RAJENDRA RAMDAS PATEL,AHMEDABAD vs. DCIT, CIRCLE-2(2), AHMEDABAD

PER SUCHITRA KAMBLE, JUDICIAL MEMBER:

This appeal is filed by the assessee against order dated 24.01.2018 passed by the CIT(A)-10, Ahmedabad for the Assessment Year 2014-15.

“1. The Ld. CIT(A) has erred both in law and on facts in not taking into account the grounds raised before CIT(A)-10, Ahmedabad and dismissed the appeal filed by the appellant dated 04/05/2016 considering that appeal was not filed as per notification No.11/2016 (F.No.149/150/2015-TPL dated 01/03/2016) of the CBDT is found non- est or treated as good as no appeal has been filed. Since the appellant was admitted in Hospital during this period and remained in coma till his death on 23/07/2016, no E-appeal could be filed by the appellant on or before appellate authorities on 15/06/2016. The successor of late appellant seeks appropriate relief from Hon'ble ITAT that appeal not filed electronically by the late appellant is merely a technical defect which the appellant could not cure due to his long illness resulting in a death. It is therefore prayed to Hon'ble ITAT, Ahmedabad

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to dispose the following ground raised before CIT(A)-10, Ahmedabad in the interest of natural justice. (a) The Ld. A.O. has erred in disallowing the bad debts claimed of Rs.35,82,835/- even though necessary details/particulars as required by his show cause notice were furnished before him for his verification. (b) The Ld. A.O. has erred in not considering the reply of the appellant filed before him for his verification wherein it was clearly brought to his notice that according to law, it is not necessary to establish that the debts have become bad when it is written off in the books of accounts of the appellant. (c) The Ld. A.O. has erred in holding that the appellant cannot take set off/adjust the loss of Rs.35,82,835/- on account of bad debts against the voluntary disclosure of income of Rs.50,00,000/- since the appellant could not explain the source of such unaccounted income at the time of recording statement of appellant u/s 131 of the IT Act, 1961. The Ld. A.O. ought to have referred the statement so recorded u/s 131 of the Act before making any such conclusion. In fact the appellant has fully explained the source of disclosure in response to Q-7 of the statement recorded on 22/04/2014. The decision of Fakir Mohamad Hazihasn vs. CIT of Gujarat High Court relied upon by A.O. is not at all relevant in case of appellant. (d) The Ld. A. O. has erred in not considering the plea of the appellant vide letter dated 07/03/2016 that the additional amount disclosed by the appellant voluntarily over and above the cash seized of Rs.29,81,000/- is nothing but related to unaccounted income of seized materials found from the office premises M/s Somabhai Ramdas & Co. Kolkata and further erred in rejecting the same without assigning any cogent reasons (copy of letter of A.O. enclosed.) (e) The Ld. A.O. has erred in rejecting the plea of the appellant that the additional amount of Rs.20,19,000/- (Disclosure Rs. 50,00,000/Less - cash Rs. 29,81,000/- found and seized) offered by him is an un accounted income pertains to seized material (PSR- 1, PSR-2, & PSR-3) found from the office premises of M / s Somabhai Ramdas & Co. when he owned up the cash so seized as his personal money and investigation wing of Kolkata office did not prefer to make any investigation about the materials seized (PSR- 1 + 2 + 3 ) from the office premises of M / s Somabhai Ramdas & Co. (in whose name authorization u / s 132 of the Act, 1961 was executed by such authority.) The Ld. A.O. ought to have considered this facts in correlating the additional disclosure made by the appellant with that of

