VARUNKUMAR TEJMAL JAIN,SURAT vs. INCOME TAX OFFICER , WARD -2(3)(4), SURAT

Assessee represented by Shri Paras F Jain, CA Department represented by Shri Vinod Kumar, Sr. DR Date of Institution of Appeal 02/06/2023 Date of hearing 10/07/2023 Date of pronouncement 10/07/2023 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] dated 10/05/2023 for the Assessment Year (AY) 2011-12 wherein the assessee has raised following grounds of appeal. “1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming proceeding under section 148 of Income Tax Act, 1961.

2. On the facts and circumstances of the case and in law, the ld. CIT(A) failed to consider that no addition can be made when no addition made on basis of reason recorded for reopening.

3. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in estimating profit of Rs. 18,46,210/- being 8% of gross receipts of Rs. 2,30,77,634/- as business income.

Varunkumar Tejmal Jain Vs ITO 4. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming an addition on estimation basis without rejecting the books of accounts under section 145(3) of the Income Tax Act, 1961.

6. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in confirming initiation of penalty proceedings under section 271(1)(c) of Income Tax Act, 1961.

on or before the date of hearing.”

2. Rival submissions of both the parties have been heard and record perused. At the outset of hearing, the learned Authorised Representative (ld. AR) of the assessee submits that at the time of filing appeal before the ld. CIT(A), details of e-mail ID i.e. patelfaruk5869@gmail.com of one of staff from the office of Shri Vipin Vora, Chartered Accountant was provided, who left the job, so the assessee/his representative could not make due compliance of various notices issued by the ld. CIT(A)/NFAC. The ld AR for assessee has now uploaded his e-mail for the purpose of serving notice of appeal or any other notices. The ld. AR of the assessee submits that he undertakes on behalf of assessee to be more vigilant in future for making timely compliance and not to waste precious time of income tax authorities. The ld. AR of the assessee submits that the assessee has good case on merit and likely to succeed if one more opportunity of hearing is given to the assessee to submits the details against the additions made by Varunkumar Tejmal Jain Vs ITO assessing officer and confirmed by ld CIT(A). The Assessing Officer has rejected books of account and estimated income @ 8% of credit shown in the bank account of assessee, which is excessive. The ld. AR of the assessee submits that he may be allowed one more opportunity to contest the case on merit before the ld. CIT(A).

3. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submits that the assessee is habitual of non- compliance. The assessee has not given any detail before the Assessing Officer. In absence of any detail, the Assessing Officer treated the deposit in assessee’s bank account as turnover and estimated income @ 8% of gross receipt against the income declared by assessee @ 0.79% of gross receipt of Rs. 2.30 crores. The ld. Sr.DR for the revenue in his alternative submission submitted that, though, the lower authorities have estimated reasonable profit yet the Bench is of the view that the assessee is required one more opportunity, in such event, the matter may be restored to the file of Assessing Officer instead of ld. CIT(A).

5. I have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. I find that during the assessment, the Assessing Officer issued various notices on the issue 3 Varunkumar Tejmal Jain Vs ITO of cash deposit and cheque deposit in the bank account maintained with Union Bank of India, Surat being account No. CA-134827, CA-134825 and CA-125442. The Assessing Officer recorded that despite giving opportunity, the assessee neither submitted reply nor sought any adjournment. The Assessing Officer was of the view that the total deposit in the bank account of assessee were of Rs. 2.24 crores. Apart from this, the turnover of assessee exceeds Rs. 40.00 lacs, the assessee was required to get his account audited and to furnish the copy of same with return of income as per Section 44AB of the Income Tax Act, 1961. The assessee neither furnished such account, therefore, separate proceeding for penalty under Section 271B was initiated. The Assessing Officer further noted that the assessee while filing return of income for impugned assessment year on 26/10/2018, declared income @ 0.79% on gross receipt of Rs. 2.30 crores. The Assessing Officer estimated the income of assessee @ 8% as prevalent in textile business and thereby made addition of Rs. 18,46,210/-. On appeal before the ld. CIT(A), the action of Assessing Officer was upheld. The ld. CIT(A) while upholding the action of Assessing Officer held that the assessee has not given/filed submission despite serving more than four opportunities through ITBA portal.

back to the file of Assessing Officer to adjudicate the issue afresh in accordance with law. Needless to direct that before passing the order, the Assessing Officer shall grant reasonable and fair opportunity to the assessee. The assessee is also directed to more vigilant and not to seek adjournment without any valid reason as the case relates to A.Y. 2011-12. With this direction, the grounds of appeal raised by the assessee are allowed for statistical purposes.

7. In the result, this appeal of assessee is allowed for statistical purposes only. Order announced in open court on 10th July, 2023 at the time of hearing.