Case Law Details
Bakulbhai Durlabhbhai Domadiya Vs ITO (ITAT Surat)
ITAT Surat held that due to non-cooperation on the part of the assessee ex-parte order was passed. Accordingly, matter remitted back, however, cost of Rs. 20,000 imposed for non-cooperation.
Facts- During assessment, AO observed that assessee deposited cash of Rs.10,00,000/- in ICICI Bank Ltd., Rs.22,00,000/- in Varachha Co-Op. Bank Ltd., and Rs.23,10,000/- in Varishtha Co-Op. Bank Ltd., totaling to Rs.55,10,000/-. The assessee had not submitted any explanation in respect of total cash deposit of Rs.55,10,000/- in his bank accounts. As the assessee had not submitted his explanation with respect to cash deposit made by him during the demonetization period, the same was treated as unexplained money u/s 69A of the Act. Due to failure of assessee to establish creditworthiness of lenders and genuineness of transactions, AO also made addition of Rs.3,71,36,034/- on account of unexplained unsecured loan u/s 68 of the Act. The AO also disallowed interest paid on unsecured loans of Rs.10,82,830/- and taxed total income @ 60% u/s 115BBE of the Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that it is an undisputed fact that the assessee has been totally no 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.55,10,000/- in different bank accounts of assessee maintained with ICICI and Varishtha Co-op. Bank Ltd., Surat. We also find that the CIT(A) had also issued five 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 non-cooperative before the lower authorities. 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 subject to payment of cost of Rs.20,000/- (Rupees twenty thousand only).
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 02.08.2023 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. The appellant respectfully submits that the delay of 303 days in filing of this appeal may be condoned as per the condonation petition along with Affidavit submitted in this appeal.
2. The learned CIT(A) has erred in law and on facts in confirming the addition of Rs.55,10,000/- u/s 69A of the Income Tax Act, 1961 being cash deposit in bank without considering the facts that the appellant has withdraw substantial cash from the bank and having sufficient cash balance on the date of deposits.
3. The learned CIT(A) has erred in law and on facts in confirming the addition of Rs.3, 71,36,034/- u/s 68 of Income Tax Act, 1961 being closing balance of unsecured loans without properly considering the facts the facts that there was substantial opening balance of unsecured loan outstanding and during the year the addition of new unsecured loan taken is only Rs.39,00,000/-.
4. The learned CIT(A) has erred in law and on facts in confirming the disallowance of interest expenses on unsecured loan amounting 10,82,830/- without properly considering the facts on record.”
3. The appeal filed by the assessee is barred by limitation by 246 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 he filed appeal before CIT(A)on 21.01.2020. The learned CIT(A), NFAC had issued various notices on ITBA Portal as stated in Para 4 of the CIT(A)’s order of which he was not aware of. He was under the tremendous stress due to critical illness in the family. He was under bona fide impression that Chartered Accountant is taking care of his tax matters. He was not aware of the appellate proceedings. However, he received appellate order dismissing his appeal in September, 2023 due to non‑ prosecution. He also submits that he is carrying on business of cheque discounting and finance on small scale basis. His Chartered Accountant has not properly guided him to file the appeal; therefore, the delay in filing of this appeal. The assessee also stated that there was no negligence or wilful attempt to avoid filing of appeal in his case, which was because of circumstances beyond his control. Hence, delay in filing the appeal by 246 days had occurred. He has prayed to condone the delay and admit the appeal for hearing.
4. On the other hand, Learned Commissioner of Income-tax – Departmental Representative (Ld. CIT-DR) for the Revenue submitted that assessee has failed to offer reasonable and sufficient reason for the delay; hence, delay should not be condoned.
5. We have heard both the parties on this preliminary issue of delay in filing appeal. In the affidavit, it is submitted that Chartered Accountant has not informed the assessee about fate of appeal due to which, the delay of 246 days has occurred in filing appeal before the Tribunal. The assessee has filed medical papers of self and family members at pages 1 to 23 of the paper book. There was hip replacement surgery of the assessee and his life was also undergoing treatment at Kiran Hospital. We note that assessee was not negligent but due to absence of legal advice of Chartered Accountant and medical related issue, there was delay in filing the present appeal. During the illness of self and his family, he was unable to pursue his case and there was lack of guidance and assistance to the assessee with respect to the procedure and formalities of filing appeal before the Tribunal. Hence, the reasons given in the affidavit for condonation of delay are reasonable and the same would constitute sufficient cause for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing.
