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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: SHRI SANJAY GARG & SHRI RAKESH MISHRA
Present for: Assessee by : None Respondent by : Abhishek Kumar, JCIT, Sr. DR Date of Hearing : 05.09.2024 Date of Pronouncement : 04.12.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as “the Ld. CIT(A))” passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2018-19, dated 30.11.2023, which has been passed against the assessment order u/s. 147 read with section 144B & 144B of the Income- tax Act, 1961 (hereinafter referred to as the “Act”), dated 28.02.2023.
The grounds of appeal raised by the assessee are reproduced as under:
“1 Ground-1. For that in the facts and in the circumstances of the case Commissioner of Income Tax (Appeals) National Faceless Appeal Centre Delhi, has issued notices Bhairablana Samabay Krishi- Unnayan Samity Limited under section 250 in an e- mail which do not belongs to the assessee, for which the ex-party order being issued. 2 Ground-2. For that in the facts and in the circumstances of the case Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi, has erred in Law and in fact considering as a non filer of Income Tax Return for the Assessment Year 2018-19 although the return has already been filed for the Assessment Year 2018- 19. The learned Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi, as well as the Assessing Officer, Assessment Unit, Income Tax Department ignored the return filed by your assessee for the Assessment Year 2018-19 which is completely bad in Law. 3 Ground-3. For that in the facts and in the circumstances of the case the learned Assessing Officer, ward-1(1), Burdwan issued notice under section 148 in a unused PAN having wrong status code of "Artificial Juridical Person" instead of correct status code " Association of Persons", and directed your assessee to file income tax return in the PAN with wrong status code which the software refuses to accept earlier and for which your assessee had to obtain a new PAN with correct status code and which is the reason for application of new PAN, indeed the learned assessing officer ignored the fact and continued the proceedings in the unused PAN in which the return could not be filed by your assessee. 4 Ground-4. For that in the facts and in the circumstances of the case Commissioner of Income Tax (Appeals) National Faceless Appeal Centre, Delhi, erred in Law invoking section 69A of the Income Tax Act 1961, although there is books of accounts maintained by your assessee and the cash deposit of Rs. 61,15,617 were explained before the assessing officer, assessment unit, income tax department, with the copy of cash book for relevant dates, and also erred infact by adding Rs. 3,00,000 in respect of Term Deposit. 5 Ground-5. For that in the facts and in the circumstances of the case Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, issued notices for hearing in an e-mail which do not belongs to your assessee and also not mentioned in the Form-35 filed. As a result your assessee could not know about the hearing leaving miscommunication to your assessee. The notice of hearing was not in the knowledge of your assessee and your assessee could not attend the hearing. 6 Ground-6. For that the assessee craves leave to alter, add, amend, moderate, substitute or delete any one or more of the ground or grounds of appeal at any time before or in course of hearing.”
3. None appeared before us in response to the notice issued hence the appeal is being decided on the basis of facts available on record with the assistance of the Ld. Sr. DR. The brief facts of the case as culled out from the appeal order of the Ld. CIT(A) are that the assessee is a Co-operative Society registered under the West Bengal Co-operative Societies Act 2006 Bhairablana Samabay Krishi- Unnayan Samity Limited as amended up to date. The assessee is a Primary Agricultural Credit Society (PACS). The primary object of the assessee is stated to be to collect deposits from its members and to provide loans to its members. The PAN of the assessee was initially allotted as AAAJB0461C and the status code was Artificial Juridical Person in PAN AAAJB0461C which was incorrect as the correct status of the assessee is claimed as Association of Persons. It is stated that the assessee faced a problem in E-filing of Income Tax Return in the incorrect status of Artificial Juridical Person and the software did not accept the Return with the wrong status code of the Cooperative Society. As there is no system to correct the status code in PAN, hence the assessee was compelled to obtain a new PAN with the correct status code of Association of Persons and the new PAN which was obtained is AACAB7492G. After obtaining the new PAN, the assessee filed the returns from A.Y. 2015-16 to 2022-23 on the new PAN from 31.01.2016 to 14.09.2022 on various dates. It was submitted before the Ld. CIT(A) that the assessee was using the new PAN AACAB7094G from a very long period and the incorrect old PAN was not used by the assessee since the new PAN was allotted. The reasons for selection of the cases for complete scrutiny under the Act were as follows: - “Reassessment of escapement of income was based on the following points 1. The Assessee is a non-filer of Income Tax Return for the Assessment Year 2018- 19. ii. Cash Deposits of Rs 6115617.00 in one or more accounts (other than current account and time deposits). iii. Time Deposit (other than the time deposit made through renewal of another time deposit) of Rs 300000.00. 3.1 It was further submitted before the Ld. CIT(A) that: Your Appellant informed the Assessing Officer about the non-use of this wrong PAN and the information of fling of Income Tax Return for the Assessment Year 2018-19 in the new corrected PAN AACAB7492G.
Bhairablana Samabay Krishi- Unnayan Samity Limited Your Appellant also produced the details of cash deposited in Bank and the source of the Cash so deposited through Income Tax Portal but the Assessing Officer did not consider the same in issuing his Assessment Order. Your Assessee also submitted the source of time deposit made of Rs 300000.00 in Burdwan Central Cooperative Bank, which is not considered in issuing Assessment Order.
The Assessing Officer Assessment Unit Income Tax Department increases the total income of your assessee by Rs 61,15,617.00 (Cash Deposit in Bank of Rs 61,15,617 plus Time Deposit of Rs 300000) and the assessed income is 64,15,617 and a demand of Rs 1,05,16,784 raised by the learned Assessing Officer Assessment Unit Income Tax Department which is completely bad in law and needs to be quashed.
Before the Ld. CIT(A), the assessee challenged the notice issued u/s 148 of the Act and invoking clause (a) of Explanation 2 to section 147 of the Act as the assessee had filed the return for A.Y. 2018-19 and was not a non-filer. Section 147 invoked on the wrong PAN was stated to be incorrect. Since the assessee had not filed the documents regarding surrendering / deletion of PAN, therefore, the Ld. AO added the cash deposit of Rs.61,15,617/- as unexplained u/s 69A of the Act. It was contended before the Ld. CIT(A) that there is no provision in the Act for PAN based assessment ignoring the assessee. The entry of cash deposit in bank was contra entry between the cash and bank as the bank account was debited when the cash was deposited in the bank and the cash account was credited and on the other hand if cash was withdrawn from the bank, the cash account was debited while the bank account was credited. The assessee submitted that the Ld. AO has erred in law in invoking section 69A of the Act while adding the cash deposit in the bank and bank deposit made, both the recorded in the bank account. Further, submission was filed before the Ld. CIT(A) as under: - “4.0 Submissions. The appellant had submitted the following submission while filing the instant appeal.
Bhairablana Samabay Krishi- Unnayan Samity Limited "Your appellant is a Cooperative Society, Registered under the West Bengal Cooperative Societies Act, 2006 as amended up to date. Your appellant is a Primary Agricultural Credit Society (PACS). The primary object of your appellant society is collection of deposits and to provide credit facilities to its members. Your appellant society was filing its Income Tax Return manually with the PAN: AAAJB0481C. The status code of this PAN was "Artificial Juridical Person" which is a wrong status code for your appellant. Your appellant has not faced any problem in respect to the filing of its Income Tax Return manually, but the problem arises when your appellant tried to E-file its Income Tax Return. The Software of E-Portal did not accept the PAN of your appellant having wrong status code. The correct status code of your appellant is "Association of Persons and your appellant faced a lot of problem in E-filing its Income Tax Return. Your appellant compelled to apply for a new Permanent Account Number. There is no system of rectification of status code of PAN. The new PAN obtained is AACAB7492G. The old PAN: AAAJB0461C became useless. Your appellant started to E-file its Income Tax Return with the new PAN."”
