Saroj Kumar Senapati Vs ITO (ITAT Cuttack)
The Income Tax Appellate Tribunal (ITAT) Cuttack Bench has allowed an appeal for statistical purposes in the case of Saroj Kumar Senapati vs. Income Tax Officer, restoring the matter to the file of the Commissioner of Income Tax (Appeals) [CIT(A)] for fresh adjudication. The case pertains to the Assessment Year 2017-18, centering around estimated income on alleged unexplained cash deposits.
The assessee, an individual engaged in the wholesale rice business, had filed his return declaring a net income of ₹2,98,520. However, scrutiny proceedings were initiated based on substantial cash deposits amounting to ₹99,27,624 observed in two bank accounts. The Assessing Officer (AO) issued notices under sections 143(2) and 142(1) of the Income Tax Act, 1961, seeking an explanation of the source of cash deposits and supporting financial documents.
Despite multiple opportunities, the assessee failed to respond or furnish the required books of account, bills, and vouchers. The AO, therefore, treated the total bank deposits as turnover and estimated profit at 8% in line with Section 44AD, resulting in an assessed business income of ₹7,94,210. The AO disallowed deductions claimed by the assessee and framed the assessment accordingly.
Aggrieved, the assessee filed an appeal before CIT(A). However, due to continued non-compliance and absence during hearings, the CIT(A) dismissed the appeal ex parte, upholding the AO’s assessment. The assessee then approached the ITAT with a further appeal, also seeking condonation of a delay of 448 days in filing.
In support of the delay condonation petition, the assessee submitted an affidavit citing persistent health issues and unawareness of the ex parte order by CIT(A) due to lack of legal consultation. The Departmental Representative (DR) opposed the condonation plea.
Upon hearing both parties, the ITAT found the explanation offered by the assessee reasonable and condoned the delay, admitting the appeal for adjudication. The assessee’s Authorized Representative contended that the 8% profit estimation under Section 44AD was excessive given the nature of business and that the assessee had not been provided a proper opportunity to represent before the CIT(A).
The ITAT agreed with the argument that the order passed by the CIT(A) lacked a fair hearing and violated principles of natural justice. Accordingly, the Tribunal set aside the ex parte appellate order and restored the matter to the file of CIT(A) for fresh disposal after granting one final opportunity to the assessee to present his case. The assessee was directed to ensure compliance without seeking adjournments.
This order is consistent with judicial precedent where appellate forums have prioritized substantive justice over procedural lapses. In Collector, Land Acquisition vs. Mst. Katiji & Others [(1987) 66 CTR (SC) 23], the Supreme Court held that a liberal approach should be adopted in condoning delays to advance substantial justice. Similarly, in Balakrishna H. Wani vs. ITO [(2018) 96 taxmann.com 226 (Mumbai-Trib.)], ITAT Mumbai had held that non-appearance due to genuine hardship could be a reasonable ground for restoring the matter.
In conclusion, while the appeal of the assessee has not been decided on merits, the Tribunal has provided a final opportunity for redressal at the first appellate level, emphasizing fair procedure and the right to be heard. The appeal was thus allowed for statistical purposes only.
FULL TEXT OF THE ORDER OF ITAT CUTTACK
