Loading judgment…
Facts
The assessee's appeal was against an order upholding additions made to income. The assessee did not appear before the Assessing Officer (AO) or the Commissioner of Income Tax (Appeals) (CIT(A)), leading to ex-parte orders.
Held
The Tribunal noted that the assessee, a trader in shares, was unheard by both lower authorities. To ensure justice and fair play, the matter was remitted back to the AO to provide the assessee with a fresh opportunity for a hearing.
Key Issues
Whether the lower authorities erred in making additions without hearing the assessee, and whether the amendments to Section 115BBE and disallowances were justified.
Sections Cited
250(6), 143(3), 68, 115BBE, 144, 234A, 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCHES: F : NEW DELHI
Before: SMT. ANNAPURNA GUPTA
Assessment Year: 2016-17 Ravindra Nath Mishra, Vs ITO, C-39, 2nd Floor, Ward-71(5), Adarsh Nagar Extn., Delhi. New Delhi – 110 033. PAN: AMCPM1105C (Appellant) (Respondent) Assessee by : None Revenue by : Ms Harpreet Kaur Hansra, Sr. DR Date of Hearing : 02.04.2025 Date of Pronouncement : 09.04.2025 ORDER
PER ANNAPURNA GUPTA, AM:
The present appeal has been filed by the assessee against order passed by the National Faceless Appeal Centre, NFAC ,(hereinafter referred to as CIT(A)) under section 250 (6) of the Income Tax Act 1961(hereinafter referred to as “Act”) pertaining to Assessment Year 2016-17.
The grounds raised
by the assessee read as under: “1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the determination of total income of the appellant at Rs. 76,31,785/- as against declared income of Rs. 6,06,720/- in an order of assessment 28.12.2018 under section 143(3) of the Act.
2. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding an addition made of Rs.69,22,000/- under section 68 of the Act read with section 115BBE of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining addition of Rs. 60,00,000/- representing sums received from the M/s Tricon Associates as LOAN and Rs. 9,22,000 as gift from father and wife erroneously held as unexplained credits under section 68 read with section 115BBE of the Act: 2.2 That while sustaining the aforesaid addition the learned Commissioner of Income Tax (Appeals) has completely overlooked that there was no adverse material brought on record by the learned Assessing Officer to assume that credits by way of banking channel under agreement with M/s Tricon Associates and, burden which lay upon the assessee in terms of section 68 of the Act had not been discharged. 2.3 That the learned Commissioner of Income Tax (Appeals) Assessing Officer has failed to appreciate that once the aforesaid loan had duly confirmed made, he could not have upheld the addition on arbitrary grounds and that too without bringing any evidence or even alleging that aforesaid credit have no identity, creditworthiness and genuineness by the appellant company. 2.4 That the learned Commissioner of Income Tax (Appeals) and Assessing Officer has failed to appreciate that the loan and through banking channels and supported by necessary documents and therefore, once such loan and gift were identifiable received could not in law or on fact be brought to tax u/s 68 of the Act. 2.5 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that appellant had placed on record voluminous evidences in the shape of audited financial statement, annual returns, order of assessment of the share applicant to discharge the burden with regard to both genuineness of the transactions and creditworthiness of the share applicant and therefore, there in absence of any whisper to rebut the said evidence, the credit could not arbitrarily be regarded as unexplained cash credit under section 68 of the Act.
3. That without prejudice to the above and in the alternative, even otherwise, the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in holding that amount deposited in the bank by the appellant is taxable as income under section 68 of the Act and thereafter computed the demand in accordance with the rates specified in section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 2016. 3.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the amendment made by the Taxation Laws (Second Amendment) Act, 2016 was w.e.f. 1.4.2017 and thus applicable from financial year 2017-18 onwards and not from the financial year 2016-17 relevant to assessment year 2017-18 and therefore, demand computed was not only arbitrary but highly excessive. 3.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that substitution of provisions by Taxation Laws (Second Amendment) Act, 2016 w.e.f. 1.4.2017 was not retrospective in nature but was prospective and only application from financial year 2017-18 relevant to assessment year 2018-19.
4. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in uphel a disallowance @ 30% of 3,43,549/- i.e. Rs. 1,03,065/- on following expenditure incurred in the course of business by the appellant:
Sr Nature of Disallowance Amount (Rs.) No. i) Business Promotion 78,140 ii) Legal professional 1,30674 hi) Travelling expenses 1,34,735 Total 3,43,549 4.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that in absence of any change in facts and circumstances in the year under consideration, no disallowances were warranted in the instant year on the principle of consistency as during the preceding years and subsequent years identical claim of expenditure stands allowed 5. That the learned Commissioner of Income Tax (Appeals) has further erred in upholding the levy of interest u/s 234A of the Act, us 234B of the Act of the Act which are not leviable on the facts of the instant case. Prayer: It is therefore prayed that assessment made by the learned Assessing Officer and sustained by the learned Commissioner of Income Tax (Appeals) deserves to be quashed as such. It is also prayed that, addition made and sustained by the learned Commissioner of Income Tax (Appeals) may kindly be deleted and, appeal of the appellant be allowed.”
None came present on behalf of the assessee despite notice of hearing being served , nor any application filed seeking adjournment. The appeal was therefore proceeded to be adjudicated ex parte the assessee, on the basis of material on record and with the assistance of the Ld. DR.
As is evident from a perusal of the grounds above , the solitary issue in the present appeal relates to the addition made to the income of the assessee u/s 68 of the Act on account of loan received from one M/s TricommAssociates amounting to ₹60,00,000 /-and gift received from father amounting to ₹9,22,000/- remaining unexplained.
We have noted that both before the AO and the Ld. CIT(A) the assessee has remained unrepresented. The assessment order has been passed u/s 144 of the Act with the additions being made in the absence of any submissions made by the assessee proving the aforementioned amounts received from the said two parties to be genuine. The Ld. CIT(A), we have noted, dismissed the assessee’s appeal in the absence of any representation by the assessee before him, merely noting that the assessee did not submit anything to dislodge the findings of the AO.
Though we have noted that both the authorities did give opportunity of hearing to the assessee, but considering that the assessee has remained unheard before both the authorities and noting from the assessment order that the assessee is a trader in shares having filed return of income declaring income of Rs.6,06,720/,-the addition made of ₹69,22,000 to the income of the assessee without the assessee being heard at all would be grossly unjustified. In the interest of justice and fair play, we deem it just and appropriate to afford one last opportunity to the assessee and remit the matter back to the file of the AO with the direction to afford fresh opportunity of hearing to the assessee and thereafter decide the issue in accordance with law.