Kiwans Farsuram Bhamwala Vs ITO (ITAT Surat)
Income Tax Appellate Tribunal (ITAT) Surat reviewed the appeal filed by the late Kiwans Farsuram Bhamwala against the assessment order under Sections 144 and 147 of the Income Tax Act, 1961. The case pertained to the assessment year 2010-11, where cash deposits of ₹15,43,000 in the assessee’s bank account were deemed unexplained and added to her income under Section 69A. Both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] dismissed the assessee’s case due to non-compliance with statutory notices and lack of evidence.
The assessee’s representative argued that non-compliance was due to ill health and hospitalization, leading to her death in 2018. It was contended that the orders of the AO and CIT(A) violated principles of natural justice as the deceased assessee was unable to provide explanations. The representative requested another opportunity to present the case before the AO with adequate evidence. The revenue department raised no objections to a remand but emphasized the need for strict compliance by the assessee.
After reviewing the circumstances, ITAT noted that the assessee was consistently non-cooperative during the proceedings before the AO and CIT(A), despite being issued multiple notices. However, the Tribunal acknowledged the representative’s submissions regarding health-related challenges and the subsequent demise of the assessee. Emphasizing the principles of natural justice, ITAT decided that the case warranted a fresh examination.
The Tribunal set aside the orders of CIT(A) and directed the AO to conduct a de novo assessment after granting the assessee adequate opportunity for a hearing. ITAT instructed the assessee to cooperate and furnish all required details without unnecessary delays. With these directions, the appeal was allowed for statistical purposes, ensuring the matter would be reassessed comprehensively.
FULL TEXT OF THE ORDER OF ITAT SURAT
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 29.05.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2010-11.
2. The grounds of appeal raised by the assessee are as under:
“1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing ex-parte order without reasonable and sufficient opportunity of being heard.
2. On the facts and circumstances of the case as well as law on the subject, ld. Assessing officer has erred in re-opening assessment u/s 147 by issuing notice u/s 148 of the I.T. Act, 1961.
3. On the facts and circumstances of the case as well as on the subject, the assessing officer has erred in making addition of Rs.15,43,000/- u/s 69A of the I.T. Act on account of alleged unexplained money being cash deposits in bank account.
4. It is therefore prayed that the assessment framed u/s 144 r.w.s. 147 may kindly be quashed and/or the addition made by the assessing officer and confirmed by CIT(A) may please be deleted.
5. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
3. The facts of the case in brief are that assessee had not filed her return of income for AY.2010-11. The case was re-opened u/s 147 of the Act. The Assessing Officer (in short, ‘AO’) recorded the reasons at pages 1 to 2 of his order. Various notices and show notice were issued to the assessee, but there was non-compliance with the notices. The AO completed the assessment u/s 144 r.w.s 147 of the Act on 22.12.2017. The AO observed that assessee had deposited cash of Rs.15,43,000/- in her bank account maintained with Bank of Baroda. The AO asked assessee to furnish the relevant details. However, the assessee neither furnished any reply/submission nor filed any explanation. The AO also found that assessee had received bank interest of Rs.31/- in his savings bank account during financial year 2009-10. In absence of any relevant evidence, sources of cash deposited by the assessee of Rs.15,43,000/- had not verified and the same remained unexplained. The AO held that the preliminary onus to prove the source of cash deposits is on the assessee who should explain it with supporting documentary evidence. The AO assessed the total income at Rs.15,43,000/- by treating cash deposits as unexplained money within the meaning of section 69A of the Act.
4. Aggrieved by the order of AO, the assessee filed appeal before CIT(A). The CIT(A) extracted the assessment order at pages 2 to 4 of his order. The CIT(A) had issued 4 notices of hearing but there was no reply. The first notice of hearing was dated 24.12.2020 and last notice was dated 16.05.2024 and hence more than three years’ time was given to the appellant to file his submission. The CIT(A) thereafter relied upon the decisions in cases of CIT vs. B. N. Bhattacharya, 118 ITR 461 (SC) and Whirlpool India Ltd. Vs. DCIT, ITA No.2006/Del/2011, dated 19.12.2011 wherein it was held that non-attending hearing is effectively not pursuing the agree. The CIT(A) also relied upon the judgement of Hon’ble Supreme Court in the case of H. M. Esufali H. M. Abdulali, (1973) 90 ITR 271 (SC) and held that the appellate authority cannot substitute its own judgement in place of the judgment of the AO, unless it is shown that the judgment of the AO was biased, irrational, vindictive or capricious. Finally, the CIT(A) concluded that assessee had failed to produce any cogent explanation or documentary evidence to controvert the findings of the AO. Therefore, the CIT(A) confirmed the addition made by AO and dismissed the appeal of the assessee.
5. Aggrieved by the order of the CIT(A), the assessee filed appeal before The Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted that the assessee Smt. Nayanaben Farsuram Bhamwala had died on 06.09.2018. Copy of death certificate is placed on record. The Ld. AR of the assessee submitted that the assessee remained non-compliant before the AO and CIT(A) due to ill-health and hospitalization. Both the orders being an ex parte, stood vitiated on account of violation of principles of natural justice. The assessee could not appear before the CIT(A) due to circumstances beyond his control. Therefore, Ld. AR requested that one more opportunity should be given to the assessee to plead his case before the AO on merits.
6. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the revenue submitted that assessee was negligent before both lower authorities. He would have no objection if matter is restored to file of AO; but assessee should be directed to comply with the requirements of AO.
7. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee has been non-cooperative to the statutory notices and the show cause notice issued to him by the AO and the CIT(A). There were total cash deposits of Rs.15,43,000/- in his bank account maintained with Bank of Baroda. We also find that the CIT(A) had issued 4 notices, which are at para 4 of the appellate order. Considering all these facts, we are of the view that the assessee was negligent and noncooperative before the lower authorities. The Ld. AR submitted that the noncompliance was neither deliberate nor intentional. He submitted that assessee was suffering from various ailments and was hospitalized at Sterling Hospital. She died on 06.09.2018. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh. Accordingly, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes.
8. In the result, appeal of the assessee allowed for statistical purposes.
Order is pronounced in the open court on 28/11/2024.
