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Appellant represented by Shri Prakash Jhunjhunwala, C.A & Shri PawanJagetia, C.A. Respondent represented by Shri H. P. Meena, CIT-DR Date of hearing 08/04/2022 Date of pronouncement 11/04/2022 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: This appeal by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals) (in short, the ld. CIT(A)/National Faceless Appeal Centre (in short, NFAC) dated 30/11/2021 for the Assessment year 2011-12. The assessee has raised following grounds of appeal:
“1. On the facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the addition U/s 68 of Rs. 13,94,23,769/- without considering, analyzing and appreciating the written submissions, supporting documents and judicial decisions filed by the appellant during course of Appellate proceedings.
ITA 246/SRT/2021 Gautam D Jain Vs CIT 2. On the facts and circumstances of the case and in law, ld. CIT(A) erred in confirming the addition U/s 68 of Rs. 13,94,23,769/- in respect of deposits made in bank accounts, though the nature and source of credits had been explained alongwith supporting documents.
The ld. CIT(A), before sustaining the addition of cheque/RTGS deposits made in bank accounts of Rs. 13,94,23,769/-, ought to have considered the understated vital facts, being; a) The nature and source of deposits corresponds to consideration received on sale of goods, realization of debtors and business receipts already credited to audited P&L account; b) The exhaustive documentary evidences being purchase bills, corresponding sale bills, confirmation, PAN, bank statements, purchase and sale registers, stock register and other documents filed on record had not disputed by ld. A.O. and ld. CIT(A); c) The rejection of books of accounts u/s 145(3), without pointing any specific defect, is erroneous;
Without prejudice to Grounds No. 2 & 3, an alternate prayer is made to adopt the concept of real income and restrict the addition @ 1% of disputed transactions;
On facts and circumstances of the case and in law, the notice issued u/s 148 in vague manner and in absence of fresh tangible material, on the basis of borrowed satisfaction and without having reason to believe of escapement of income is bad in law.”
Brief facts of the case are that the assessee is an individual and engaged in the business of diamond. The assessee filed his return of income for the assessment year 2011-12 on 30/09/2011 declaring income of Rs. 6,72,160/-. The return of income of was processed under section 143(1) of the Income Tax Act, 1961 (in 2 ITA 246/SRT/2021 Gautam D Jain Vs CIT short, the Act) on 10/11/2011. Subsequently, the case of the assessee was reopened on the basis of information received from the office of DDIT, Unit-3(1), Mumbai that huge debits/credits transactions were made in the account of assessee with Axis bank. The enquiry was conducted by the Investigation Wing and the assessee could not explain the source of credit entry in its bank account. On the basis of such information, the Assessing Officer made his belief that the income of assessee chargeable to tax has escaped assessment. The notice under Section 148 of the Act was issued to the assessee to file return of income. The Assessing officer recorded that despite service of notice, no return of income in response to notice under Section 148 of the Act was filed by the assessee. The Assessing Officer issued several notices under section 142(1) of the Act. The Assessing Officer recorded that despite giving ample opportunity, the assessee has not explained the source of credit entry in his bank account. The Assessing officer issued show cause notice as to why the entire credit entry in the accounts should not be added to the income of the assessee. In the show cause notice, the Assessing Officer mentioned that the required details be furnished on or before 26/10/2018. The Assessing Officer further recorded that the assessee neither complied with the notices nor filed any return of income, accordingly, a final show cause notice was issued to the assessee to furnish required details on or before 26/12/2018. The Assessing Officer again recorded that no details were furnished by the assessee. The Assessing Officer accordingly made addition of Rs. 13,92,23,769/- on account of unexplained cash credit.
ITA 246/SRT/2021 Gautam D Jain Vs CIT 3. Aggrieved by the additions, the assessee filed appeal before the ld. CIT(A). The appeal of the assessee was adjudicated by the National Faceless Appeal Centre (NFAC) vide order dated 30/11/2021. The ld. CIT(A)/NFAC upheld the addition by taking a view that during the appellate proceedings, the assessee contended that all documents were submitted before the Assessing Officer to substantiate the genuineness of sale and receipts and that the statement of other parties cannot be relied upon unless the opportunity of cross examination were provided to the assessee. The payments were received through banking channel. The ld. CIT(A)/NFAC held that the assessee has to prove by cogent evidence that the transaction were genuine. The assessee has to prove the identity, creditworthiness and the genuineness of transactions. The assessee made no attempt to prove the same. The ld. CIT(A)/NFAC by referring the decision of the Hon'ble Apex Court in the case of CIT Vs Devi Prasad Viswanath 72 ITR 194 (SC), wherein it was held that onus is on the assessee to prove the source of income from any particular source.the ld CIT(A)/ NFAC upheld the addition by taking a view that the additions are in accordance with the provisions of law. Further aggrieved, the assessee filed the present appeal before this Tribunal.
