SHRI RAJESH SANWALCHAND BAFNA,MUMBAI vs. INCOME TAX OFFICER 19(3)(1), MUMBAI

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ITA 5445/MUM/2019Status: DisposedITAT Mumbai31 October 2022AY 2010-114 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) enhanced the addition without issuing any notice to the assessee, violating principles of natural justice. Therefore, the case was remanded back to the CIT(A) for a fresh decision.

What were the facts?

The assessee filed a return of income, and the case was reopened. The Assessing Officer added Rs. 3,50,000/- as unexplained cash credit. The CIT(A) enhanced this addition to Rs. 11,61,000/-.

What were the issues?

Whether the enhancement of addition by the CIT(A) without issuing a notice to the assessee is sustainable in law. Whether the additions made under Section 68 and initiation of penalty proceedings are justified.

Which sections of the Income-tax Act were involved?

Section 68,Section 147,Section 148,Section 271(1)(c),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

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

Before: SHRI KULDIP SINGH

For Appellant: Shri Rajesh Bafna, A.R
For Respondent: Shri Anil Gupta, D.R

Per : Kuldip Singh, Judicial Member:

1.

The appellant, Shri Rajesh Sanwalchand Bafna (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 30.04.2019 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment year 2010-11 on the grounds inter alia that :-

“(1) The income Tax Officer has earned in law in reopening the Assessment of The Assessee which is unjustfied.

(2) The Learned Income Tax officer has erred in Law in making addition of Rs.3,50,000/- as a unexplained cash credit u/s 68 and The Learned Commissioner of Income Tax (Appeal) enhanced the Addition by Rs.11,61,000/-. The Total addition confirmed CIT (A) Rs. 350000+1 1,61,000/-. (3) The Income Tax Officer has erred in Law in Levying Interest under section 234A, 234B, 234C which is erred and bad in Law. (4) The income tax Officer erred in initiating Penalty proceeding under section 271(1) (c). (5) The Learned Commissioner of Income Tax (Appeal) has also erred in Law in initiating Penalty proceeding under section 271(1)(c) of the Income Tax Act. 1961. (6) The Appellant craves to Leave, add any of the Grounds of Appeal, before or at the time of hearing the said Appeal.”

2. Briefly stated facts necessary for adjudication of the issues at hand are: assessee being an individual filed the return of income declaring total income of Rs.1,70,113/-. The case was reopened by way of issuance of notice under section 148 of the Income Tax Act, 1961 (for short ‘the Act’). Assessing Officer (AO) during the assessment proceedings noticed that the assessee had deposited cash of Rs.9,40,000/-. Assessee has failed to furnish any explanation for cash deposit of Rs.3,50,000/- and consequently AO made addition thereof and framed the assessment under section 143(3) read with section 147 of the Act.

3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has not only upheld the addition made by the AO rather enhanced the same from Rs.3,50,000/- to Rs.11,61,000/- under section 68 of the Act by dismissing the appeal. Feeling aggrieved assessee has come up before the Tribunal by way of filing present appeal.

4.

We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.

5.

At the very outset, it is brought to the notice of the Bench by the Ld. A.R. for the assessee that the Ld. CIT(A) has made enhancement in this case without issuing any notice to the assessee as such same is not sustainable in the eyes of law. This factual position has not been controverted by Ld. D.R. for the Revenue.

6.

Bare perusal of the impugned order passed by the Ld. CIT(A) goes to prove that Ld. CIT(A) has made an enhancement in the assessed income made by the AO from Rs.3,50,000/- to 11,61,000/- as unexplained cash under section 68 of the Act without giving any notice to the assessee. It is fundamental rule of natural justice that assessee must not be condemned unheard. In these circumstances, the Bench has no option except to remand the case back to the Ld. CIT(A) to decide afresh to impart the justice and to curtail the multiplicity of proceedings after providing adequate opportunity of being heard to the assessee.

7.

Resultantly, appeal filed by the assessee is hereby allowed.

Order pronounced in the open court on 31.10.2022.

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