Case Law Details
Jamuna Shankar Sharma Vs ITO (ITAT Agra)
In the matter abovementioned ITAT restored the matter to CIT (A) after observing that he did not consider all the documents filed before it which were in nature of additional evidence.
Assessee and his family have 261 bighas of agricultural land and did not filed his ITR for AY 2017-18. AO received information that there was cash deposits of Rs. 10,00,000/- in the bank accounts of the assessee during demonetization. Notice issued to assessee remained uncomplied. AO completed assessment u/s 144 and made additions to the income of the assessee to the tune of Rs.10,00,000/- in the hands of the assessee being unexplained cash deposit.
Before CIT (A) it was submitted that only source of income of assessee is from agriculture, and the cash deposited during the demonetization period is related to his agricultural income. Assessee’s only son, used to look after the day-to-day activities of the assessee and used to keep records of the farm proceeds who passed away on 19.12.2020 after a prolonged illness. Assessee explained that the assessee was only engaged in agricultural activities and no other business activities. Assessee submitted that he withdrew money from time to time from the bank accounts for the agricultural purposes and has deposited the same back during the demonetization period. However, CIT (A) dismissed appeal and held that assessee failed to file complete land records like 7/12 extract etc., sale bills were incomplete and even land details were incomplete.
After considering the submissions of assessee, ITAT observed that AO completed assessment u/s 144 and later on rectified the assessment u/s 154. Assessee filed two different appeals against both the orders. CIT (A) disposed the appeals by separate orders. However, assessee filed only one appeal before it as assessee ought to have filed two separate appeals. Assessee clarified that appeal against quantum order u/s 144 should be taken for consideration.
Assessee submitted that his contentions were not considered by the CIT (A) while disposing the appeal. As assessee remained fail to comply with the notices so he made a prayer to restore the matter to AO for afresh assessment. Revenue did not objected to the prayer of the assessee.
After considering the submissions from both parties ITAT observed that assessee filed documents before CIT (A) which were additional in nature as these were filed first time before the first appellate authority. CIT (A) failed to verify these evidences nor he called for any remand report from the AO. Assessee has duly explained the reason and justification for non-furnishing of the reply before AO as his only son died who was looking after the affairs of record keeping of the assessee. As CIT (A) did not consider all the facts and matter is restored back to file of CIT (A) for de-novo consideration.
The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT AGRA
This appeal in ITA No.45/Agr/2023 for the assessment year 201718 has arisen from the appellate order dated 17.01.2023 [DIN & Order No. ITBA/NFAC/S/250/2022-23/1048859429(1)](Appeal No. CIT(A) Bhopal-1/10337/2019-20), passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi, which, in turn, has arisen from the assessment order dated 02.12.2019 passed by the Assessing Officer u/s. 144 of the Income-tax Act, 1961. The appeal was first heard by ITAT, Agra Bench, Agra(SMC) on 09.12.2024, and on the same date was fixed for clarification , as there were two separate proceedings conducted by the AO u/s 144 as well u/s 154, and two different appeals were filed by the assessee before ld. CIT(A) against the aforesaid two separate orders passed by the AO, which were disposed off by ld. CIT(A) vide two separate appellate orders both dated 17.01.2023. The assessee filed one appeal before ITAT against both the two separate appellate orders passed by the ld. CIT(A) , which is against the scheme of appellate proceedings as prescribed under the Income-tax Act, 1961. The assessee clarified and filed amended grounds of appeal withdrawing the earlier grounds of appeal, and stated before the Bench through his legal counsel that this appeal filed with ITAT was against the appellate order dated 17.01.2023 passed by ld. CIT(A) which in turn had arisen against the assessment framed by the AO u/s 144 of the 1961 Act in quantum.
2. The amended grounds of appeal filed by the assessee with ITAT, Agra Bench, Agra , reads as under:
“1. That the NFAC has erred on facts and in law while sustaining the addition at Rs. 10 lac made by the AO, treating the deposits with the bank as unexplained. No addition is liable to be made, addition made by the AO, sustained by the NFAC is liable to be deleted.
