Case Law Details
Noorul Hasan Baig Vs DCIT/ACIT (ITAT Indore)
Introduction: In a landmark decision, the Indore ITAT recently examined a pivotal issue: Is it a fit case for remand where the assessee deserves another chance to furnish relevant documents initially not produced before the lower authorities?
Background:
– Profile of the Assessee: Noorul Hasan Baig, an individual, operates a civil contractor business under the name M/s. Shahjehan Builders and Developers. For the Assessment Year (AY) 2017-18, he declared an income of Rs. 3,05,720/-.
– Central Issue: During the scrutiny of his returns, authorities flagged a deposit of Rs. 7,85,000/- made during the demonetization phase. While the assessee did use the official “Cash Transaction 2016” utility to provide explanations for the deposit’s sources, the AO found no corroborative documentary evidence. As a result, the AO deemed the entire deposit as unexplained.
Assessee’s Stand:
The assessee identified three sources for the deposit:
1. Existing cash balance from prior income/savings (Rs. 3,07,000/-)
2. Cash withdrawal from his bank account (Rs. 1,00,000/-)
3. Loans taken from various individuals (Rs. 3,78,000/-)
These sources were consistently cited at different stages of the proceedings.
The Tribunal’s Perspective: The ITAT acknowledged that the assessee consistently detailed the three sources. It was also noted that the assessee insisted on having attempted to provide documentary proof on 18.12.2019/19.12.2019.
There was a significant twist, however. The loans (amounting to Rs. 3,78,000/-) cited by the assessee were presented as advance payments from clients. This critical nuance altered the context significantly.
Decision and its Implications: The ITAT held that this case warranted a remand. They reasoned that since the assessee consistently detailed his explanations and cited attempts to provide evidence, he deserved another chance to substantiate his claims. They emphasized that the fresh adjudication should be unbiased, offering the assessee adequate opportunities to present his case, especially concerning the cash receipts of the contractorship business.
Conclusion: The Noorul Hasan Baig Vs DCIT/ACIT case underscores the significance of providing assessees with ample opportunities to present their evidence. It also stresses the necessity for the assessing officer to maintain an open and unbiased approach. This decision paves the way for a more equitable examination of similar cases in the future.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by appeal-order dated 24.08.2022 passed by learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre (NFAC) [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 26.12.2019 passed by DCIT/ACIT,5(1), Bhopal, [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on following grounds:-
1. The order of the learned Commissioner is unjustified and is beyond the facts and circumstances of the case.
2. The learned Commissioner of Income tax has not considered statement of “Cash Transaction 2016” in which the assessee has furnished that he was having cash of Rs. 3,07,000/- from his personal savings, cash of Rs. 1,00,000/- as withdrawal from his bank account and cash of Rs. 3,78,000/- taken as loan from several persons, but in CIT(A), appellant has already explained each and every things in Statement of Fact that AR has attended on 18.12.2019 to the office of AO and AO has given oral instruction to AR to submit further documents and no further date has been fixed.
3. The notice u/s 250 of the Act is issued on 22.11.2021, 29.04.2022 and 02.08.2022 by Ld. CIT(A) but it has not been received by the assessee on its postal address. Though it is showing on ITBA portal further notices has been sent at email ID of Ex consultant. The assessee is not literate in information technology therefore he is unable to know about Notice issued u/s 250. Hon’ble sir, it is principle of Natural Justice that when assessee is not literate it is better to send notices through postal address.
4. Further request to remand the case for reassessment to AO.
5. The appellant craves leave to add, to amend or alter any of the grounds of appeal as and when necessary.”
2. Heard the learned Representatives of both sides at length and case-records perused.
3. The registry has informed that present appeal is filed by assessee after a delay of 9 days. Ld. AR for the assessee submitted that the assessee is an illiterate person not aware of the requirements and provisions of law and therefore a marginal delay of 9 days had occurred. Ld. AR submitted that the delay is not because of any lethargy, negligence or mala fide intention of assessee. Ld. AR submitted that by making delay in filing appeal, the assessee does not stand to derive any benefit. Placing reliance upon the decision of Hon’ble Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR 1353, 1987 2 SCC 387, Ld. AR made a very humble prayer to take a judicious view qua the assessee, condone delay and proceed with appeal. Ld. DR, realizing that the delay is small and there appears plausible explanation on the part of assessee, was fair enough in not opposing the prayer of Ld. AR. Accordingly, taking a judicious view, we condone delay and the appeal is proceeded for hearing.
4. Briefly stated facts are such that the assessee is an individual engaged in the business of civil contractor under proprietorship concern, M/s. Shahjehan Builders and Developers. The assessee filed return of income of relevant AY 2017-18, declaring a total income of Rs. 3,05,720/-. The case was selected for scrutiny. During assessment proceedings, the AO found that the assessee deposited a sum of Rs. 7,85,000/- in Bank account during demonetization period. When the AO confronted assessee to explain the source of deposit, the assessee quoted his submission already made to Income-tax Department via online utility “Cash Transaction 2016” designated by department to explain the sources of deposit in Bank A/c made during demonetization period, in which the assessee submitted three sources, namely (i) he was having a cash balance of Rs. 3,07,000/- from earlier income/savings; (ii) cash of Rs. 1,00,000/- withdrawn from his bank account; and (iii) cash of Rs. 3,78,000/- taken as loans from several persons. However, the AO found that the assessee has not furnished any documentary evidences in support of such submissions; therefore he AO treated the entire cash deposit of Rs. 7,85,000/- as unexplained and made addition u/s 69A of the Act.
