TaxTMI 
TaxTMI 
2024 (5) TMI 1412
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.... providing the reasons recorded to reopen the assessment proceedings hence the entire proceedings u/s. 148 of the Act is illegal and bad in law. 2. That on the facts and circumstances of the case and in law, the Id. CIT(Appeals) has grossly erred in confirming the addition towards unexplained cash credit under section 69A of the Act to the extent of Rs. 31,94,312/- without considering the submissions and documents produced by the assessee appellant which is bad in law and illegal. 2.1 That on the facts and circumstances of the case and in law, the Id. CIT(Appeals) has grossly erred in not considering the fact that the amount of Rs. 86,87,000/- was deposited by assessee appellant out of the cash sale proceeds of her medical store. 2.2 That on the facts and circumstances of the case and in law, the Id. CIT(Appeals) has grossly erred in not considering the additional evidences submitted during the course of appellate proceedings, i.e., Trading Account, Profit & Loss A/c., Purchase and Sale account, etc. 3. The appellant craves leave to add, alter, modify or amend any ground on or before the date of hearing." 2.2 In ITA No. 413/JPR/2023 the assess....
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....led on 08-11-2019, declaring total income at Rs. 2,36,430/-. As the assessee has not verified her return of income it was treated as "invalid". So, notice under section 143(2) cannot be issued by the system. 3.2 During the course of assessment proceedings, on perusal of bank account statement it is noted by the ld. AO that the assessee has deposited cash of Rs 86,87,000/- in her Uco bank account number 19340200000245 during the financial year 2011-12. The assessee has shown the turnover of Rs. 28,84,988 and the return of income was filed under section 44AD @ 8.2 % on total turnover of Rs. 28,84,988/- and thus, total income declared in the return of income comes to Rs. 2,36,430. The assessee was issued the show cause notice on 18/12/2019 and the assessee filled the reply dated 20/12/2019 contending that the reason is that the assessee is running a medical shop in name of M/s. Vipin Medicals, at Nayapura, Kota and cash deposit include the cash sales received from the retail customer. It was further contended that the assessee took a loan from 15 person totalling to Rs. 26,08,000/-. This explanation of the assessee is considered but not found convincing to the ld. AO as the assesse....
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.... of Rs. 8687000/- was from the cash sales of the medicines, further the appellant has taken loan from various parties amounting to Rs. 2608000/-. The AO not satisfied with the explanation accepted the cash deposit of Rs. 2500000/- as cash sales and added balance Rs. 61,87,000/- as unexplained cash deposit u/s 69A of the Act. 6.1 During the appeal proceedings the appellant filed the written submission which is placed on record. The appellant in its submission has stated that she is suffering from neuro disease and the accountant is maintaining the accounts and records of sale and purchases and at the appellate stage filed a revised working of the sales to accommodate its explanation of the cash deposit of Rs. 8687000/-. To support it the appellant also filed a copy of bank account, revised trading account etc. Further the appellant requested for admitting the additional evidence to support its grounds of appeal. The appellant in its revised working of trading account declared the sales of Rs. 1,12,82,838/-, purchase of Rs. 85,11,670/- and a gross profit of Rs. 2131746/- and a net profit of Rs. 929298/-. 6.2 The submission of the appellant is considered specifically....
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.... the original ROI and at the reassessment stage to the appellate stage when it has filed the corrected trading account. It is to be noted here that another appeal of the appellant related to AY 2017-18 is also under progress wherein the appellant had submitted the same explanation. Therefore, the re-casted account submitted by the appellant are not reliable and are an afterthought hence rejected and are not admitted. 6.4 The submission is examined and the assessment order is perused. The AO noted that there is a cash deposit of Rs. 8687000/-. The AO after examining the submission has added Rs. 6187000/-, u/s 69A of the Act. The appellant further state that she has received Rs. 2608000/- as cash loan from friends. The following facts emerges that the Total cash deposit is of Rs. 8687000/-, cash sales are of Rs. 2884988/- and cash loan of Rs. 2608000. A total of Rs. [8687000- (2884988+2608000)] = Rs. 3194012/- stands unexplained and is treated as unexplained cash credit u/s 69A of the Act. Further the appellant has accepted the cash loan of Rs. 260800/- from relatives and friends and as stated by the AO that the assessee was not able to prove the genuinity of the credit acco....