2. That while sustaining the addition, the NFAC has completely ignored that the assessee has duly furnished all the supporting documents (earning of agriculture income, complete details of agriculture land, sale bills, complete details of agriculture produce and bills of expenses) in support of his submissions and grounds taken (enjoying of agriculture income) which the NFAC has ignored, no addition is liable to be made, addition made by the AO, sustained by the NFAC is liable to be deleted.
3. That the learned NFAC has not passed the appellate order in accordance with the provisions of Sections 250(4) and 250(6) of the Income Tax Act being has not referred the submissions and the grounds to the AO for his comments. neither made any verification or enquiry in respect of the submissions made and also has not passed the order in accordance with the provisions of Section 250(6) of the Income Tax Act, the appellate order passed by the learned NFAC dated 17.01.2023 is bad in law, liable to be set aside.
4. That the deposit made with the bank account is not the income. The AO while making the addition has not mentioned under which Head of income (as prescribed under Section 14 of the Income Tax Act), addition towards income is made. Without pointing out the Head of income, no addition is liable to be made, addition made by the AO sustained by the learned CIT (Appeals) is liable to be deleted.”
3. Brief facts of the case are that the assessee has not filed return of income with Revenue u/s 139, for the impugned assessment year. As per AIR/OCM Information recieved by the AO, there was cash deposits in the bank accounts of the assessee. Notice u/s. 142(1) was issued by the Assessing Officer to the assessee, on 13.03.2018 requiring the assessee to file return of income, but the assessee did not file return of income within due date allowed u/s. 142(1) of the Act. Assessee did not reply to the aforesaid notice u/s 142(1) issued by the Assessing Officer. The AO issue further notices u/s 142(1) to explain the sources of cash deposits, but there was no response by the assessee. The case of the assessee was selected by Revenue for framing scrutiny assessment. No return of income was filed by the assessee u/s. 139 of the Act nor in response to notices issued u/s 142(1). The AO proceeded to frame assessment u/s 144, as there was failure on the part of the assessee to respond to notices issued u/s 142(1). The information of cash deposits were received by the AO is based on AIR/OCM. It was observed by the Assessing Officer that the assessee has deposited cash to the tune of Rs.10 lakhs in his bank accounts during demonetization period, out of which Rs.8 lakhs were deposited in Account No. 410605030391041 of Union Bank of India, Guna and Rs.2 lakhs in Account No. 53008417172 of State Bank of India Branch ,GBB Guna. The SCN was also issued , and the assessee sought time to file reply. The AO observed that the assessee was provided various opportunities during the course of assessment proceedings, but the assessee did not reply to various notices, and the Assessing Officer after seeking directions u/s. 144A from the learned Joint Commissioner of Income Tax, Range-3, Gwalior, made additions to the income of the assessee to the tune of Rs.10,00,000/- in the hands of the assessee being unexplained cash deposits made by the assessee in his bank accounts, vide assessment order dated 02.12.2019 passed by the AO u/s 144 of the 1961 Act.