6. Brief facts of the case are that the assessee had filed his return of income for AY.2017-18 on 28.09.2017, declaring total income of Rs.8,33,350/-. The case was selected for scrutiny through CASS. Various notices were issued and served upon the assessee. A show cause notice was issued to appellant on ITA No.759/SRT/2024/AY.2017-18 Bakulbhai Duralabhbhai Domadiya 08.12.2019 by AO. The assessee was asked to provide ledger confirmation, ITR & computation of income for AY.2017-18, balance sheet, copy of bank statement. The AO also asked assessee to furnish source of cash deposited during demonetization period with requisite evidences and explanations. In reply to the notice, the assessee submitted that he is engaged in the business of cheque discounting under the name of M/s Tulsi Enterprise. He had sufficient cash on 08.11.2016 and the amount deposited in bank was out of the cash opening balance. The AO observed that assessee deposited cash of Rs.10,00,000/- in ICICI Bank Ltd., Rs.22,00,000/- in Varachha Co-Op. Bank Ltd., and Rs.23,10,000/- in Varishtha Co-Op. Bank Ltd., totaling to Rs.55,10,000/-. The assessee had not submitted any explanation in respect of total cash deposit of Rs.55,10,000/- in his bank accounts. As the assessee had not submitted his explanation with respect to cash deposit made by him during the demonetization period, the same was treated as unexplained money u/s 69A of the Act. Due to failure of assessee to establish creditworthiness of lenders and genuineness of transactions, AO also made addition of Rs.3,71,36,034/- on account of unexplained unsecured loan u/s 68 of the Act. The AO also disallowed interest paid on unsecured loans of Rs.10,82,830/- and taxed total income @ 60% u/s 115BBE of the Act. Total income was assessed at Rs.4,45,89,210/- as against returned income of Rs.8,33,350/-.
7. Aggrieved by the order of AO, the assessee filed this appeal before CIT(A). The CIT(A) issued five notices fixing the hearing on 17.08.2020, 21.01.2021, 16.04.2021, 25.11.2021 and 10.07.2023. The assessee has not ITA No.759/SRT/2024/AY.2017-18 Bakulbhai Duralabhbhai Domadiya filed any reply in response to the other notices. Therefore, the CIT(A) has decided the appeal on the basis of the materials available on record including the assessment order. The CIT(A) discussed all the grounds which are at page 6 to 9 of the appellate order. The CIT(A) observed that the appellant has not produced any material to controvert the finding of AO during the appellate proceedings. Due to non-compliance with he notices; the CIT(A) dismissed all the grounds and upheld the order of AO.
8. Aggrieved by the order of Ld. CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted that the appellant was not given adequate opportunity of hearing by the lower authorities. He submitted that the AO has passed an order u/s 143(3) after issuing show cause notice but the relies submitted on 23.12.2019 and 27.12.2019 of the assessee were not duly considered in order u/s 143(3) r.w.s. 147 of the Act. He further submitted that the CIT(A) has issued 5 notices, the last are being on 23.06.2023. However, he has passed the order u/s 250 of the Act on 02.08.2023, which shows that the order was passed without hearing the assessee in violation of the principles of natural justice. The Ld. AR of the assessee submitted that the assessee remained non-compliant before the CIT(A) due to medical issue and lack of assistance from his Chartered Accountant. The Ld. AR contended that assessee could not represent his case before CIT(A) and the order 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. Adequate opportunity of ITA No.759/SRT/2024/AY.2017-18 Bakulbhai Duralabhbhai Domadiya 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 AO.
9. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee was negligent and careless during the appellate proceedings; hence, appeal of the assessee should be
10. We have heard both the parties and perused the material available on It is an undisputed fact that the assessee has been totally no 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.55,10,000/- in different bank accounts of assessee maintained with ICICI and Varishtha Co-op. Bank Ltd., Surat. We also find that the CIT(A) had also issued five 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 non-cooperative before the lower authorities. The Ld. AR submitted that the non-compliance was not deliberate but due to medical issues and lack of advice of his Chartered Accountant. 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 subject to payment of cost of Rs.20,000/- (Rupees twenty thousand only) by ITA No.759/SRT/2024/AY.2017-18 Bakulbhai Duralabhbhai Domadiya 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 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.
11. In the result, appeal of the assessee allowed for statistical purposes.
Order is pronounced in the open court on 25/11/2024.
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