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Facts
The assessee, a private limited company, filed its return of income and was selected for limited scrutiny. The Assessing Officer made an addition of Rs. 10,39,000/- for violating Section 40A(3) of the Income Tax Act due to cash payments exceeding Rs. 20,000/-.
Held
The Tribunal held that although the assessee did not make submissions before the lower authorities, in the interest of justice, the issue should be restored to the file of the Ld. Addl/JCIT(A) to grant one final opportunity to the assessee to substantiate its case.
Key Issues
Whether the addition made under Section 40A(3) is justified when the assessee was not given a proper opportunity to present its case before the lower appellate authority.
Sections Cited
40A(3), 143(2), 142(1)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA
This appeal filed by the assessee is directed against the order dated 09.08.2024 of the Ld. Addl/JCIT(A) Ranchi relating to assessment year 2015-16.
There is a delay of 34 days in filing of this appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. After considering the contents of the condonation application filed along with the affidavit and after hearing the Ld. DR, the delay in filing of the appeal is condoned and the appeal is admitted for adjudication.
Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. Addl/JCIT(A) in confirming the addition of Rs.10,39,000/- made by the Assessing Officer u/s 40A(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Facts of the case in brief, are that the assessee is a Private Limited Company. It filed its return of income on 08.10.2015 declaring total income of Rs.47,76,720/-. The case was selected for limited scrutiny under CASS. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee, in response to which the AR of the assessee filed the requisite details from time to time.
During the course of assessment proceedings the Assessing Officer noted that the assessee has violated the provisions of section 40A(3) of the Act by making payment in cash exceeding Rs.20,000/-. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs.10,39,000/- u/s 40A(3) of the Act.
Since the assessee did not make any submission before the Ld. Addl/JCIT(A) despite number of opportunities granted, the Ld. Addl/JCIT(A) upheld the addition made by the Assessing Officer by observing as under: “9. I have gone through the available records and found that the appellant has not filed any written submission or evidence/additional evidence in support of the claim that Rs.10,39,000/- should be allowed as deduction. The action of AO is upheld that the relevant transactions are squarely covered by Sec 40(A)(3) of the Act. Moreover, in light of the above details of non-compliance and non-pursuance of appeal, reference is made to the following judicial ruling of the Hon'ble Apex
Court. In CIT vs. B.N. Bhattacharjee (1977) 118 ITR 461(SC), the Hon'ble Supreme Court while dealing with the issue of pursuing of appeal has stated that "preferring an appeal means more than formally filing it but effectively pursuing it". The Hon'ble ITAT, Delhi, in CIT vs. Multiplan India Pvt. Ltd., as reported in 38 ITD 320 (Delhi), when faced with a similar situation of non- pursuing of appeal dismissed the appeal of Revenue. The law assists those who are vigilant and not those who sleep over their rights. This principle is embodied in the following maxim- "vigilantibus non dormientibus jura subveniunt". In view of the above, it is clear that the appellant is not interested in pursuing this appeal. Therefore, the appeal filed by the appellant is dismissed.”
Aggrieved with such order of the Ld. Addl/JCIT(A), the assessee is in appeal before the Tribunal.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. Addl/JCIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the assessee did not make any submission before the Ld. Addl/JCIT(A) despite number of opportunities granted for which the Ld. Addl/JCIT(A) sustained the addition made by the Assessing Officer. It is the submission of the Ld. Addl/JCIT(A) that the assessee had filed the requisite details on 31.07.2023 and sought adjournment for 15 days. It is his submission that although the assessee had filed the details which is after the date fixed by the Ld. Addl/JCIT(A) but before passing of the order, however, the same was not considered and the Ld. Addl/JCIT(A) has passed the ex-parte order. It is also his submission that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details before the Ld. Addl/JCIT(A). Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. Addl/JCIT(A) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to make its submissions, if any, before the Ld. Addl/JCIT(A) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. Addl/JCIT(A) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 9th April, 2025.