4. Assessee being aggrieved by the assessment order dated 02.12.2019 passed by the AO u/s 144, filed first appeal with the ld. CIT(Appeals) ,and submitted in the Statement of Facts filed in Form No. 35 before ld. CIT(A) that the assessee and his family have 261 bighas of agricultural land. Only source of income of assessee is from agriculture, and the cash deposited during the demonetization period is related to his agricultural income. The assessee in its grounds of appeal filed before ld. CIT(A) stated that cash deposited is related to agricultural income not other taxable income it is exempt income. During the course of appeal proceedings before learned CIT(Appeals) , the assessee submitted reply dated 11.01.2023 that the assessee is an illiterate farmer and is engaged along with his family members in agriculture and allied activities and owns around 261 bighas of agricultural/irrigated land in his own name and in the name of his family members. Whole family members are involved in agricultural and allied activities and this is the only source of income of the whole family. The assessee claimed that he has earned income from agricultural income and allied activities, and deposited Rs.10 lakhs in the bank accounts. Assessee also claimed that the assessee’s only son, Sh. Mritunjay used to look after the day-to-day activities of the assessee and used to keep records of the farm proceeds, but unfortunately, he passed away on 19.12.2020 after a prolonged illness. He was the only son of the assessee and the lone caregiver to the aged parents. The assessee was taken aback by the death of his only son. Due to the death of his only son, assessee has suffered and the assessee even had no smart phone and did not know how to operate email account. Assessee was not having any idea about the notices being sent and even the address was of his son where his son used to live temporarily while he was studying in Bhopal. The assessee enclosed the land holding records before the ld. CIT(Appeals). The assessee explained that the assessee was only engaged in agricultural activities and no other business activities. The assessee also claimed that the assessee has withdrawn money from time to time from the bank accounts for the agricultural purposes and has deposited the same back during the demonetization period. Assessee enclosed copy of bank statement to establish that the cash withdrawals from the banks were made by the assessee which were used to be deposited in the bank accounts. Assessee also claimed that the assessee had KCC account from which money was withdrawn from time to time for agricultural activities and the same were deposited back in the same bank account as per his needs. It was also submitted that the assessee was selling his crops in cash ,wherein the money realized in cash from sale of crops were deposited in the bank account. Thus, in nutshell, assessee tried to explain before learned CIT(Appeals) that the assessee is only engaged in agricultural activities. Assessee had withdrawn money from bank accounts, which was deposited back during demonetization period. It was also claimed that the assessee was selling agricultural cops in cash and the amount was deposited in the bank account. Amounts withdrawn from KCC account was also deposited back in the bank account in cash. Ld. CIT(Appeals) recorded the said contentions of the assessee in his order, but while disposing of the appeal, ld. CIT(Appeals) has referred to the non-compliance by the assessee to various statutory notices issued by the Assessing Officer u/s. 142(1) of the Act during the assessment proceedings as well as to the notices issued by ld. CIT(Appeals) u/s. 250 of the Act. Ld. CIT(Appeals) also observed that the assessee has not filed documentary evidence of agricultural income like 7/12 extract ,incomplete land details as well incomplete sale bills of agricultural produce, bills of expenses etc. during the assessment proceedings as well as appellate proceedings. The ld. CIT(Appeals) also observed that the assessee is not able to prove that the cash withdrawals made by the assessee from the bank accounts were deposited back during the demonetization period and hence, in nutshell, ld. CIT(Appeals) dismissed the appeal of the assessee.
5. Still Aggrieved, the assessee has filed appeal before the Tribunal. This appeal was heard on 05.12.2024 and while studying the file, it was observed that the Assessing Officer has passed an ex-parte assessment order dated 02.12.2019 u/s. 144 of the Act and later, same was rectified u/s. 154 of the Act vide order dated 17.08.2021. The assessee filed two different appeals before the ld. CIT(Appeals), firstly against the order u/s. 144 and secondly against rectification order u/s. 154 of the Act. The ld. CIT(A) disposed off both the aforesaid appeal vide separate appellate orders both dated 17.01.2023. However, while filing appeal with the Income-tax Appellate Tribunal, Agra Bench, Agra, the assessee had filed only one appeal although learned CIT(Appeals) has disposed of both the appeals filed by the assessee against the assessment order u/s. 144 and rectification order u/s. 154 by separate orders both dated 17.01.2023. This is against the scheme of the Act governing filing of appeals before ITAT, as separate appeal ought to have been filed , as separate cause of action has arisen from these two proceedings. On clarification, the Assessee clarified that assessee’s appeal filed before ITAT should be treated against the quantum assessment u/s. 144 vide assessment order dated 02.12.2019, which was disposed of by the CIT(Appeals) vide order dated 17.01.2023.
