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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: SHRI S.S. GODARA & SHRI PRADIP KUMAR KEDIA
आदेश / O R D E R PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the assessee against the order of the Commissioner of Income Tax(Appeals)- Gandhinagar [CIT(A) in short] dated 22/08/2014 in the matter of assessment order under s.144 r.w.s. 147 of the Income Tax Act, 1961
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 2 - (hereinafter referred to as "the Act") dated 30/12/2013 relevant to Assessment Year (AY) 2006-07.
The grounds of appeal raised by the Assessee read as under:-
The order of learned Commissioner of Income Tax (Appeals) – Gandhinagar [CIT(A)] is bad in law as well on facts on the following grounds; (1) Learned CIT(A) has erred in not adjudicating grounds of appeal No.1 & 2 against reopen of assessment u/s.147 and assessment u/s.144 of the Act. 1.1. Learned A.O. has erred in reopening assessment u/s.147 of the Act. 1.2. Order of A.O. u/s.144 is without detail inquiry and verification of facts. (2) The learned CIT(A) has erred in confirming the addition made by A.O. of Rs.7,84,000/- being cash deposited in saving bank account with Mahindra Bank Ltd., Unjha, in as much as. (i) The AO has not decided the case on merits and facts of the case. (ii) The AO has passed the order without detail inquiry of the case though AO had sufficient time up to 31/03/2014. (3) The learned CIT(A) has erred in confirming the interest charged by AO u/s.234A, 234B & 234C of I.T.Act, 1961.
Briefly stated, the assessee an individual was found to have made cash deposits of Rs.10.19 lakhs in his bank account with Kotak Mahendra Bank Unjha. The assessment was reopened under s.147 of
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 3 - the Act and assessment proceedings were initiated against the assessee. The assessee failed to appear and explain the source of cash deposits of Rs.10,19,000/- in aggregate in bank account before the Assessing Officer (AO). The AO accordingly quantified the cash deposit at Rs.7,84,000/- as unexplained and undisclosed income.
Aggrieved, the assessee preferred appeal before the CIT(A) without any success. The relevant operative para of the order of the CIT(A) is reproduced hereunder for ready reference: 4.5. I have considered the facts of the case, assessment order and the submission made by the appellant.
The contention of the AO in the assessment order for making the addition is that the appellant has failed to respond to various notices issued and on the basis of information gathered from the bank by issuing notice u/s.133(6) of the Act.
During the course of appellate proceedings appellant has raised objection against the order passed by the AO u/s.144 claiming that order was passed without detailed enquiry and verification though the AO was having sufficient time upto 31/3/2014. Further, appellant has claimed that he is assessed to tax and maintaining regular books of accounts. Appellant has tried to explain the source of the impugned addition made of Rs.7,84,000/- by a cash flow statement. The cash flow statement shows opening balance of Rs.7,25,000/- of previous year and the appellant has claimed that the above cash is deposited out of opening balance. Appellant was asked to produce the sources of opening balance and was also asked to produce the cash book and other relevant books of
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 4 - previous year, copy of return of income and balance sheet. However, the AR of the appellant was not in a position to produce the books of accounts or cash flow statement of previous year on which basis he could have explained the source of opening balance and admitted that no books are maintained of previous years and the appellant has not filed return of income prior to the year under consideration. Further, the AR of the appellant was also asked to produce any evidences which could explain the source of opening cash balance of Rs.7,25,000/-. The AR of the appellant could not substantiate or produce any material evidences. Thus, it is very clear that appellant has failed to substantiate or explain the source of deposits made totalling Rs.10,19,000/- in the bank account. From the cash credit and cash debit entries, it is amply clear that the appellant is not eligible for any relief as there was continuous cash deposited in the bank account. Therefore, the additional evidences filed by the appellant are admitted. However, it does not help the appellant as the appellant has miserably failed to adduce any evidences with regard to the source of cash deposited in the bank account. Therefore, it is held that the AO is justified in making addition of Rs.7,84,000/- and the addition made is confirmed. The grounds of appeal are therefore, rejected.”
Aggrieved, the assessee preferred appeal before the Tribunal. 5.
The assessee in its grounds of appeal has challenged the action of the CIT(A) on jurisdictional point under s.147 of the Act and merits of addition of Rs.7,84,000/- towards cash deposits.
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 5 - 7. The Ld.AR for the assessee submitted that the order of the CIT(A) is incorrect. The Ld.AR also submitted that the notice issued under s.147 of the Act is bad in law. Similarly, the Ld.AR submitted that the cash deposits made in the saving account are fully explained and therefore no addition towards unexplained cash deposit is called for. The Ld.AR thereafter relied upon the decision of the Coordinate Bench in the case of Jitendrakumar Prabhudas Patel vs. ITO in ITA No.11/Ahd/2015 for AY 2006-07, order dated 21/09/2017 and claimed that under similar circumstances, the issue was set aside to the file of AO. The Ld.AR also referred to the application for admission of additional evidences and requested that the matter be set aside to the file of AO for appraisal of the additional evidences. Similarly, prayer for condonation of delay in filing of belated appeal was pressed.
