Maneken Keshvalla Patel Vs NFAC (ITAT Mumbai)
Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently pronounced a significant ruling in the case of Maneken Keshvalla Patel Vs National Faceless Appeal Centre (NFAC). In a critical judgement, the tribunal stated that merely citing different Permanent Account Numbers (PANs) by the assessee and the Assessing Officer cannot be grounds for dismissing an appeal.
Analysis: The dispute arose around the addition of a sum to the appellant’s account as an unexplained cash credit. The Assessing Officer issued a notice on a PAN that the appellant claimed was incorrect. The appellant argued that the assessment proceedings were illegal due to the change in place of residence and the incorrect PAN. The CIT(A) maintained that the appeal was not maintainable, arguing that the assessment order was passed on a different PAN than the one filed in the appeal.
However, the ITAT Mumbai opined that an appeal could not be dismissed as non-maintainable solely based on a difference in PANs cited by the assessee and the Assessing Officer. Instead, the tribunal emphasized the need to examine the source of the credit under section 68 of the Act, a task neither the Assessing Officer nor the Ld. CIT(A) had undertaken.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 18.04.2022 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12 raising following grounds:
1.1 The order passed u/s 250 on 18.04.2022 for A. Y. 2011-12 by NFAC, Delhi upholding the addition of Rs. 63,76,868/- towards credits in account no. 001801520946 with ICICI Bank Borivali Branch Mumbai as unexplained is wholly illegal, unlawful and against the principles of natural justice.
1.2 That in the facts and circumstances of the case as well as in law, the assessment proceedings continued and completed by ITO Ward-32(2)(3) Mumbai were illegal, unlawful and without jurisdiction in view of change in place of residence from Mumbai to ‘nagar which was not disputed by any of the authorities. The Ld. NAC has failed to appreciate that place of having bank account does not confer jurisdiction to assess under IT Act.
1.1 That in the facts and circumstances of the case as well as in law, the Ld. CIT (A) erred in not considering fully and properly the evidence produced and explanation furnished by the appellant. The Ld CIT(A) ought to have given opportunity to produce evidence relating to the impugned addition of RS. 63,76,868/- in case the assessment & appeal proceedings were to be persisted by them failing which there was violation of the principles of natural justice. so The appellant should be allowed to produce additional evidence which may be admitted as per Rule 29.
2.1 The Ld. NFAC has grievously erred on facts and in law in upholding addition of Rs.63,76,868/-as unexplained credit.
2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC ought not to have upheld the addition of RS 63,76,868/-. The Ld. NFAC ought to have provided copy of and details relating to the impugned credits in said bank account and allowed sufficient opportunity to explain the same.
It is, therefore, prayed that addition of unexplained cash credit u/s 68 Rs. 63,76,868/- deserves to be deleted.
2. Briefly stated, facts of the case are that on receipt of the information from the Investigation Wing about the banking transactions carried out through one bank account in the name of assessee maintained with ICICI bank, the Assessing Officer issued notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’). In response, the assessee filed return of income and submitted that assessee was issued notice u/s 148 on wrong PAN i.e. AICPP1497J, whereas assessee was already filing return of income against PAN ALFPP74 1 0D . The Assessing Officer thereafter issued notice under section 142(1) of the act however same were not responded by the assessee. The Assessing Officer also issued a final show cause notice on 17/12/2018 and passed the final assessment order on 20/12/2018 under section 147 read with section 143(3) of the Act and added the deposits of Rs.63,76,868/- as unexplained cash credit u/s 68 of the Act observing as under:
“6. The requirement of statutory notices issued from time to time affording the assessee opportunity to explain the case have not been complied with. Also it is found that the credits to the bank account of BhaveshKeshavlal Patel (HUF) were mainly received from the bank account of the concerns of the family members of Smt. Manekben Keshavlal Patel and immediately debited the same amount to the individual’s account of the family members of the assessee. Since the assessee has not filed her Return of Income the quantum and patterns of the transaction are not match with her income profiles. Therefore, the creditworthiness and identity of the parties advancing these amounts has not been established in the case of the assessee. Hence, the credit to the bank account of the assessee remain unexplained. Therefore, the amount of Rs.63, 76,868/- is added back towards the taxable income under section 68 of the Act as unexplained cash credit. Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are initiated for concealment of income.
Thus the total income of the assessee for the year under reference is computed as under:
