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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.754/Ahd/2023 (Assessment Year: 2017-18) Rohit Vijay, Vs. Income Tax Officer 114, Block-D, Silver Spring, Ward-2(2)(3), Indore, Madhya Pradesh-452001 Ahmedabad [PAN No.AEMPV2758Q] (Appellant) .. (Respondent) Appellant by : Shri Kalpesh Shah, A.R. Respondent by: Shri Ankit Jain, Sr. DR Date of Hearing 02.05.2024 Date of Pronouncement 20.05.2024 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi vide order dated 27.07.2023 for Assessment Year 2017-18.
The Assessee has taken the following grounds of appeal:-
“1. Best Judgement order without appreciating evidences on records The Learned AO and CIT Appeal has erred in passing and confirming Ex-Parte Order of Assessment based on the basis of doubt, surmise and conjecture, rather than judicially appreciating the cogent material and evidences on record in the form of bank statement reflecting cash deposit arid payments on day to day basis. Thus order addition of Rs 156,08,530/- be deleted. 2. CIT Appeals Order Contrary to Provisions of the Law: In law, on the facts and circumstances of the case, the Ld. CIT Appeals grossly erred in confirming the action of Assessing officer to consider Cash Deposit of Rs. 156,08,530/- as income of the Assessee, without appreciating evidences on record in form of prior and subsequent orders of assessment on record along with bank
ITA No. 754/Ahd/2023 Rohit Vijay vs. ITO Asst.Year –2017-18 - 2–
statements of the Assessee. The Learned CIT Appeals must have passed the order on merit as per provisions of the Section 250. The Learned CIT Appeals also erred in disposing off the appeal without passing reasoned and speaking order on merit. Under the provisions of Section 250, it is a settled position that irrespective of the non-appearance of the Assessee before the CIT(A), the CIT(A) ought to have dealt with the issues so raised by the Assessee on merits and to pass order by way of speaking order and in accordance with the law. 3. The Evidence in form of Bank Statement supports the nature of business carried on by the Assessee. The Learned AO and CIT Appeal have erred in passing and confirming high pitch order of assessment contrary to the fact that was available in the Bank Statement. The cash was deposited routinely throughout the previous year, before and subsequent to the previous year. Thus, addition of Rs 1,56,08,530/- was unwarranted. The Bank Accounts were in name of Restaurant -PARV FOODS as a franchise of Sankalp. Instead of making best judgement of Profit of the business the Assessing Officer choose to overlook payment side of the bank statement and conveniently invoked Section 69A to add entire cash deposit as Deemed Income of the Assessee. Thus, order is against the intent of law for Best Judgment Assessment and Section 69A of the Act. 4. High Pitch Assessment with Huge Tax Demand of Rs 120,57,587/- The high pitched order of assessment is passed without the application of mind and with a prejudicial mind set. The order is vindictive. This order has created demand of Rs 120,57,587/- on the assessed income of Rs 1,56,08,530/-. Thus, the order suffers from inherent defect that cannot be cured. The order has to be deleted. 5. Peak Credit Working under best judgement assessment The Learned AO was duty bound to make the best judgment of the income of the Assessee in absence of the Assessee and should have considered the Bank Statement in totality i.e. deposit of cash and withdrawal and payment from bank account to various parties. He may have alternatively assessed the PEAK of Bank Balance as Income of the Assessee, exercising his Best Judgment, rather than taking undue advantage of absence and ignorance of the Assessee. 6. Penalty initiation without specific charge In law, on the facts and circumstances of the case, the AO has grossly erred in initiating the penalty proceedings u/s 271AAC of the Act when no such penalty is exigible. Since, the proceedings are wrongly initiated, AO may be directed to withdraw such proceedings. The Appellant craves leave to add, alter, amend and’/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.”
ITA No. 754/Ahd/2023 Rohit Vijay vs. ITO Asst.Year –2017-18 - 3– 3. The brief facts of the case are that the assessee had not filed return under Section 139 of the Act, therefore, notice under Section 142(1) of the Act dated 12.03.2018 was issued to the assessee asking the assessee to file return of income.
During the course of assessment proceedings, various notices of hearing were issued to the assessee, but the assessee did not comply with any of the notices issued to the assessee and assessment order was passed by Ld. AO under Section 144 of the Act. The Ld. AO was in possession in information that assessee had deposited substantial cash into his bank accounts during the demonetization period. The AO issued notices under Section 139(6) of the Act to the bank account where the assessee held it’s bank account i.e. Indian Bank and ICICI Bank. The AO, in absence of return of income filed by the assessee and any explanation received from the assessee, made addition of deposit / credit entries appearing in the bank accounts held by the assessee amounting to Rs. 1,56,08,527/- under Section 69A of the Act as unexplained money.
