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Income Tax Appellate Tribunal, ‘B’ BENCH, PUNE
Before: HON’BLE SHRI SATBEER SINGH GODARA & SHRI G. D. PADMAHSHALI
ORDER PER G. D.PADMAHSHALI, AM; These three alike appeals are instituted by the aggrieved assessee against separate orders of the National Faceless Appeal Centre, Delhi [‘Ld. NFAC/CIT(A)’ in short] vide DIN & Order No. ITBA/NFAC/S/250/2023- 24/1059188286(1), 1059187934(1) & 1059187841(1), all dt. 29/12/2023 passed u/s 250 of the Income Tax Act, 1961 [‘Act’ in short] which in turn arisen out of three distinct order of assessment u/s 147 r.w.s 144 r.w.s 144B of the Act by the National Faceless Assessment Centre, Delhi [‘Ld. AO’ in short.
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Shahnaz Khatun Sohail Vs ITO to 387/PUN/2024 2. This bunch was called up for hearing twice; none appeared at the bequest of the appellant assessee, on the primary briefing from the Revenue and having regard to order-sheet entries we deem it to proceed to adjudicate the limited issue ex-parte u/r 24 of ITAT-Rules, 1963.
The case records and lower adjudication proceedings revealed that facts involved and issue dealt therein are common & identical therefore on the request of Ld. DR these three appeals for the sake of brevity & convenience are heard together & disposed by common & consolidated order.
The facts as presented by the Ld. DR and as deciphered from the case records concisely reveals us that; 4.1 Assessee is an individual and engaged in the proprietary business of trading fruits etc., in the name & style as ‘Shabnam Fruit Company’. During the years under consideration the assessee has filed its original return of income declaring taxable total income of respective year as tabulated hereinbelow; AY 2013-2014 AY 2014-2015 AY 2015-2016 ₹3,09,960 ₹6,90,030 ₹7,54,500 4.2 The case records further reveals that in these cases the Ld. AO reopened assessment u/s 147 of the Act based on the information from Insight Portal under the head ‘High Risk Transaction’ on account of huge cash withdrawal made by the assessee as a fruit vendor.
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Shahnaz Khatun Sohail Vs ITO to 387/PUN/2024 4.3 In the event of failure on the part of assessee to reconcile the cash withdrawal made through bearer cheques and prove its utilization for the purchase of trading goods namely fruits, the Ld. AO disallowed the same u/s 40A(3) of the Act in the respective assessment as tabulated here under; AY 2013-2014 AY 2014-2015 AY 2015-2016 ₹8,77,67,036 ₹7,62,38,606 ₹8,30,97,382 4.4 The aforestated disallowances were agitated in separate appeals before the Ld. NFAC. In the absence of documents as claimed to have been filed as an additional evidence alongwith form No 35, the Ld. NFAC dismissed the appeal ex-parte as the other documents such as (a) computation of income (b) form 3CB & 3CD (c) profit & loss account and balance-sheet (d) SBI & ICIC bank account statement (e) purchases & sales breakup figures etc., did not in his view sufficient to prove conclusively the claim of the assessee.
Aggrieved by the first appellate ex-parte adjudication the assessee filed the present bunch of appeal on the following common grounds; ‘1.On the facts and the circumstances of the case and in law, lower authorities erred in making disallowance of Rs. 8,77,67,036 under section 40A(3) of IT Act without appreciating the business module of the appellant and by rejecting the contention of the appellant that entire payment is covered under the exception provided under rule 6 DD of IT Rule 1962, the addition is also not justified for the reason that for subsequent years the entire such cash payments are allowed by the Learned Assessing Officer, Appellant prays for entire disallowance.
On the facts and in the circumstances of the case and in law, the Lower Authorities have erred in making the additions of entire purchase amount thereby all most entire sales are ITAT-Pune Page 3 of 6
Shahnaz Khatun Sohail Vs ITO to 387/PUN/2024 getting tax this is unjustified under the provision of Income Tax Law in view of this the income may be estimated at the reasonable percentage of total turnover.’
