MAFAJI UMEDAJI JAT,DEESA vs. THE INCOME TAX OFFICER, WARD-1, PALANPUR

The Assessee filed his return of income for the AY 2016-17 on 17.02.2017 u/s. 139(4) of the Act declaring total income at Rs.2,95,870/-. Subsequently, case of the assessee got re-opened on the basis of information available with the department that the assessee has introduced capital in cash of Rs.28,00,000/- in the firm M/s.Salasar Balaji Cold Storage, Deesa during the year under consideration. The Assessee filed his return of income in response to notice u/s.148 of the Act on 30.04.2021 declaring same income as shown in the original return of income. Notices u/s.143(2) and u/s142(1) of the Act were issued to the assessee in response to which the assessee submitted details like partnership deed of the firm M/s.Salasar Balaji Cold Storage, bank statements, ITR-V, computation of income and balance sheet, etc.

The AO observed that apart from introduction of new capital in cash for Rs.28,00,000/- by an assessee in Salasar Balaji Cold Storage, there is also unsecured loan of Rs.10,01,843/- from Salasar Balaji Cold Storage and Sundry Creditors of Rs.40,99,915/-. The AO asked for establishing source along with documentary evidence.

The Assessee explained that he was doing agricultural activities and trading in potatoes since last 25 years. Source of capital introduction in Salasar Balaji was cash withdrawal from bank, Sale of Milk, sale of Potatoes Mafaji Umedaji Jat vs. ITO and accumulated savings from agricultural income. About an unsecured loan of Rs. 10,01,843/-, he explained that the firm is giving loans to farmers against the stock which it is holding (being Cold Storage) the same amount is a kind of pledge loan that assessee had taken from Salasar Balaji Cold Storage for warehousing of potatoes in the cold storage. He also submitted that sundry creditors of Rs. 40, 99,915/- is for potato purchase from farmers and he can submit the Land records and KYC of all the Farmers for AO's verification.

The AO not being satisfied with the explanation and for want of documentary evidence, made the addition of entire amount of capital introduced of Rs.39,00,000/- (including cash introduction in Salasar Balaji Cold Storage), Sundry Creditors of Rs.40,99,315/- and unsecured loan of Rs.10,01,843/- thereby making total addition of Rs.90,01,758/- u/s.68 of the Act as unexplained cash credit.

The assessee filed appeal before the Ld.CIT(A) against the order of AO. The Ld.CIT(A) issued notices on 28-07-2023, 21-08-2023, 11-09-2023, but there was no any response from the assessee. The only response received from the assessee was a request to adjourn the matter for 15 days. On 16-11-2022, communication window was enabled so that assessee can respond without any notice, but there was no response from the assessee. Therefore, the Ld.CIT(A) dismissed the appeal for want of necessary material on record to decide the matter on merit.

Aggrieved by the order of the Ld.CIT(A), the assessee is before us with the following grounds of appeal: Mafaji Umedaji Jat vs. ITO “1. The Ld. CIT(A), NFAC, Delhi was grievously erred in confirming the addition of Rs. 39,00,000/- u/s. 68 made by the Ld. A.O. as unexplained credit being entire investment made in partnership firm M/s. Salasar Balaji Cold Storage which is illegal and incorrect because Rs. 39,00,000/- is in the Books of the Firm and not in the books of the appellant.

The Ld. CIT(A), NFAC, Delhi was grievously erred in confirming the addition of Rs. 10,01,843/- u/s. 68 made by the Ld. A.O. as unexplained credit being pledge loan taken from the firm M/s. Salasar Balaji Cold Storage against the stock of potatoes which is illegal and incorrect. The Ld. A.O. has overlooked the sizeable amount of Potato closing stock of Rs. 38,77,626/-.

The Ld. CIT(A), NFAC, Delhi was grievously erred in confirming the addition of Rs. 40,99,915/- u/s. 68 made by the Ld. A.O. as unexplained credit being creditors for the purchase of potatoes being creditors in the course of business which is illegal and incorrect.

The Ld. A.O. has grievously erred in levying the Interest of Rs. 27,478/- u/s. 234A and Rs. 19,65,168/- u/s. 234B which is illegal and bad in law.

The appellant therefore requests your Honour to kindly delete the above- mentioned additions confirmed by the Ld. CIT(A) which were made by the Ld. A.O. and interest u/s. 234A & 234B looking to the merits of the case.

The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.”

During the course of hearing before us, the assessee submitted an application for admission of additional evidence under rule 29 of ITAT

Therefore, we set aside the order of the Ld.CIT(A) and restore the matter back to the file of the AO. The AO is directed to re-examine the case afresh, considering the additional evidence and explanations provided by the assessee. Needless to say that the AO would afford reasonable opportunity to the assessee for furnishing the additional evidence, if any. The assessee is also hereby directed to co-operate with the AO for furnishing अहमदाबाद/Ahmedabad, "दनांक/Dated 15/07/2024

""यथ" / The Respondent. 3. संबं"धत आयकर आयु"त / Concerned CIT 4. आयकर आयु"त ( अपील ) / The CIT(A)-(NFAC), Delhi

"वभागीय ""त"न"ध , आयकर अपील"य अ"धकरण , राजोकट/DR,ITAT, Ahmedabad, 6. गाड" फाईल /Guard file.