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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 14/03/2022 passed under section 250 of the Income Tax Act, 1961 (‘the Act’) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [‘learned CIT(A)’], for the assessment year 2012–13.
In this appeal, the assessee has raised the following grounds:
“Ground No. 1-Order passed in violation to principle of natural justice ought to be treated as invalid
Kiran Kishormal Jain ITA no.2127/Mum./2022 1.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in passing the order without grant of sufficient opportunity of hearing thereby violating the principle of natural justice; 1.2 The appellant prays before your Honour that the impugned order ought to be set aside. Ground No. 2-Order passed u/s. 144 r.w.s 147 of the Act in bad in law and ought to be quashed 2.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred to upheld the order passed by the learned AO w/s. 147 r.ws 144 of the Act which is invalid and bad in law; 2.2 The learned CIT(A) failed to appreciate and ought to have held that entire reopening proceedings is based on an incorrect understanding of the facts that no regular assessment has been made for the captioned assessment year inasmuch as the original assessment was completed vide Order passed us. 143(3) of the Act dated 02.03.2015 thereby making the entire reopening proceedings as void ab initio, 2.3 The learned CIT(A) erred in confirming the validity of reopening proceedings inasmuch as the pre-requisite condition of first proviso to section 147 of the Act that income chargeable to tax has escaped assessment for the reason of failure on part of the assessee to disclose truly and fully all material facts was not mentioned in reasons recorded for reopening the captioned assessment year. 2.4 The learned CIT(A) failed to appreciate and ought to have held that the objections filed by appellant dated 27.07.2019 was disposed by the learned AD on same date arbitrarily and order was passed on immediate next date based on an incorrect understanding of the facts; 2.5 The appellant prays before your Honour, that the Order passed u's. 147 r.ws. 144 of the Act is merely based on borrowed satisfaction of third party without independent application of mind and thus, ought to be quashed. Without prejudice to the above. Ground No. 3- Addition of unexplained cash deposits u/s. 68 of the Act is arbitrary and ought to be deleted 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in affirming the addition of Rs. 59,52,292/- made u/s. 68 of the Act without appreciating the fact that the learned AO failed to bring any cogent material to establish that the said income is not genuine and has escaped assessment..
2. The learned CIT(A) erred in affirming the action of the learned AO by treating 0.77% of the cash deposits made during the year as unexplained cash sales purely based on surmises and conjectures.” Page | 2
Kiran Kishormal Jain ITA no.2127/Mum./2022
The brief facts of the case as emanating from the record are: The assessee filed his return of income on 27/09/2012, declaring total income of Rs. 7,30,044, during the year under consideration. On the basis of information received from DDIT (Investigation), Mumbai that the assessee had carried out large value cash transactions and other several credits in the bank account of its proprietary concern namely M/s Kiran Jewellers, and the same funds were further transferred to M/s Ashok Metal Corporation (Prop. Kishoremal Jain), initiated reassessment proceedings under section 147 of the Act. From the perusal of the bank statement, it was also noted that there had been some kind of bullion trading as the funds are transferred to Edelweiss Commodities and prior to the payment to Edelweiss Commodities, large value cash was deposited to the tune of Rs. 77,30,25,000, into the bank account in the name of assessee’s proprietary concern. Accordingly, notice under section 148 of the Act was issued to the assessee on 29/03/2019. Thereafter, the notices under section 142(1) of the Act dated 05/10/2019 and 12/11/2019, along with specific questionnaire in respect of cash deposits and transaction carried out with Edelweiss Commodities were issued and served upon the assessee. However, no compliance was made by the assessee to the aforesaid notices. The Assessing Officer (‘AO’) issued notices under section 133(6) of the Act to Edelweiss Commodities and Ashok Metals for information regarding the transaction done by the assessee during the year under consideration. On verification of ledger and invoices received from the aforesaid parties, it was seen that the assessee had made purchases during the year under consideration and payment for purchases is also reflected in the bank Page | 3
Kiran Kishormal Jain ITA no.2127/Mum./2022 statements. Since no details were filed on behalf of the assessee, the AO initiated penalty proceedings under section 271(1)(b) of the Act for each default of non-compliance of the above statutory notices. Again, notices under section 142(1) dated 09/12/2019, and 14/12/2019, were issued to the assessee to justify the source of such cash deposit in the bank account and transaction carried out with Edelweiss Commodities and Ashok Metals. However, again the assessee failed to comply with the above statutory notices. The AO issued final show cause notice on 24/12/2019, in reply thereto assessee filed its objection against the initiation of proceedings under section 147 of the Act. The said objections filed by the assessee were disposed of by the AO vide order dated 27/12/2019. Since the assessee has not filed return of income and not complied with the notice under section 148 of the Act, and the assessee has not furnished any of the requisite details such as income, sales register, purchase register, stock in trade, cash in hand, cash book and bank book etc., the AO passed the order under section 144 of the Act based on material/data available on record. Accordingly, in absence of any details, the AO vide order dated 28/12/2019, made an addition of 0.77% of the total cash deposit of Rs. 77,30,25,000 (i.e. Rs. 59,52,292) to the total income of the assessee.
In appeal before the learned CIT(A), despite various notices being issued, no reply/submission was filed on behalf of the assessee. Accordingly, vide impugned ex–parte order dated 14/03/2022, the learned CIT(A) dismissed the appeal filed by the assessee by upholding the addition made by Kiran Kishormal Jain ITA no.2127/Mum./2022 the AO in the absence of any contradictory material being available on record. Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned Authorised Representative submitted that the assessee neither received any notice of hearing nor received the copy of the impugned order, and only during the course of filing the return of income for the assessment year 2022–23, the impugned order came to his notice.
On the contrary, the learned Departmental Representative submitted that the assessee also did not comply to various notices issued by the AO during the assessment proceedings and the assessment in the case of the assessee was completed under section 144 of the Act.
We have considered the rival submissions and perused the material available on record. It is evident that the learned CIT(A) has passed the order ex-parte due to the non-appearance of/on behalf of the assessee. Further, now in appeal before us, the assessee is duly represented by the learned Authorised Representative and wishes to pursue the litigation against the addition made by the AO. In view of the above, we are of the considered opinion that in the larger interest of justice, the assessee be hereby granted one more opportunity to represent its case on merits before the learned CIT(A). Consequently, we deem it fit and proper to restore the matter to the file of the learned CIT(A) for de novo adjudication of the appeal on merits after consideration of all the details/submissions as may be filed by the Kiran Kishormal Jain ITA no.2127/Mum./2022 assessee. Needless to mention that no order shall be passed without affording reasonable opportunity of hearing to the parties. Further, the assessee is directed to appear before the learned CIT(A) on all the dates of hearing as may be fixed without any default. As the matter is being restored to the file of the learned CIT(A) for adjudication on merits, the other grievances raised by the assessee on merits do not call for adjudication at this stage. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 01/12/2022