6. Now, proceeding further, during the course of hearing, ld. Counsel for the assessee has, at the outset, submitted that the appellate order passed by the ld. CIT(Appeals) has not considered the contentions of the assessee and no enquiry, whatsoever, has been made by ld. CIT(A) who simply dismissed the appeal of the assessee. It was submitted that the Assessing Officer has passed an ex-parte assessment order u/s. 144 of the Act, wherein, deposits made by the assessee in the bank accounts to the tune of Rs.10 lakhs was brought to tax in the hands of the assessee. It was submitted that there was no attendance/compliance of notices issued by the Assessing Officer during the assessment proceedings, as the assessee’s son, Mrityunjay was seriously ill (who ultimately died )and hence, there was no compliance before the Assessing Officer as his son was looking after the necessary record keeping. Further, notices were issued to the address at Bhopal where the assessee’s son was temporarily living when he was studying at Bhopal. The assessee was not aware of the assessment proceedings. It was also submitted that the assessee is an illiterate farmers and he does not have any smart phone and does not have access to email etc. Only Son of the assessee who was looking after the affairs of the assessee died. It was submitted that before the ld. CIT(Appeals), detailed reply/evidences were submitted, which were not considered by ld. CIT(A) in proper perspective. The assessee and his family members are owning around 261 bighas of agricultural land and assessee’s only income is from agriculture. Thus, the assessee was having exempt income. Ld. CIT(Appeals) dismissed the appeal of the assessee without considering the evidences filed before ld. CIT(A) in proper perspective ,and without making any enquiry as is contemplated u/s. 250(6) read with section 250(4) of the Act. Even the AO was not directed to make enquiries and verification as to the additional evidences submitted for the first time before ld. CIT(A). No remand report was called by the ld. CIT(Appeals) from the AO. Thus, the evidences submitted before ld. CIT(A) were not considered by ld. CIT(A) in proper perspective, nor any verification proceedings were directed by ld. CIT(A) to the AO to submit remand report after verifying the evidences and contentions of the assessee. Prayers were made to set aside the order of the CIT(Appeals) and restore the matter back to the file of CIT(Appeals) for de novo adjudication of appeal.
6.2 Learned Sr. DR fairly submitted that the matter can be restored back to the file of ld. CIT(Appeals) for fresh adjudication.
7. I have considered contentions of both the parties and perused material on record. I have observed that the assessee has not filed return of income u/s. 139 of the Act. Information was received by the Assessing Officer under AIR/OCM that there were cash deposits made by the assesee in his bank accounts during the demonetization period. Notice u/s. 142(1) was issued by the Assessing Officer on 13.03.2018 for filing return of income, but the assessee did not file return of income in response to notice u/s. 142(1) of the Act. Further, notices u/s 142(1) were issued by the AO to the assessee to explain cash deposits made by the assessee in its bank account, but there was no response from the assessee. The case of the assessee was selected by Revenue for framing scrutiny assessment and despite several opportunities given by the Assessing Officer to the assessee during the course of assessment proceedings, the assessee did not comply with the notices issued by the Assessing Officer nor furnished any information. SCN was also issued by the AO to the assessee, and the assessee merely sought time to file reply. The Assessing Officer observed that during the demonetization period, the assessee has deposited cash to the tune of Rs.10 lakhs in the bank accounts, out of which Rs.8 lakhs were deposited by assessee in his bank account No. 410605030391041 with Union Bank of India, Guna and Rs.2 lakhs in his bankaccount No. 53008417172 with State Bank of India Branch GBB Guna , and the same remained unexplained and the Assessing Officer after seeking directions u/s. 144A from the learned Joint Commissioner of Income Tax, Range-3, Gwalior, framed the assessment order u/s. 144 of the Act by bringing to tax unexplained cash credit of Rs.10,00,000/- being cash deposited during demonetization period , in the hands of the assessee as unexplained income of the assessee. Assessee being aggrieved, filed first appeal with ld. CIT(Appeals) and the assessee made contentions in the statement of facts that the assessee and his family members were owning 261 bighas of agricultural land. Entire family is engaged in the activities of agriculture and the cash has