The Ld.DR for the revenue, on the other hand, submitted that the additional evidences placed before the Tribunal cannot be admitted under Rule 29 of the ITAT Rules, 1963. The Ld.DR submitted that due opportunity was given to the assessee by the AO which was squandered by the assessee willfully.
We have considered the rival submissions. At the outset, we condone the delay of 51 days in view of the reasons specified in the prayer dated 24/10/2017.
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 6 -
We now turn to the application for admission of additional evidences. We find that no cogent reason has been given by the assessee which prevented him from filing the additional evidences before the AO or thereafter before the CIT(A). On perusal of the additional evidences, we do not find anything to assume that these evidences have come in possession of the assessee after the completion of the proceedings before the CIT(A). We observe that the admissibility of additional evidence under Rule 29 of the ITAT Rules is made to depend not upon the relevancy or materiality to the issue before the Tribunal of the evidence sought to be admitted but upon whether or not the Tribunal requires these evidences to ‘enable it to pass orders or for any other substantial cause’. At this stage, we observe the negligent conduct of the assessee. Neither did the assessee file the return of income under s.139(1) nor did it care to reply to the notice under s.148 and subsequent notices. The non-attendance was shown to be attributable to the wrong advice by the legal advocate. We are totally flummoxed by such conduct. The statutory notices have been treated with disdain. The penalty under s.271(1)(b) was also issued to enforce the compliance, however, without any avail. No explanation was offered at the assessment stage towards the cash deposit in a bank account where the assessee is a joint holder. Significantly, we notice a very typical pattern of cash deposits just below Rs.50,000 (Rs.49,5000 to be specific) at number of instances as noted by
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 7 - the AO in its order. Such pattern of deposits shows conscious efforts on behalf of assessee to keep the transactions out of I.T.scanner. The assessment ultimately framed ex-parte under s.144 r.w.s.147 of the Act.
Before the CIT(A), the assessee has sought to explain the source of cash deposit against the opening balances of such large amount. The assessee failed to substantiate with any material evidence to support such huge cash balance at the beginning of year. We also find that new evidences were furnished before the CIT(A) and were readily admitted after the appreciation of the additional evidences filed before the CIT(A). The CIT(A) has therefore concluded adverse to the assessee. By way of new additional evidences, after the proceedings before CIT(A), the assessee is seeking to rope in new line of arguments. We are not impressed with the plea of the assessee for admission of the additional evidence in these circumstances. The prayer for admission of the additional evidence is therefore rejected.
On merits, we find that the assessee has miserably failed to explain the cash deposits as noted. The assessee has made cash deposits in a typical pattern of Rs.49,500/- or thereabout i.e. just below Rs.50,000/- at one instance. Despite the fact of deposit coming to the notice of the AO and issuance of notice for explaining such source of deposits, the assessee did not even bother to respond to the statutory notices. The
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 8 - reasons cited for such non-attendance are prima-facie flimsy. The CIT(A) has also granted sufficient opportunity and has taken note of the explanation offered. No cogent material was placed before the CIT(A) either to explain the source of cash deposit. Under this circumstances, we decline to interfere with the order of the CIT(A). The assessee has sought to rely upon the decision of the Coordinate Bench of Tribunal in the case of Jitendrakumar Prabhudas Patel (supra). In that case, the ex- parte order passed by the AO was restored back. However, the circumstances for doing so are not clear. Therefore, the conclusion drawn in that case depending on the fact of that case would not apply to the case in hand.
The assessee has also sought to impugn the notice issued under s.147 of the Act. In this context, we notice that the assessee did not file the return either before the issuance of notice under s.147 or after the issuance of notice under s.147 of the Act. Cogent material was available in the possession of the revenue to allege escapement of income. Large cash deposits were found to have been made in the back account for which no explanation was available on record either prior to the issuance of notice or subsequent thereto. In the circumstances, we fail to understand as to how the action of the AO to initiate the proceedings under section 147 is bad in law.
ITA No.10/Ahd/2015 Ketankumar Jashwanthbhai Patel vs. ITO Asst.Year – 2006-07 - 9 - 14. In the result, appeal of the assessee is dismissed. This Order pronounced in Open Court on 21/ 11 /2017
Sd/- Sd/- (एस.एस.गोदारा) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( S.S. GODARA ) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/ 11 /2017 ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-Gandhinagar �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 9.11.17 (dictation-pad 19- pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …10.11.17 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….21.11.17 7. Date on which the file goes to the Bench Clerk………………21.11.17 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………