CHETAN AGARWAL,HYDERABAD vs. ACIT., CENTRAL CIRCLE-1(1), HYDERABAD

Succinctly stated, the assessee was subjected to search and seizure proceedings on 17.03.2020. Thereafter, the A.O. framed the original assessment vide his order passed u/s 144 of the Act dated 23.09.2021, determining the income of the assessee at Rs. 4,69,74,877/-. 3. On a perusal of the record, we find that as the assessee in the course of the first round of litigation had failed to comply with the notices issued by the CIT(A)-11, Hyderabad, therefore, the latter had dismissed his appeal for want of prosecution.

On further appeal, the Tribunal vide its order in ITA No.576/Hyd/2023 dated 28.02.2024, had set aside the order of the lower authorities and remanded the matter to the file of the A.O., subject to imposition of cost of Rs. 5,000/- which the assessee/ appellant was directed to deposit with the Prime Minister National Relief Fund within one month from the date of receipt of the order. For the sake of clarity, the observations of the Tribunal, vide its order passed in ITA No.576/Hyd/2023, dated 28.02.2024, are culled out as under: “7 We have heard the rival contentions of both the parties and perused the material available on record and also the orders passed by the lower authorities. On perusal of the impugned order passed by ld. CIT(A), we found that ld. CIT(A) passed an ex-parte order confirming the action of the Assessing Officer in his assessment framed on 23.09.2021. The merits of the assessee’s appeal before the ld.CIT(A) have neither been discussed nor decided by the ld.CIT(A). From para 6 of the order of ld.CIT(A), it is clear that ld.CIT(A) was forced to decide the appeal on the basis of material available on record, as there was no representation on behalf of the assessee even after granting several opportunities. In view of the above reasons, in our view, the ends of justice will be met if the matter is remanded back to the file of Assessing Officer with a direction to decide the issue after considering the documents available on record and affording the opportunities of hearing to the assessee in accordance with law subject to payment of costs of Rs.5,000/- (Rupees Five Thousand only) each in favour of Prime Minister National Relief Fund which shall be payable within one month or from the date of receipt of this order or whichever is earlier.

The assessee shall be at liberty to file documents, if any, as required for proving his case and the Assessing Officer shall consider the evidences, if any, filed by the assessee. Needless to say the Assessing Officer shall examine those documents / evidence filed by the assessee and also the other documents available on record. After considering the documents filed by the assessee and the submissions made by the 5 Chetan Agarwal assessee, the Assessing Officer shall pass a detailed speaking order dealing with the contentions of the assessee. We have not adjudicated the other grounds on merits as we are setting aside the orders passed by the lower authorities to the file of Assessing Officer for fresh adjudication. Thus, the grounds of the assessee are allowed for statistical purposes.”

However, as the assessee had thereafter failed to fully comply with the aforesaid direction of the Tribunal and had deposited the cost of Rs. 5,000/- with the Prime Minister National Relief Fund beyond the prescribed period, i.e only on 27.08.2024, therefore, the A.O. in the course of the set-aside proceedings observed that that there was non-compliance of the direction of the Tribunal by the assessee. Accordingly, the A.O. determined the income of the assessee, vide his order passed u/s 143(3) r.w.s 254 of the Act, dated 22.11.2024 at Rs. 4,69,74,877/-, i.e., as was originally assessed by his predecessor vide order passed u/s 144 of the Act, dated 23.09.2021. 6. In the meantime, the assessee approached the Tribunal by filing an application, viz. MA No. 58/Hyd/2024. The Tribunal, vide its order passed in MA No. 58/Hyd/2024, dated 20.01.2025 (arising out of ITA No.576/Hyd/2023), after considering the facts leading to the delay on the part of the assessee to deposit the amount of cost that was imposed by the Tribunal with the Prime Minister National

6.10 The condition imposed by the Hon’ble ITAT is obligatory and imperative. The assessment proceedings are bound by the directions of the Hon’ble Tribunal and in the absence of compliance with the timelines, there is no scope for the Assessing Officer to provide any new opportunity and proceed for re-doing the assessment. The Assessing Officer cannot overrule the directions issued by the Hon’ble ITAT. The set-aside proceedings will commence only upon fulfilment of the conditions laid down by the Hon’ble ITAT. A.O. duly noticed that the appellant failed to comply with the directions of the Hon’ble ITAT and completed/restored order u/s 144 dated 23.09.2021. The responsibility of pursuing the matter diligently rested entirely with the appellant, and having failed to do so, the consequences must follow. In such circumstances, there would not be any occasion to interfere with the order of the Assessing Officer dated 22.11.2024. 6.6.11 In view of the appellant’s failure to comply with the directions of the Hon’ble ITAT within the stipulated timeline, the order under section 143(3) r.w.s 254 dated 22.11.2024 is confirmed. The grounds of appeal are not adjudicated separately. 7. In result, the appeal is dismissed.”

