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Income Tax Appellate Tribunal, BENGALURU “B” BENCH, BENGALURU
Before: Smt. Beena Pillai. & Shri Laxmi Prasad Sahu
Shri Vinay Sudhir Kashthriya vs DCIT, Central Circle Plot No. 65, Basavanagar C R Building Annexe Haliyal Road Navanagar Dharwad 580003 Hubballi 580025 PAN – AGUPK3930B (Appellant) (Respondent) Appellant by: Shri Narayana Murthy, CA Respondent by: Shri Manjunath Karkihalli, CIT-DR Date of hearing: 03/08/2022 Date of pronouncement: 05/08/2022 O R D E R Per: L.P. Sahu, A.M. These two appeals have been filed by the assessee against the order of the learned CIT(A), 2, Panaji in appeal No. CIT(A)-2/PNJ/10322/2016- 17 dated 02.02.2022 for assessment years 2009-10 & 2010-11 on the following grounds of appeal: - “1). The order of the learned CIT(A) -2, Panaji is arbitrary, against the provisions of law and contrary to the facts of the case and is therefore unsustainable. 2). The learned CIT(A) erred in taking the appeal out of turn without any such request from the Appellant and dismissing the appeal by rejecting the request for adjournment of the Appellant for genuine and very valid reasons which were evident on record. 3). The learned CIT(A) erred in not considering that the Assessment Order was passed U/s144 and that the Appellant did 2 & 442/Bang/2022 Shri Vinay Sudhir Kashthriya not have any record relating to the search based on which the Ex parte Assessment Order was passed. 4). The learned CIT(A) erred in not considering the ground that the Assessment Order was passed U/s144 without giving the Appellant effective opportunity and confirming such an Ex Parte Assessment Order. 5). The learned CIT(A) erred in not considering the ground that, no evidence was found for any suppressed income during the search and that the advance was made out of borrowed funds. 6). The learned CIT(A) ought to have noted that the Appellant had enough cash balances available with him on the relevant dates for advances to properties. 7). Interest charged u/s 234A, 234B and 234C being consequential in nature to be deleted. 8). For the grounds stated above and for the grounds which may be permitted to be adduced at the time of hearing of the appeal it is prayed that addition made in the assessment order be deleted and justice rendered.”
The issues involved in both the appeals are similar and the case was decided ex-parte before the lower authorities, for the sake of convenience the appeal in is decided first. The decision in this appeal will apply mutatis mutandis in other appeal also.
The brief facts of the case are that a search and seizure operation under Section 132 of the Income Tax Act (the Act) was carried out on 22.03.2015in assessee’s case, in consequence of search notice under Section 153A of the Act was issued to the assessee. Thereafter other statutory notices were issued to the assessee. The assessee did not file the return of income. Even though opportunities were given to the assessee, he did not appear for assessment proceedings. Thereafter the assessment was completed under Section 144 of the Act on the basis of the searched documents available before the AO and determined the income as under: - Accordingly the assessed income was determines at Rs.58,50,000/-. Aggrieved by the order of the AO the assessee filed appeal before the CIT(A). Before the CIT(A) the assessee did not appear and not responded to the notices in spite of giving many opportunities. He was only requesting for adjournments of the case. Accordingly the CIT(A) finalised the appeal and upheld the action of the AO. Aggrieved by the order of the CIT(A) the assessee filed appeal before the Tribunal.