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....ht reasons for re-opening the assessment proceeding u/s 148 of the Act. 4. That Ld. Assessing Officer vide letter dated 06.12.2019 mentioned regarding the enclosure of copy of reason recorded by stating as under:- Kindly refer to above cited submit. You have requested to provide reasons recorded for reopening the assessment. Your request is considered and reasons recorded for reopening assessment proceedings for A.Y. 2012-13 are hereby provided to you. Further, you are requested to file replies/submission online on e- proceedings portal in future on or before 10.12.2019 regarding reopening the assessment proceedings. Encl:- copy of reasons of reopening assessment u/s 147/148 for A.Y. 2012-13. 5. That the enclosure of reason recorded as mention in the notice dated 06.12.2019 was never received by the assessee nor it was uploaded on the Income-tax India portal. 6. That I am stating the afore-said statement on oath that no reason recorder were received during the assessment proceeding and we could not file the objection for reopening the assessment proceedings. 7. That I had also highlighted this issue before the ld. CIT(A), howeve....
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.... respect of cash deposit made with the UCO Bank. However, the Id. AO, did not allow any further time to the assessee. The Id. AO, considering the cash deposit of Rs. 25 Lakhs made in the bank account out of total sales of Rs. 28,84,988/- as disclosed by the assessee for the year under consideration and made addition of Rs. 61,87,000/- (86,87,000- 25,00,000) u/s 69A of the Act holding/ observing "During the course of assessment proceedings the assessee were given many opportunity to explain the source of these deposits but the assessee has failed to do". Also, the ld. AO made reference to the Joint Commissioner of Income-tax Range -2 kota for taking loan in cash by the assessee, aggregating to Rs. 26,08,000/- under section 26955 and 271D of the I.T. Act. The ld. AR of the assessee further submitted that the cash deposit totaling to Rs. 86,87,000/- made with the UCO Bank during the F.Y 2011-12 relevant to the A.Y 2012-13, it is submitted that since the assessee was suffering from neuro disease she could not explain the source of said cash deposit properly and correctly during the course of reassessment proceedings as no sufficient opportunity was allowed by the Id.AO. Only, one da....
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....llowing written submission in support of the various contentions so raised: "In this case, the assessee has e-filed his return of income for A.Y. 2012-13 on 19.09.2012 declaring total income of Rs. 2,36,430/-. Return was processed u/s 143(1) of the I.T. Act by CPC on 26.02.2013. Thereafter proceedings u/s 147 of 1.T. Act was initiated by issuing notice u/s 148 of I.T. Act on 30.03.2019. Subsequently notice u/s 142(1) was issued to assessee along with specific questioner vide which the source of cash deposit of Rs. 86,87,000/- in UCO Bank was asked for in response the assessee submitted that he was running a retail medical shop at Nayapura, Kota The assessee has shown total turnover of Rs. 28,84,988/- and declaring net profit of Rs. 2,36,430/- u/s 44AD of the 1.T. Act. Further since the assessee has deposited of Rs. 86,87,000/- in the bank account maintained with UCO bank, she was asked about the source of the aforesaid cash deposit in his bank accounts. The assessee in his submission before the AO submitted the followings: 1. She has taken cash loan of Rs. 26,08,000/ during the year consideration in from 15 peoples whose details viz. name, PAN No. and the....
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....re the Id.CIT(A) were not taken on record by the Id. CIT(A) as per provision of rule 46A of the I.T. Rules 1962. There is no infirmity in the order of the Id. CIT(A). The assessee has taken the same plea before the Hon'ble Bench which was rejected by the CIT(A) after due consideration. The assessee has not submitted any evidences under Rule 29 before the Hon'ble Bench and the submission/ evidences filed before the Ld. CIT (A) have already been considered by the CIT(A) under Rule 46A and rejected. Hence it is requested to the Hon'ble Bench that the order of Assessing Officer or Id. CIT(A) be upheld since the same was passed considering the submission of the assessee before the Assessing Officer." 7. We have heard the rival contentions, perused the material placed on record. The bench noted that during reassessment proceedings, the ld. AO was requested to provide reasons recorded for issuance of notice under section 148 of the act. Despite this specific request made by the assessee to the learned assessing officer, the ld. AO did not provide any reasons recorded for issue of notice under section 148 of the Act. Although, after the expiry of reasonable time of providing....
