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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, Honble & SHRI ARJUN LAL SAINI, Honble
O R D E R
PER PAWAN SINGH, JM:
This appeal by the assessee is directed against the order of Ld. Commissioner of Income Tax(Appeals)-1 [“CIT(A)” ], Surat dated 26.02.2016, which in turn arises from the assessment order dated 31.03.2009 passed under section 144 r.w.s 147 of Income-tax Act (Act) for assessment year 2009-10.
Grounds raised
by the Assessee read as under: On the circumstances of the case as well as law on the subject, the learned
1. Commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in reopening the assessment u/s.147 of the I.T. Act, 1961 and issuing notice u/s.148 of the Income Tax Act, 1961.
Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10
2. On the facts in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.43,68,000/- on account of alleged unexplained investment in goods in the form of fabrics put on hold.
3. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.84,92,899/- on account of export man made fabrics to Afghanistan treated as alleged unexplained investment u/s.69 of the I.T.Act, 1961. 4. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.32,89,382/- on account of alleged sale of DEPB scripts. 5. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred in confirming the action of the assessing officer in making addition of Rs.1,00,000/- on account of alleged income from other sources. 6. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 7. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”
Brief facts of the case as gathered from the orders of lower authorities are that assessee is proprietor of M/s Shree Salasar Fabrics, engaged in the business of fabrics. No Return of Income for assessment year 2009-10 was filed by assessee. A search was carried out by Directorate of Revenue Intelligence (DRI) at the bushiness premises of the assessee on 28.11.2008, during said search, various incriminating records, documents were recovered. On the basis of incriminating material the Assessing Officer (AO) was information by DRI that the assessee had made massive investment in stock. On the basis of such information from DRI, Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10 the AO recorded reasons for reopening under section 147. Notice under section 148 was issued on 19.09.2011. No response was made by the assessee. The ld.AO issued notice under section 142(1) on 26.09.2012 asking assessee to furnish certain details. The AO recorded that the assessee not responded to such notice as well. Ultimately, the AO vide show cause notice dated 18.02.2013, proposing various additions was served upon the assessee. The notice was served by affixation at the address on 1012, Rohit A/C Market, Ring Road, Surat and on D/41, 202, Akshar Township, Puna Kumbhariya Road, Surat. The AO recorded that even after service of notice by affixation, the assessee not responded. The AO completed the assessment under section 144 read with section 147 of the Act. The AO noted that DRI carried out searches at the premises of assessee on 28.11.2008, during such search, various incriminating records, documents were recovered. From the incriminating material, it was noticed that assessee sent consignment with the intention to export misdeclared goods, which was put on hold. The assessee declared value of Rs.3,13,61,422/- against the actual value of Rs.43,68,000/- as ascertained by Expert Committee of DRI. On the basis of such observation, the AO took his view that an amount of Rs.43,68,000/- was invested by assessee, which remained undisclosed to the department, by not filing the Return of Income. During this said search, DRI also seized documents which shows export of manmade fabrics to Afghanistan between July 2008 to November 2008 by way of 14 different shipping bills, Free on Board (FOB) Value of which was shown at Rs.6,06,63,561/-, however actual value was only Rs.84,92,899/-. It was further revealed during the course of investigation that assessee had sold five Duty Entitlement Pass Book (DEPB) scripts fraudulently from his proprietary 3 Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10 concern to various importers for a consideration of Rs.32,89,382/-. This amount also represents the income of assessee. It was also revealed that assessee had incurred expenses @0.5% of brokerage and commission for cheque amount.
The AO in para 2.5 recorded that assessee has disclosed his income of Rs.1,08,456/- as income from ‘other sources’ while filing the Return of Income of for AY 2008-09. Since no Return of Income was filed for the year under consideration nor any evidence was produced before the ld.AO. The AO took his view that assessee has earned similar income from ‘other sources’. The ld.AO proposed to add Rs.1.00 lakhs under the head ‘income from other sources’. The AO while passing the assessment order u/s.144 r.w.s 147 ultimately made the following addition: Unexplained investment-goods put on hold : Rs.43,68,000/- Unexplained investment-Afghanistan : Rs.84,96,89/- Sale of DEPB scrips Rs.32,89,382/- Income from other sources : Rs.1,00,000/- TOTAL INCOME : Rs.1,62,50,281/- ROUNDED OFF TO : Rs.1,62,50,280/- 5. On appeal before the ld. CIT(A), all the addition as well as the reopening u/s.147 was upheld. The ld. CIT(A) upheld the action of AO in ex-parte order dated 26.02.2016. Further aggrieved, the assessee has filed present appeal before this Tribunal.
