MAHESH TULSIDAS PATEL,SURAT vs. ITO, WARD-3(2)(5), SURAT

4. The business of the assessee was closed and the necessary papers were under collection. Therefore there is a delay. Your Honour is requested to condone the delay.”

The learned authorised representative (AR) of the assessee submits that there is only delay of 12 days in filing the appeal before the Tribunal. The delay occurred due to fact that the assessee has suffered loss in cheque discounting business and left to his native place. On realising that the assessee is required to file appeal against the order of ld. CIT(A), came to Surat again, however, in the mean time, the time period of filing appeal has lapsed. The ld. AR submits that non-filing of appeal within stipulated period was neither intentional nor deliberate nor with melafide intention of the assessee. The ld. AR submits that there is only 12 days delay in filing the present appeal and the Bench may take liberal view and condone the delay in filing the appeal. The assessee is really interested in pursuing his appeal on merit. The assessee has already filed his affidavit for seeking condonation of delay in filing appeal.

On the other hand, the learned senior departmental representative (DR) for the revenue has not seriously opposed the application for condonation of delay.

We have considered the submissions of both the parties and perused the record carefully. Considering the submissions of the ld. AR of the assessee 2 Mahesh Tulsidas Patel Vs ITO that there was no deliberate and malafide intention in filing the appeal belatedly and that the assessee is really interested in pursuing his appeal on merit. And that on coming to know about the order against him, he immediately filed appeal. Therefore, taking a liberal view, the delay of 12 x days in filing the appeal is condoned.

Now adverting to the merits of the case, the briefly stated facts of the case are that the case of assessee for the Assessment Year (AY) 2010-11 was reopened on the basis of information received from Investigation Wing, Ahmedabad that a search action under Section 132 of the Income Tax Act, 1961 (in short, the Act) was carried out in case of Barter Group, Ahmedabad on 04/12/2014. In the search action, incriminating evidence was seized from the said group. The incriminating evidence indicates that they have received fund in various companies in the form of share capital for providing accommodation entry, which was not genuine. The said unaccounted fund received in cash was routed into books of account in the companies in the form of share application, share capital, share premium etc. In the search action, an information was gathered that the assessee through his proprietor concern made investment of Rs. 5.00 lacs in the shares of M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd., with Barter group which was not genuine, such investment was not shown by assessee in his regular books of accounts. On the basis of such information, the Assessing Officer 3 Mahesh Tulsidas Patel Vs ITO had a reason to believe that amount of Rs. 5.00 lacs for the A.Y. 2010-11 had escaped assessment within the meaning of Section 147 of the Act. The Assessing Officer reopened the case of assessee after taking proper approval of ld. PCIT-3, Surat on 27/03/2018. Notice under Section 148 of the Act was served upon the assessee. No return of income in response to notice under section 148 was filed by the assessee. The Assessing Officer recorded that despite giving ample opportunity, no compliance was made by the assessee. The Assessing Officer issued final show cause notice dated 15/11/2018 fixing the date of hearing on 26/11/2018. The Assessing Officer noted that despite service of final notice, no compliance was made by assessee. The Assessing Officer, thereafter, decided to complete the assessment under Section 144 of the Act on the basis of information/ material available on record. The Assessing Officer on the basis of information that such action was carried out in Barter Group, Ahmedabad on 04/12/2014 and on subsequent date, documents were seized from secrete office of Shri Anil Hiralal Shah and Atul Hiralal Shah (premises owned by Shri Bhadresh Natwarlal Shah, brother in law of Shri Atul Hiralal Shah) situated at B-406, Wall Street-II, Near Gujarat College, Ellisbridge, Ahmedabad wherefrom loose papers, registers, diaries inventorised and PAN cards, cheque books, original stamp and seal and books of account in tally and digital data were seized as per panchnama dated 06-07/12/2014. The 4 Mahesh Tulsidas Patel Vs ITO other documents were also recovered indicating funds received in cash and routed in the books of account in the form of share application, share capital and share premium. On such evidences it was revealed that the assessee also made investment of Rs. 5.00 lacs as share capital in M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. which was found as non-genuine. Such transaction/investment was not disclosed by assesse in return of income filed for A.Y. 2011-12. On the basis of such evidence about the investment of Rs. 5.00 lacs by assessee who is a proprietary firm, the Assessing Officer treated the said investment of Rs. 5.00 lacs as undisclosed investment and made addition under Section 69 of the Act.

Aggrieved by the additions in the assessment order, the assessee challenged only addition under Section 69 of the Act. The assessee filed its submission in writing. In the submissions, the assessee stated that he is in the business of cheque discounting on which he eared certain commission. The re-assessment for same assessment year was completed wherein the Assessing Officer estimated addition @ 10% of entire transaction. However, on appeal before the ld. CIT(A), it was reduced to 2% and ultimately the Tribunal restricted to 0.15%. The assessee simply denied investment in any kind of share. The ld. CIT(A) after considering the submission of assessee and the assessment order held that on the basis of information received from Investigation Wing, Ahmedabad, the assessee has invested Rs. 5.00 5 Mahesh Tulsidas Patel Vs ITO lacs which is not shown in his regular return of income. Incriminating documents found during the search reveals that the assessee has made investment of Rs. 5.00 lacs as share capital in the name of M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. Hence in absence of any clarification or evidence, the addition under Section 69 was upheld. Further aggrieved, the assessee has filed the present appeal before the Tribunal.

We have heard the submissions of ld. AR of the assessee and the ld. Sr. DR for the Revenue and perused the material available on record. The ld. AR of the assessee submits that the assessee is in the business of cheque discounting. The case of assessee was reopened second time for the assessment year under consideration. In the first re-assessment, the assessing officer made addition of the 10% of the credits in the accounts of the assessee, however, on appeal before ld CIT(A), the additions were restricted to 2% of the total credit. Against the order of ld CIT(A), the revenue filed further appeal before Tribunal, which was registered as wherein the assessee filed his Cross Objections (CO) being 167/Ahd/2015. The appeal of revenue was dismissed and on the CO, the coordinate bench restricted the addition to the extent of 0.15% only. The case of assessee again reopened on the basis of information of investigation wing Ahmadabad that the assessee was made investment of Rs. 5.00 lacs in M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. on 6 Mahesh Tulsidas Patel Vs ITO account of share capital. Such information was received on the basis of search action carried out on Barter Group, Ahmedabad. The Assessing Officer made addition under Section 69 of the Act.

The ld AR for the assessee further submits that before the ld. CIT(A), the assessee filed detailed written submission and submitted that in the re- assessment the assessing officer made addition in the income of assessee @ 2% of total credit in the bank account of assessee maintained with Bank of India, Bank of Baroda and Dena Bank. Against the addition of 2.00%, the assessee as well as revenue filed appeal before the Tribunal wherein the assessee raised CO and the Tribunal restricted the addition to 0.15%. The assessee has not made any investment in any kind of share nor introduced any amount in M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. The assessee made discounting of the said amount and made RTGS to his client M/s Rajendra Suri Financial Services (Gujarat) Pvt. Ltd. and got commission @ .10%. The amount is not the investment of assessee as well as it was not shown in the balance sheet of assessee ending on 31/3/2011. The ld. AR of the assessee has reiterated that the assessee has not made any investment in the share and received only commission income. The Assessing Officer has not brought any evidence on record and share application, allotment of share in the form of physical agreement, sales certificate or payment of dividend. No evidence with regard to the fact that the assessee really made 7 Mahesh Tulsidas Patel Vs ITO investment in share of said company. Thus, entire addition is liable to be deleted. 10. In alternative plea, it was submitted by the ld. AR of the assessee that in the first re-assessment under Section 143(3) r.w.s. 147 of the Act for the A.Y. 2011-12 completed on 27/09/2017 and the matter was carried in appeal before Tribunal wherein the addition was restricted to .15% thus, the grounds of appeal

The ld. AR of the assessee in his alternative submission submitted that in the earlier re-assessment completed under Section 143(3) r.w.s. 147 of the Act on 27/09/2017 and the addition @ 10% of total turnover of his cheque discounting was made and on appeal before ld. CIT(A), it was restricted to 2%. And on further appeal before the Tribunal, the same was restricted to .15% and that the grounds of appeal