KANUBHAI LAXMANBHAI RABARI,VADODARA vs. THE ITO, WARD-3(1)(1), VADODARA

The brief facts of the case are that the assessee did not file his return of income for A.Y. 2018-19. The case of the assessee was reopened on the basis of information received by the AO that the assessee had made cash deposits in his bank account and also indulged in purchase and sale of immovable properties during the year. It transpired that the assessee had made cash deposit of Rs. 20,97,000/- in his bank account and there was credit of Rs. 52,53,000/- appearing in the bank account. In the absence of any explanation, the entire cash deposit and the credits appearing in the bank account were treated as unexplained and added to the income. Further, it was found that the assessee had purchased immovable property of Rs. 2,50,41,500/- and there was also a sale of immovable property for a consideration of Rs. 2,78,69,057/- during the year. In the absence of any explanation, the AO had considered the purchase price of the property as unexplained investment and the sale consideration of the property was held as short-term capital gain. Further, the deduction claimed u/s. 80C was also disallowed to the extent of Rs.1,47,536/-. The assessment was completed u/s. 147 r.w.s. 144B of the Act on 06.03.2024 at total income of Rs. 6,11,80,403/-. The AO had also initiated penalty proceedings u/s. 270A of the Act for misreporting of income as well as penalty proceeding u/s. 270AAC(1) of the Act, in respect of various additions as made in the assessment order. Thereafter, a separate penalty order u/s 270A of the Act was passed on 24/09/2024 imposing penalty of Rs.1,89,34,180/- on the assessee. An order u/s 271AAC(1) of the Act was also passed on 20/09/2024 imposing penalty of Rs.25,02,243/- on the assessee.

Aggrieved with the assessment order of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the Learned CIT(A) vide the impugned order and the appeal of the assessee was dismissed. Th

Now the assessee is in second appeal before us. The following grounds have been taken in this appeal:

Shri Hardika Vora, the Ld. AR of the assessee submitted that the Ld. CIT(A) did not condone the delay in filing the appeal before him and the appeal was out-rightly rejected. He explained that the grounds taken by the assessee before the Ld. CIT(A) was not at all adjudicated by the him on merits. Regarding the delay in filing the appeal before the Ld. CIT(A), the Ld. AR submitted that the assessee is an illiterate person residing in remote location. He was neither well versed with the Income- tax law nor was digitally literate. He did not know how to operate the computer or check the income tax portal. The assessee was totally unaware about the order passed by the AO and the matter came to his knowledge only after the demand was pressed for recovery. Thereafter,

Per Contra, Shri Rignesh Das, the Ld. CIT-DR supported the order of the lower authorities. However, he had no objection if the matter was set aside to the file of the Ld. CIT(A) to adjudicate the grounds of the assessee on merits.

We have considered the rival submissions. It is true that no compliance was made by the assessee before the AO in the course of assessment proceeding. At the same time, the AO was also not correct in treating the entire cash deposits as well as the credit entries appearing in the bank accounts as income of the assessee without taking into account the debit entries and also without examining the nature of transactions in the bank account. Further, the entire sale consideration of the immovable property could not have been considered as short-term capital gain without allowing the deduction for cost of acquisition of the property. The AO was also not correct in making addition for the purchase consideration

In the result, the appeal of the assessee is allowed for statistical purpose.

These two appeals pertain to penalty levied u/s. 270A and u/s. 270AAC(1) of the Act. The Ld. CIT(A) had dismissed these appeals on the ground of delay, without adjudicating the grounds of the assessee on merit. Since the quantum appeal has been set aside to the file of Ld. CIT(A), we deem it proper to set aside these two appeals pertaining to penalty levied u/s. 270A and u/s. 270AAC(1) of the Act to the file of Ld. CIT(A), as well. He is directed to re-adjudicate the appeals of the assessee against the penalty orders, after first deciding the quantum appeal.

In the result, both the appeals of the appeals are allowed for statistical purpose.

In the final result, all the three appeals of the assessee are allowed for statistical purposes.