BABULAL BACHRAJ BOKADIA,MUMBAI vs. ITO, WARD-19(1)(1), MUMBAI

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ITA 1554/MUM/2024Status: DisposedITAT Mumbai02 April 2025AY 2009-10Bench: MS. PADMAVATHY S, ACCOUNTANT MEMBER\nAND\nSHRI RAJ KUMAR CHAUHAN (Judicial Member)9 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal, citing the assessee's severe medical condition (cancer) and the death of his wife as sufficient cause, relying on the Supreme Court's decision in Collector, Land Acquisition Vs. MST. Katiji & Ors. The Tribunal noted that the impugned order was passed ex-parte and that the assessee was not given an effective opportunity of hearing as mandated by Section 250(2) of the Act and principles of natural justice. The Tribunal found that the reasons provided by the assessee for not presenting their case before the CIT(A) were justified. Therefore, the Tribunal set aside the impugned order and restored the matter to the file of the Ld. CIT(A) with directions to decide the same afresh after giving an effective opportunity of hearing to the assessee. The assessee was directed to present its case before the Ld. CIT(A) within 90 days of the order. The issue of addition on account of non-genuine purchases and the applicability of the Mohammed Haji judgment were not decided on merits, as the matter was remanded.

What were the facts?

The assessee, Babulal Bachraj Bokadia, filed an appeal against the order dated 09.12.2022 passed by the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi. The NFAC had confirmed the Assessing Officer's (AO) order and dismissed the assessee's appeal ex-parte. The original assessment for AY 2009-10 was completed at Rs. 3,58,690/-. Subsequently, information was received regarding hawala bills for accommodation entries. The assessee's name appeared in a list from the Maharashtra Sales Tax Department, alleging purchases of Rs. 2,24,05,844/- from parties issuing false bills. The AO made an addition of Rs. 2,80,730/- on account of non-genuine purchases. The CIT(A) dismissed the assessee's appeal ex-parte.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Learned NFAC erred in confirming the addition of Rs. 28,00,730/- which is 12.5% of the purchases? (Question of law and fact, relying on Section 143(3) and Section 147 of the Income Tax Act, 1961). 2. Whether, on the facts and in the circumstances of the case, the Learned NFAC erred in negating the landmark judgment in the case of Mohammed Haji bearing ITXA No. 1004 of 2016, wherein GP rate on sales has been exempted? (Question of law, relying on principles of precedent). 3. Whether, on the facts and in the circumstances of the case, the Learned NFAC erred in not considering that the AO had only considered the non-genuineness of the purchases, whereas sales made by the appellant were accepted? (Question of law and fact, relying on Section 143(3) of the Income Tax Act, 1961). Assessee's contentions: The assessee argued that the impugned order was ex-parte and they could not pursue their appeal due to the death of his wife and his own cancer diagnosis. They also relied on the judgment in Mohammed Haji for exemption of GP rate on sales and highlighted that sales were accepted by the AO while purchases were questioned. Revenue's contentions: The Revenue relied on the judgment of the Ld. CIT(A) and argued that there was no sufficient cause for condoning the delay. They also stated that the appellant deliberately did not respond to notices issued by the Ld. CIT(A), making the appeal liable for dismissal.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(3),Section 147,Section 148,Section 142(1),Section 250(2)

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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: MS. PADMAVATHY S & SHRI RAJ KUMAR CHAUHAN

For Appellant: Shri Dharan Gandhi, Ld. AR
For Respondent: Shri Hemanshu Joshi, Ld. DR
Pronounced: 02.04.2025

O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 09.12.2022 of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as the “CIT(A)”],

2.

The brief facts of the case are that, assessee has filed the return of income of Rs. 3,13,271/- on 21.09.2009 which was processed u/s 143(1) of the Act accepting the returned income. However, scrutiny assessment u/s 143(3) was completed on 30.11.11 wherein the total income was assessed Rs. 3,58,690/-. Thereafter an information was received from DGIT(Inv.), Mumbai regarding a scam unearthed by the Sales Tax Department regarding issue of hawala bills for accommodation entries by various parties in Mumbai. The assessee’s name appeared in the list given by the Maharashtra Sales Tax Department. The assessee allegedly made purchases of Rs. 2,24,05,844/- from the parties who issued false bills without delivery of goods. The details of those parties who has issued the accommodation bills are as under:-

1 Coral Trading CO Rs. 22,604/- 2 Stelco Steel Industries Rs. 2,49,998/- 3 Manav Impex Rs. 1,14,659/- 4 Kushal Steel Corporation Rs. 1,20,43,805/- 5 Anmol Industries Rs. 1,03,894/- 6 Naman Enterprises Rs. 33,216/-

3.

Accordingly the case was reopened u/s 147 of the Act by issuing the notice u/s 148 of the Act on 12.03.14. Statutory notices u/s 142(1) and 143(2) of the Act were also issued. After considering the response, the assessment officer made addition of Rs. 2,80,730/- on account of non- genuine purchase. Penalty proceedings were also initiated.

4.

Aggrieved by the assessment order, assessee preferred the appeal before the Ld. CIT (A) who dismissed the appeal ex-parte and confirmed the order of AO.

5.

Therefore, aggrieved by the order of Ld. CIT(A), assessee preferred the present appeal before us and has raised the following grounds of appeal:-

1) That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in confirming the addition of Rs. 28,00,730/-which is 12.5% of the purchases.

