Ramanlal K. Darji Vs ITO (ITAT Mumbai)
The AO rejected the loan transaction and treated the same as unexplained cash credit u/s 68 of the Act. Needless to say that the assessment order has been passed u/s 144 of the Act. No opportunity of being heard was given to the assessee. The books of accounts have been rejected and the cash credit was added to the income of the assessee without giving an opportunity of being heard to the assessee in accordance with law. The assessee has confirmed the loan which lies at page 1 to 9 of the paper book. The confirmation is on the record. The said documents were produced before the CIT(A) as well as AO also. The authority nowhere considered these documents. The rejecting the contentions without any reason nowhere seem justifiable. The explanation and confirmation given by assessee was nowhere considered. The rejecting the claim of the assessee without any basis nowhere required to be sustainable in the eyes of law, therefore, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to decide the issue afresh by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, these issues are decided in favour of the assessee against the revenue.
FULL TEXT OF THE ITAT JUDGEMENT
The assessee has filed the present appeal against the order dated 15.01.2014 passed by the Commissioner of Income Tax (Appeals) – 5, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2005-06.
The assessee has raised the following grounds: –
“1. Condonation of Delay: The Appeal Order was collected from Post Office on 14/12/2014 which was immediately forwarded to the Chartered Accountant for filing of an Appeal. But the appealed was not filed due to CA’s ignorance. Moreover, the building which housed the office was demolished for the purpose of redevelopment. thus we were not able to receive any further notice. We came to know about the non- filing of appeal only when the recovery proceedings were initiated.
The Learned CIT (A), confirmed the adhoc addition in GP of Rs. 6,57,560/- @3.64% on the quantum of sates for Rs 1,80,64,000/-on the basis of assumptions, presumptions and on estimation, which is unwarranted and unjustified.
The Learned CIT (A), not justified in confirming addition of Rs. 4,64,760/- u/s. 68 without providing proper opportunity.
The Learned CI’I’ (A), not justified in confirming the disallowance of interest (Rs. 40,744/-) on the Additions made for Cash Credit u/s. 68.
The Learned CIT (A), not justified in upholding the Penalty u/s. 271(I)(C) Rs. 3,91,490/-.”
3. The brief facts of the case are that the assessee filed his return of income on 26.10.2005 declaring total income to the tune of Rs.5,74,463/-. The return was processed u/s 143(1) of the I. T. Act, 1961. The case was selected for scrutiny under CASS. Notices u/s 143(2) & 142(1) of the Act were issued. The assessee nowhere responded to the notice, therefore, the assessment of the assessee was initiated u/s 144 of the Act. The gross profit was shown to the tune of Rs.15.10 lakhs which was works out @ 8.36%. The net profit has been declared at Rs.5,25,454/- which was worked out 2.91% of the sales turnover. The details were not submitted, therefore, after the rejection of the books of account., the gross profit was estimated @ 12% of the total sales turnover and the excess of 3.64% was worked out of Rs.6,57,560/-and was added to the income of the assessee. From the examination of annexure 2 clause-24 of the Tax audit report u/s 44AB of the Act, it was seen that the assessee has availed of loans/deposits from the following six parties.