We have heard the submission of learned authorized representative (ld.AR) of the assessee and Sr. Departmental Representative (DR) of the Revenue and perused the order of Lower Authorities. The ld.AR of the assessee submits that vide application dated 14.10.2020, the assessee has raised additional ground of appeal. The additional grounds of appeal relates to not granting adequate Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10 opportunity to the assessee and passing ex-parte and non-speaking order by the ld. CIT(A). The ld.AR of the assessee further submits that additional grounds of appeal
is purely legal in nature and does not require to bring additional fact on record. The fact for adjudicating the additional grounds emanates from the order of ld. CIT(A). In support of his submissions, the ld.AR relied upon the decision of decision of Hon'ble Supreme Court in National Thermal Power Corporation Ltd Vs CIT (1998) 229 ITR 383 SC.
7. On merit, the ld.AR of the assessee submits that DRI carried out a search at the premises of assessee on 28.11.2008. Consequent upon search a statement of assessee and his Brother-in-law namely Rajiv K.Tulsiyan was recorded. Copy of statement of assessee and Shri Rajiv K.Tulsiyan is filed on record. In the statement, the assessee as well as his Brother-in-law stated before the team of DRI that affairs of business of assessee was managed by Shri Rajiv K.Tulsiyan. On the basis of alleged incriminating material, the case of assessee as well as Shri Rajiv K.Tulsiyan was reopened. The AO made various additions in the assessment order passed against Shri Rajiv K.Tulsiyan as made in case of assessee. The ld.AR of the assessee further submits that business affairs of assessee were also looked after by Mr. Tulsiyan. During the period of hearing before the ld. CIT(A), the father of Shri Rajiv K.Tulsiyan was suffering from chronic liver disease and ultimately passed away. The ld CIT(A) passed ex-parte order against Shri Rajiv K.Tulsiyan as well. Similarly, in case of the assessee no compliance was made on various notices issued by the ld. CIT(A) which ultimately resulted in passing the ex-parte order. The ld.AR of the assessee submits that the Shri Rajiv K.Tulsiyan filed appeal before Tribunal vide ITA No.’s 700/AHD/2016, 3093/Ahd/2014 nad 5 Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10 3094/Ahd/2014 for A.Y.’s 2007-08, 08-09 and 2009-10 respectively. The Tribunal restored the appeal of Shri Rajiv K.Tulsiyan to the file of the ld.AO vide order dated 05.06.2018.
The ld.AR further submitted that assessee has a good case on merit and likely to succeed if he is given an opportunity of hearing on merit. The assessee would suffer loss, if opportunity of hearing on merit is not granted. The order passed by the ld.CIT (A) is not in accordance with mandate of Sub-section (6) of Section 250 of the Act. The ld. AR for the assessee prayed to restore the appeal to the file of AO. The assessee under take to cooperate with the AO. In support his submission, the ld.AR also relied upon the following decisions. CIT Vs. Premkuamr ArjundasLuthra(HUF) [2016] 69 taxmann.com 407 (Bombay HC), Roadmaster Industries of India (P) Ltd. Vs. I.AC [2006] 156 Taxman 351 (Punjab& Haryana HC), Shri Jitendra N TalpadaVs. ITO [2020] ITL 61 (ITAT, AHD.), Dynamic Process Pvt Ltd. Vs. ACIT; Pawan Kumar SinghalVs. ACIT [2019] 108 Taxmann.com 548 (Delhi – Trib.) and SWATI PAWA VS. DCIT; [2019] 103 Taxmann.com 300 (Delhi- Trib.).
On the other hand, the ld.Sr.DR supported the order of ld.CIT(A). The ld.Sr.DR submitted that despite granting sufficient opportunity, assessee failed to comply with the notices of ld. CIT(A). The ld. CIT(A) has no option except to pass the order on the basis of material available on hand. On confronting with the order of Tribunal the assessee’s groups case/Brother-in-law Shri Rajiv K.Tulsiyan, on similar set of facts, wherein the Tribunal restored the similar appeals to the file of the AO. The ld.Sr.DR submits that Bench may take call in accordance with Law.
Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10
We have considered the rival submissions of both the parties and perused the record of Lower Authorities. We have also perused the various documents filed by the assessee including the statements of assessee and Rajiv K. Tusiyan recorded by DRI. We have also deliberated on various case law relied by ld AR for the assessee. As recorded above the assessee has raised additional ground of appeal
vide application dated 14.10.2020. In the additional grounds of appeal the assessee has raised grounds that the ld CIT(A) passed ex-party order and that no sufficient opportunity was granted to the assessee before passing the order. We have noted that the additional ground of appeal raised by the assessee is purely legal in nature. No additional facts are required to be brought on record for adjudication of additional grounds of appeal, the facts for considering the additional grounds are emanating from the record of lower authority. Thus, considering the ratio of decision of Hon’ble Supreme Court in National Thermal Power Corporation Ltd Vs CIT (supra) is admitted for adjudication.
