order was passed for non-prosecution and, in the interest of natural justice, decided to provide the assessee another opportunity to present its case. The matter was remanded back to the CIT(A) for fresh adjudication.

What were the facts?

The assessee, a fireworks manufacturer, deposited demonetized currency notes totaling Rs. 3,69,85,500/- into its bank accounts. The Assessing Officer added this amount to the assessee's income, treating it as unaccounted income.

What were the issues?

Whether the cash deposits of demonetized currency notes by customers into the assessee's bank accounts constitute unaccounted income of the assessee. Whether the CIT(A) order passed for non-prosecution should be set aside.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL

Hearing: 09.04.2024Pronounced: 09.04.2024

अपीलाथ� क� ओर से/Appellant by : Shri S. Kumarasubramanian, Advocate ��यथ� क� ओर से/Respondent by Shri D. Hema Bhupal, IRS, JCIT. सुनवाई क� तारीख/Date of Hearing : 09.04.2024 घोषणा क� तारीख/Date of Pronouncement : 09.04.2024 आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1056276261 (1) dated 19.09.2023. The assessment was framed by the Assistant Commissioner of Income Tax, Circle 1, Virudhunagar, for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 21.12.2019.

. 2 2. At the outset, it is noticed that this appeal by assessee is barred by limitation by 26 days. The assessee received the impugned appellate order on 19.09.2023 and appeal was to be filed on or before 18.11.2023 but actually it was filed on 14.12.2023 thereby there was a delay of 26 days. The assessee has filed condonation petition stating the reason that the assessee have handed over papers relating to filing of appeal to an Auditor and the Auditor on one pretext or others has not perused the matter and on realizing the same, assessee had approached an Advocate at Madurai who have facilitated in filing the appeal, thereby there is a delay of 26 days. When this was confronted to the ld. Senior Departmental Representative he has not objected for condonation of delay. Hence, we condone the delay and admit the appeal.

3.

Brief facts of the case are that assessee is a partnership firm engaged in business of manufacture and sale of fireworks. Assessee filed its return of income for the relevant assessment year 2017-2018 on 28.09.2017 declaring a total income of Rs.2,10,46,040/-. The assessing officer selected the case for scrutiny and noticed that the assessee made cash deposits of the demonetized currencies of SBN in the bank accounts to the extent of Rs. 2,63,54,500/- into TMB Ltd., and Rs.1,06,31,000/- into Axis Bank Ltd., and the total amount aggregated to Rs.3,69,85,500/-. The asssessee explained

. 3 that the cash deposits were made by the customers of the asssessee directly in the bank accounts of the assessee towards pending dues or as advance and furnished the names and addresses of the customers in different parts of India, who made cash deposits of SBN. After examining all the details, the assessing officer held that deposits of SBN by the customers directly in the bank account of the assessee was not a legally accepted transaction and therefore added the entire deposits. The asssessee contended that it was a legally accepted transaction as per Rule 2(v) of the scheme of demonetization. It was also pointed out that the assessee had given authorization to the customers and the customers filed proof of identity with the bank and therefore the source for the deposit of SBN can be examined only in the hands of the depositors and not in the case of the assessee. However, the assessing officer did not accept the contention of the assessee and added the entire cash deposits of SBN at Rs 3,69,85,500/- towards unaccounted income under section 68 on the ground that SBN cannot be used for any purpose other than exchanging. Aggrieved, assessee preferred an appeal before the ld. CIT(A).

4.

The CIT(A) also confirmed the action of the AO for the reason that the assessee has not filed any reply to the notices issued. Aggrieved, assessee preferred an appeal before us.

. 4 5. Now before us, the ld. Counsel for the assessee submitted that the order of CIT(A) i.e., final disposal is practically for non-prosecution and just simpliciter confirmed the action of the ld. Assessing Officer and he requested to setting aside the appeal to the file of the ld. CIT(A).

6.

When these facts were confronted to ld. Senior Departmental Representative, he objected to setting aside of this appeal to the file of the ld. CIT(A) for the reason that the CIT(A) has provided many opportunities but the assessee did not avail for the reasons best known to him.

7.

We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessee was provided many opportunities by the ld. CIT(A) but assessee did not avail the opportunities but in the interest of natural justice, we are of the view that to do substantial justice one more opportunity be provided to the assessee to represent the true and clear facts before the ld. CIT(A) and hence, we set aside the order of the CIT(A) and remand the matter back to the file of the ld. CIT(A) with a cost of Rs.25,000/- to be paid to the Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras on or before 15.05.2024. The assessee will pay this cost and produce the receipt before the ld. CIT(A). In term of the above, the order of the ld. CIT(A) is set aside and matter restored back to the file of the ld. CIT(A) for fresh adjudication. Needless to say that . 5 the ld. CIT(A) will allow reasonable opportunity of being heard to the assessee and assessee is also directed to represent its case as and when notice is issued, otherwise adverse view can be taken against the assessee.

8.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court at the time of hearing on 9th April, 2024 at Chennai.

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