5. During first appeal, Ld. CIT(A) issued notices of hearing to assessee on 22.11.2021, 29.04.2022 and 02.08.2022 but the assessee did not make any submission. Therefore, Ld. CIT(A) decided first appeal on the basis of material available on record (Para No. 5 of order). While deciding, in Para No. 3 of his order, Ld. CIT(A) noted following facts as stated by assessee himself in Statement of Facts in Form No. 35:
“The Assessee has not received the notice u/s 142(1) dt. 11.6.2019 and received notice u/s 142(1) dt. 21.10.2019 in response to notice A R Shri Vinod Kumar Shrivastava has attended and replied accordingly on 18.12.2019 in reply the AR has explained source of income and handed over some documentary evidence eg confirmation letter from various party and to whom cash received by assessee and remaining documentary evidence required by AO has been submitted on 19.12.2019 therefore the assessee has furnished all documentary evidence in support of his savings from earlier income or withdrawal documentary evidence submitted as under: documentary evidence regarding cash deposited of Rs. 785000/-, the confirmation letter nos. eight of Rs. 378000 and cash withdrawal of Rs. 100000 bank statement and family cash in hand statement of Rs. 307000 evidence regarding current year loss of Rs. 392330, interest certificate from dewan housing finance Ltd.”
Thereafter, in Para No. 8.2 of appeal-order, the CIT(A) has re-produced the finding made by AO in assessment-order. Ultimately, he concluded in Para No. 8.4 that the assessee has failed to furnish the documents/proof in support of his claim, hence the appeal was dismissed.
6. Aggrieved, now the assessee has come in next appeal before us.
7. During hearing before us, Ld. AR for assessee submitted that the assessee is engaged in the business covered under presumptive taxation scheme of Section 44AD and therefore while filing return of income (copies of the Acknowledgement of Return and Computation of total income are placed at page nos. 1 to 3 of Paper-Book) the assessee had declared gross-receipts of business at Rs. 85,32,710/- received through Banking channel and at Rs. 13,85,000/- received in cash and accordingly offered 6% profit on former and 8% profit on later in terms of that section 44AD. Ld. AR submitted that the gross-receipts of Rs. 13,85,000/- declared by assessee are more than enough to cover the impugned cash-deposit of Rs. 7,85,000/-made in bank a/c. Replying upon certain judicial rulings, Ld. AR also submitted that if an assessee is covered under presumptive taxation scheme of section 44AD, there is an immunity from maintaining books of account in Income-tax law and the assessee is not required to explain the deposits made in bank a/c. This way, Ld. AR submitted that the deposits in bank a/c were made out of gross-receipts of business which was covered u/s 44AD and hence the source stands explained.
8. Per contra, Ld. DR for the revenue supported the orders of lower authorities.
9. We have considered rival submissions of both sides and perused the orders of lower authorities as also the documents in Paper-Book referred to above to which our attention is drawn. First of all, on perusal of assessment-order we find that the assessee has himself declared three sources of impugned cash-deposits in Bank A/c on the utility designed by Income-tax Department “Cash Transaction 2016” for explaining the sources. The sources explained by assessee were (i) he was having a cash balance of Rs. 3,07,000/- from earlier income/savings; (ii) cash of Rs. 1,00,000/-withdrawn from his bank account; and (iii) cash of Rs. 3,78,000/- taken as loans from several persons. That was the first stage of explanation by assessee. Then came the second stage of assessment-proceeding where again the assessee explained the same three sources to AO. Thereafter, during third stage of first-appeal, the assessee again submitted the same sources in the Statement of Facts in Form No. 35. Lastly, in Ground No. 2 raised before us, the assessee has again mentioned the same three sources. Thus, the assessee is consistently explaining those three sources. Moreover, in the Statement of Facts submitted to CIT(A) in Form No. 35 as well as in Ground No. 2 raised before us, the assessee strongly contends that he attempted to file or filed documentary evidences to AO on 18.12.2019/ 19.12.2019. Therefore, taking cognizance of same, when we asked Ld. AR as to how the three sources consistently explained by assessee are at par with the source explained by him before us i.e. the cash-receipts of contractorship business covered u/s 44AD carried on by assessee? In reply, Ld. AR submitted that the loans of Rs. 3,78,000/- stated by assessee were in fact advance-payments received from customers in the business. Be that, the AO has noted a finding that the assessee did not file any documentary evidence. Further, the CIT(A) has decided first-appeal on the basis of AO’s finding because the assessee did not comply the notices of hearing issued by CIT(A). Further, it is assessee’s stand in the Statement of Facts submitted to CIT(A) as well Ground No. 2 before us that he attempted/filed documentary evidences to explain all three sources. Further, in Ground No. 4, the assesse has prayed to remand this case to AO. Therefore, taking into account all aspects, we are inclined to remit this case back to AO for a fresh adjudication. The AO shall pass order afresh without being influenced by his previous order. While doing so, he will give needful opportunities to assessee and consider the evidences of assessee including the submission made by Ld. AO before us that the impugned cash-deposit were part of cash-receipts of business-turnover carried on by assessee u/s 44AD.
10. Resultantly, this appeal of assessee is allowed for statistical purpose.
Order pronounced in the open court on 20.07.2023.