5. The Ld. CIT(A) noted that there was no compliance to six notices issued for hearing and it was obligatory on the part of the assessee to co- operatively and effectively pursue the appeal before the appellate authority in an effective and productive manner and the appellant had shown complete lack of interest. The appeal was accordingly disposed off ex-parte. The Ld. CIT(A) held that the assessee had not been vigilant in pursuing the appeal and had not effectively prosecuted the appeal. The grounds of appeal were rejected by giving the finding as under:
“5.4 From the above discussion it is evident that the appellant has no evidence to substantiate the grounds taken in the instant appeal and it has not even once argued with any supporting, relevant and cogent arguments/averments in support of the grounds of appeal. Therefore, there is no option left with me but to go through the extremely brief non-speaking description appearing in the grounds of appeal, statement of facts filed by the appellant and the order appealed against. 5.5.1 Vide the first and second grounds of appeal, the appellant had challenged the order u/s. 147 r.w.s. 144 of the IT Act, dt.28.02.2023. In the instant case, it was noticed by the assessing officer that the appellant had not filed return of income for the A.Y.2018-19. Subsequently, the A.O. received the following information through insight portal for the PAN of the appellant i.e. PAN-AAAJB04616. (1) The appellant a non-filer of ITR for the AY 2018-19. (2) The appellant had deposited Rs.61,15,617/- in one or more accounts (other than current account and time deposits).
Bhairablana Samabay Krishi- Unnayan Samity Limited (3) The appellant had made time deposits (other than the time deposit made through renewal of another time deposit) of Rs. 3,00,000/-. Therefore, as the appellant was a non-filer, initiation of proceedings u/s. 147 of the IT Act, 1961 was required measures from the interest of revenue. So, the A.O. initiated the proceedings u/s. 147 of the IT Act in the case of the appellant by issuing notice u/s. 148 of the IT Act, 1961 for the A.Υ.2018-19. Further, the appellant has taken plea that instead of the old PAN- AAAJB0461C (the status code is Artificial Juridical Person), the appellant is using the PAN- AACAB7492G (the status code is Association of Person). But, there is no evidence on record that the appellant has surrendered the old PAN after obtaining new PAN. The assessee has submitted reply that it has filed the return on the other PAN (AACAB7492G) but the information about the cash deposit was on the original PAN (AAAJB0461C). As per PAN Database, the Original PAN was also active. The assessee has not filed the documents regarding surrendering, deleting of PAN before the A.O. Therefore, the A.O. had no option, except to complete the assessment on material available on record. In absence of the documentary evidence, source of cash deposits cannot be verified. Therefore, the A.O. treated the cash deposit of Rs 61,15,617.00 as unexplained and added back to the income of the appellant under section 69A of the I.T. Act for the A.Y.2018-19. 5.5.2. During the appellate proceeding, six notices were issued to the appellant for submission of details/documentary evidences in support of its contentions made in the aforesaid grounds of appeal. But the appellant has not complied to any of the six notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no details/documentary evidence in support of the issues raised in the grounds of appeal or the appellant does not want to pursue the appeal. 5.5.3. In want of proper documentary evidences, the assessee's claim has remained unverified. In this situation, no infirmity is found in the action of the A.O. while issuing notice u/s. 148 of Income Tax Act. Thus, the first and second grounds of appeal are dismissed. 5.5.4. Vide the third, fourth and fifth grounds of appeal, the appellant has challenged the addition of Rs.61,15,617/- made u/s.69A of the IT Act, 1961 as per order u/s.147 r.w.s. 144 of the IT Act, dt.28.02.2023 for the A.Y.2018-19. After initiation of proceedings u/s.147 of the IT Act, notices u/s.148 of the IT Act was issued to the appellant on 30.03.2022 for compliance within 30 days of receipt of the said notice. But, the appellant did not complied to the said notice issued by the A.O. Subsequently, notices u/s. 142(1) were issued to the appellant on different dates for furnishing of required details/documents. But the appellant did not reply to the said notices. For non-compliance to the said notices by the appellant, the issue cash deposit of Rs.61,15,617/- during the F.Y.2017-18 remained unverifiable at the end of the A.O.