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....ns for issuance of Notice u/s 148 of the Act to the assessee. However, the AO did not provide the same. In appeal before the ld. CIT(A), the assessee had categorically raised the specific ground that the reasons recorded for reopening of the assessment was never supplied / provided to the assessee. However, the ld. CIT(A) had ignored the said ground of the assessee and also did not deal with the specific ground raised by the assessee. In our view, the AO was bound to furnish reasons recorded by him within a reasonable time as has been held by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs ITO (supra) wherein the Hon'ble Court held as under:- ''5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice u/s 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a spe....
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....h reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. Therefore, the Tribunal in our opinion was perfectly justified in quashing such reassessment order. 10. We do not find any substantial question of law arising in the matter. Therefore, the appeal of the Revenue stands dismissed. No costs.'' The SLP of the Revenue against the above order of Karnataka High Court (supra) has also been dismissed by the Hon'ble Supreme Court reported in (2019) 262 Taxman 16. Therefore considering the totality of the facts and circumstances of the case and keeping in view the legal proposition as discussed above, we hold that recording of reasons before initiation of reassessment proceedings and communication thereof to the assessee is sine qua non as held by the Hon'ble Supreme Court (supra) that goes to the root of the matter and confers or deprives the assessing authority of the jurisdiction to undertake such reassessment proceedings, as the case may be. In the present case, admittedly such reasons were not supplied to the assessee during the contemporary period before going ahead with the reassessment proceedings. ....
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....the assistance of employees of the shop even though she was suffering from Neuro disease. The assessee was almost dependent on the Munim / accountant of the shop for accounting work, as she was not well versed with computer work. So, she has no access to the computer. 12. In the return of income filed by the assessee, she has declared the turnover of Rs. 70,18,942/- and declared net profit of Rs. 5,79,763/- under section 44AD of the IT Act. It was also filed that cash was deposited out of sale proceeds from day to day business activity. It has been noticed that the assessee has deposited the cash amount in the UCO bank account for an amount of Rs. 1,27,55,100/-. The assessee was asked to provide the details of cash deposited in bank account during the period 01.04.2016 to 31.03.2017 and demonetization period from 09.11.2016 to 30.12.2016. The assessee or her authorized representative has submitted the details of cash deposited in banks accounts during the demonetization period, source of income & funds, bank statements which is placed on records. The assessee has deposited cash of Rs. 17,02,500/- in her bank account during the demonetization period. 13. During the assessment ....
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....e year. 14. The assessee has declared profit of Rs. 5,79,763/- from turnover of Rs. 70,18,942/- but sales ledger account & cash ledger account were not submitted/uploaded for examination. Copy of VAT return is also not submitted for examination. There may be some expenses which have been paid in cash during the year. Therefore, in absence of accurate details of the cash sales and cash deposits in bank account from cash receipts of the business. The ld. AO accepted cash deposits of Rs. 60,00,000/- from cash sales and balance cash deposits of Rs. 67,55,100/- (1,27,55,100- 60,00,000) was treated as unexplained money under section 69A of the Act. Considering overall facts of the case, addition of Rs. 67,55,100/- (Including cash of Rs. 17,02,500/- deposited during demonetization period) made in assessed income of the assessee under section 69A of the IT Act, 1961. 15. Aggrieved from the above addition made in the retuned income of the assessee the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised, the relevant findings of the ld. CIT(A) is as under:- 6. Decision The appellant in its ground of appeal has assailed the AO the addit....
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....5100/- it has taken cash loan of Rs. 3057000/- from relative and friends. 6.3 The submission of the appellant is considered. The appellant at the appellate stage has come up with an explanation that because of dependence on the accountant the complete sales could not be declared at the original assessment stage and at the reassessment stage. The appellant filed a revised trading account along with the purchase and sales account. As is seen the appellants gross sales have increased to Rs. 17289892/- and the net profit Rs. 1390915. It can be seen that the appellant's profit ratio remains the same at around 8% declared in the original ROI and at the appellate stage when it has filed the supposedly corrected trading account. The appellant has not submitted any substantive reason other than to state that the accountant committed the mistake. This is a substantive error, therefore the submission of the appellant in its revised computation and trading account is not acceptable. If the appellant thought of the error, it could have revised the return or have submitted the same before the AO during the assessment proceedings. The assessee took chance and when the explanation of ....
