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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED & SHRI SIDDHARTHA NAUTIYAL
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT (Through web-based video conferencing platform) ] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER Assessment Year : 2010-11 Prakashbhai Madhvjibhai Income-Tax Officer, Thummar, Vs Ward 3(1)(2), “Dharti”, 10-Krishna Nagar, Near Rajkot Swaminarayan Chowk, Rajkot PAN : AEIPT 6588 G अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) Assessee by : None Revenue by : Shri B.D. Gupta, Sr. DR सुनवाई की तारीख/Date of Hearing : 08/05/2023 घोषणा की तारीख /Date of Pronouncement: 12/05/2023 आदेश/O R D E R PER WASEEM AHMED, AM :
This appeal filed by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-2, Rajkot [hereinafter referred to as "CIT(A)" for short] dated 12.03.2018 passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short] for the Assessment Year (AY) 2010-11. 2. The assessee has raised the following grounds of appeal:-
“1. The addition of ₹63,88,000/- has come to be made erroneously & summarily without consideration of real state of affairs, facts and surrounding circumstances, which should be deleted.
There was sufficient & reasonable cause for which no details could be submitted without any fault of appellant, which requires an opportunity for sake of natural justice.” Shri Prakashbhai M Thummar Vs. ITO AY : 2010-11 2
When the matter was called out for hearing, neither the assessee nor his authorized representative appeared before us despite the fact that the impugned matter has already been listed for hearing on several occasions. Thus, in the absence of any co-operation from the assessee, we proceed to adjudicate the issue after hearing the ld. DR of the Revenue.
The only issue raised by the assessee is that the learned CIT(A) has erred in confirming the addition made by the AO for ₹63,88,000/- representing the cash and cheque deposits in the saving bank accounts.
The facts in brief are that the assessee in the present case is an individual and runs a shop of pan masala. The assessee has filed his return of income for AY 2010-11 under section 139 of the Act on 28.01.2011 declaring an income of ₹ 1,09,140/- only.
At the outset, it was noticed that the authorities below have passed ex-parte order by making and confirming the addition of the cash/cheque deposits in the saving bank accounts of the assessee for ₹ 63,88,000/- only.
Admittedly, the notices were issued by the AO as well as by the Ld. CIT(A), on various dates intimating the date of hearing but the assessee failed to adhere the same.
8 The Ld. DR submitted that the assessee is not serious in pursuing the appeal as he has not responded to the notices issued by the authorities below. Thus, the Ld. DR contended that the assessee should not be given further opportunity. Shri Prakashbhai M Thummar Vs. ITO AY : 2010-11 3
Heard the ld. DR and perused the materials available on record. Admittedly, the assessee failed to appear before the authorities below during the respective proceedings and therefore an ex-parte order was passed. In other words, an inference can be drawn that the assessee failed to extend the cooperation by furnishing the necessary details in order to justify that the cash/cheque deposits that the same do not represent the income. However, the revenue authorities in the absence of cooperation from the assessee cannot sit idle with folded hands. As such, the revenue has to frame the assessment based on the materials available on record but in a scientific manner. Even if the assessee doesn’t cooperate, the revenue does not get the power to make the addition/disallowances in arbitrary manner. In the present case, the revenue has made the addition of the entire cash/cheque deposits in the bank as income of the assessee. In principle, the cash/cheque deposit per se does not represent the income until and unless it is corroborated by some supporting material. For example, there can be a situation where the assessee has withdrawn the money in cash from the bank which has been utilized for the purpose of re-depositing in the bank which can certainly not be made subject to the addition. It is seen that in such kind of situations, the revenue in numerous cases has adopted the peak credit theory for bringing the cash/cheque deposit under the net of taxes. But we note that such an aspect has not been considered by the revenue and entire cash/cheque deposit has been added merely on the reasoning that the assessee failed to cooperate during the assessment proceedings.
9.1 We note that the Hon’ble Gujarat High Court in the case of S.R. Koshti Vs. CIT reported in 276 ITR 165 has held as under: Shri Prakashbhai M Thummar Vs. ITO AY : 2010-11 4 20. A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. N.O. Parekh, CIT [Spl. Civil Application No. 622 of 1981 dated 20- 8-1981], has laid down the approach that the authorities must adopt in such matters in the following terms:
The Supreme Court has observed in numerous decisions, including Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361, State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 and Babutmal Raichand Oswal v. Laxmibai R. Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt.
9.2 From the above, it is revealed that the income of the assessee should not be over assessed even if there is a mistake of the assessee. As such the legitimate deduction for which the assessee is entitled should be allowed while determining the taxable income.
9.3 We also note that the Hon’ble Gujarat High Court in the case of Vareli Textile Industry Vs. CIT reported in 154 Taxman 33 wherein it was held as under:
It is equally well-settled that where a cause is consciously abandoned (as in the present case) the party seeking condonation has to show by cogent evidence sufficient cause in support of its claim of condonation. The onus is greater. One of the propositions of settled legal position is to ensure that a meritorious case is not thrown out on the ground of limitation. Therefore, it is necessary to examine, at least prima facie, whether the assessee has or has not a case on merits.
9.4 In view of the above and after considering the facts in totality, keeping in view of the interest of justice and fair play, we are inclined to Shri Prakashbhai M Thummar Vs. ITO AY : 2010-11 5 give one more opportunity to the assessee to represent his case before the AO. It is also directed to the assessee to co-operate during the assessment proceedings and not to seek any adjournment without just cause. Hence the ground of appeal of the assessee is allowed for the statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.