4. We have heard the submissions of the ld. authorised representative (AR) of the assessee and the learned Commissioner of Income-tax- departmental representative (ld. CIT-DR) for the Revenue and have also gone through the orders of the lower authorities. At the outset of hearing, the ld. AR of the assessee submits that, at this stage, he is raising very limited prayer before the Bench, that the neither 4 ITA 246/SRT/2021 Gautam D Jain Vs CIT the assessing officer has given fair and reasonable opportunity to the assessee nor the ld. CIT(A)/NFAC granted reasonable opportunity of hearing to the assessee. The ld. AR by inviting our attention on para 7 of the assessment referred that a show cause notice was issued by the Assessing Officer to furnish explanation on or before 26/12/2018 and the assessment order was passed immediately on 30/12/2018. Before the ld. CIT(A)/NFAC, the assessee filed/uploaded his submission on 07/11/2018. Besides that the assessee also uploaded various party wise details of sales and realization of sale consideration, copy of acknowledgement for furnishing such detail is filed as per page No. 4-5 of paper book. The assessee in his submission furnished party wise details, confirmation of account debtors, sale register, purchase register, bank statements of the assessee, entry wise nature of transactions made in al bank account, stock register, sale bill, income tax acknowledgement of debtors and tax audit report and audited balance sheet. However, the ld. CIT(A)/NFAC instead of considering the documentary evidences, dismissed the appeal of appeal by taking a view that it was the responsibility of the assessee to prove the identity, creditworthiness and genuineness of transaction. The ld. AR submits that the assessee has furnished complete details of all the parties, their addresses, bank statements, PAN number, confirmation, ledger accounts of all the parties and discharged its primary onus. No comments were made on such evidences by first appellate authority. The ld. AR prayed that since the order was passed by the ld. CIT(A)/NFAC was without considering the documentary evidences, the order is absolutely silent on the documentary evidences furnished by the assessee, therefore, ITA 246/SRT/2021 Gautam D Jain Vs CIT the matter may be restored back to the file of the ld. CIT(A)/NFAC with the direction for adjudicating the issue afresh after considering the various documentary evidences and to pass reasoned order. The ld. AR further submits that the assessee has a good case on merit and is likely to succeed if order is passed after considering the entire documentary evidences furnished by the assessee.
5. On the other hand, the ld. CIT-DR for the Revenue submits that the assessee seems to be beneficiary of bogus purchases. The assessee was given sufficient opportunity by the Assessing Officer by issuing various notices. However, the assessee failed to make proper compliance of the notices of the Assessing Officer. The assessing officer made addition of 100% of the credit in the account of the assessee. The NFAC has confirmed the addition on merit and the assessee does not deserve any relief. On our specific query to the ld CIT-DR for the revenue that the ld. AR of the assessee has not argued his case on merit and has made a limited prayer to restore the appeal to the file of ld. CIT(A)/NFAC with direction to consider the documentary evidences and to pass an order afresh as the evidences filed by the assessee was not considered by NFAC. The ld. CIT-DR submits that the Bench may take appropriate decision in accordance with law.
We have considered the submissions of both the parties and have gone through the orders of the lower authorities. We have also deliberated on various documentary evidences furnished by the assessee. Before us, the ld. AR of the assessee after referring various acknowledgement of e-filing as shown on page Nos.
ITA 246/SRT/2021 Gautam D Jain Vs CIT 2 to 5 of the paper book that he has furnished complete details to substantiate the credit entry in the bank account of assessee and that such evidence was not considered by the ld. CIT(A)/NFAC. We find merit in the submission of the ld. AR of the assesse that the assessee has furnished sufficient documentary evidences to substantiate its contention with regard to credit entries in the bank account of the assessee. The assessing officer also passed the assessment order and made huge addition of entire credit found in various banks accounts. We find that the ld. CIT(A)/NFAC ignored the vital piece of evidence, therefore, keeping in view the relevancy of the evidences, the appeal of the assessee is restored back to the file of the ld. CIT(A)/NFAC to adjudicate all the grounds of appeal raised by the assessee afresh by passing a speaking order after considering the entire evidences. The assessee is also directed to make proper compliance and to furnish necessary details and evidences if so desired. Therefore, the grounds of appeal raised by the assessee is allowed for statistical purposes.