Case Law Details
Vivekkumar S Bhavsar Vs ITO (ITAT Ahmedabad)
In the case of Vivekkumar S Bhavsar vs ITO, heard by the ITAT Ahmedabad, the assessee appealed against an exparte appellate order confirming additions made by the AO relating to unexplained cash deposits. The appeal was based on the grounds of insufficient opportunity and lack of findings by the Commissioner of Income Tax (Appeals) (CIT(A)).
Background: The assessee, an individual, filed their return of income for the Assessment Year 2017-18, declaring a total income of Rs. 2,05,970. The return was selected for limited scrutiny due to large cash deposits during the demonetization period. Despite multiple notices, the assessee did not respond, leading to the addition of the cash deposits to their income.
Assessee’s Argument: The assessee, represented by counsel, contended that they were unable to provide details due to the COVID-19 pandemic and the closure of their business activity before the completion of assessment. They also claimed that the ex-parte order was a result of their Chartered Accountant’s failure to communicate the appellate hearing details.
Court’s Ruling: While acknowledging the lack of cooperation from the assessee and their consultant, the ITAT deemed it unfair to entirely treat the cash deposits as income. To uphold principles of natural justice, the matter was remanded back to the Assessing Officer (AO) with a condition to impose a cost of Rs. 5000, payable to the Prime Minister National Relief Fund. The AO was directed to provide the assessee with a proper opportunity to present necessary documents and pass a fresh assessment order in accordance with the law.
Conclusion: The ITAT’s decision highlights the importance of cooperation in tax proceedings and the consequences of non-compliance. While imposing a cost on the assessee, the court ensured that procedural fairness was maintained by remanding the matter for reconsideration with proper opportunity provided to the assessee.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal is filed by the Assessee as against the exparte appellate order dated 09031.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the assessment order passed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18.
2. The brief facts of the case is that the assessee is an individual. For the Assessment Year 2017-18, the assessee filed his Return of Income on 05.08.20 17 declaring total income of Rs.2,05,970/-. The return was selected for limited scrutiny since large cash deposits made during demonetization period and the Business return filed for the first time. Accordingly notice u/s. 143(2) was issued through e-mail address available with the ITBA system. However the assessee has not responded to the other six notices issued from 07.08.2018 to 27.08.2019. Therefore the cash deposits made in Dena Bank of Rs.2,11,95,770/- was treated as the unexplained investment and added to the income of the assessee and demanded tax thereon.
3. Aggrieved against the exparte order, the assessee filed an appeal before Commissioner of Income Tax (Appeals) with communication e-mail address as [email protected] being assessee’s Chartered Accountant e-mail ID. The assessee appeal was fixed for hearing on 16.02.2021, 23.01.2021, 02.12.2021 and 10.12.2021. However the assessee neither filed any details nor sought for adjournment, against the above hearing notices. Therefore the Ld. CIT(A) confirmed the addition made by the Assessing Officer and dismissed the assessee appeal.
4. Aggrieved against the same, the Assessee is in appeal before us raising the following Grounds of Appeal:
1. The learned commissioner (Appeal) erred in confirming the addition of 2,11,95, 770/- being cash deposit in Bank as un explained Investment u/s. 69A of Income Tax Act.
2. The learned commissioner (Appeal) erred in passing ex-parte order without giving sufficient opportunity.
3. The learned commissioner (Appeal) erred in not giving any finding on addition made by A.O as unaccounted cash and taxed u/s. 69 and 69A of Income Tax Act being unexplained Investments.
4. Your appellant prays for appropriate relief on above grounds of appeal.
5. Ld. Counsel for the assessee submitted that the assesse had carried out sale of mobile recharge vouchers on a wholesale basis and earned commission income. The assessee purchased recharge vouchers from M/s. Telenor India Communication Pvt. Ltd. and M/s. Vodafone Mobile Service Ltd. and he made payments to the said concerns through NEFT/RTGS from his Dena Bank account. The assessee deposited the sale proceeds of mobile recharge vouchers in the above Dena Bank account and made payments to the mobile companies. The assessee could not produce the details being Covid-19 pandemic period and also closed down the business activity before completion of assessment, which has resulted in passing the exparte order. Further the Ld. Chartered Accountant also not informed the appellate hearing details to the assessee. The assessee also produced a Notarized Affidavit from the then Chartered Accountant that due to his mistake, the appellate hearing could not be communicated to the assessee, which has resulted in passing the exparte appellate order. However the Ld. Counsel submitted that he has got all the details about the sale of recharge vouchers, ledger account of M/s. Vodafone Mobile Service Ltd. and M/s. Telenor India Communication Pvt. Ltd. with invoice copies, bank statement details, cash book, bank book, etc and filed two sets of Paper Book running to 491 pages. Thus pleaded the case may be set aside to the file of Assessing Officer for passing orders on merits.
6. Per contra Ld. Sr. D.R. appearing for the Revenue supported the order passed by the Lower Authorities and requested to uphold the
7. We have given our thoughtful consideration and perused the materials available on record. It is undisputed fact that the assessee was not cooperative with the department both while passing the assessment order and appellate order for various reasons stated above. There seems to be absolute negligence on the part of the assessee and his Consultant. However there cannot be entire addition of cash deposit made in the bank account of the assessee as his income. In order to meet the ends of Natural Justice, we deem it fit to set aside the matter back to the file of the Jurisdictional Assessing Officer with a condition to impose a cost of 5000/- payable to the Prime Minister National Relief Fund. On production of the payment receipt, the Assessing Officer is directed to hear the assessee with necessary documents and pass fresh assessment order by giving proper opportunity to the assessee and in accordance with law.
8. In the result, the appeal filed by the Assessee is allowed for statistical purpose.
Order pronounced in the open court on 24 -01-2024
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