DEEPAK N BHUPTANI,,MUMBAI vs. ITO 19(2)(1), MUMBAI

Facts of the case are that the assessee filed his return of income on 30.9.2008 declaring a total income at Rs.1,27,486/- which was processed under section 143(1) of the Income Tax Act, 1961 (the Act). Thereafter the case of the assessee was selected for scrutiny and proceedings under section 143(2) and 142(1) were followed and assessment was completed vide order dated 27.12.2010 u/s 143(3) at Rs.30,27,080/- by making an additions of Rs. 30,27,078/-on protective basis .

The brief facts of the case are that the assessee was doing business through his wife as he was suffering from paralytic stroke however the noted that bank account of M/S Anuj Enterprises a proprietary concern was opened by Smt Rita D Rupani in the capacity as proprietor. In the said bank account the huge transactions were carried out both of deposit and withdrawals. The total credits during the year were Rs. 30,27,15,753/-.The AO after considering the submissions and replies of the assessee during the course of assessment proceedings from time to time , rejected the same as the AO was not convinced with the contention of the assessee that he earned only 0.042% commission on the total turnover and made an addition equal to 1% of Rs. 30,27,15,753/- on protective basis whereas making the similar additions in the hands of wife of the assessee on substantive basis .

At the outset, the ld.AR submitted before us that the ld.CIT(A) has acted in gross violation of principle of natural justice in confirming the action of the AO vide order dated 02.01.2012 despite the facts that the appeal was adjourned to 21.2.2012 by the office of the ld.CIT(A).

We have heard the rival contentions and perused the material placed before us including the orders of authorities below. We find that in the present case the addition has been made by the AO on the protective basis. During the course of assessment proceedings before the AO, the wife of the assessee submitted that the assessee has received commission at the rate of 0.042% of the total amount credited in the bank account of the assessee which was Rs.30,27,07,783/- and the assessee could not appear before the AO since he was suffering from paralysis and was not in a position to move. However, the AO made the addition of Rs.30,27,078/- on protective basis in the hands of the assessee in order to protect the interest of the revenue. Aggrieved by the order of the AO, the assessee preferred and appeal before the ld. CIT(A) who confirmed the action of the AO by observing and holding as under :

“2.6 I have carefully gone through the assessment order and the submissions made on behalf of the appellant, the appellant is an adatia in Iron & Steel market. It has been claimed on behalf of the appellant that he has arranged meeting between the suppliers and the purchasers long back in the past and at that time it was agreed that whenever the transaction will take place between such supplier and purchaser, the appellant would be entitled to aadat of seven aana i.e. forty two paise on every thousand rupees on completion of the financial transaction. It is also submitted on behalf of the appellant that the A.O. was not justified in estimating the income from business or profession of the appellant at Rs. 30,27,078/- being 1 % commission on the turnover of Rs. 30,27,07,783/-.It is also submitted that the books of account of the appellant are audited u/s 44AB of the IT. Act, 1961 and thus, there is no reason for estimating the income of the appellant. The A.O. on the other hand has observed that the commission shown to have been earned by the appellant of Rs. 1,27,068/- which is 0.042% of 30,27,07,783/- is to meager and to low to be believed. Further, the appellant could not produce any evidence to his claim that he was earning only 42 paise on every thousand rupees as commission. I find considerable force in the arguments of the A. O. that the commission shown by the appellant is very meager and low. Therefore, in my view, the A.O. is quite justified in estimating the same at 1% of the turnover of Rs.30,27,07,783/-. Therefore, the addition made by the AO of Rs.30,27,078/-“

The ld. AR vehemently argued before us that the assessee was bed ridden following the paralytic attack and could not attend either before the AO or before the ld. CIT(A) and the ld. CIT(A) decided the matter on 2.1.2012 despite the fact that the hearing was adjourned to 21.2.2012 by the office of ld.CIT(A) and therefore humbly prayed that the matter be restored to the file of the ld.CIT(A) to decide afresh after giving reasonable opportunity of being heard to the assessee in the interest justice and fair play.

The ld. DR also fairly agreed with the arguments advanced by the ld.AR.

We find from the above discussions and contentions of the parties, that the main grievance of the assessee was that despite the hearing was adjourned to 21.2.2012 , the ld CIT(A) decided the appeal on 02.01.2012 and the assessee did not get the opportunity to present his case. It is also noted from the record that the assessee suffers from paralytic stroke and was not in a position to move. We are , therefore , of the opinion that the ends of justice would be met if the assessee is granted one more opportunity of hearing to present his case . We also find that the ld.CIT(A) also decided the case of the assessee on the date prior to the date of hearing. Accordingly, we set aside the order of the ld. CIT(A) and restore the appeal to the file of the ld. CIT(A) to decide the same as per facts and law after providing fair and reasonable opportunity to the assessee. Resultantly, the appeal of the assessee is allowed for statistical purposes.

Facts of the case are that the assessee filed her return of income to the notice under section 148 at Rs.30,000/- and relying on the basis of the facts of her husband, the AO made an addition of Rs.30,27,078/- including the addition of Rs.1,67,173/- being unexplained receipts assessing the total income at Rs.32,24,250/ vide an assessment order dated 8.3.2013 passed under section 143(3) r.w.s 147 of the Act on substantive basis. Aggrieved by the order of AO, the assessee preferred an appeal before the ld.CIT(A), who also confirmed the action of the AO and the assessee filed appeal before the Tribunal.

Since, we have already set aside the issue to the file of the ld.CIT(A) for fresh adjudication of the issue in assessee’s husband’s case in which the addition were made on protective basis. In the present case, the addition has been made on substantive basis. Since, we have restored the issue to the file of the ld.CIT(A) for fresh adjudication in assessee’s husband case supra , therefore we set aside the order of the ld.CIT(A) and restore the same to the file of the ld.CIT(A) to decide the matter afresh after affording reasonable hearing.

Other grounds raised in this appeal are of academic in nature and hence required no adjudication, therefore dismissed.

In the result, both the appeals are allowed for statistical purpose. Order pronounced in the open court on 26.10.2016. Sd sd (MAHAVIR SINGH ) (RAJESH KUMAR) Judicial Member Accountant Member म ंबई Mumbai; ददनधंक Dated : 26.10.2016 Sr.PS:SRL: