Case Law Details
Meetu Bansal Vs DCIT (Uttarakhand High Court)
Uttarakhand High Court held that issuance of notice by Commissioner (Appeals) mandatory in terms of section 251(2) of the Income Tax Act before enhancing the assessment.
Facts- The Income Tax Department carried out search and seizure operation on 26.04.2012, in respect of the appellant’s husband, including the residential premises of the appellant. Notice was issued to the appellant u/s. 153A of the Income Tax Act. In response to the said notice, she submitted her return.
Notices were issued to the appellant/assessee u/s. 153A read with Section 143(3) and Section 142(1) of the Income Tax Act. The appellant filed the return u/s. 156A, along with an income statement / balance sheet, on 31.03.2007. AO, while accepting the declared income of the appellant, made addition to the tune of Rs.5,63,500/- by adding: (a) a sum of Rs. 1.5 lacs, which was the gift received by the assessee from her father, by treating the same as income u/s. 56(2)(vii), and; (b) difference in cash aggregating to Rs. 4,13,500/- by considering the same as cash credit u/s. 68. AO made addition of Rs.4,13,500/- by considering the same to be unexplained cash, credited in the books of account. The grievance of the appellant is that the same was done without show cause notice to the assessee, and additions were made u/s. 68 to the tune of Rs.4,13,500/- without any opportunity to the assessee. Consequently, penalty proceedings were also initiated with the issuance of notice u/s. 271(1)(c).
AO passed the assessment order u/s. 153A(1)(b) read with Section 143(3) on 01.09.2014. The assessee filed an appeal u/s. 249 of the Income Tax Act before CIT(A). He deleted the addition of Rs.1,50,000/-, being gift received from father, i.e., blood relative. However, so far as the addition u/s. 68 of the Income Tax Act was concerned, i.e. the net cash in hand of Rs. 4,13,000/- (Rs.4,66,500 minus Rs. 53,050/-) credited in the books of the assessee, the Commissioner of Appeals enlarged the scope of assessment by enhancing the cash in hand from Rs. 4,13,500/- to Rs. 4,66,500/-, i.e. by adding the original cash in hand, which was declared in return furnished u/s. 139, without issuing any show cause notice as mandated u/s. 251(2) of the Income Tax Act. The further appeal to the ITAT failed, and, consequently, the present appeal has been preferred by the appellant / assessee.
Conclusion- Noted that show cause notice was not issued to the assessee by the Commissioner (Appeals), as mandated by Section 251(2) of the Income Tax Act, before enhancing the cash in hand from Rs. 4,13,500/- to Rs. 4,66,500/-.
Held that the appellant / assessee was entitled to put to notice before enhancing the cash in hand, by the Commissioner (Appeals). The matter is remanded to the Commissioner (Appeals) for rehearing of the appeal on the aforesaid issue.
FULL TEXT OF THE JUDGMENT/ORDER OF UTTARAKHAND HIGH COURT
In view of the fact that the delay in preferring the present appeal is only 38 days, and since Mr. Bhatia fairly does not oppose the delay condonation application, the same is allowed for the reasons given in the application. The delay, accordingly, stands condoned.
Income Tax Appeal No. 07 of 2022
2) In terms of the order dated 20.05.2022, Mr. Bhatia has produced the scanned copy of the record. We have perused the same.
3) The appellant / assessee has preferred the present appeal against the order dated 21.09.2021, passed by the learned Income Tax Appellate Tribunal, in ITA No. 3943/Del/2016: AY 2007-08, Meetu Bansal Vs DCIT, Central Circle, Dehradun, dismissing the appeal preferred by the appellant / assessee against the order dated 11.03.2016, passed by the learned CIT (Appeals), in Appeal No. 343/CIT(A)-1/DDN/14-15, relating to the Assessment Year 2007-08.
4) We have heard learned counsels, and we are of the opinion, that the following substantial questions of law arises for our consideration :-
“a) Whether on the facts and circumstances of the case an in law, the Ld. ITAT committed a manifest error of judgment, in not appreciating that the Ld. CIT (Appeals), could not enhance the original assessment, without issuing a show cause notice / opportunity of hearing, as mandated u/s 251(2) of the Income Tax Act, 1961?
b) Whether on the facts and circumstances of the case, the final Appellate order dated 21.09.2021, passed by the Ld. ITAT, is perverse (i.e. the assessment order u/s 153A dated 01.09.2014 and the appellate order dated 11.03.2016, had merged in the final appellate order dated 21.09.2021); in upholding that additions u/s 68 made by the Ld. A.O. and the enhancement of income additions made by the CIT (Appeals); without prior show cause notice / opportunity of hearing; which both orders were devoid of any incriminating document / informations and as such the revenue had failed to discharge their burden, which squarely fell on their shoulders?”