2) That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in negating the landmark judgment in 3) That on the facts and in the circumstances of the case of the appellant and in law Ld. NFAC has erred in not considering the fact that the Id. AO has only considered the non-genuineness of the purchases whereas sales made by the appellant is being accepted by the Assessing Officer.

4) That the impugned order being contrary to law, evidence and facts of the case may kindly be set aside, amended and modified in the light of the grounds of appeal enumerated above and the appellant be granted such relief as is called for on the facts and in the circumstances of the case of the appellant and in law.

5) That each of the grounds of appeal enumerated above is without prejudice to and independent of one another.

6) That the appellant craves leave to reserve to himself the right to add, to alter or amend any of the grounds of appeal before or at the end of the hearing and to produce such further evidence, documents and papers as may be necessary.

6.

We have heard Ld. AR and Ld. DR and examined the record. At the very outset, Ld. AR submitted that there is delay of 480 days in filing the appeal before the ITAT. Accordingly, an application seeking condonation of delay has been filed stating that delay has been caused as the appellant was diagnosed Cancer in the month of June 2022 and was Babulal Bachraj Bokadia admitted in hospital in July 2022. Further, his wife expired on 31.08.23. It is therefore stated that this was a justified ground for condonation of delay, because the delay was inadvertent. The application is supported by the affidavit of the appellant.

7.

The Ld. DR has relied upon the judgment of the Ld. CIT(A) stating that there was no sufficient cause for condonation of delay and the judgment is legally perfect.

8.

We notice that nothing contrary has been brought on record by the respondents which may contradict and falsify facts alleged by the appellant in support of seeking condonation of delay. The Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji&Ors., [1987] 167 ITR 471 (SC),dated 19.02.1987, was pleased to hold regarding the condonation of delay as under:

“The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits”. The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making of justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.

Babulal Bachraj Bokadia And such a liberal approach is adopted on principle as it is realized that:

1. 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.

2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.”

9. In the facts and circumstances as discussed above and because of the law laid down by the Hon’ble Supreme Court in Collector, Land Acquisition Vs. MST. Katiji & Ors (supra),we are of the considered opinion that there was sufficient cause for condoning the delay. Accordingly, we condone the delay and admit the appeal for hearing.

10. On merit, it was submitted by Ld. AR that the impugned order is ex- parte and the appellant could not pursue its appeal because of death of his wife and he was also suffering from Cancer during the relevant period. The Ld. DR on the other hand stated that the appellant deliberately did not respond to the notice issued by the Ld. CIT(A) on several dates for filing reply, therefore it was submitted that the appeal is liable to be dismissed.

Babulal Bachraj Bokadia 11. We have considered the rival submissions and examined the record. Para 4 and 5 of the impugned order, which is extracted below would make it clear that the impugned order has been passed ex-parte:- 4. During the course of appellate proceedings vide notices dated 13.06.2019, 19.06.2019, 08.07.2019, 21.07.2020, 24.12.2020, 29.12.2020 and 31.10.2022. The appellant was requested to file reply. However no submissions were made during the entire appellate proceedings. The appellant during the appellate proceedings did not comply with the notices and hence made no submission in support of grounds of appeal

. So it is held that the appellant had nothing more to submit except for raising the ground. 4.1 The Hon'bleITAT in for the A.Y. 2002-03 in the case of M/s Chhabra Land and Housing Ltd. after following the decision of Hon'ble Supreme Court in the case of B.N. Bhattachargee, 118 ITR 461 (SC) held that the appeal does not mean merely filing of the appeal but effectively pursuing it. Keeping in view of the aforesaid factual position, the appeal filed by the appellant is, therefore, decided on merits.

5. In the instance of the case the appellant failed to make any submissions in support of grounds of appeal

, this gives rise to an undisputable conclusion that the assessee has got nothing more to say in this regard. I have gone through the record before me and based on the record I have decided to adjudicate the issue on the merits of the case. In the instant case the AO has rightly assessed an income of Rs. 31,59,420/- under the head income on account of non-genuine purchase of amounting to Rs. 28,00,730/-. Since the appellant failed to substantiate appellant's claim and addition made by the Assessing Officer of Rs28,00,730/- is hereby confirmed.

12. There is nothing brought on record by the revenue that the notices allegedly mentioned in para 4 of the impugned order as extracted above Babulal Bachraj Bokadia were duly served or received by the assessee. Hearing of the appellant at the time of hearing of the appeal is a legal necessity as mandated by section 250(2) of the Act as under:-

“Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: - a. The appellant, either in person or by an authorised representative;” 13. It is evident from the provision that the hearing to be given is not a formality but an effective hearing is sine qua non for the purpose of upholding the principal of natural justice.

14.

The reasons given by the appellant for his inability for joining the proceeding before the Ld. CIT(A), in the given facts and circumstances, makes a justified cause for not presenting their case before the Ld. CIT(A). We consider that the appellant be given one more opportunity for presenting its case before the Ld. CIT(A). The passing of impugned order ex-parte, in our opinion, has resulted into miscarriage of justice and for that reason, the impugned order is set aside. The matter is restored to the file of Ld. CIT(A) with the directions to decide the same afresh by giving effective opportunity of hearing. The appellant/assessee shall present its case before the Ld. CIT(A) within 90 days of this order.

Order pronounced in the open court on 02.04.2025.

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