been deposited out of earlier cash withdrawals and /or sale of cops. During the course of appeal proceedings, the assessee had filed details of land records before the ld. CIT(Appeals) as well as bank statements. It was claimed by the assessee before the ld. CIT(Appeals) that cash deposit to the tune of Rs.10 lakhs was arising either out of cash withdrawals from the bank accounts and/or withdrawal from KCC(Kisan Credit Card)and/or from the sale of crops. Assessee had also enclosed bank statements and land records. The assessee claimed that his only son Mrityunjay was looking after the record keeping , who was suffering from prolonged illness( who ultimately died) , and the assessee was not aware of the assessment proceedings . The assessee being an aged person and illiterate farmer was not having smart phone and the assessee was not aware of the proceedings before the Assessing Officer. The assessee also claimed that the assessee’s only source of income is from agriculture , which is exempt from tax. Despite all the information as well evidences furnished by the assessee, the ld. CIT(Appeals) did not consider the aforesaid evidences in proper perspective, which were in the nature of additional evidences filed for the first time before ld. CIT(A) as the ld. CIT(A) did not made any verification and/or enquiry wrt additional evidences filed by the assessee, nor does the ld. CIT(A) called for any remand report from the Assessing Officer , and dismissed the appeal of the assessee. The CIT(Appeals) of his own even did not deem it necessary to conduct any enquiry/verification as is required u/s. 250(4) of the Act, despite that land records as well bank statements were filed by the assessee before ld. CIT(A) as additional evidences, nor it was considered fit by ld. CIT(A) to direct AO to make necessary verifications /enquiries as to the claims, contentions and additional evidences filed by the assessee.The assessee has duly explained the reason and justification for non furnishing of the reply before the Assessing Officer as his only son Mrityunjay was suffering from prolonged illness, who ultimately died and who was looking after the affairs of record keeping etc. of the assessee. The ld. CIT(A) has recorded in its appellate order dated 17.01.2023 at page 1/para 1 that the AO has not filed any objections in respect of the statement of facts submitted by the assessee before ld. CIT(A).Severe prejudice is caused to the assessee by the action of the ld. CIT(A) in dismissing the appeal of the assessee by not considering in proper perspective the additional evidences, claims and contentions raised by the assessee before ld. CIT(A) in the first appellate proceedings, as ld. CIT(A) did not made proper enquiries/verifications nor called for remand report from the AO. Reference is drawn to Rule 46A of the Income-tax Rules, 1962 and Section 250(4) of the 1961 Act. Under these facts and circumstances and in the interest of justice, I am of the view that the claims , contentions and additional evidences filed by the assessee ought to have been admitted by the ld. CIT(Appeals) and proper verification/enquiry ought to have been done by the CIT(Appeals) as is required u/s 250(4) , or the CIT(Appeals) ought to have directed the Assessing Officer to make proper enquiry with respect to additional evidence filed by the assessee such as records of land holding, details of sale of crops, bank statements etc. and furnish remand report to the ld. CIT(A)(Rule 46A), but rather, ld. CIT(Appeals) simply dismissed the appeal of the assessee, and such appellate order is not sustainable in the eyes of law liable to be set aside for denovo adjudication of the appeal of the assessee. Under these facts and circumstances and in the interest of justice and fairness to both the rival parties, appellate order of the CIT(Appeals) is not sustainable in the eyes of law and the said order is set aside , and the matter is restored back to the file of ld. CIT(Appeals) for de novo adjudication of the appeal of the assessee after considering the additional evidences, claims and contentions of the assessee, which were earlier filed by the assessee before ld. CIT(A) in the appellate proceedings, or which may be filed by the assessee during the de novo appellate proceedings conducted by ld. CIT(A) in set aside remand proceedings, and the first appeal be decided by ld. CIT(A) on merits in accordance with law. Needless to say that the ld. CIT(A) shall give proper opportunity of being heard to both the parties in the set aside appellate proceedings. I clarify that I have not commented on the merits of the issues arising in the appeal. I order accordingly.
8. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 15/01/2025.
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