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Facts
The assessee's appeal was filed against the order of the NFAC (CIT(A)) for AY 2010-11, concerning proceedings under Sections 144 and 147. The appeal was dismissed by the CIT(A) for non-compliance. The assessee had also faced a delay in filing the present appeal, which was condoned due to the Chartered Accountant's illness.
Held
The Tribunal condoned the delay in filing the appeal and set aside the order of the CIT(A). The matter was remanded to the CIT(A) to grant one more opportunity to the assessee for compliance, subject to payment of costs, and to decide the appeal on merits.
Key Issues
Whether the reassessment proceedings were validly initiated without proper reason to believe and adequate material? Whether the CIT(A) was justified in dismissing the appeal for non-compliance without examining the merits, and if a further opportunity should be granted to the assessee?
Sections Cited
144, 147
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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Ms. Suchitra Kamble & Shri Narendra Prasad Sinha
आदेश/ORDER PER : NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER
This appeal is filed by the assessee against the order of National Faceless Appeal Centre (NFAC), Delhi (in short the “CIT(A)) dated 07/06/2024 for the assessment year (AY) 2010-11 in the proceeding under section144 read with section 147 of the Income Tax Act, 1961 (in short “The Act”).
A.Y. 2010-11 Bankim Education Trust vs. ITO (Exemption) 2. There was delay of 180 days in filing this appeal. The assessee had filed a condonation application along with an affidavit explaining the reason for delay. It is stated that the chartered account Shri Mukund Bakshi, who was authorized to file the appeal, had undergone medical treatment due to his sudden and serious illness. As a result, the present appeal could not be filed in time. It is stated that the delay in filing the appeal was neither intentional nor deliberate but purely due to circumstantial reason due to unavoidable health condition of the authorized Chartered Accountant. Considering the explanation of the assessee, the delay in filing the appeal is condoned.
The following grounds have been taken in this appeal: -
“1. The learned CIT(Appeals)/NATIONAL FACELESS APPEAL CENTRE [NFAC] has grievously erred both in law and on facts in dismissing the appeal of the appellant on the ground of non-compliances with notices and also not quashing the reassessment order on the ground of illegality of initiation of reopening of assessment which was without jurisdiction. It be so held now and order passed by CIT(A)/NFAC be set aside.
Without prejudice to the above ground, the Id CIT(A)/NFAC further erred in law and on facts in not appreciating that the there was no basis for the Id AO to hold that the appellant trust had received any unexplained income/receipts and no such material or evidence was furnished to the appellant as requested. The conditions of section 147 being not satisfied, the order passed ought to be quashed. It be so held now and order passed by Id. CIT(A)/NFAC affirming the action of Id AO be set aside.
3. The Id CIT(A)/NFAC also erred in law and on facts in upholding the order of Id AO initiating reassessment proceedings without valid and correct reason to believe as envisaged by the law and also when no such material and sanction as required by law was furnished to the appellant. It be so held now and order passed by authorities below be cancelled.
4. Without prejudice to the above grounds, the Id. CIT(A)/NFAC erred in law and on facts in not appreciating that as submitted by appellant, no such income was received and hence negative could not be proved as alleged by Id AO. The addition of Rs.2,24,97,980/- without providing evidence and material as well as cross examination is untenable in law. It be so held now and addition made be deleted.
5. The Id CIT(A)/NFAC also further erred in law and on facts in affirming the illegal and erroneous order of Id. AO making huge additions merely on the basis of alleged so called material found during search appellant which is not provided for rebuttal nor allowed to cross examine the same. The order passed by Id AO ought to have been quashed. It be so quashed now.
Both the lower authorities erred in law and on facts in not appreciating that even as per the inquiry with the alleged Sigma Group, it was clear that no such amount was ever paid to appellant Trust and hence action in the case of appellant and resulting additions are wholly untenable and incorrect. It be so held now.
The Id CIT(A)/NFAC also erred in law and on facts in affirming the order of Id AO and dismissing appeal of the appellant when no information as regards alleged search in the case of third party was furnished nor any incriminating material acceptable in law was furnished. The action taken u/s 147 of the Act in such a case A.Y. 2010-11 Bankim Education Trust vs. ITO (Exemption) of alleged search as stated by Id. AO is against sanction of law. It be so held now and orders passed be cancelled.”
Shri Divyakant Parikh, the ld. counsel for the assessee submitted that the case of the assessee for A.Y. 2010-11 was reopened u/s 147 of the Act on the basis of information received in connection with the search conducted in the case of one Sigma group. He explained that in the course of that search one Sri Mahesh Kachhiya, an employee of Sigma Group, had made a statement that an amount of Rs.2,24,97,980/- was paid to the assessee for change of management of the Trust. The Ld. AR submitted that the assessee had denied the transaction before the AO and had requested to provide the relevant documents and the copy of the statement. However, the same was not provided to the assessee. The Ld. AR further submitted the Ld. CIT(A) had dismissed the appeal of the assessee for the reason that no compliance could be made before him due to ill health of the concerned counsel. He, therefore, requested that the assessee may be allowed another opportunity to make compliance, by setting aside the matter to the file of Ld. CIT(A) as he had not decided the appeal of the assessee on merits.
Per Contra Shri R P Rastogi, Ld. CIT. DR supported the order of the lower authorities. He, however, had no objection if the matter is set-aside to the file of the Ld. CIT(A) for allowing another opportunity to the assessee.
A.Y. 2010-11 Bankim Education Trust vs. ITO (Exemption) 6. We have carefully considered the submissions of the assessee. We do not find any reasonable explanation for non- compliance before the Ld. CIT(A). The Ld. CIT(A) had allowed as many as six opportunities to the assessee but apart from seeking adjournment on one occasion, no compliance was made on any of the other occasions. The assessee cannot escape by merely passing on the blame for non-compliance on the counsel. Once the appeal was filed, it was the responsibility of the assessee to pursue the matter and ensure that proper compliance was made before the Ld. CIT(A) in the course of appeal proceeding. In the absence of any reasonable explanation for the non-compliance before the Ld. CIT(A), we deem it proper to impose a cost of Rs.5,000/- on the assessee, which should be deposited in “Prime Minister’s National Relief Fund” within a period of 15 days from the receipt of this order.
7. The Ld. CIT(A) had dismissed the appeal of the assessee in- limine and the merit of the additions as made by the AO was not examined by him. It is found that the addition in the present case was made on the basis of statement of the employee recorded in the course of search in Sigma Group. However, the copy of the document found in the course of search based on which the statement was recorded as well as the extract of the statement of the employee, was not made part of the assessment order. As a result, the merit of additions could not be examined. In the course of assessment, the assessee had denied having received any amount from Sigma Group and had requested to provide the copy of the relevant documents and statement. The action of the AO in not providing the documents and statement, based on which the A.Y. 2010-11 Bankim Education Trust vs. ITO (Exemption) additions were made, cannot be held as correct. In the interest of justice, we, therefore, deem it proper to set aside the matter to the file of Ld. CIT(A) with a direction to allow another opportunity to the assessee for making compliance. Subject to the payment of cost by the assessee as directed earlier, the Ld. CIT(A) is directed to allow one more opportunity to the assessee to furnish the details and clarifications as required and thereafter, re-adjudicate the appeal of the assessee and decide the grounds taken on merit. The assessee is also directed to comply before the Ld. CIT(A) in the course of set-aside proceeding. In case the assessee does not make compliance, the Ld. CIT(A) will be free to decide the matter on merits on the basis of materials available on record.
In the result, the appeal filed by the assessee is allowed for statistical purposes.