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....eration was also found to be filed on the basis of these incomplete ledger accounts, by the then tax consultant, wherein total sales of Rs. 70,18,942/- was shown on the basis of figure of purchases/sales given by then accountant. Now, after verification of said ledger accounts and reconciliation of bank account, factual position of these accounts for the F.Y 2016-17 relevant to the A.Y 2017-18, emerges as under:- (i) Total amount of purchase Rs. 1,39,43,702 (ii) Total amount of sales Rs. 1,72,89,892 (iii) Cash deposit-in UCO Bank account of cash sales mentioned-above-(ii) Rs. 1,28,69,720 In support of above claim/details, following documents are submitted as additional evidences and for which separate application is filed as per the provisions of Rule 46A of Income Tax Rules, 1962 before the ld. CIT(A) (i) Revised Trading & Profit and Loss A/c. (ii) Revised Computation of Total Income. (iii) Revised monthly summary of cash available for the F.Y. 2016- (iv) Affidavit of the assessee. (v) Copy of Ledger Account- Purchases-F.Y. 2016-17. (vi) Prescription slips of Doctor. (vii) Copy of Ledger A....
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....s running a retail medical shop at Nayapura, Kota and this is her only source of income. The assessee has shown total turnover of Rs. 70,18,942/- and declaring net profit of Rs. 5,79,763/- u/s 44AD of the I.T. Act. Further during the course of assessement proceeding it was noticed that the assessee had deposited Rs. 1,27,55,100/-in two bank accounts maintained with UCO bank. Further the assessee was asked about the source of the aforesaid cash deposit in his bank accounts. The assessee in his submission before the AO submitted the followings. 1. She has taken cash loan of Rs. 30,57,000/- during the year consideration from 18 peoples, whose details viz. name, PAN no. and the amount was furnished in tabular form before the AO. Some confirmation letters were also uploaded but the creditwornthiness of loan givers were not prove by the assessee. 2. The assessee further submitted that the cash amount of Vipin Medicose (Prop. Akash Chakravarty) was deposited in the bank account of the assessee. The assessee stated that the Vipin Medicose is sister concern of the assessee and the firm was not having any current account. The parties from whom the purchase were made were de....
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....the additional evidence before the Id CIT(A) as per provision of rule 46A of the I.T. Rules 1962. The Id CIT(A) categorically stated that the assessee took chance before the AD and when the explaination of the assessee was not accepted by the A 0, then the assessee came up with this explanation at this stage. Further the Id. CIT(A) also stated that recasted accounts by the appellant are not reliable and are an afterthought hence rejected. Hence the assessee's appeal was dismissed by the Ld. CIT(A). From the above it is clear the assesee's additional evidences submitted before the Id.CIT(A) were not taken on record by the Id. CIT(A) as per provision of rule 46A of the I.T. Rules 1962. There is no infirmity in the order of the Id. CIT(A). The assessee has taken the same plea before the Hon'ble Bench which was rejected by the CIT(A) after due consideration. The asseseee has not submitted any evidences under Rule 29 before the Hon'ble Bench and the submission/ evidences filed before the Ld. CIT(A) have already been considered by the CIT(A) under Rule 46A and rejected. Hence it is requested to the Hon'ble Bench that the order of Assessing Officer or....
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....count Statement -Account no. 66231010007367 -Bank of India-F.Y. 2016-17 Copy of Ledger Account-Bank Account No. 19340200000245-UCO Bank F.Y 2016-17 Copy of Ledger Account-Bunk Account No. 662320110000067-Bank of India- F.Y. 2016-17. Copy of Ledger A/C-Bank Account no. 66231010007367 -Bank of India- F.Y. 2016-17 . Copy of Ledger A/C-Bank Account no 19340100005009- UCO Bank- F.Y. 2016-17. The ld. CIT(A) has not admitted this additional evidence only on the reason that in the original return assessee declared sales at Rs. 70,18,942/- and accordingly income was computed u/s 44AD of the Act on the said turnover. In the assessment proceedings when the assessee was confronted about the deposit of cash of Rs. 1,27,55,100/-. The assessee also said that they have accepted a cash loan of Rs. 30,57,000/- from relatives and friends. That submission of the assessee in the assessment record contradicts with the facts presented in the form of additional evidence stating that the turnover of the assessee is Rs. 1,72,89,892/- and accordingly profit @ 8% where prayed to be considered but the ld. CIT(A) hold that the assessee has not submitted any substantive rea....