The assessee, being aggrieved with the order of CIT(A), has carried the matter in appeal before us. 9. We have heard the learned Authorized Representatives of both parties, perused the orders of the lower authorities, and the material available on record. 10. Shri Y.V. Bhanu Narayan Rao, learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that though the assessee had inadvertently failed to comply with the direction given by the Tribunal vide its order passed in ITA No. 576/Hyd/2023, dated

02.2024, and had deposited the costs of Rs. 5,000/- imposed on him with the Prime Minister National Relief Fund beyond the time period allowed, but thereafter, the Tribunal had modified its earlier order in MA No. 58/Hyd/2024, dated 20.01.2025, and had extended the period for depositing the aforesaid amount up to 30.08.2024. 11. Elaborating further on his contention, the Ld. AR submitted that as the A.O. had framed the assessment, vide his order passed u/s 143(3) r.w.s 254, dated 22.11.2024, i.e., before the order was passed by the Tribunal in MA No. 58/Hyd/2024, dated 20.01.2025, there was no occasion for the assessee to bring to the notice of the A.O. about the extension of time limit for depositing the costs of Rs. 5,000/- by the Tribunal. The Ld. AR submitted that inadvertently, the said fact about the extension of the time period by the Tribunal for depositing the costs of Rs. 5,000/- (supra) up to 30.08.2024 was not brought by the assessee to the notice of the CIT(A). The Ld. AR submitted that as the CIT(A) had thereafter, without taking cognizance of the extension of time limit up to 30.08.2024 (supra) had approved the order passed by the A.O., who had repeated the original assessment for the reason that the assessee had failed to 9 Chetan Agarwal comply with the order of the Tribunal, therefore, the matter, in all fairness, be restored to the file of the A.O. with a direction to re- adjudicate the same in the backdrop of the specific directions issued by the Tribunal. 12. We have thoughtfully considered the facts involved in the present case in the backdrop of the orders of the lower authorities. 13. Although the Tribunal, in all fairness, had vide its order passed in ITA No. 576/Hyd/2023, dated 28.02.2024, set aside the ex-parte order passed by the A.O u/s 144 of the Act, and restored the matter to his filed, subject to a rider that the assessee would deposit costs of Rs. 5,000/- with the Prime Minister National Relief Fund within the period of one month from the date of receipt of the order, but we find that the assessee had failed to comply with the directions and had deposited the amount only on 27.08.2024. However, it is a matter of fact borne from the record that the Tribunal thereafter, vide its order in M.A.No.58/Hyd/2024 dated 20.01.2025, had extended the time period for carrying out compliance of its directions, i.e., depositing of the costs imposed upon the assessee/appellant up to 30.08.2024. 10 Chetan Agarwal

We find that the Tribunal had adopted a liberal approach and vide its order passed in M.A No. 58/Hyd/2024, dated 20.01.2025 by extending the time period for depositing of the cost imposed upon the assessee upto 30.08.2024 had, thus, brought the deposit of cost of Rs. 5,000/- by the assessee with the Prime Minister National Relief Fund on 27.08.2024 within the meaning of the necessary compliance of its earlier direction given vide its order passed in ITA No. 576/Hyd/2023, dated 28.02.2024. Admittedly, as the A.O. had already passed the set-aside assessment order under Section 143(3) r.w.s 254 of the Act, dated 22.11.2024, therefore, there was no occasion for the assessee to bring to his notice the aforesaid subsequent order passed by the Tribunal in M.A No. 58/Hyd/2024, dated 20.01.2025, wherein the time period for depositing of the cost of Rs. 5,000/- imposed upon the assessee was extended upto 30.08.2024. However, we find no justifiable reason for the assessee in not bringing the aforesaid fact of extension of time period to the notice of the CIT(A), who thus found no infirmity in the order passed by the A.O under Section 143(3) r.w.s 254 of the Act, dated 22.11.2024, and vide his order dated 15.05.2025, had approved the same and dismissed the assessee’s appeal.

We have given thoughtful consideration and are of the firm conviction that, as the assessee had complied with the directions of the Tribunal and deposited the cost of Rs. 5,000/- within the extended time period, i.e. up to 30.08.2024, therefore, the order passed by the A.O. under 143(3) r.w.s 254 of the Act, dated 22.11.2024, wherein he had refrained from addressing the issues before him, for the reason, that the assessee had failed to comply with the directions of the Tribunal by not depositing the cost imposed within the time period allowed cannot be sustained, and requires to be re-visited in the light of the subsequent development. However, we find that the assessee had adopted a lackadaisical approach and for no justifiable reason not brought the subsequent order passed by the Tribunal in M.A No. 58/Hyd/2024, dated 20.01.2025 to the notice of the CIT(A), who, thus, found no infirmity in the order passed by the A.O under Section 143(3) r.w.s 254 of the Act, dated 22.11.2024, and approved the view taken by him and dismissed the appeal. We are of the firm conviction that though the matter requires to be restored to the file of the A.O. for fresh adjudication, but considering the lackadaisical conduct of the assesseee who had failed to bring the order passed by the Tribunal

निर्धाररती/The Assessee : Chetan Agarwal, H.No.3-5-141, Shanti Villa, Street No.3, Eden Garden, Ramkote, Hyderabad - 500001 2. रधजस्व/ The Revenue : The Income Tax Officer, Circle – 1(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file