TaxTMI 
TaxTMI 
2024 (4) TMI 1316
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of being heard to the assessee in gross breach of law and are bad in law, invalid, illegal and on facts of the case, and hence the same may kindly be quashed and the resultant addition may kindly be deleted in full. 2. The ld. CIT(A) has grossly erred in law as well as on the facts of the case in passing exparte order without providing adequate and reasonable opportunity of being heard in the gross breach of law. Hence the additions so made by the Id. AO may kindly be quashed and delete. 3. Rs.50,00,000/-: The ld. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.50,00,000/- made by the Id AO on account of alleged of covering the possibility of unexplained cash credit, without invoking any provisions of the act. The Ld. AO and CIT(A) both have also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the addition so made by the Id. AO and confirmed by the ld. CIT(A) is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 4. The ld. AO has also grossly erred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t assessee did not respond. In absence of reply from the assessee, considering the nature of trade, the AO considered it reasonable to make a lump sum addition of Rs. 50,00,000/- for covering the possibility of un-explained cash credit and completed the assessment u/s 144 of the Act. Further, even during the course of present appellate proceedings, the assessee did not respond to the notices and did not furnish any details or documentary evidence with regard to the source of the cash credits. Under the circumstances, in the absence of any details or documentary evidence forthcoming from the assessee, I am of the considered opinion that the AO rightly made the impugned addition of Rs.50,00,000/-warranting no interference of the appellate authority. Thus, the Ground No.1 and 2 raised by the assessee on this issue are dismissed. 7.3 Ground No. 3 is raised against the AO's action in not following the principles of natural justice during the assessment proceedings. As seen from the assessment order, during the assessment proceedings, the assessee was given sufficient opportunity of being heard by issuing notices including show cause notice. Further, the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tting documents. However, the ld. Pr.CIT, did not consider the request of the assessee and passed order on 31/3/2021 itself. Thus, considering the said facts, we are of the view that right to fair hearing is guaranteed right to an assessee and thus granting of effective opportunity is sine qua non in Section 263 of the Act for setting aside a statutory order. Thus, in our view, it was the duty of the ld. Pr.CIT to provide the assessee an effective and reasonable opportunity of hearing so as to enable him to substantiate its claim. In any case, it is one of the fundamental principles of natural justice that no person can be condemned unheard i.e audi alteram partem, the impugned order was thus passed in violation of the principles of natural justice in absence of any effective/reasonable opportunity of hearing provided to the assessee. Although, the ld. CIT-DR has relied upon the decision in the case of Deniel Merchants P. ltd. & Anr. Vs ITO & Anr in Special Leave Petition No. 23976/2017 dated 29/11/2017, however, the facts of the present case are altogether different from the facts of case as relied by the ld. CIT-DR as in that case, the issue was receipt of share application money....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e order dated 31.03.2022 passed under Section 148A(d) of the Act. It is ordered accordingly." Here also the same position and liable to be quashed the assessment order. Further the case of the assessee is on much strong footing because in the notice the time is given only 3.00 hour as the notice digitally signed at 11.06 AM on dt. 17.12.2019 and the time is given for reply at 02.36PM on dt.17.12.2019 on same date and there is time gap only about three hour which also take the time in uploading seeing etc. Here even one day time not given hence how it is possible to make an request. The allegation of the ld. AO has also wrong that no details filed when we had already filed all the details as required. In support we are enclosing herewith full e-proceedings vide annexure-2 and also furnishing the details and reply filed to the ld. AO. Also refer Zenith Processing Mills v/s CIT 219 ITR 721(Guj.) Prayer: Thus in view of the above facts, circumstances and the legal position of law the proceedings so initiated and assessment so passed may kindly be quashed. 2. No Show Cause for 115BBE: 2.1 Further the ld. AO has not issued any show cause notic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the income of the assessee is determined and charged or taxed in the manner as proposed by the A.O. but in the instant case no such type of opportunity had been provided but the AO has failed to do so, which is against the principal of natural justice and against the law. This sec. 115BBE is charging of tax on a higher rate and it cannot be applied directly without giving any show cause notice when the issue are disputed that whether the higher rate of tax applicable or not on the alleged income or the nature of income falls u/s 68/69 and 115BBE. Hence it was mandatory on the part of the AO to issue show cause before invoking the provisions u/s 115BBE, in absence of the same the rate cannot be charged more than to normal rate of tax, if the addition if any sustained. 3.1 No provisions has been applied by the ld. AO: The ld. AO made the lum sum addition for covering the possibility of un-explained cash credit as income from other sources but he has not invoked or applied any provisions of law. The ld. AO has not stated under what provision of law he has made addition whether, under business or trading income as assessee is running the petrol pump business, or u/s 56 or u/s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar Oli Ltd. Now the issue is covered by the decision of ITO Ward 1(1)(3) Ahmedabad v/s M/s. Ashapura Petrochem Marketing Pvt. Ltd in ITA No. 511/Ahd/2020 dt. 18.10.2023 copy is enclosed, the same kindly be considered also treat this order as our WS before your honor. 7. Correct facts: At the very outset it is submitted we want to bring the correct facts on record despite available on record which has not been considered by the ld. AO despite available on record. That in this year first time the assessee has started the petrol pump business of Essar Company. During the demonetization the assessee has accepted the demonetized currency. As the Govt. has allowed/ permitted to the petrol pump owner to accept the SBN notes of Rs.1,000/- and Rs.500/-. And this being the first year the assessee is not understand the difference mentioned in the notification (being the assessee 10th failed) as the other Petrol Pump of Essar Company or other private company were accepting the same, and the assessee was also under bonfide belief that he can accept the same. And in some other Petrol Pump owner no action has been taken, which may be verified through the ld. AO and may kindly be directed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re is no defect in purchases and sales and same are matching with inflow and outflow of stock, there is no reason to disbelieve sales- Assessing officer accepted sales and stocks-AO has not disturbed closing stock which has direct nexus with sales-Movement of stock is directly linked to purchase and sales- Audit report u/s 44AB, financial statements furnished in paper book clearly shows reduction of stock position and matching with sales which goes to say that cash generated represent sales-Assessee has furnished trading account, P& L account and reduction of stock is matching with corresponding sales and assessee has not declared exorbitant profits-Though certain suspicious features were noticed by AO as well as DDIT (Inv.), both authorities did not find any defects in books of accounts and trading account, P&L account and financial statements and failed to disprove condition of assessee-Once, assessing officer accepts books of accounts and entries in books of accounts are matched, there is no case for making addition as unexplained-Assessee has established sales with bills and representing outgo of stocks-Sales were duly accounted for in books of accounts and there were no abnorm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from bank was incurred either as revenue expenses or capital expenses-In absence of any documentary evidence, it can be safely presumed that cash withdrawn from bank was available with assessee which was subsequently deposited with bank and same could not be treated as undisclosed income of assessee-ITAT in Rameshbha iSomabhai Patel held that bank statement was not considered as books of accounts-Therefore, any sum found credited in bank passbook could not be treated as an unexplained cash credit- In the case of ITAT in RameshbhaiSomabhai Patel Vs. ITO in ITA No. 1864/AHD/2014 has held that the bank account of the assessee is not considered as part of the books of accounts. (ii) Further the assessee has offer the explanation and not denied the same. As the assessee has stated the cash deposit in the bank account was from the sale of oil product which has been shown in the cash book as well as in the trading account and in the books of account and these facts or explanation has never been denied by the ld. AO which are supported by the documentary evidences or books of account which have also not been rejected. The ld. AO has made addition on the ground of Violati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nnot impact on the sale of the assessee under the income tax. If some violation has been done by the appellant related to some other Act, then action for such violation can be taken under that Act only. In the present case the AO has not pointed out any violation of any condition regarding declaring the sales from the petrol pump. In the case of appellant, the assessee made sale of oil products to which has been made to the customers. There is no dispute regarding this. The appellant is also the owner of the Petrol pump as per the license given by the Essar Pvt. Ltd and there is no dispute regarding this. The appellant has accepted the SBN Notes of Rs.1,000/- or 500/- due to some misunderstanding. Against this the assessee has sold the oil product and thereafter he deposited the same in to Bank account and also made payment to the Essar Company against the purchase from this very Bank account. The Company has never informed to the assessee that he is not entitled to accept the SBN note, when this was the onerous duty of the company to clarify or intimate to their dealer. Thus, it can be seen that the income or sale was correctly shown by the assessee. However if t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he ratio laid down in principal is also applicable in the present case. 11. Contradictory approach: In the cash book every details has been given. One side the ld. AO doubted the cash deposited in the bank account and other side he has accepted the source of cash from sales and, which shows contradictory approach of the ld. AO. We are producing herewith complete cash books and relevant pages for your kind perusal. Further sales details also filed and the ld. AO when has accepted our sales and he has not stated that where this sales amount has been utilized or invested by the assesseee other than to cash deposited in the bank accounts. 12. Notice u/s 143(2) is invalid: At the very out-set it is submitted that the ld. AO has issued the notice u/s 143(2) dt. 29.09.2018 vide Annexure-4 by stating that return of income filed by you for A.Y. 2017-18 on 28.10.2017 is selected for scrutiny". But the ld. AO has not provided the reason for scrutiny for what reason it has been selected, whether limited scrutiny or complete scrutiny or other reason. While it was mandatory on the part to mention or write the reason in the notice of 143(2) vide CBDT instruction no. 20/2015 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account of long term capital gains-Held, there is not an iota of any cogent material mentioned by Assessing Officer which enabled him to have reached conclusion that this case was a fit case for conversion from limited scrutiny to complete scrutiny-If proposal of Assessing Officer and approval of Pr. Commissioner of Income Tax are examined on anvil of paragraph 3 of CBDT Instruction No.5/2016, it is very much clear that no reasonable view is formed as mandated in said CBDT Instruction No.5/2016 in an objective manner and secondly merely suspicion and inference is foundation of view of Assessing Officer-There is no direct nexus brought on record by Assessing Officer in said proposal and, therefore, it is very much apparent that proposal of converting limited scrutiny to complete scrutiny was merely aimed at making fishing enquiries-Pr. Commissioner of Income Tax has accorded approval in a mere mechanical manner which is in clear violation of CBDT Instructions No.20/2015-Coordinate bench of ITAT at Chandigarh in case of PayaKumari in ITA No.23/Chd/2011, vide order dated 24.02.2011, has held that even Section 292BB cannot save infirmity arising from infraction of CBDT Instructions de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c higher figure Even during period of demonetization business of petrol pump was running well and assessee were receiving cash regularly from sale of fuel which was deposited into bank. Aassessee made Proper and detailed replies to A.O. time to time to AO on following dates Vide e-proceedings enclosed. Assessee also submitted Following attachments/Supporting were made along with above replies ⮚ Denomination wise deposit of cash summary ⮚ Monthly sale and purchase ⮚ Monthly sale and cash deposit comparison ⮚ Bank statements ⮚ ITR & Computation, audited accounts ⮚ VAT Returns ⮚ Cash Book ⮚ Stock Register ⮚ Confirmations However the ld. AO has blindly ignored these vital evidences. Even he has not mentioned in the Assessment Order and therefore completely ignored by AO. Procurement of Unsecured Loan -Our business of Petrol pump commenced in Financial Year 2016-17. Since it was very first year of operation, we were in need of finance, to carry out our business efficiently we procured Unsecur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,18,010/- during the demonetization period and he remained failed to prove the source of deposits. It is noted that during the assessment proceedings the AO with a view to completing the scrutiny assessment asked for various details/ documents from the assessee for which the assessee submitted the part reply and thus failed to prove the sources of deposit, sources to introduce capital and other issues. Hence in this situation, the AO had no other alternative except to complete the case on the basis of material available on records. The AO further observed that as per provisions of Section 144(1)(b) of the Act, if the assessee fails to comply with the terms of a notice issued u/s 142(1), the AO is to gather relevant material and to make the assessment of the total income to the best of his judgement and determined the sum payable by the assessee on the basis of such assessment. It is noted that the AO provided number of opportunities to the assessee to file his reply in relation to various queries raised therein but none of these had been complied with . Hence, the AO had no other option except to complete the assessment u/s 144 of the Act. Further, the AO on perusal of the material....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... date i.e on dt. 17.12.2019 till 2.36 PM. The AO has given only 2.30 hours to the assessee which shows injustice to the taxpayer and it also proves that the AO has violated the Principal of natural justice . It is also noted from the records that AO has not taken into considerations various documents filed by the assessee during assessment proceedings. To this effect, we rely on the Tribunal order in the case of Sh. Ashutosh Bhargav v/s Pr. CIT, Jaipur in ITA No.20/Jp/2021 dt.06.01.2022 (Supra) in which it was held that "the ld. Pr.CIT has committed a gross error in not providing effective/reasonable opportunity of being heard to the assessee before passing the order. Accordingly, the revisional proceedings framed U/s 263 of the Act by the ld. Pr.CIT stands quashed". Further, we also rely on Judgments of Honble Delhi High Court in the case of Inderpal Singh Sayan v/s Assessment Unit Income Tax Department & Ors 293 Taxman 0731(DelHC) wherein the Honble High Court has held as under:- ''13. Clearly, the petitioner was not heard in support of his stand. There is, therefore, if nothing else, a breach of principles of natural justice, as the AO, without dealing with the request ....