11. We have seen that the AO passed the order under section 144 r.w.s 147 and made various additions as stated above in para no-4(supra). The ld.CIT(A) confirmed the order of AO by taking that more than enough opportunity was given to the assessee. The assessee neither filed written submission nor any details. The ld. CIT(A) in para 5 of the impugned order has recorded various non- compliance by assessee. We have noted that ld. CIT(A) while confirming the order of AO dismissed the appeal on account of non-prosecution. The order passed by ld CIT(A) on various additions is not in accordance as mandated by Section 250(6) of the Act.
Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10
We have further noted that the case of Shri Rajiv K.Tulsiyan, Brother-in- law of assessee was also opened by the Revenue on the basis of same search carried out at the premises of assessee. The coordinate bench of Tribunal on almost similar set of facts, in case of Shri Rajiv K.Tulsiyan, while admitting the additional evidence, restored the matter to the file of the AO by passing the following order. “12. We have heard the rival contentions of both the parties. We find that the assessment in both the years have been passed ex-parte under section 144 read with section 147 of the Act by the AO. The AO though afforded number of opportunities but the assessee has failed to respond the same. Therefore, we find that books of accounts were seized by DRI and Shri Hari Prasad Agarwal was under treatment for chronic liver paveuse ajmal diseases (Evidence filed PB 55 to 59) and has ultimately passed away. Therefore, there was medical emergency in the family, due to which, the assessee could not appear before the Assessing Officer for A.Y. 2007-08 and nor makes compliance on appeal. The ld.CIT (A) has also decided these appeals without admitting additional evidences and proper compliance and without allowing proper opportunity of being heard. The principle of audi alteram partem is the basic concept of natural justice. The expression “audi alteram partem” implies that a person must be given an opportunity to defend himself. This principle is sine qua non of every civilized society. The right to notice, right to present case and evidence, right to rebut adverse evidence, right to cross examination, right to legal representation, disclosure of evidence to party, report of enquiry to be shown to the other party and reasoned decisions or speaking orders are must. We find the guidance for right of hearing, as is laid down by the Hon'ble Supreme Court in the case of Maneka Gandhi v. Union of India, wherein Hon'ble Supreme Court has held that rule of fair hearing is necessary before passing any order. We find that it is pre-decision hearing standard of norm of rule of audi alteram partem. We find that in this instant case, the assessee was not given proper hearing. We also observe that the CIT(A) has not admitted additional evidences filed under Rule 46A of I.T.Rules for the assessment year 2008-09 and 2009-10. Therefore, on the basis of finding as given by … in appeal for assessment year 2007-08 in the additional evidences and directed to be admitted under Rule 29 of ITAT Rules. The AO is directed to consider same in fresh assessment proceedings and allow evidences to be adduced by the assessee as may be needed. Therefore, we are of the view that the assessee must be given one more opportunity of hearing and to represent his case. Therefore, in exercise of power conferred under Rule 28 of Tribunal Rules, we restore this appeal / these appeals for the assessment years 2008-09 and 2009-10 to the file of the ld. Assessing Officer for allowing proper opportunity of being heard in accordance with law. Nevertheless, to mention that the assessee will cooperate in the appeal proceedings and file necessary evidences on which he wants to rely upon.
In the result, the appeal of the assessee for the assessment year under consideration / assessment years 2008-09 and 2009-10, in I.T.A. No’s. 3093 & 3094/Ahd/2014/SRT are allowed for statistical purposes.”
Sudeep Kumar Agarwal Vs. ITO, Ward-6(4) Surat A.Y.2009-10
13. Considering the fact that on similar set of facts, the coordinate bench of Tribunal in case of Shri Rajiv K.Tulsiyan was restored to the file of AO to pass the order afresh. Further considering the statement of assessee and Rajiev K Tulsiyan, recorded by DRI that the affair of assessee’s firm was also managed by Rajiv K.Tulsiyan. The ld. AR also vehemently submitted that father of Rajiv K.Tulsiyan was not well during the period when the appeal of assessee was pending before first appellate authority and ultimately died. Further, considering the facts that lower authorities have passed ex-party order against the assessee. Therefore, keeping in view the principal of natural justice that the impugned order is passed without hearing the assessee. Accordingly the additional ground of appeal
raised by the assessee is allowed and all the issues raised by the assessee are restored to the file AO to pass the order afresh. Needless to direct that before passing the order the AO shall grant opportunity of hearing to the assessee and pass the order in accordance with law. The assessee is also directed to provide all necessary information/evidence to the ld.AO and not to seek adjournment without any valid reason.
14. In the result, appeal of the assessee allowed for statistical purpose. Order pronounced on 15-10-2020 as per Rule 34(5) of Income Tax (Appellate Tribunal) Rules 1963.