In the absence of assessee invoking rule 24 of ITAT-Rules, 1963 we have heard the respondent Revenue on the limited issue of ex-parte adjudication and considered the facts in the light of settled position of law and note that, during the assessment the assessee was given ample opportunities to make submissions substantiating her contention of having made cash purchases from farmers with the requisite documents and furnish information in response to the notice issued by the Ld AO u/s 148 of the Act followed by multiple notices u/s 142(1) of the Act. Nevertheless, the assessee continued to fail to present and/or furnish the requisite details in response various notices including the show cause notice issued to her. In consequence thereof, the Ld. AO framed the assessment to the best of his judgment u/s 147 r.w.s. 144 of the Act. On the other hand when matters travelled in separate appeals, the Ld. CIT(A) upheld the disallowance vis-à- vis assessment by rejecting to accept the assessee’s plea that her case is falling within the ambit of Rule 6DD exempting the disallowance u/s 40A(3) of the Act for cash payments made in excess of rupees ten thousand because of non-availability of any evidence in support of such payments. The relevant para of impugned order is reproduced herein below; ‘The Form 3CD was silent as to whether on the basis of the examination of books of account and other relevant documents/evidence, whether the expenditure covered under section 40A(3) read with rule 6DD were made by ITAT-Pune Page 4 of 6
Shahnaz Khatun Sohail Vs ITO to 387/PUN/2024 account payee cheque drawn on a bank, i.e., without mentioning either yes or no.
The Assessment order is self-explanatory as to the total non-compliance on the part of the appellant to the various statutory notices issued by the AO. The profit and loss account shows that the purchases account for 97% of the revenue recognised. The scrutiny of the bank accounts show that regular cash withdrawals through self cheques and issue of bearer cheques to parties with name and without name. The total cash withdrawals is a fact which the appellant has to account for with minimum cash in hand at the end and beginning of the year. It is therefore clear that the cash withdrawals account for the payment towards the purchases which are found to have been in a mode other than the prescribed mode under the Act attracting the provisions of section 40A(3) of the Act. The protection available to the appellant cannot be presumed in appellant's favour unless the appellant leads evidence asserting the entitlement. As the appellant had failed to prove that the appellant is entitled to the exempted circumstances with documentary evidence, the statutory disallowance made by the AO cannot be interfered with, even though the end result of assessment may be unrealistic. It is an accepted principle that law Comes to the rescue of persons who are vigilant at least when missed opportunities present itself once again. The documents presented during appellate proceedings are of no avail to adjudicate the grounds in appellant's favour as they are grossly inadequate to adjudicate the issue. For these reasons, the grounds raised are dismissed after holding that the appellant once again failed to prove her contentions submitted with documentary evidence in the form of protection available under Rule 6DD.’ (Emphasis supplied)
7. Order-sheet entries reveals us that, these cases were accorded as many as five hearing opportunities previously to contest the findings of quasi-judicial authorities nevertheless the assessee effectively failed to present herself and/or through authorised representative. It is crucial to ITAT-Pune Page 5 of 6
Shahnaz Khatun Sohail Vs ITO to 387/PUN/2024 note that the assessee has not been able to make any substantive submission dismantling the contention of both the tax authorities below that cash purchases made during the year falls within the ambit of Rule 6DD (supra). The onus fastened u/s 40A(3) r.w.r. 6DD (supra) with the substantive documentary evidences was on the appellant and is possible only if she is granted an opportunity before the tax authorities once again and that is in turn dreadful unless the impugned orders are set-aside. In view therefore, without touching grounds of appeal, in the larger interest of justice we deem it to grant one more opportunity to the appellant to prove her case before the Ld. NFAC. Accordingly we set-aside the impugned orders and remand the matters back to the file of Ld. NFAC with a direction to allow the appellant not less than two effective opportunities to furnish cogent evidence demonstrating that her case/s falls within the ambit of rule 6DD (supra) and decide the issue on merits in accordance with law and pass speaking order in terms of s/s (6) of section 250 of the Act.
These three appeals, in results stand PARTLY ALLOWED FOR STATISTICAL PURPOSES. U/r 34 of ITAT Rules, order pronounced in open court on this Monday, 02nd day of September, 2024.
-S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE; दिन ांक / Dated : 02nd day of September, 2024. आदेशकीप्रतितितिअग्रेतिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr.CIT Concerned. 6.ग र्डफ़ इल / Guard File. 4. The CIT-Concerned(MH-India) 5. DR, ITAT, Bench ‘B’, Pune आिेश नुस र / By Order वररष्ठदनजीसदिव / Sr. Private Secretary आयकरअपीलीयन्य य दिकरण, पुणे / ITAT, Pune.
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