NARENDRA KHIMJI SAVLA,MUMBAI vs. ITO WARD 6(1)(1), MUMBAI, MUMBAI

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming reassessment proceeding 1 under section 148 in violation of first proviso to section 149 of Income Tax Act, 1961 as the proceeding for AY 2013-14 is time barred.

On the facts and circumstances of the case and law, the Ld. CIT(A) failed to considered that notice issued under section 148 of Income Tax Act, 1961 without mentioning the DIN Number on notice itself is in violation of CBDT Circular No. 19 of 2019 dated 14.08.2019 and bad in law.

On the facts and circumstances of the case and law, the Ld. CIT(A) failed to considered that the permission obtained under section 151 of the Act is not in accordance with law.

On the facts and circumstances of the case and in law the Ld CIT(A) failed to considered that assessment order is passed without providing an opportunity of cross examination to appellant which is against the principles of natural justice.

On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming validity of reassessment proceedings under section 148 which is bad in law and required to be quashed.

On the facts and circumstances of the case and in law the Ld CIT(A) erred in confirming addition of Rs.1,37,85,000 on account of alleged borrowing of cash loan without considering the fact that no material was provided to appellant on which the department relied for making addition.

Without Prejudice to Ground No 6, on the facts and circumstances of the case and in law the CIT(A) failed to consider that borrowing of cash loan does not fall into definition of income. Hence, cannot be added to the total income of the appellant.

On the facts and circumstances of the case and in law, the Ld CTT(A) erred in confirming addition in the hands of appellant by relying on the information provided by the DDIT (Inv) Unit 5(4) whereas as per the information in the assessment order name of borrower is Asoj Soft Caps and Kirti Stores which are different from the appellant.

On the facts and circumstances of the case and in law the Ld CIT(A) failed to considered that assessment order was passed on PAN No DQGPS6936E (for which the assessee has already filed an application for cancellation) as against PAN AHEPS9345P is regularly used by the assessee.

On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming charging of interest under section 234A and 234B of Income tax Act, 1961. 11. On the facts and circumstances of the case and in law, the Ld CIT(A) erred in confirming invocation of penalty provisions under section 271(1)(c) and 271F of the Income Tax Act, 1961

Briefly stated facts of the case as culled from the assessment order reveals that are that the assessee is an Individual and had not filed return of income for the relevant year. Information on Insight portal of the Department showed that a search and seizure action u/s 132 of the Act was carried out in the case of one M/s Evergreen Enterprises. The documentary evidences found in the search as well as statement on oath of Mr. Nilesh Bharani, one of the partners of above concern, recorded u/s 132(4) of the Act revealed an undisclosed activity of money lending and borrowing in unaccounted cash being operated at the premises of M/s Evergreen Enterprises by Mr.Bharani. The parties to whom cash loan were given through Shri Bharani had been identified and the assessee was one of the parties, who had taken cash loans of Rs.1,37,85,000/-. Accordingly, notice u/s 148 was issued and the assessee filed the return of income showing income of Rs.4,03,490/-.

1 During assessment proceedings, the assessee denied any such transaction stating that he was the Director in M/s Asoj Soft Caps Private Limited and had received remuneration from the said company. Apart from remuneration, he also earned saving bank interest. It was also stated that he neither received any statement of Nilesh Bharani nor any opportunity to cross examine him was provided to him. Further, Sri Bharani had already retracted his statement and if the retraction statement was not considered as final statement, then the original statement recorded ofsuch person should also not be considered while proposing impugned addition of such alleged cash loan. Request was also made to cross examine ShriNileshBharani. The AO did not find it tenable as nothing cogent was furnished by Shri Bharani to show that earlier statement recorded on oath was under coercion or due to mental pressure created by search team and was taken by force. Merely a retraction statement that earlier statement was under coercion did not make the said statement null and void. The AO on perusal of information received, it was seen that during the period under consideration, the assessee had taken cash loan transaction of Rs. 1,37,85,000/-. However, during the assessment proceedings, the assessee denied having entered into any such transaction but did not furnish any relevant documentary evidences with respect to the above transaction. Considering the facts and circumstances and in view of the findings recorded by the Investigation Wing, it was clear that tangible material in the instant case existed in the form of information received from Investigation Wing. In view of the above facts and circumstances of the case, it is held that the assessee was the owner of this money amounting to Rs.1,37,85,000/-within the meaning of section 69A of the Act which was added to his income.

In the subsequent appeal, the assesse contested the addition reiterating the same contention both in respect of notice u/s 148 of the Act and merits of the addition. The ld.CIT(A) upheld the action of the AO observing that the parties to whom cash loan was given through Shri Nilesh Bharani had been identified and the assessee being one of the parties, who had taken cash loans. The validity of reassessment proceedings u/s 147 of the Act was confirmed.

1 In respect of merits of the addition, it was stated by him that considering the facts and circumstances and in view of the findings recorded by the Investigation Wing, it was clear that tangible material in the instant case existed in the form of information received from Investigation Wing. In view of the above facts and circumstances of the case, it is held that the assessee was the owner of this money amounting to Rs.1,37,85,000/- within the meaning of section 69A of the Act. Accordingly, the amount of Rs.1,37,85,000/- was held as assessee's income. The addition of Rs.1,37,85,000/- u/s 69A was confirmed.

Before us, the ld.AR has vehemently agitated the appellate order claiming that the ld.CIT(A) did not adjudicate any of the issues in proper perspective and upheld the action of the AO without independently applying his mind to the various grounds of appeal and the submission made before him. He failed to take any cognizance of the denial of the assessee with said transaction which he never made. Besides,the addition has been made only on the statement of a third party. Despite raising the ground requesting for cross examination, the appellate order is silent in this regard.Both the authorities have failed to adjudicate the issue in fair manner and without allowing adequate opportunity of hearing. The ld.DR relied on the orders of the authorities below.

We have perused the facts of the case. We find that the appellate order is nothing more than repetition of the assessment order without reflecting any independent application of mind. All the issues before him have been conveniently glossed over in a rather injudicious manner. We hold that the ld.CIT(A) has not decided the appeal on merits which is contrary to the mandate of section 250(6) of the Act. A bare perusal of this provision makes it clear that the CIT(A) is bound to dispose of the appeal before him on merits. Once an appeal is preferred before him, then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as per section 250(4) of the Act. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides, Explanation to sub- section (2) of Section 251 of the Act also makes it dear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). The appellate order is therefore, deficient in this regard.

Considering the above facts and non application of mind on part of the ld.CIT(A),we proposed that the assessee may be provided one more opportunity to advance his arguments/submissions before him so as to provide details in connection with the merits of its case to support the contentions made in the grounds of appeal. The ld.DR agreed to this proposal.

Accordingly, in the substantial interest of justice, we set aside the appellate order and restore the entire matter back to the ld.CIT(A) for passing the appellate order de novo and to pass order after allowing adequate opportunity of hearing to the assessee who is also directed to remain cooperative during the course of proceedings before him for fair adjudication of the issues involved. Thus, all the grounds of appeal are allowed for statistical purposes only.

In the result, the appeal is allowed for statistical purposes.