PRAKASH SHANKARAPPA PATTANASHETTI,BAGALKOT vs. ITO, BAGALKOT

The assessee runs a petrol bunk. He filed return of income for AY 2006-07 on 1.7.2008 declaring an income of Rs.12,541. The assessee did not respond to various notices issued by the A.O nor did he produce books of accounts and various details required by the A.O. Therefore, the A.O completed the assessment ex parte u/s 144 on a total income of Rs.9,52,512 making additions on ground of unexplained capital introduced and genuineness of unsecured loans not proved as follows:-

Aggrieved, the assessee preferred appeal before the CIT(Appeals). The case before the CIT(Appeals) was posted on as many as 11 occasions by issue of notices, but none appeared on behalf of the assessee nor any written submissions were filed. The CIT(A) was of the view that the assessee is not serious in contesting the appeals. Therefore applying the decision of the ITAT Delhi Bench in CIT v. Multiplan India Ltd. (38 ITD 320) and the Hon’ble Madhya Pradesh High Court judgment in the case of Estate of Late Tukojirao Holkar v. CWT (223 ITR 480), the CIT(A) held that the appeal was liable to be dismissed in limine.

Even on the merits of the case, the CIT(A) observed that the additions made by the A.O are on strong footings with reasoning. He further observed that the assessee has neither during the assessment proceedings nor during the appellate proceeding been able to make out a case proving that the additions made by the A.O were wrong. Sources of capital introduced or the genuineness of loans were not proved by the assessee. So also, the CIT(A) noted that the assessee has failed to prove the identity of the creditors, genuineness of the transactions and the creditworthiness of the creditors. Therefore, the CIT(A) confirmed the order of the AO on merits as well.

Aggrieved, the assessee is in appeal before us.

There has been a delay of 4 days in filing the appeal before the Tribunal. In this connection, the assessee has filed application for condonation of delay along with an affidavit stating that the impugned order of CIT(A) was served on the assessee on 7.5.2015 and appeal ought to have been filed before the Tribunal on or before 6.7.2015. The reasons for the delay have been stated to be that assessee is a diabetic patient and was treated by family Doctor at Badami, who on 26.6.2015 advised him complete rest upto 10.7.2015. A medical certificate to this effect has been filed by the assessee. It is further stated that the appeal papers were sent to him for signature on 7.7.2015 and the appeal was filed before the Tribunal on 10.7.2015 resulting in a delay of 4 days. It has accordingly been prayed for condonation of delay in filing the appeal.

‘We find that the there is reasonable cause for the delay in filing the appeal before the Tribunal and condone the delay.

Before us, the ld. counsel for the assessee stated that the assessee had agricultural lands and enough agricultural income in order to raise the capital for opening up a petrol bunk. Further, it was argued that out of the opening capital, only a sum of Rs.2,12,541 was taken as probable savings by the AO and the remaining Rs.2 lakhs was added as income from other sources (not proved). It was submitted that the assessee comes from an agricultural family and has enough agricultural income for brining any capital for the petrol bunk. It was also argued that the assessee would have proved the hand loans taken from known persons if an opportunity was provided, which was denied as the order was passed u/s. 144 by the AO. It was further submitted that the loans taken from Sri Sadashiv Chiniwalar of Rs.1,55,933 and Sri Veerabhadrappa Kuratti of Rs.50,000 were added by the AO since no confirmation letters were furnished. The ld. counsel for the assessee contended that the CIT(Appeals) has dismissed the appeal ex parte and has not considered the written arguments which were filed on 30.6.2014. He submitted that the CIT(A) also failed to consider the earlier appearances and remand report of the Respondent dated 1.3.2011. The CIT(A) confirmed the additions on account of loans without giving opportunity to the assessee to adduce evidence.

The ld. DR, on the other hand, vehemently argued that the CIT(A) order dismissing the appeal in limine is justified as the assessee completely ignored to appear before the CIT(A) on many occasions and merely filing written arguments would only indicate that the assessee was not serious in pursuing the appeal. He submitted that the CIT(A) also rightly confirmed the order of AO on merits in the absence of any material produced by the assessee.

We have heard both the parties. The fact remains that the assessee has failed to prove the source of capital introduced to the satisfaction of the lower authorities. The assessee’s contention that he had agricultural land should be substantiated by production of land holdings and agricultural income derived from such land. The assessee has also to establish that the had enough agricultural income from the previous year or accumulated agricultural income from the preceding years which was utilized towards capital for the petrol bunk. Secondly, with respect to unsecured creditors, the assessee has to furnish the list and details of creditors and that they are connected with him with enough source to advance the loans to the assessee along with confirmation letters. In short, the assessee has to prove the identity and creditworthiness of creditors and genuineness of the transactions as held in the case of R.B. Mittal v. CIT, 246 ITR 283 (AP).

In the result, the appeal is allowed for statistical purposes.