2022 (8) TMI 355 - AT - Income Tax

Appeal dismissed, tax addition upheld under Section 69A. Vigilance in legal rights exercise emphasized.

Dharmin N Thakkar (HUF) Versus The Income-tax Officer, Ward-4 (2) (1), Ahmedabad

The tribunal dismissed the appeal, upholding lower authorities' decisions. The addition of Rs. 12,13,500 under Section 69A read with Section 115BBE was ... Validity of faceless assessment - sufficient opportunity of hearing especially during the Covid-19 Pandemic period was not given to the assessee, which is violation of principles of natural justice - HELD THAT:- It is seen from the appellate order though five opportunities were given by the NFAC from April, 2021 to November, 2021. The assessee does not dispute the above hearing dates, however not filed any submissions before NFAC and now claiming before us violation of principles of natural justice. The assessee could not produce before us any valid reasons for non appearance of the assessee, before the NFAC which was only National Faceless Appellate proceeding. Thus the NFAC is correct in applying the legal maxim “VIGILANTIBUS, NON. DORMIENTIBUS, JURA SUBVENIUNT” which means, law will help only those who are vigilant. Law will not assist those who are careless of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Thus law confers rights on persons who are vigilant of their rights. The assessee could not demonstrate the reasons for non appearance on the hearing dates by NFAC before deciding the appeal. So we do not find any merit in the grounds raised by the assessee. The same is hereby rejected. Addition u/s. 69A r.w.s. 115BBE - unexplained cash deposits during demonetization out of income declared u/s. 44AD - HELD THAT:- Assessee has not obtained the PAN Number as required u/s. 139(1)(ii) of the Act read with Rule 114 of the Income Tax Rules. The Ld. Counsel has not produce any details for the delay in obtaining PAN Number on 10.11.2016 even though the assessee’s return of income field for the Assessment Year 2015-16 wherein the gross turnover as admitted by the assessee is Rs. 9,10,500/- which is violation of Section 139A(1)(ii) - assessee though placed before us, the Return of Income filed by the assessee for the subsequent Assessment years namely 2019-20 & 2020-21. The above returns also resulting in Nil assessable income and readymade business turnover assessable under 44AD @ 8% is Rs. 1,80,047/- for the Assessment Year 2010-20 and Rs. 49,693/- for the Assessment year 2020-21. Further as it can be seen that the returns for the Assessment Years 2015-16 & 2016-17 is filed on the same day namely 25.11.2016 and other list of events taken place in the above case clearly shows that the claim made by the assessee is found to be not genuine. In the absence of any evidence in support of his garments business carried out by the assessee, and the cash deposit made during demonetization period out of the income declared under the garments business is not proved with necessary records. Thus the assessee failed to prove the concurrent findings of the lower authorities with proper evidences. In the absence of the same, we do not find any merits to interfere with the orders passed by the lower authorities, consequently the grounds raised by the assessee are hereby rejected. Issues Involved:1. Sufficient opportunity of hearing during the COVID-19 pandemic.2. Rejection of computation of profit under Section 44AD of the Income Tax Act.3. Confirmation of addition of Rs. 12,13,500 under Section 69A read with Section 115BBE of the Income Tax Act.4. Confirmation that the addition is taxable under Section 115BBE of the Income Tax Act.5. Alleged breach of law and principles of natural justice by lower authorities.6. Levying of interest under Sections 234A/B/C of the Income Tax Act.7. Initiation of penalty under Section 271(1)(c) of the Income Tax Act.Detailed Analysis:1. Sufficient Opportunity of Hearing During COVID-19 Pandemic:The assessee claimed that the CIT(A) did not provide sufficient opportunity for a hearing, especially during the COVID-19 pandemic, violating the principles of natural justice. However, the appellate order showed that five opportunities were given from April 2021 to November 2021. The assessee did not dispute these dates but failed to file submissions before the NFAC. The tribunal found no valid reasons for the assessee's non-appearance and upheld the NFAC's decision, applying the legal maxim 'VIGILANTIBUS, NON DORMIENTIBUS, JURA SUBVENIUNT,' meaning the law assists those who are vigilant about their rights.2. Rejection of Computation of Profit Under Section 44AD:The assessee argued that since the return was filed under Section 44AD (presumptive taxation), maintaining proper books of accounts was not required. The assessee claimed sufficient cash balance was available from business receipts and opening cash balance. However, the tribunal noted that the assessee obtained the PAN only during the demonetization period and failed to provide evidence of business activities in earlier years. The tribunal upheld the rejection of the computation under Section 44AD due to the lack of supporting evidence for the claimed business activities.3. Confirmation of Addition of Rs. 12,13,500 Under Section 69A Read with Section 115BBE:The assessee deposited Rs. 12,13,500 in cash during the demonetization period, which the AO questioned. The assessee's explanation of the cash being from retail business was rejected due to inconsistencies and lack of evidence. The tribunal found that the assessee did not comply with Section 139A(1)(ii) of the Act, which mandates obtaining a PAN for businesses with turnover exceeding Rs. 5 lakh. The tribunal agreed with the lower authorities that the cash deposit remained unexplained and upheld the addition under Section 69A read with Section 115BBE.4. Confirmation That the Addition is Taxable Under Section 115BBE:The tribunal confirmed that the addition of Rs. 12,13,500 was taxable under Section 115BBE, as the assessee failed to provide evidence supporting the source of the cash deposit. The tribunal noted that the assessee's returns for earlier years were filed during the demonetization period, raising doubts about their genuineness.5. Alleged Breach of Law and Principles of Natural Justice:The assessee claimed that the lower authorities ignored various submissions and explanations, breaching the principles of natural justice. However, the tribunal found that the assessee was given multiple opportunities to present evidence but failed to do so. The tribunal upheld the lower authorities' decisions, finding no merit in the assessee's claims of breach of natural justice.6. Levying of Interest Under Sections 234A/B/C:The tribunal noted that the charging of interest under Sections 234A, 234B, and 234C was consequential to the main findings and did not require separate adjudication. The interest levied was upheld as per the provisions of the Income Tax Act.7. Initiation of Penalty Under Section 271(1)(c):The initiation of penalty proceedings under Section 271(1)(c) was also found to be consequential and did not require separate adjudication. The tribunal upheld the initiation of penalty proceedings as per the provisions of the Income Tax Act.Conclusion:The tribunal dismissed the appeal filed by the assessee, upholding the decisions of the lower authorities on all grounds. The addition of Rs. 12,13,500 under Section 69A read with Section 115BBE was confirmed, along with the consequential interest and penalty proceedings. The tribunal emphasized the importance of vigilance in exercising legal rights and found no merit in the assessee's claims of breach of natural justice.