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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. NFAC, Delhi, (in brevity ‘the CIT (A)’) order passed u/s 250 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2017-18. The impugned order was emanated from the order of the ld. ITO, Ward-2(4), Jalandhar, (in brevity the ld. AO) order passed u/s 143(3) of the Act.
2. The assessee has taken the following grounds:
“1. That the Ld. C.I.T (Appeals) has failed to consider the appellant’s contentions that no adequate opportunity was afforded to him by the Income Tax Officer Ward 2 (4) Jalandhar during the assessment proceedings.
That the Ld. C.I.T (Appeals) has failed to appreciate the written submission tendered by the appellant and thus gravely erred both in law as well as on the facts of the case while dismissing the appeal.
3 That the Ld. C.I.T (Appeals) has not appreciated the contention of the assessee that the assessee discloses all the material facts to the assessing authority during the assessment proceedings and difference in appreciating the facts does not attracts concealment proceedings.
4 That the order passed by the ld. C.I.T (Appeals) is bad in law as well as on facts and therefore to be quashed.
5 That the Ld. C.I.T (Appeals) has does not appreciated the circumstances to find out reality and the matter has to be considered by applying the test of human probabilities.
6 That the appellant may add or amend any ground of appeal before the same is finally heard and disposed off.”
Brief facts as culled out from the records are that the assessment was framed u/s 143(3) with addition of Rs.27 lac depositing cash in the bank which was treated as unexplained income of the assessee and added back with the total income. The ld. AO claimed that during demonetisation period the cash was deposited on 12.11.2016. The assessee claimed that the cash was generated by the sale of scrap on 08.11.2016. The ld. AO claimed that there was no opening stock and no reasonable observation in relation to other assessment year that on same day the assessee acquired cash through sale Rs. 27 lacs. The ld. AO treated this as an unnatural and the books of account was rejected u/s 145(3) and entire cash deposit was added back with the total income of the assessee. Aggrieved assessee filed an appeal before the ld. CIT(A). But the assessee remained unsuccessful. Being aggrieved the assessee filed an appeal before us.
The ld. AR vehemently argued and submitted written submissions which are kept in the record. The ld. AR placed that the reasonable opportunity was denied by the assessee during appeal proceeding. The ld. AR placed that the submission was not properly taken care and without allowing the reasonable opportunity of hearing and the video hearing the order was passed by the ld. CIT(A).
The ld. DR vehemently argued and relied on order of revenue authorities.
The ld. DR invited our attention in appeal order at page 10 and 11. The relevant para nos. 4 to 4.4 are inserted as below:
“4. Considered the facts of the ground, contention of the AR of the appellant and various case laws relied upon by it and impugned assessment order. It is noted that an addition of Rs. 27,00,000/- has been made by the AO u/s 69A of the IT Act. The appellant had deposited Rs.27,00,000/- in its bank account on 12.11.2016 i.e. during the demonetization period. The appellant was specifically asked to explain the source of cash deposit. The appellant has argued that it was on account of sale proceeds of his proprietorship business M/s Kailash Gupta & Co. The appellant further investigated into the claims of the appellant by calling for various documents and details. However, the same were rejected on account of failure on the part of the appellant to satisfactorily explain the source of cash deposits.
4.1 It is noted that the appellant had deposited Rs.27,00,000/- on 12.11.2016,which the appellant claimed to be out of the sale proceeds of his proprietorship business M/s Kailash Gupta. It is quite important to mention here that the AO had called for the comparative chart for the FY 2015-16 and 2016-17. During the FY 2015-16, the appellant had cash sales of Rs.50,186/- only, cash deposits of - s 55 0000/- only and cash withdrawals of Rs.40,000/- only. Also, during the FY -5-17, the appellant had not shown any cash sales nor any cash withdrawals or rasn deposits, except for showing cash sales of Rs.27,18,366/- on 08.11.2016 and rereafter there was no cash sales during the remaining year. What is more important is that the opening and closing cash in hand remained static at Rs.7375/- only. The cash sales of Rs.27,18,366/- have been only reported on 08.11.2016 and thereafter there was no cash sales during the remaining year.
4.2 All the facts have been examined. It is important to mention here that Income tax law runs on the basis of preponderance of probability. It cannot be a sheer coincidence that the for the last 2 previous years, the appellant had none to very meagre cash sales, cash withdrawals or cash deposits and suddenly the appellant is found to have made cash deposit of Rs.27,18,366/- on 08.11.2016 and thereafter there was no cash sales during the remaining year. What is more surprising that after that there was no cash sales during the remaining year. In fact, AO has clearly mentioned this facts in para 3.4 of its impugned order. This clearly is against the preponderance of probability.
4.3 It is quite surprising that the appellant was not found to have any prior stock of the item sold and the same were purchase from M/s Shree Mahavir Traders, Jalandhar on 08.11.2016 itself and on the very said date the party received the consignment and even further provided to the appellant company on the same date. This all looks quite unrealistic and that too, when the appellant has claimed that its father had died on the very said date i.e. 08.11.2016. This all is against the preponderance of probabilities.
4.4 The appellant failed to provide the identities and confirmation of 15 persons to whom it claimed to have made cash sales of Rs.2718,366/-. Also, the observation of the AO with regard to rejection of the claim of appellant as regards to the sales having been duly reflected in the VAT returns filed with the sales tax department in view of the decision of Hon’ble Delhi High Court in the case of CIT vs Nestle India Ltd. -337 ITR 103.”
We heard the rival submission and considered the documents available in the record. The ld. AO rejected the entire transaction of the assessee related to sale of scrap during this demonetisation period. The cash sale was done amount to Rs.27,18,366/- and the said amount was reflected in the VAT Returns filed with the Sale Tax Department. There is a lack of verification from the end of the ld. CIT(A), we find that the reasonable opportunity was denied in case of assessee during appeal proceeding. In view of these discussions, as also bearing in mind the entirety of the case, we deem it fit and proper to remit the matter to the first appellate authority after giving an opportunity for a personal hearing, in terms of rule 12 of the Faceless Appeals Rules 2021, for adjudication de novo in accordance with the law and by way of a speaking order. Ordered, accordingly.
In the result, the appeal of the assessee bearing is allowed for statistical purpose.
Order pronounced in the open court on 13.09.2023