5) The appellant is engaged in private coaching and vocational training profession. In the Assessment Year 2007-08, the appellant earned income from business (profession) and other sources. She filed her income-tax return for the Assessment Year 2007-08, on 18.03.2008, declaring an income of Rs.1,18,500/-, earned from private coaching and vocational training from her residence. Since the income shown was below Rs. 1.20 lacs, she claimed that she was not required to maintain books of account. She declared cash held in business of Rs.1,100/- in column 6, Part-A of the balance sheet.
6) The Income Tax Department carried out search and seizure operation on 26.04.2012, in respect of the appellant’s husband, including the residential premises of the appellant. Notice was issued to the appellant under Section 153A of the Income Tax Act. In response to the said notice, she submitted her return of income declaring Rs. 1,19,475/-, which included an income of Rs. 1,18,500/-, earlier declared by her in her return, i.e., ITR-4, for the Assessment Year 2007-08. An additional of Rs.975/- was made towards income from interest earned on savings bank account, which had earlier not been included in the returned income.
7) Notices were issued to the appellant / assessee under Section 153A read with Section 143(3) and Section 142(1) of the Income Tax Act. The appellant filed the return under Section 156A, along with an income statement / balance sheet, on 31.03.2007. The Assessing Officer, while accepting the declared income of the appellant, made addition to the tune of Rs.5,63,500/- by adding: (a) a sum of Rs. 1.5 lacs, which was the gift received by the assessee from her father, by treating the same as income under Section 56(2)(vii), and; (b) difference in cash aggregating to Rs. 4,13,500/- by considering the same as cash credit under Section 68. The learned Assessing Officer made addition of Rs.4,13,500/- by considering the same to be unexplained cash, credited in the books of account. The grievance of the appellant is that the same was done without show cause notice to the assessee, and additions were made under Section 68 to the tune of Rs.4,13,500/- without any opportunity to the assessee. Consequently, penalty proceedings were also initiated with the issuance of notice under Section 271(1)(c).
8) The Assessing Officer passed the assessment order under Section 153A(1)(b) read with Section 143(3) on 01.09.2014. The assessee filed an appeal under Section 249 of the Income Tax Act against the assessment order dated 01.09.2014, before the Commission of Income Tax (Appeals), Dehradun. He deleted the addition of Rs.1,50,000/-, being gift received from father, i.e., blood relative. However, so far as the addition under Section 68 of the Income Tax Act was concerned, i.e. the net cash in hand of Rs. 4,13,000/- (Rs.4,66,500 minus Rs. 53,050/-) credited in the books of the assessee, the Commissioner of Appeals enlarged the scope of assessment by enhancing the cash in hand from Rs. 4,13,500/- to Rs. 4,66,500/-, i.e. by adding the original cash in hand, which was declared in return furnished under Section 139, without issuing any show cause notice as mandated under Section 251(2) of the Income Tax Act. The further appeal to the ITAT failed, and, consequently, the present appeal has been preferred by the appellant / assessee.
9) On 20.05.2022, this Court passed an order, the relevant extract whereof reads as follows:
“Having heard the learned counsel appearing for the parties, we are of the opinion that prima facie, there has been a violation of Sub-section (2) of Section 251 of the Income Tax Act 1961, as the impugned order does not reflect it was enhancing the assessment of the appellant and opportunity was granted to her show cause.
The learned counsel for the revenue, however, submits that it can only be known from the records and he is willing to produce the scanned copy of the records of the learned C.I.T. (Appeals) in appeal No. 343/CIT(A)-1/DDN/14-15 on the next date.
Let the learned counsel for the revenue to produce the scanned copy of the records only to satisfy us that a proper notice to show cause has been given to the appellant.”
10) In response to the said order, the scanned record has been produced by Mr. Bhatia. He fairly states that show cause notice was not issued to the assessee by the Commissioner (Appeals), as mandated by Section 251(2) of the Income Tax Act, before enhancing the cash in hand from Rs. 4,13,500/- to Rs. 4,66,500/-.
11) We have heard learned counsels.
12) We find merit in the submission of Mr. Mullick that the appellant / assessee was entitled to put to notice before enhancing the cash in hand, by the Commissioner (Appeals).
13) We, accordingly, answer the first question in favour of the assessee, and against the Revenue. The matter is remanded to the Commissioner (Appeals) for rehearing of the appeal on the aforesaid issue.
14) So far as the second question framed aforesaid is concerned, we do not have the relevant factual position before us. It appears that when the matter was argued on 20.05.2022, the only issue raised by the appellant was with regard to violation of Sub-section (2) of Section 251 of the Income Tax Act. Mr. Bhatia submits that the respondents were not required to produce the record of the Assessing Officer.
15) Aforesaid being the position, we leave the second question of law, as framed, open. Since, the matter is being remanded back to the Commissioner (Appeals), it shall be open to the assessee to urge the said issue as well before the Commissioner (Appeals).
16) The appeal stands disposed of in the aforesaid terms.
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