Case Law Details
Kishan Valjibhai Kheni Vs ITO (ITAT Surat)
ITAT Surat imposed cost of Rs. 10,000 on the assessee for non-cooperation before lower authorities and accordingly, remanded the matter back to CIT(A) for examining the entire issue afresh.
Facts- The assessee was engaged in the business of providing works contract service and labour service. AO found that assessee had made a cash deposit of Rs.62,10,000/- in the bank account during demonetization period. AO observed that the entire cash deposit, repayment, cash receipt from debtors etc. were concocted just to avoid tax payment. The total cash deposit of Rs.62,10,000/- was treated by him as unexplained and unaccounted income of assessee and the same was taxed @ 60% u/s 115BBE of the Act. The AO assessed the total income of Rs.65,25,123/- against the returned income of Rs.3,15,123/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the assessee was negligent and non-cooperative before the lower authorities. The Ld. AR submitted that the non-compliance was neither deliberate nor intentional. She 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 CIT(A) re-examines the entire issue afresh subject to the payment of cost of Rs.10,000/- by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to the assessee.
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 20.12.2023 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2017-18.
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 giving reasonable and sufficient opportunity of being heard.
2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making the addition of Rs. 62,10,000/- u/s 69A as alleged unexplained income being cash deposits in the bank accounts of the assessee.
3. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the total business receipts by taking the rate @ 77.25% by attracting section 115BBE instead of estimation of profits at normal tax rate.
4. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the income u/s 115BBE @ 77.25% in a retroactive manner by applying the duly substituted section 115BBE inserted retrospectively instead of taxing at it 35.54% as per the old provision of section 115BBE.
5. It is therefore prayed that addition made by assessing officer may please be deleted or matter may be please set aside to the file of CIT(A) for deciding a fresh adjudication
6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
3. The appeal filed by the assessee is barred by limitation by 62 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal of appeal before the Tribunal. In the affidavit, the assessee stated that Ld. CIT(A) has passed order u/s 250 of the Act on 20.12.2023. The appeal before this Tribunal was required to be filed within 60 days, i.e. on or before 18.02.2024. However, the assessee filed the appeal on 20.04.2024. Therefore, there is a delay of 62 days. The Ld. AR submitted that in the Form 35, the assessee specifically opted ‘No’ for sending notices/communication on the email. However, the notices were sent to the said email of the assessee. The assessee had not regularly checked his own email ID and was not aware of the appellate proceedings. The assessee came to know that the CIT(A) passed an ex parte order through his consultant in the Month of April, 2024. The assessee further consulted a senior Chartered Accountant, Shri Rasesh Shah after passing of the due date of filing the appeal and filed the appeal belatedly before the Tribunal. The Ld. AR requested to condone the delay in the interest of justice.
4. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that assessee has failed to explain ‘sufficient cause’ for the delay; hence, delay should not be condoned.
5. We have heard both the parties on this preliminary issue and note that there is a delay of 62 days. We note that assessee was not negligent but due to miscommunication with the Chartered Accountant, the delay has occurred in filing the present appeal before the Tribunal. The reasons given in the affidavit for condonation of delay would constitute sufficient cause for delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing.
6. The facts of the case in brief are that assessee filed his return of income on 07.02.2018, declaring total income of Rs.3,15,123/-. The case was selected for scrutiny under CASS. Various statutory notices and show cause notices were issued to the assessee and served upon him. The assessee was engaged in the business of providing works contract service and labour service. The Assessing Officer (in short, ‘AO’) found that assessee had made a cash deposit of Rs.62,10,000/- in the bank account No.50200011636437 maintained with HDFC Bank during demonetization period. In response to the show cause notice issued on 09.11.2019, the assessee filed reply on 14.11.2019. The assessee submitted the source of cash deposit was out of opening balance and receipt from sundry debtor of Rs.40,32,318/-. During the year under consideration, the assessee had also deposited cash of Rs.5,69,180/- in Kotak Bank. The assessee stated that he had received cash of Rs.40,32,318/- from sundry debtors before demonetization and the same was deposited in the bank. The AO stated that assessee had failed to establish the cash balance on the closing of previous assessment year. The AO observed that the entire cash deposit, repayment, cash receipt from debtors etc. were concocted just to avoid tax payment. The total cash deposit of Rs.62,10,000/- was treated by him as unexplained and unaccounted income of assessee and the same was taxed @ 60% u/s 115BBE of the Act. The AO assessed the total income of Rs.65,25,123/- against the returned income of Rs.3,15,123/-.
7. Aggrieved by the order of AO, the assessee filed appeal before CIT(A).
The CIT(A) had issued 4 notices of hearing, i.e. on 12.11.2021, 17.03.2022, 04.11.2022 and 07.12.2023 but there was no response from assessee. The CIT(A) relied upon various decisions of Hon’ble Supreme Court and other Tribunals that filing appeal means effectively prosecuting it. The Hon’ble Supreme Court in the case of CIT vs. B. N. Bhattacharya, 118 ITR 461 (SC) held that mere institution followed by withdrawal would cancel the effect and result in non-prosecution and obliteration of appeal which is the same as not preferring an appeal. The CIT(A) stated that appellant was granted adequate opportunity to file details and documents, but there was noncompliance with the notices. The CIT(A) observed that the sources of cash deposited remain unexplained. The appellant failed to furnish cash book in the FY.2015-16 to explain opening cash balance of Rs.29,09,374/- for FY.2016-17. No evidence had been furnished to explain the cash receipt of Rs.40,32,318/- from various sundry debtors. The assessee has not explained as to why the cash was kept in his personal custody and was deposited in the bank account during demonetization period. The CIT(A) concluded that the appellant had not made full and true disclosure of its transactions with documentary evidence before the AO as well as CIT(A). Therefore, the CIT(A) confirmed the addition made by AO and dismissed the appeal of assessee.
8. Aggrieved by the order of the CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the assessee submitted that the assessee remained non-compliant before the CIT(A) but the CIT(A) has also failed to consider the details given in statement of facts. He submitted that order being an ex parte order, 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. Adequate opportunity of hearing was not given to the assessee; therefore, Ld. AR contended that one more opportunity should be given to the assessee to plead his case before the CIT(A).
9. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the revenue submitted that assessee was negligent during the appellate proceedings; hence, appeal of the assessee should be dismissed.
10. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee has been totally noncooperative to the statutory notices and the show cause notice issued to him by the AO and more particularly before the CIT(A). We also find that the CIT(A) had issued 4 notices, which are at ‘para 3.0’ of the appellate order. The assessee did not respond to the said notices. The Ld. AR submitted that CIT(A) failed to consider ‘statement of facts’ filed in Form No.35. We have perused the same, but it is found that it was a general assertion that details had been given to Ao but AO added it because it was not satisfactory. Considering all these facts, we are of the view that the assessee was negligent and non-cooperative before the lower authorities. The Ld. AR submitted that the non-compliance was neither deliberate nor intentional. She 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 CIT(A) re-examines the entire issue afresh subject to the payment of cost of Rs.10,000/- (Rupees ten thousand only) by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) 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 explanation as needed by the CIT(A) by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes.
11. In the result, appeal of the assessee allowed for statistical purposes.
Order is pronounced in the open court on 28/11/2024.
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