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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
The captioned appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-1, Jalandhar dated 23.04.2019for Assessment Year: 2015-2016 wherein the assessee has raised the following grounds of appeal:
“1. That the Id CIT(A) misdirected herself in sustaining the addition of Rs. 1,03,90,650/-, out of total addition of Rs. 1,40,61,500/- made by the Id.AO by treating the bank credits as unexplained u/s.69A.
2. That the Id.CIT(A) failed to appreciate that assessee being a distributor of Bharti Airtel Ltd., the entire receipts in current account with Punjab Gramin bank, transferred to said Company soon thereafter, were trading receipts and hence not unexplained credits u/s.69A,
3. That the Id.CIT(A) having accepted part of the said transactions in the same bank as trading in nature, she was not justified in arbitrarily treating the impugned transactions of Rs.1,03,90,650/- in the same bank as unexplained u/s.69A.
4. That by any angle, not the entire deposits of Rs.1,03,90,650/-, but only the element of profit/commission earned if any, on said amount, could be sustained.
That the order under appeal is wholly against law, perverse on facts, against natural justice, hence liable to be set aside.”
At the outset, the counsel requested vide application received on 24.04.2023 for condonation of delay duly supported with an affidavit attested by notary of Government of Punjab dated 10thApril 2023. The relevant para of the same reads as under:
“(iii) Aggrieved, the assessee was advised to file first appeal. Since it was the first ever occasion for assessee to go in appeal, he was referred by someone to a Jalanahdar based counsel, Mr. H. S. Bhogal. Advocate, who preferred the first appeal. The said counsel was apprised of all facts and also provided with relevant documents, for filing of appeal and also in support of assessee’s contention that all the deposits in bank represented sale proceeds of mobile recharge and other connected services. However, vide impugned order, the Id.CIT(A), accepting the bank credits to the extent of turnover declared in return, confirmed balance addition of Rs.1,03,90,650/- as unexplained.
(iv) This order dated 23.04.2019 was not in the knowledge of assessee. In fact, he was hardly ever updated by his counsel at Jalandhar as to the status of appeal filed. The assessee nurtured a bonafide belief that the appeal was still pending, till he shockingly came to know of it on 05.01.2023, when he received, by registered post, a letter from ITO W-1, Hoshiarpur, for recovery of demand of Rs.52,11,1150/-. A copy of this letter alongwith envelope bearing the date of dispatch and receipt by assessee is enclosed as Anneure-1, for kind perusal.
(viii) It is relevantly added that the delay for the period starting from 15.03.2020 to 30.05.2022i.e. 807 days is covered by thedecision of Hon’ble Supreme Court in the case of Cognizance forExtension of Limitation, In re (2022) 441 ITR 722 (SC) dt.10thJan., 2022, wherein the limitation prescribed by various statuteswas suo motu extended from 15 03.2020 to 01.03 2022 with further period of 90 days i.e. till 30.5.2022 on account of disruptions caused by Pandemic Covid-19.
(ix) This leaves the total delay 478 days (before Covid-19 and after 30.5.2022) to be condoned. Appreciating the reasonable cause outlined above, and the facts and circumstances of the case, which are also supported by a sworn affidavit of assessee, enclosed as ANNEXURE- II, it is humbly prayed that the delay involved be kindly condoned. (x) Needless to add, there was no malafide or dilatory tactics involved in not filing the appeal in time. It was not to benefit the assessee in any manner, when a huge addition had been sustained in the impugned order. Therefore, taking a lenient and holistic view of the matter, it is humbly prayed that the delay of 478 days be kindly condoned and the appeal of assessee be admitted and allowed to be argued on merits. (xi) Before parting, useful support is drawn from the decision of this Bench in the case of Kashmir Roadlines vs. DC1T (2021V 186ITD 454 (ASR)wherein the Hon’ble Bench, while condoning delay of 124 days, placed reliance on various Supreme Court decisions, taking a view that the expression 'sufficient cause' employed by the legislature in the Limitation Act is adequately elastic to enable the Courts to apply the law in a meaningful manner which sub-serves the ends of justice - that being the life purpose for the existence of the institution of Courts. The ITAT Bench also relied upon the decision of the Hon’ble Apex Court in Nand Kishore vs. State of Punjab (1995) 6 SCC 614, wherein, under the peculiar
Vijay Kumarv. ITO circumstances of the case, delay of about 31 years, in approaching the apex court was condoned by holding that it must be remembered that in every case of delay there can be some lapse of the litigant concerned. That alone is not enough to turn down the pleas and to shut the doors against him. If explanation does not smack mala fide or does not put forth as a dilatory strategy, the Court must show utmost consideration to such litigant.”
2.1 In the present case, the delay for the period starting from 15.03.2020 to 30.05.2022 i.e.,807 days (about 2 years) was covered by the decision of Hon’ble Supreme Court in the case of Cognizance for Extension of Limitation, (2022) 441 ITR 722 (SC) dated 10th Jan. 2022, wherein the limitation prescribed by various statutes was suo motu extended from 15 03.2020 to 01.03 2022 with further period of 90 days (about 3 months)i.e., till 30.5.2022 on account of disruptions caused by Pandemic Covid-19. This leaves the total delay of 478 days (before Covid-19 and after 30.5.2022) has been requested to be condoned. Appreciating the reasonable cause of wrong advice by the earlier counsel and covid pandemic which are supported by an affidavit of assessee, we find that there was no malafide or dilatory tactics involved in not filing the appeal in time as it was not to benefit the assessee in any manner, when a huge addition had been sustained in the impugned order. Accordingly, taking a lenient and holistic
Vijay Kumarv. ITO view in the matter, we accept the prayer of the appellant as genuine and as such, the said delay is hereby condoned. Appeal admitted on merits.
Briefly facts of the case are that the assessee filed return of income on 30.03.2017 declaring income of Rs. 2,83,070/-. The case was selected for scrutiny under CASS for the year 2015-16 and notice u/s 143(2) of the Income Tax Act, 1961 was served upon the assessee. During the assessment proceedings, the assessee was supplied details of cash deposited by him in his bank account No.1183 maintained with Punjab Gramin Bank, Garhshankar amounting to Rs. 1,40,61,500/-. As per return of income filed for the assessment year 2015-16, the assessee has declared gross receipts of Rs. 36,70,850/-, whereas the cash deposits made by the assessee in the bank account were Rs. 1,40,61,500/-. The assessee was asked to file proof to substantiate the gross turnover/receipts disclosed in the return of income for the assessment year 2015-16. The assessee was also required to file a copy of VAT return, it any, filed during the year under consideration. In the absence of any explanation filed by the assessee, amount of Rs. 1,40,61,500/- was assessed as income of the assessee u/s 69A r.w.s. 115BBE of the Income Tax Act, 1961 and assessment was made accordingly.
In appeal, the Ld. CIT Appeal has confirmed the addition by observing as under:
3.3 I have carefully considered the facts of the case and submissions of the appellant. The assessing officer has made addition on account deposits of Rs. 1,40,61,500/- in the bank account of the assessee. The assessing officer has referred to the bank account as saving bank account. In this regard, the Ld. Counsel has explained that the impugned bank account is a current bank and not a saving bank account. A copy of the bank statement has been filed to show that the account is maintained in the name of M/s Sharma Trading Prop. Vijay Kumar. The assessee is engaged in the business of mobile recharge and other related services. It is argued that the bank account was made the basis of filing of return of income and income declared at Rs. 2,83,070/- is on the higher side if we even look at the maximum credit balance as appearing on a particular date in the bank account and hence the assessing officer was not justified in treating the entire cash deposits in the bank account as income of the assessee. It was further argued by the Ld. Counsel that bank statement would show that cash is being deposited but on the same day or the next day the amounts are transferred trough NEFT, which clearly shows that the account was for the business, and not a saving bank account. is observed that the assessee has filed income tax return declaring income from proprietorship business (services sector). As per the return of income, the assessee has considered gross turnover of Rs. 36,70,850/-, from his business and filed income tax return accordingly. The total deposits made in the bank account are Rs. 1,40,61,500/-. The assessee has only admitted an amount of Rs. 36,70,850/- as business turnover and declared income therefrom. Therefore, relief of Rs.36,70,850/- out of addition of deposits in the bank account of the assessee is allowed. The balance amount of Rs. 1,03,90,650/- (1,40,61,500 - 36,70,850) remain unexplained. Accordingly, addition of amount of Rs. 1,03,90,650/- is confirmed which remains unexplained. These grounds of appeal are thus partly allowed.
5. The council submitted that the AO while making the addition has just added the sum total. He argued that all the cash deposits made in the bank
Vijay Kumarv. ITO account were trading receipts and that all the deposits made in the bank account cannot be the income of the assessee. Attention in this regard was drawn to the judgment of jurisdictional Amritsar Bench in case of Gurpal Singh Vs ITO wherein it has been held "that wherever AO proceeded on fallacious assumptions that bank deposits constituted undisclosed income, overlooking fact that source of deposits need not necessarily income of the assessee and, therefore action of AO -was not justified — yes." It is only his assumption and presumption and hence the action of the AO deserves to be vacated on this score. The assessee in this regard also drawn our attention to the judgments where it has been held that addition under assumptions & presumptions or guess work cannot be made vide citations 254 ITR (SC) 216 — J.J. Entp. V DCIT 67 TTJ (Del) 354 Modern Steel Inds. Vs ACIT 94 TTJ (Del) 1071 — Bajrang Bansal Vs DCIT. The council argued that only a few opportunities had been provided to the assessee to explain his case and the initial notice was dated 18/9/2017and after that two notices were issued, and assessment order was passed on 24/12/2017 but whether the said notices had been served on the assessee or not is not ascertainable from the assessment order, and in absence of proper service, how can the assessee is expected to file the desired information is hard to understand.
Vijay Kumarv. ITO 6. Per Contra, the learned DR Supported the Order passed by the CIT appeal.
Having heard both the sides, perusal of the record and impugned order, we find that the appellant assessee was engaged in the business of distributorship of Airtel Sim Card (APB pg. 2 to 4). The Ld AR also submitted copy of the Bank Statement of the appellant wherein sale of receipts of the Sim Cards credited and debited to the Bharti Airtel stands self-explanatory accounted for (APB pg. 7 to 16) which were supported with TDS certificates (APB pg. 17 to 19). From the bank statement, it is seen that cash deposited in Bank A/c of appellant was being transferred either on the same day or the next day through NEFT to Airtel, which clearly shows that the account was meant and used for the business, and not a saving bank account.
From the Record and the assessee’s explanation, it is found that the initial notice was dated 18/9/2017and thereafter two notices were claimed to be issued, but whether the said notices had been served on the assessee or not is not ascertainable from the assessment order, and in absence of proper service, the assessee would not be expected to file the desired information. In fact, the AO has mentioned the factum of issue of Vijay Kumarv. ITO the notices to the Assessee but he failed to mention the factum of service of said notices to enable the appellant assessee to file the desired information required for passing the assessment order. It is seen that the AO passed the assessment order ex-parte qua the assessee and Ld. CIT(A) dismissed the appeal by rejecting the condonation of delay without appreciating the merits of the case is unjustified and against the principles of natural justice. Accordingly, we consider it deem fit to remand the matter back to the file of the AO to pass the denovo assessment order, after granting adequate opportunity of being heard to the assessee. However, it is clarified that the appellant assessee being engaged in the business of distributorship of Airtel Sim Card and earning commission income only and therefore, total receipts deposited in the bank account which were supported with TDS certificates may not constitute income of the assessee.
Accordingly, the AO is directed to examine the trading receipts deposited in the bank account in consonance with the TDS certificates and compute the income of the assessee by adopting appropriate GP/NP Rate to estimate commission income based on History of the appellant and the comparable case of similar trade in that region.
Vijay Kumarv. ITO 9. Accordingly, the matter is remanded back to the file of the AO to pass the de novo assessment order as per law. 0
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 13.09.2023