Bhairablana Samabay Krishi- Unnayan Samity Limited 5.5.5. Due to non-furnishing of required details/documents, the A.O. had no option rather to complete the assessment proceeding ex-parte on the basis of the facts and materials available on record of the appellant for the A.Y.2018-19. So, the A.O. treated the entire cash deposit of Rs.61,15,617/- as unexplained cash deposit u/s. 69A of the IT Act and added the same to the total income of the appellant for the A.Y.2018-19. The A.O. passed the assessment order u/s. 147 r.w.s. 144 of the I.T. Act, 1961 on 28.02.2023. 5.5.6. During the appellate proceeding, six notices were issued to the appellant for submission of details/documentary evidences in support of its contentions made in the aforesaid grounds of appeal
. But the appellant has not complied to any of the six notices issued during the appellate proceedings. The consistent non-compliance of the appellant may be because the appellant has no details/documentary evidence in support of the issues raised in the grounds of appeal or the appellant does not want to pursue the appeal. 5.5.7. In want of proper documentary evidences, the assessee's claim has remained unverified. In this situation, I have no other option but to go along with the findings of A.O. on making addition of Rs.61,15,617/- u/s.69A of the IT Act, 1961 in the assessment order u/s.147 r.w.s.144 of the IT Act, dt.28.02.2023. 5.5.8. Thus, the third, fourth and fifth grounds of appeal are dismissed. 5.5.9. The sixth ground of appeal is general in nature. Therefore, it needs no further adjudication. 5.5.10. Before parting, it is trite that an appellate authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No. 3791 of 2013 (O&M) dated 01.05.2014] and in the absence of any reasonable, cogent and valid arguments/contentions advanced by the appellant in the instant appeal to counter the AO's decision as contained in the penalty order, as mentioned earlier, the penalty imposed by the AO is sustained in terms of the observations herein- above.
6. The appeal of the appellant is dismissed.” Hence, the appeal before the Tribunal.
We gone through the facts of the case and the grounds of appeal. Ground no.1 is against the ex-parte order of the Ld. CIT(A). Although the Ld. CIT(A) has mentioned issuance of six notices from 22.08.2023 to 06.10.2023 for which no compliance was made, however, both the assessment order as well as the appellate orders have mentioned the old PAN AAAJB0461C and not the new PAN on which the assessee had filed Bhairablana Samabay Krishi- Unnayan Samity Limited the return for A.Y. 2015-16 to 2022-23 including the return for the impugned assessment year, as mentioned in the appellate order and therefore, the possibility of using an incorrect email cannot be ruled out. The Ld. AO made the addition as well as the Ld. CIT(A) confirmed the same as no documentary evidence was filed for surrender or deletion of the old PAN which was mentioned in the bank account and the term deposit. The assessee contends that it was using the new PAN from 31.01.2016 onwards. Merely because the bank account had the old PAN which had incorrect status of the assessee, the deposits in bank accounts are not liable to be added to the income u/s 69A of the Act, more so when on account of difficulty in filing the return of income, the assessee had applied for a new PAN on which the returns were filed for the earlier and subsequent AYs. The provisions of Section 69A of the Act are reproduced as under: - “69A. Unexplained money, etc. -Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.”
7. Therefore, there is merit in the contention of the assessee that since the return was filed with the new PAN, the notice u/s 147 of the Act by treating the assessee as a non-filer could not be issued. Non-deletion of the old PAN was a technical issue which ought not to have been the primary reason for making the addition. The Ld. CIT(A) has sustained the penalty in para 5.5.10 in place of sustaining the assessment order and on this ground as well the order of the Ld. CIT(A) is erroneous. Since, the merits of the case have not been adjudicated, it would be in the interest of justice and fair play on the facts of the case if both the orders of the Ld.
Bhairablana Samabay Krishi- Unnayan Samity Limited CIT(A) as well as the Ld. AO are set aside and the assessment is made de novo considering the return filed on the new PAN AACAB7492G and after granting an opportunity of being heard to the assessee. The assessee shall produce all necessary evidence in support the claim that the addition was not warranted in the first place. Hence, Ground nos. 1, 2 and 3 are allowed, while Ground no. 4 is allowed for statistical purposes and Ground nos. 5 and 6 are general in nature and do not require any specific adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 4th December, 2024.