VIVEK AGARWAL,KORBA vs. INCOME TAX OFFICER-1,, KORBA

The assessee in this appeal has raised the following grounds of appeal :-

Brief facts of the case are that the assessee filed his return of income u/s.139(1) of the Act. Thereafter on the information available in ITBA/ITD module, the AO issued notice u/s.148 of the Act to the assessee on the ground that during the financial year 2013-2014 the assessee has deposited cash amounting to Rs.14,48,850/- in his bank account with State Bank of India, but had not filed return of income for assessment year 2014-2015. In response to the notice u/.148 of the Act, the assessee filed his return of income electronically on 18.09.2019 declaring total income of Rs.2,18,470/-. The AO found that no books of accounts were Rs.19,85,670/- and declared profit of Rs.2,15,620/-. Further the AO observed that the assessee has not filed bank statement of his bank account regarding nature of goods purchased and sold. It was also found by the AO that the assessee during the year under consideration has deposited cash of Rs.14,48,850/- in his bank account with State Bank of India, however, only Rs.2,15,620/- was available with the assessee for deposit in the bank. Therefore, the AO treated the remaining amount of cash deposited Rs.12,33,230/- as undisclosed income and added to the total income of the assessee.

Against the above order of AO, the assessee preferred appeal before the ld. CIT(A), however, the ld.CIT(A) upheld the observations of the ld. AO and dismissed the appeal of the assessee holding that the assessee could not submit relevant evidences to substantiate his claim.

Against the above order of the ld. CIT(A), the assessee is in further appeal before the Tribunal.

Ld. AR, at the outset, before us submitted that the addition of Rs.12,33,230/- made by the ld. AO vide order u/s.147 r.w.s.143(3) of the Act on 29.11.2019 was bad in law. It was the contention of the assessee that the initiation of proceedings u/s.147 r.w.s148 of the Act without fulfilling the requisite conditions, makes the assessment order bad in law and the same should be phased in the interest of justice. It was also the submission of the assessee that the ld.CIT(A), has erred in refusing without giving any opportunity to accept additional evidence in the form of bank statement etc., which could not be filed for reasons beyond appellant’s control, as the bank did not supply it during the assessment proceedings. Ld. AR drew our attention to para 3 of the assessment order wherein the AO has observed that although the assessee has shown the turnover of Rs.19,85,670/- and declared profit of Rs.2,15,620/- but has not explained the nature of goods purchased and sold by the assessee, bank statements were not filed, capital account statement of assessment year 2014-2015 and also date-wise cash book or cashflow for the relevant period were not filed by the assessee. It was observed by the ld. AO that the assessee has deposited cash of Rs.14,48,850/- in his bank account maintained with State Bank of India. It was the observation of the ld. AO that the available profit of the assessee was only Rs.2,15,620/-, therefore, the expenses incurred by the assessee was Rs.17,70,050/- (19,85,670- 2,15,620) was deposited by the assessee from its undisclosed income for the assessment year 2014-2015. Such observations of the ld. AO were beyond the imagination because the ld. AO has presumed that the assessee has made entire expenditure out of the cash available with him and nothing was paid from the amounts deposited in the bank. The observation of the ld. AO was on a mistaken belief and without going through the evidence or on the basis of any enquiry.

While the matter was in appeal before the ld. CIT(A), the assessee has produced bank statement but the same was not considered by the ld.CIT(A) stating that the bank statement submitted by the assessee cannot be relied upon since the additional evidence is not submitted as per the provisions of Rules. Further even if the same is accepted the said bank statement is neither on the bank’s letter head nor the bank has affixed its stamp on it, hence, the genuineness of the bank statement is not clear. Such observation of the ld. CIT(A) was without any opportunity to the assessee to refute on the same, therefore, the same was against the principle of natural justice. If the ld.CIT(A) was not having the confidence on the documents submitted by the assessee, the same should have been forwarded to AO for his comment or enquiry from the bank to verify the same. In such circumstances, it was the prayer of the assessee that the impugned orders of the AO and ld. CIT(A) deserve to be set aside being arbitrary and bad in law.

Ld. Sr. DR submitted that the assessee has failed to discharge the onus cast upon him as he has not provided the information to the ld. AO. Also it was the observation of the ld. CIT(A) that the assessee had multiple opportunities to provide all the facts before the AO and also before the undersigned but the assessee has failed to do so. It is, therefore, the request of the ld. Sr. DR that the orders of both the authorities below should be upheld.

We have considered the rival submissions and perused the material available on record. After a careful perusal of the orders of the revenue authorities, wherein the Assessing Officer has made an addition of Rs.12,33,230/- on the assessee based on the probability that the turnover of the assessee of Rs.19,85,670/- was utilised towards expenditure of Rs.17,70,050/- and, therefore, the assessee was left with only Rs.2,15,620/- as available for depositing to the bank. The turnover of the assessee and expenses incurred were not disputed by the ld. AO, however, without examining the bank statement of the assessee the AO has concluded that the amount deposited in the bank over and above Rs.2,15,620/- was undisclosed income of the assessee. Since the assessee was unable to submit the bank statement before the ld.AO due to reason that he was unable to procure the same from his bankers even after several requests, the assessee has made to the banker. This fact is transpired from the assessee’s submission to the AO. Copy of the submission of assessee before the ld. AO was furnished before us at page No.4 of the paper book of the assessee. On perusal of the order of the ld. CIT(A) it is evident that the assessee has furnished a copy of the bank statement before the ld. CIT(A), however, the same was not accepted and considered by the ld. CIT(A) observing that the bank statement submitted was an additional evidence not submitted following the provisions of Income Tax Rules. Ld. CIT(A) observed that even if the bank statement is accepted the said bank statement is neither on the bank’s letterhead nor it has the bank stamp, hence, the genuineness of the documents is not clear. With such observations, the contentions of the assessee were rejected by the ld. CIT(A) and the appeal of the assessee was dismissed. It is an undisputed fact that the assessee was partially non-compliant before the revenue authorities, however, since the reopening was on account of cash deposits by the assessee in his bank account with the State Bank of India, if the assessee was unable to obtain the ld. CIT(A), without giving the opportunity to respond on such objection to the assessee, on account of not providing it on letterhead of the bank or the same was not endorsed by the bank by putting its stamp on the same. In our considered opinion, to appreciate the facts on the issue properly, ld. AO or the ld. CIT(A), should have conducted an enquiry with the bank asking for copy of the bank statement of the assessee or to verify the copy of the statement submitted by the assessee before the ld. CIT(A) but no such exercise was considered as necessary by both the revenue authorities and have decided the case of the assessee on the assumption and probabilities. In such factual circumstances, in the interest of justice, we are of the considered opinion that the matter should be restored back to the file of ld. CIT(A) for readjudication, the assessee is also directed to submit all the necessary information, evidence, submissions, following the procedures prescribed under the provisions of the Act, failing which the revenue authorities would be at liberty to form their opinion and decide the issue according to law.

In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the court on 07/07/2023. (RAVISH SOOD) (ARUN KHODPIA) न्याधयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER रायपुर/Raipur; ददिांक Dated 07/07/2023 Prakash Kumar Mishra, Sr.P.S(on tour) आदेश की प्रधतधलवप अग्रेवषत/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant- प्रत्यर्थी / The Respondent- 2. 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, रायपुर/ DR, ITAT, Raipur 6. गार्ा फाईल / Guard file. आदेशािुसार/ BY ORDER, सत्यावपत प्रधत ////