Case Law Details
Maha Singh Vs ITO (ITAT Delhi)
Introduction: In the case of Maha Singh vs ITO, the Income Tax Appellate Tribunal (ITAT) Delhi has granted a fresh adjudication of a previous order. The issue pertained to unexplained cash deposits in the assessee’s saving bank account, which led to an income tax addition under the Income Tax Act, 1961. However, the ITAT set aside the exparte order, citing procedural deficiencies and a violation of natural justice principles.
Analysis: The appeal by Maha Singh argued that the Commissioner of Income Tax (Appeals)-Ghaziabad had confirmed the reassessment order without proper jurisdiction and without complying with the mandatory conditions set under sections 147 to 151 of the Income Tax Act. It was further claimed that the addition of Rs. 78,86,270/- on the ground of unexplained cash deposits was unjustified and was made without observing the principles of natural justice.
The most significant point of contention was that the CIT(A) had decided the case ex parte, without offering the appellant a fair opportunity to present their case. This was attributed to an incorrect address mentioned in the CIT(A)’s order, which led to non-receipt of hearing notices by the appellant.
After assessing the facts presented, the ITAT found merit in the appellant’s contention and concluded that the CIT(A) failed to follow due process as required by Section 250(6) of the Act. As a result, the ITAT set aside the order of the CIT(A) and restored the matter for re-adjudication, ensuring a fair chance for the appellant to present their case.
Conclusion: The ITAT Delhi ruling in Maha Singh vs ITO showcases the importance of procedural compliance and upholding the principles of natural justice in tax matters. While tax authorities are vested with powers to ensure adherence to tax laws, they must also ensure due process and fair hearing rights are preserved. This decision is a significant reminder of these fundamental principles and the need for their strict adherence.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 30.11.2017 of the Commissioner of Income Tax (Appeals)-Ghaziabad relating to Assessment Year 2010-11.
2. Brief facts of the case as culled out from the material on
3. Assessee is an individual in whose case notice u/s 148 of the Act was issued for the reason that AO has received information that assessee had deposited cash amounting to 1,53,70,000/- in his Saving Bank account. Notice u/s 148 of the Act was issued on 25.03.2015 and served on the assessee. Thereafter, the case was taken up for scrutiny and assessment was framed u/s 143(3) r.w.s 147 of the Act vide order dated 11.03.2016 and the total income was determined at Rs. 1,39,47,280/-.
4. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 30.11.2017 in Appeal 98/2016-17/GZB dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds:
1. “That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/147 and that too without assuming jurisdiction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned reassessment order u/s 143(3)/147, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs. 78,86,270/- allegedly on the ground that the cash deposits are unexplained and that too by recording incorrect facts and findings and without observing the principles of natural justice.
4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the addition of Rs. 78,86,270/- allegedly on the ground that assessee has failed to explain the cash deposit, received from his brother out of sale of land, is bad in law and against the facts and circumstances of the case.
5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.59,05,225/- allegedly on the ground that exemption u/s 54F for investment in residential house is not allowable and that too by recording incorrect facts and findings and without observing the principles of natural justice.
6. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
5. Before us, Learned AR at the outset, submitted that the appeal has been decided ex parte by CIT(A) and not on merits. It is the submissions of the Learned AR that the non appearance before CIT(A) was not due to any malafide intention but for the reason that no notice for hearing was received from CIT(A)’s office. He submitted that the notices for hearing has been issued at wrong address and therefore assessee did not receive it. In support of his contention that the notice have not been correctly addressed, he pointed to name and address of the assessee mentioned at page 1 of the order of CIT(A) wherein the village is stated as ‘Mahuali’ whereas the correct village of the assessee ‘Mehrauli’. He, therefore, submitted that assessee be given a chance to plead its case and assessee would appear before authorities and file all the necessary details.
6. Learned DR on the other hand supported the order of lower authorities but opposed the seeking of second innings by the Assessee.
7. We have heard the rival submissions and perused the material available on record. Before us, it is assessee’s case that assessee did not have a chance to appear before CIT(A) as no notice of hearing from CIT(A)’s office was received by him as probably the notices for hearing were not sent at the correct We find force in the contention of the Learned AR, in view of the fact that in the assessment order passed by AO and in the Form No.36 that has been filed before Tribunal, the village of the assessee is stated as ‘Mahrauli’ whereas in the appellate order passed by CIT(A), address of the village of the assessee is stated as ‘Mahuali’. Before us, Revenue has not placed any material on record to demonstrate that the notices were issued to the assessee at his correct address and assessee had also received notices. In such a situation, we are of the view that by dismissing the appeal without considering the issue on merits, Learned CIT(A) has failed to follow the mandate required in Sub Section (6) of Section 250 of the Act. Further it is also a well settled principle of natural justice that sufficient opportunity of hearing should be offered to the parties and no parties should be condemned unheard. In view of these facts, we set aside the impugned order of CIT(A) dated 30.11.2017 and restore the issue to the file of CIT(A) for re-adjudication of the issues after granting sufficient opportunity of hearing to the assessee. Assessee is also directed to promptly furnish the details called for by the lower authorities. In view of our decision to restore the issue to CIT(A), we are not adjudicating on merits the grounds raised by the assessee. Thus the ground of assessee is allowed for statistical purposes.
8. In the result, appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 13.06.2023