The assessee filed appeal before Ld. CIT(A) however, despite issuance of as many as six notices of hearing issued by Ld. CIT(A) from 25.12.2020 to 18.07.2023, the assessee neither caused appearance and nor furnished any evidence / explanation in respect of the amount deposited in the bank account of the assessee. Accordingly, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:-
“06. In view of the above, the Appellant is not aggrievedwith the assessment order impugned herein and is not interested in prosecuting the appeal. Accordingly, the additions/disallowances as challenged in the Grounds of Appeal and in the Appeal, Memo are hereby confirmed. Accordingly given that this office has not received any information or
ITA No. 754/Ahd/2023 Rohit Vijay vs. ITO Asst.Year –2017-18 - 4– document so as to make as judgment based on merits, this office is left with no option but to dismiss this appeal. Accordingly, the appeal of the assessee stands dismissed.” 6. The assessee is in appeal before us against the order passed by Ld. CIT(A).
The Counsel for the assessee submitted before us that the assessee is engaged in the business of running hotel in the name of “Parv Foods”. The Counsel for the assessee drew our attention to return of income filed by the assessee at Page 4 of the Paper Book for A.Y. 2016-17. Further, the Counsel for the assessee drew our attention to assessment order for A.Y. 2018-19, and submitted that from the contents of the assessment order, it is clear that the assessee is in the business of running of a hotel and has computed income under Section 44AD of the Act and calculated taxable income @ 8% of total sales. Further, the Counsel for the assessee submitted that in the immediately preceding year, the total cash deposits out of business of running of Restaurant / hotel was Rs. 1,52,13,608/-. Accordingly, it was submitted that the aforesaid cash deposits / credit entries in the bank account was coming from the business of running a hotel and this fact is evident from the assessment order for the succeeding assessment year as well. The Counsel for the assessee further submitted that the reason for bringing up the case of the assessee under scrutiny was on account of cash deposits made by the assessee in his bank account during demonetization period amounting to Rs. 12,46,000/-. The Counsel for the assessee submitted that while the cash deposits made during the demonetization period was only 12,46,000/- but in the assessment proceedings, the Assessing Officer has added the entire amount of Rs. 1,56,08,527/- which was deposited / credited to the bank accounts held by the assessee, without
ITA No. 754/Ahd/2023 Rohit Vijay vs. ITO Asst.Year –2017-18 - 5– any justification or sound basis. The Counsel for the assessee submitted that firstly the entire amount of cash deposits / credits were added by the AO as unexplained income of the assessee and the same were coming out of the business of running of hotel “Parv Foods” by the assessee, during the impugned year under consideration and secondly, the assessee drew our attention to Pages 35-61 of the Paper Book (bank account details of assessee’s account with Indian Bank) and the Counsel for the assessee submitted that cash was deposited in the said account of the assessee, as many as 91 times and further, there were continues withdrawals from this bank account as well and notably, the highest balance in the said account was never more than Rs. 3,00,000/- at any point in time. However, the Assessing Officer proceeded to add the entire amount of cash deposits /credits in the bank account held with Indian Bank / ICICI Bank without looking into the facts of the assessee’s case and without taking into consideration that the assessee had also been continuously making withdrawals from the above bank accounts as well. The Counsel for the assessee submitted that the assessee could not cause appearance before the Tax Authorities because of Covid pandemic during the impugned period under consideration and further, the Counsel for the assessee submitted that if given an opportunity of hearing the assessee was in a position to fully demonstrate / explain the source of such cash deposits / credits made in the bank accounts held by the assessee, during the impugned year under consideration.
In response, Ld. D.R. placed reliance on the observations made by the A.O. and Ld. CIT(A), in their respective orders.
ITA No. 754/Ahd/2023 Rohit Vijay vs. ITO Asst.Year –2017-18 - 6– 9. We have heard the rival contentions and perused the material on record.
On going through the facts of the instant case, we are of the considered view that looking into the instant facts, in the interest of justice, the matter may be restored to the file of Ld. AO for de-novo consideration, after giving due opportunity of hearing to the assessee. The assessee is also hereby directed to promptly and diligently comply with all notices of hearing issued by the AO, and in case of any failure on part of the assessee to comply with the notices issued by the Department, the Ld. AO would be at liberty to pass appropriate order, on the basis material available on record.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 20/05/2024
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 20/05/2024 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. संबं�धत आयकर आयु�त / Concerned CIT 3. आयकर आयु�त(अपील) / The CIT(A)- 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad