Case Law Details
Mohanlal S. Gachi Vs ITO (ITAT Mumbai)
Introduction: In a case presented before the Income Tax Appellate Tribunal (ITAT) in Mumbai, Mohanlal S. Gachi faced a challenge stemming from communication discrepancies between himself and his tax consultant. The heart of the matter revolved around a non-reply to a notice from the Commissioner of Income Tax (Appeals) due to this miscommunication.
Analysis: The issue began when Mohanlal S. Gachi’s account displayed a cash deposit of Rs.12,81,952/-. While this was explained as income from jewellery-making labour charges, an addition of Rs.2,86,737/- was made based on peak cash credit under section 68 of the Income Tax Act, 1961. An appeal was subsequently filed against the assessment order, leading to further notices from the CIT(A).
However, when it was time to reply to these notices, Gachi, while prepared with a response, experienced a miscommunication with his tax consultant, leading to a failure in uploading the reply. Consequently, the CIT(A) dismissed the appeal in an ex-parte manner. The focal point of contention is this miscommunication, which became the crux of the appeal to ITAT Mumbai.
While the Departmental Representative insisted that the assessee was granted ample opportunity to respond, the evidence presented showed that the reply was ready but not uploaded due to the stated miscommunication.
Conclusion: Recognizing the intricacies of the case and the plausible communication breakdown between the assessee and his consultant, ITAT Mumbai chose to restore the appeal to the CIT(A) for a denovo adjudication. This decision not only emphasizes the need for clear communication but also highlights the importance of ensuring that procedural fairness is maintained in legal proceedings.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)] dated 09/03/2023, for the Assessment Year 2013-14.
2. The appeal is time barred by one day. The assessee has filed an application citing reasons for delay in filing of the appeal. The delay in filing of appeal is condoned and the appeal is admitted for hearing on merits.
3. Shri Bhupendra Shah appearing on behalf of the assessee submitted at the outset that appeal is against an exparte order passed by the CIT(A). He submitted that the case of assessee was reopened on the basis of AIR information that the assessee had cash deposit in the bank account to the tune of Rs.12,81,952/-. During the course of assessment proceedings, the assessee explained that the cash amount received on various dates was in respect of jewellery making labour charges. The Assessing Officer made addition of Rs.2,86,737/- based on peak cash credit u/s. 68 of the Income Tax Act, 1961 [in short ‘the Act’].
3.1 Aggrieved by the assessment order dated 17/12/2018 passed u/s. 143(3) r.w.s. 147 of the Act. the assessee filed appeal before the CIT(A). The CIT(A) issued notice to the assessee. On 17/02/2023 the assessee filed letter seeking adjournment. On the next date of hearing i.e. 06/03/2003 the assessee was ready with reply but due to some miscommunication the Tax Consultant could not upload the reply. The CIT(A) dismissed the appeal ex-parte on 09/03/2023. He prayed for an opportunity to appear before the CIT(A) and to furnish reply. The ld. Authorized Representative of the assessee stated that the assessee undertakes to appear before the CIT(A), if an opportunity is afforded to him to represent the case before the CIT(A).
4. Per contra, Shri Sunny Kachhwaha representing the Department vehemently opposed the appeal of assessee. The ld. Departmental Representative submitted that sufficient opportunity was granted to the assessee by CIT(A), however, the assessee failed to make submissions before the CIT(A). The CIT(A) had no other option but to decide the appeal ex-parte on the basis of material available on record. Even before, the Assessing Officer assessee has not filed documentary evidence to support his contention.
5. Both sides heard, orders of authorities below examined. A reading of the impugned order shows that the assessee had appeared before the CIT(A) on 17/02/2023 and sought adjournment. The case was adjourned to 06/03/2023. On the said date, there was no response from the assessee. Consequently, the CIT(A) decided the appeal in an ex-parte proceedings The contention of the assessee is that the reply to be furnished on 06/03/2023 was ready but could not be upload on portal due to some communication gap between the assessee and the Tax Consultant. Taking into consideration, entire facts of the case, the appeal is restored to the file of CIT(A) for denovo adjudication, after considering the submissions of the assessee, in accordance with law.
6. The assessee is directed to make submissions before the CIT(A) without fail on receipt of notice. In case the assessee fails to furnish submissions, the CIT(A) is at liberty to take an adverse view.
7. In the result, impugned order is set aside and appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open Court on Monday the 24th day of July, 2023.