The ld. A.R. filed a written synopsis which reads as under: - “Unexplained Investment in Property Rs.51,00,000 No evidence was found for any suppressed income during the search. In November 2008, the Appellant had paid an advance of Rs.60,00,000 to tone Mr. Girish Deshpande for a property transaction. The transaction did not take place and the Appellant received the advance back in the A.Y. 2010-11. The agreements etc.., relating to the transaction were seized during the search. In Assessment Orderes for A.Y. 2009-10 and 2010-11 the Assessing Officer also has referred to the transaction. During the search the Appellant explained the sources for payment of advance of Rs.60,00,000 as Rs.9,00,000 as advance received from one Mr.Mahesh and the balance as loan from friends and relatives. The Assessing Officer accepted Rs.9,00,000 but treated Rs.51 ,00,000 as Unexplained Investment in property. The Appellant had not maintained any books of accounts and being not conversant with accounts or income tax was not able to prepare his assets and liabilities from year to year. The Appellant has now prepared Statements of Accounts on 31/03/2009 which is at Annexure I. It can be seen from the Statement of Accounts that the Appellant had an opening balance of Rs. 33,49,000. The opening balance is the accumulated savings of the Appellant from 4 & 442/Bang/2022 Shri Vinay Sudhir Kashthriya his earnings over past 20 years and amounts received from his father and mother apart from the gifts received during his marriage. Between May and November 2008, the Appellant had given his properties (Residential Houses and Shops) on lease/mortgage and had received advances in cash of Rs.54,50,000. The details are in Page 9 of the Written Submissions and the copies of the agreements are in Annexure J of the Paper Book.AII the Agreements are contemporaneous documents which were available at the time of search also. They were not inventorised or seized. The cash balance in November 2008 when the advanced of RS.51,00,000 was paid was Rs. 87,99,000 (opening balance of Rs.33,49,000 and the lease advances of Rs.54,50,000) which is much more than the advance of Rs.51,00,000. Thus there was no unexplained investment in property of RS.51,00,000 and the addition needs to be deleted. Unexplained Advance Rs. 7,50,000 The addition includes Rs.5,00,000 paid in December 2008 referring to seized material (Annexure K to the Paper Book) and Rs.2,50,000 referring to seized material copy of which is not available with the Appellant. In the statement U/s 131(1A), the Appellant stated that it was not paid by the Appellant, but by the person who was interested in buying the land. The seized material (Annexure K) itself shows that the amount of Rs.5,00,000 was paid by the Appellant and another person at Rs.2,50,000 each. Thus, the amount that can be treated as paid by the Appellant can at the most be Rs.2,50,000. The Total Amount out of Rs.7,50,000 that can be treated as paid by the Appellant can at the best be Rs.5,00,000. The balance in December 2018 available with the Appellant as can be seen from the Statement of Accounts was Rs.37,69,000 and even after considering that the Appellant has paid Rs.5,00,000 there would still be a balance of Rs.32,69,000. Thus there was no unexplained Advance of Rs.7,50,000 and the addition needs to be deleted. “
5 & 442/Bang/2022 Shri Vinay Sudhir Kashthriya He also filed a paper book for both the years containing pages 2 to 98. The ld. A.R. requested that the matter may be sent back to the AO for fresh examination because the assessee could not appear before the lower authorities.
The ld. D.R. vehemently objected to the request made by the ld. A.R. for sending back the matter to the lower authorities because both the authorities below had given sufficient opportunities to the assessee during the course of assessment proceedings as well as in appellate proceedings, in spite of which he did not appear before them. Even the assessee has not filed his return of income in response to the notice under Section 153A as well as 139(1) of the Act. He also submitted that the addition had been made on the basis of seized material and during the course of search and seizure the assessee has accepted that the amount recovered during the search was unexplained investment and therefore addition should be sustained.
After perusal of the documents, orders of the authorities below and prayer of the assessee we observe that the assessment has been completed ex-parte at AO’s level and before the CIT(A) also the assessee did not appear. Considering the prayer of the assessee, we think it fit to restore the issue to the file of AO for de-novo assessment of the matter with the direction that the assessee is to be provided three effective opportunities to defend his case. The assessee is at liberty to submit further details/documents to substantiate his case and directed not to seek unnecessary adjournments for early disposal of the case .
Since we have sending back the appeal in ITA No.441/Bang/2022, consequently ITA No. 442/Bang/2022 is also sending back to the AO for de-novo assessment as per the above directions.