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unaccounted income of seized materials along with cash seized (both found & seized from the office premises) during search operation. 2. The Ld. A.O. have erred in making addition of Rs.117000/- towards interest as it was not received by the appellant and even has not claimed TDS while filing the return of income. 3. The appellant craves leave to add, alter or delete any ground either before or in the course of hearing of the appeal.” 3. The assessee filed return of income on 06.11.2015 declaring total income of Rs.31,21,428/-. The case was picked up for compulsory scrutiny for the reason that during the 2014 Loksabha Election the assessee was found to be in possession of cash amounting to Rs.29,81,300/-. The authorisation under Section 132 of the Income Tax Act, 1961 was executed and cash found was also seized during the said proceedings. Notice under Section 143(2) of the Act was issued on 17.12.2015. In response to the statutory notices, the Chartered Accountant of the assessee attended proceedings and furnished various details. The Assessing Officer observed that the assessee has shown a loss of Rs.37,73,901/- under the head “income from business and profession”. The assessee had declared sales amounting to Rs.36,99,835/- against the purchase of Rs.33,32,485/-. The assessee claimed bad debts amounting to Rs.35,82,835/- in his Profit & Loss account during the relevant Assessment Year. On verification of the previous six years’ return of income, the Assessing Officer observed that the assessee had not carried out any substantial trading activities, therefore, the same may have resulted into such huge bad debts. The assessee claimed bad debts in respect of sale shown during the year itself. After taking cognisance of the assessee’s reply, the Assessing Officer made addition of Rs.35,82,835/- and disallowed the claim of bad debts. The Assessing Officer also made addition of Rs.1,17,551/- towards receipt of interest from Nutan Nagrik Sahkari bank Limited.

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after excluding the period of Covid Pandemic. The Ld. AR submitted that the affidavit of Shri Vijay Vyas who was dealing with the Income Tax return of late Shri Rajendra Ramdas Patel, Partner of M/s. Rajendra Ramdas & Company for last many years and filed return of income under Section 153A of the Act from Assessment Year 2008-09 to 2014-15. The Ld. AR submitted that due to the search & seizure carried on 27.03.2014 at Calcutta Bench, certain documents were not available. Besides this, the Ld. AR submitted that the assessment proceedings for the year under consideration was completed on 23.03.2016 and the assessee filed appeal before the CIT(A) on 04.05.2016 but the said appeal was dismissed on 24.02.2018 thereby mentioning that no appeal was filed on e-portal even though the notices were sent to the assessee. The Ld. AR submitted that non-compliance of the notices was due to the reason that the assessee died on 23.07.2016 but the said fact was not communicated to the Tax Consultant including Shri Vijay Vyas who was responsible for assessee’s assessment proceedings and subsequent tax proceedings. As the assessee’s wife is a house wife and illiterate lady and at that time she was having minor children, thus, the death of the assessee was never communicated to Shri Vijaya Vyas till July 2022 and, therefore, the assessee through his Legal Heir Shri Aniket Patel filed the present appeal on 18.07.2022. Thus, the Ld. AR submitted that the delay may be condoned. The Ld. AR further submitted that the appeal before the CIT(A) was dismissed on the ground that no e-appeal has been filed on or before 15.06.2016 but the assessee has e-filed the appeal on 04.05.2016 itself. In fact, the notices were also issued to the assessee but due to the death the assessee was not represented properly. The Ld. AR submitted that the matter may be remanded back to the file of the CIT(A) for proper adjudication of the issues on merit.

7 We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that in the present case the assessee died/expired on 23.07.2016 which is two months after filing the appeal before the CIT(A). The assessee’s wife being a house wife and illiterate lady with minor children was having genuine reason as the sudden death of her husband i.e. the deceased assessee herein would have not followed the procedure of approaching the Tax Consultant at that period. The affidavit of Shri Vijay Vyas filed by the Legal Heir of the assessee

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appears to be genuine in explaining the delay before the Tribunal and thus, in the exceptional circumstances, we are condoning the delay in filing the present appeal. This order should not be taken as precedent in other cases as the present case has peculiar facts and circumstances. Besides this, the assessee has filed e-appeal in May 2016 which was totally ignored by the CIT(A) and decided the appeal only on technical ground without discussing the merits of the case and, therefore, it will be appropriate to remand back this matter to the file of the CIT(A) for proper adjudication of the issues contested therein as per Income Tax Statute. Needless to say, the assessee be given opportunity of hearing by following the principles of natural justice.

Order pronounced in the open Court on this 11th June, 2024.

Sd/- Sd/- (NARENDRA PRASAD SINHA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 11th June, 2024 PBN/*

Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

By order UE COPY

Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad