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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee, through his legal heir, challenging the impugned order dated 02/08/2022, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of income tax Appeals), National Faceless Appeal Centre [“learned CIT(A)”], for the assessment year 2014-15.
The present appeal is delayed by 187 days. In its application seeking condonation of delay supported by an affidavit, the legal heir of the assessee submitted that he is the legal heir of Shri Bharat Kumar Rungta, and in the Shri Paritosh Rungta ITA no.1138/Mum./2023 status of legal heir filed an appeal before the learned CIT(A). It is further submitted that the notices of hearing were issued in the name of his father, i.e. Shri Bharat Kumar Rungta, and he wrote several times that his father has expired and the notices are issued in the name of his father, whose compliance is required to be filed online. However, due to some technical problem, the legal heir was not able to file the written submissions online. Pending resolution of the aforesaid issue, the learned CIT(A) passed the order ex–parte in the name of the late Shri Bharat Kumar Rungta. It is also submitted that after receipt of the order passed by the learned CIT(A), the legal heir again wrote to the Department that without solving the problem the learned CIT(A) has passed the ex–parte order in the name of his deceased father. Subsequently, he approached his counsel, who advised him to file the appeal before the Tribunal against the ex parte order. Thus, in view of the aforesaid facts and circumstances, the filing of the present appeal is delayed. On the other hand, the learned Departmental Representative (“learned DR”) did not raise any serious objection against the prayer for condonation of delay in filing the present appeal.
We find that the reasons stated by the assessee for seeking condonation of delay fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector Land Acquisition, Anantnag Vs. MST Katiji and others: 1987 SCR (2) 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. In the present case, the assessee did not stand to Shri Paritosh Rungta ITA no.1138/Mum./2023 benefit by the late filing of the appeal. In view of the above and having perused the affidavit, we are of the considered view that there exists sufficient cause for not filing the present appeal within the limitation period and therefore, we condone the delay in filing the appeal by the assessee and we proceed to decide the appeal on merits.
In this appeal, the assessee has raised the following grounds:– “1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in passing the ex-parte order, without granting sufficient opportunity of being heard to the appellant.
2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in exceeding jurisdiction in the assessment, initiated under limited Scrutiny scope through CASS, which is contrary to the CBDT notification no. 20/2015 dated 29.12.2015.
3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in passing the Assessment order u/s. 143(3) of the Income Tax Act, 1961, in the name of dead person, which is void and bad in law, required to be quashed immediately.
4. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of Rs.1,79,89,972/- u/s 68 of the Income Tax Act, 1961 by treating the commission received from M/s. Daikai Engineering Pvt. Ltd as alleged unexplained cash credit, without considering the facts & circumstances of the case.
5. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in invoking provision of section 115BBE of the Income Tax Act, 1961 on the addition made of Rs.1,79,89,972/-, without considering the facts and circumstances of the case.
6. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in not allowing the set off of business loss against the addition made u/s.68 of the Income Tax Act, 1961, without considering the facts and circumstances of the case.
7. The appellant craves leave to add, amend, alter or delete the said ground of appeal.”
Shri Paritosh Rungta ITA no.1138/Mum./2023
The brief facts of the case are: For the year under consideration, the assessee filed its return of income on 29/11/2014, declaring a total income of Rs.4,51,120. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued. In response to the same, Shri Paritosh Rungta, assessee’s son submitted that the assessee expired on 07/12/2013, and he is the legal heir/representative of the assessee. Accordingly, the proceedings have been conducted through the legal heir i.e. the assessee’s son. The assessee, an individual, has credited commission income of Rs. 1,79,89,972, and debited other expenses including loss from derivatives (F & O) of Rs.1,21,06,336, to the profit and loss account. Further, interest income of Rs.5,70,917, was shown as income from other sources. During the assessment proceedings, the assessee was required to furnish the details of the aforesaid commission income along with the details of the transaction on which the said commission was received. The assessee was also asked to furnish the evidence, rate of commission, and tax deducted at source from the said commission. In response thereto, the assessee submitted that the commission was received from M/s Daikai Engineering PTE Ltd, Singapore against getting them orders for 12 Shipset of Main Engines of Ships built by AVG Shipyard. However, the assessee did not furnish any documentary evidence, invoices/bills raised, any procurement orders, or any correspondence related to the services rendered in relation to the claim of commission income. Since the commission claimed to have been received from the foreign party, the assessee was asked to furnish copies of FIRC from the banks. However, the assessee failed to furnish the Shri Paritosh Rungta ITA no.1138/Mum./2023 details. At the fag end of the proceedings, the assessee made a fresh claim that the commission is still receivable and has not been received. However, it was noticed that the copy of the balance sheet of the assessee furnished by the assessee does not show any debtors. Accordingly, vide assessment order dated 23/12/2016, passed under section 143(3) of the Act the Assessing Officer (“AO”) held that the claim of commission income of Rs.1,79,89,972, has not been substantiated by the assessee. It was further held that the said income is credited to the profit and loss account but no evidence of the said income, its nature, services rendered, etc. has been furnished till date. Further it was held that the credit of Rs.1,79,89,072, is appearing in the accounts of the assessee, but the source of the said credit has not been explained by the assessee. In the absence of relevant details, evidence, and satisfactory explanation, the AO treated the credit of Rs.1,79,89,972, as unexplained cash credit under section 68 of the Act and added the same to the total income of the assessee.
In the appeal before the learned CIT(A), despite various notices being issued, no reply/submission was filed on behalf of the assessee. Accordingly, vide impugned ex–parte order dated 02/08/2022, the learned CIT(A) dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us.
We have considered the rival submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-parte due to the non-appearance of/on behalf of the assessee. The learned Authorised Representative (“learned AR”), before us, submitted that due to Page | 5
Shri Paritosh Rungta ITA no.1138/Mum./2023 some technical glitches on the ITBA portal, notices of hearing were not received by the legal heir of the assessee, and therefore the same could not be attended. Further, now in appeal before us, the assessee is duly represented by the learned AR and wishes to pursue the litigation against the additions made by the AO. We also find that the learned CIT(A) has not rendered any finding on the merits of the addition made by the AO. Therefore, in view of the above, we deem it appropriate to restore the appeal to the file of the learned CIT(A) for de novo adjudication. We direct the assessee to furnish all the details in support of its claim before the learned CIT(A) within 90 days of the receipt of this order and thereafter notice of hearing be issued by the learned CIT(A). Needless to mention that no order shall be passed without affording reasonable opportunity of hearing to the parties. Further, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 04/07/2023