Case Law Details
Bhavani Shankar Rao Shanapathi Vs ITO (ITAT Visakhapatnam)
ITAT Visakhapatnam remanded the matter back to CIT(A) for fresh consideration since CIT(A) passed ex-parte order as there was on response on behalf of the assessee.
Facts- During the assessment proceedings, AO observed that the assessee has made substantial cash deposits during demonetization period but did not file his return of income for the AY 2017-18. AO observed that in the absence any cogent documentary evidence to explain the source of the cash deposits, AO completed the assessment U/s. 144 of the Act by making additions towards unexplained cash deposits U/s. 69A of the Act; additions towards unexplained online credits U/s. 69A of the Act and addition towards interest income not offered to tax.
CIT(A) passed ex-parte order in absence of any representation on behalf of the assessee. Being aggrieved, the present appeal is filed.
Conclusion- Held that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the Ld. CIT(A)- NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal by confirming the additions made by the Ld. AO. In this situation, considering the issues involved in the appeal, as well as considering the prayer of the Ld. AR, and in the interest of justice, strictly following the principles of natural justice, I hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice.
FULL TEXT OF THE ORDER OF ITAT VISAKHAPATNAM
This appeal filed by the assessee is against the order of the Ld. CIT(A)-NFAC, Delhi in DIN & Order No. ITBA/NFAC/S/250/2023-24/1056963339(1), dated 11/10/2023 arising out of the order passed U/s. 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18.
2. At the outset, it is noticed that there is a delay of 156 days in filing this appeal before the Tribunal. With respect to belated filing of the appeal, the assessee filed petition for condonation of delay along with the affidavit and the relevant paras of the affidavit is extracted herein below for reference:
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2. Whereas, it is stated that the assessee was to go to Counsel’s office for signing appeal papers on 07/12/2023 but on the previous day while attending function in his relative’s house, while getting down on the steps from the first floor, slipped and fell down resulting in hair line fracture to right hand wrist. Immediately got the medical treatment and was advised to take bed rest for 10 weeks. In this process, going to counsel’s office for signing the appeal papers slipped out the assessee’s mind. Whereas on 2nd May, 2024 received a phone call from the Income Tax Office for payment of taxes and then realized that the appeal was not filed. Accordingly, approached the Counsel for requesting to prepare the documents which was done on 13th May, 2024 and the appeal was filed on 14th May, 2024 causing a delay of 158 days.
3. In the light of the above, it is respectfully submitted that this delay in filing the appeal belatedly was not as a result of any negligence or lack of diligence, but solely due to the unfortunate and unforeseen circumstances surrounding assessee health. Doctor’s certificate in support of petition is attached herewith.
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3. On perusal of the explanation given by the assessee with respect to filing of the appeal before the Tribunal beyond the prescribed time limit, I find that the assessee was prevented by a reasonable and sufficient cause to file the appeal beyond the stipulated time. Therefore, I hereby condone the delay of 156 days in filing the appeal of the assessee before the Tribunal and proceed to adjudicate the appeal on merits.
4. Briefly stated the facts of the case are that the assessee is a ration shop dealer distributing essential goods to white ration card holders under the State Government’s Public Distribution System. During the assessment proceedings, the Ld. AO observed that the assessee has made substantial cash deposits during demonetization period but did not file his return of income for the AY 2017-18. Therefore, a notice U/s. 142(1) of the Act was issued to the assessee on 02/02/2018 to file the return of income. However, the assessee did not comply with the notices issued on various dates. Therefore, the Ld. AO obtained information from the bank authorities as per the provisions of section 133(6) of the Act. Considering the assessee’s no response to the notices issued U/s. 142(1) of the Act, the Ld. AO issued summons to the assessee U/s. 131 of the Act wherein the assessee was asked to explain the source for the cash deposits made into his bank accounts during the FY 2016-17 along with documentary evidence but the assessee did not comply with the notices and the summons issued. Thereafter, the Ld. AO issued show cause notice on 19/09/2019 and the assessee was asked to as to why the total income of the assessee for the AY 2017-18 should not be assessed at Rs. 20,65,575/- and also to submit the objections, if any. Otherwise, the Ld. AO proposed to complete the assessment U/s. 144 of the Act. In response to the show cause notice issued on 19/09/2019, the assessee submitted reply dated 25/09/2019 and along with various submissions the assessee sought time to pay the tax dues and requested the Ld. AO not to initiate proceedings U/s. 144 of the Act. However, the Ld. AO denied the submissions as well as the request made by the assessee and observed that in the absence any cogent documentary evidence to explain the source of the cash deposits, the Ld. AO completed the assessment U/s. 144 of the Act by making the following additions viz., (i) Rs. 17,95,500/- towards unexplained cash deposits U/s. 69A of the Act; (ii) Rs. 2,03,787/- towards unexplained online credits U/s. 69A of the Act and (iii) Rs. 66,289/- towards interest income not offered to tax. Thus, the Ld. AO determined the total income of the assessee at Rs. 20,65,576/- and passed the assessment order U/s. 144 of the Act dated 25/09/2019. The Ld. AO also initiated the penalty proceedings separately. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.
5. On appeal, since there was no response from the assessee with respect to the hearing notices issued and in the absence of any representation on behalf of the assessee, the Ld. CIT(A)-NFAC passed the order ex-parte dismissed the assessee’s appeal. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. That under the facts and circumstances of the case the assessment completed U/s. 144 of the Act dated 25/09/2019 and the order passed U/s. 250 of the Act by the Ld. CIT(A)-NFAC dated 11/10/2023 is contrary to the facts of the case and provisions of the Law.
2. The Ld. CIT(A) disposed of the case ex-parte without giving reasonable opportunity to the assessee to present his case thus violated the principles of natural justice.
3. The Ld. CIT(A) dismissed the case ex-parte while so failed to adhere to the provisions of section 250(4) of the Act by which the impugned order passed U/s. 250 of the Act is liable to be set aside.
4. The Ld. CIT(A) ought to have known that the assessee having Kirana business and also distributor of essential goods (ration shop) under the State Government Public Distribution System, these impugned cash deposits are emanating from day to day transactions carried out by the assessee in this line of business activity.
5. For these and other reasons that are to be urged at the time of hearing of the case the appellant prays that the impugned orders are liable to be set-aside in the interest of justice and fair play.”
6. At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before me that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.
7. Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor his Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call for any interference.
8. I have heard the both the sides and carefully perused the materials available on record. On examining the facts of the case, I find that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the Ld. CIT(A)- NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal by confirming the additions made by the Ld. AO. In this situation, considering the issues involved in the appeal, as well as considering the prayer of the Ld. AR, and in the interest of justice, strictly following the principles of natural justice, I hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. It is ordered accordingly.
9. In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
Pronounced in the open Court on 09th October, 2024.
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