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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS. SUCHITRA KAMBLE & SHRI MAKARAND V. MAHADEOKAR
PER MAKARAND V. MAHADEOKAR, AM: These five appeals have been preferred by the assessee against the orders passed by the Ld.Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)"], for the Assessment Years (AYs) 2013-14 to 2017-18 arising from the orders passed by the Assessing Officer (hereinafter referred to as “AO") u/s 143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter referred to as “the Act). Since common issues are involved, all these appeals are disposed of by this consolidated order. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 2 Condonation of Delay
These appeals have been filed with a delay of 40 days. The assessee has filed an affidavit affirmed by the Director of the company explaining the reasons for the delay. It was stated that the company had engaged a chartered accountant, Mr. Kamlesh Bhojani, to handle its appellate matters. The mobile number and email ID provided in Form No. 35 belonged to the said counsel, and therefore, the appellate orders passed by the Ld. CIT(A), NFAC, were delivered to the counsel and not directly to the assessee. The assessee contends that the said orders were not brought to its notice in time, resulting in an unintended delay in filing the appeals before the Tribunal. It was further submitted that the delay occurred despite due diligence on the part of the company, and there was no deliberate default or negligence.
Considering the facts placed on record and the averments made in the affidavit, we are of the view that the delay of 40 days in filing the appeals is supported by reasonable cause. Accordingly, in the interest of justice, the delay is condoned, and the appeals are admitted for adjudication on merits. Facts of the case
The assessee is a private limited company engaged in software-related services. In all years under consideration, the assessments were reopened under Section 147 based on information received from the Investigation Wing regarding substantial cash deposits made in the assessee's bank accounts which were not reconciled with the returned income. In case of AY 2013-14 to AY 2016-17, the AO reopened the assessments under Section 147 on the basis of information relating to cash deposits and passed orders under Section 143(3) r.w.s.147 making various additions. The assessee participated ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 3 partially but failed to produce documentary evidence. The CIT(A) also passed ex-parte orders without adjudicating the issues on merits. The grievance of the assessee is that it was not afforded effective opportunity before the CIT(A) and the orders were passed without proper appreciation of facts and law. In case of A.Y. 2017-18, the assessment was completed under Section 144, as the assessee failed to file return or comply with notices under Section 142(1). Based on deposits of Rs.5.67 crore in HDFC Bank during the demonetisation period, the AO made addition under Section 69A, alternatively under Section 68, and taxed the same under Section 115BBE. The CIT(A) also passed an ex-parte order. The assessee contends that the proper opportunity was not given and seeks a chance to explain the nature and source of such credits.
Aggrieved by the orders of CIT(A), the assessee has raised the following grounds of appeal:
ITA No.353/Ahd/2024 for AY 2013-14 “1). The learned CIT (A), NFAC has grievously erred in law and facts in upholding the addition of Rs.2,80,08,032/-made by the A.O. to the return income of Rs.2,478/- without properly appreciating the facts and explanation of appellant. 2). He has previously erred in law and facts in upholding the ex-party order U/s 144 r.w.s.147 without considering and appreciating the fact that the assessment order passed by A.O. resorting to re-assessment proceedings was submitted to be bad in law and on facts in as much as that the conditions envisaged U/s 147 have not been fulfilled and there is no valid assumption of juri iction as per law. 3). He has erred in law and facts in not considering the detailed written submission dated 08/09/2022_in response to appeal hearing notice dated 24/08/2022 duly uploaded on 07/09/2022 vide Ack. No. 475518821070922 in as much as that in the submission the re-assessment proceedings was seriously disputed legally even though appeal order has been passed on 27/04/2023. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 4 4). He has also erred in law and facts in not considering and appreciating the legal decisions of various courts as detailed in submission dated 08/09/2022 in support of erroneous initiation of re-assessment proceedings. 5). He has erred in law and facts in confirming additions/disallowances made by the A.O. as detailed below which were seriously disputed. (a). Addition on account of cash deposit in bank as per para -5 of assessment order Rs.1,20,80,000/- (b). Disallowance of 30% expenses of Rs.1,45,87,050/-as per para 6 of assessment order (c). Addition of liabilities as per para-7 of assessment order Rs.13,40,978/- 6). He has erred in law and facts in confirming the order of A.O. without considering the facts mentioned in the written submission and without referring to the said submission and by wrongly applying the decision of Roshan Di Hattti and Kale Khan Mohammad Hanif on the point of burden of proof in as much as that the said decisions are not applicable to the facts of the assessee. 7). He has erred in law and facts in upholding charging of interest U/s 234A of Rs.90,86,870/- and U/s 234B of Rs.90,86,870/- without appreciating the facts of the assessee. 8). on the facts the return Income of Rs.2,478/- ought to have been accepted. 9). the appellant craves leave to add, to alter and/or to modify any grounds of appeal."
ITA No.354/Ahd/2024 for AY 2014-15 “1). The learned CIT (A), NFAC has grievously erred in law and facts in upholding the addition of Rs.2,80,08,032/-made by the A.O. to the return income of Rs.2,51,290/- without properly appreciating the facts and explanation of appellant. 2). He has previously erred in law and facts in upholding the ex-party order U/s 144 r.w.s.147 without considering and appreciating the fact that the assessment order passed by A.O. resorting to re-assessment, proceedings was submitted to be bad in law and on facts in as much as that the conditions envisaged U/s 147 have not been fulfilled and there is no valid assumption of juri iction as per law. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 5 3). He has erred in law and facts in not considering the detailed written submission dated 08/09/2022_in response to appeal hearing notice dated 24/08/2022 duly uploaded on 07/09/2022 vide Ack. No. 475681311070922 in as much as that in the submission the re-assessment proceedings was seriously disputed legally even though appeal order has been passed on 27/04/2023. 4). He has also erred in law and facts in not considering and appreciating the legal decisions of various courts as detailed in submission dated 08/09/2022 in support of erroneous initiation of re-assessment proceedings. 5). He has erred in law and facts in confirming additions/disallowances made by the A.O. as detailed below which were seriously disputed. (a). Addition on account of cash deposit in bank as per para -5 of assessment order Rs.1,20,80,000/- (b). Disallowance of 30% expenses of Rs.1,45,87,050/- as per para 6 of assessment order (c). Addition of liabilities as per para-7 of assessment order Rs.13,40,978/- 6). He has erred in law and facts in confirming the order of A.O. without considering the facts mentioned in the written submission and without referring to the said submission and by wrongly applying the decision of Roshan Di Hattti and Kale Khan Mohammad Hanif on the point of burden of proof in as much as that the said decisions are not applicable to the facts of the assessee. 7). He has erred in law and facts in upholding charging of interest U/s 234A of Rs.91,06,945/- and U/s 234B of Rs.91,06,945/-without appreciating the facts of the assessee. 8). on the facts the return Income of Rs.2,51,290/- ought to have been accepted. 9). the appellant craves leave to add, to alter and/or to modify any grounds of appeal."
ITA No.355/Ahd/2024 for AY 2015-16 “1). The learned CIT (A), NFAC has grievously erred in law and facts in upholding the addition of Rs.3,69,83,639/- made by the A.O. to the return income of Rs.5,90,250/- without properly appreciating the facts and explanation of appellant. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 6 2). He has previously erred in law and facts in upholding the ex-parte order U/s 143(3) r.w.s.147 without considering and appreciating the fact that the assessment order passed by A.O. resorting to re-assessment proceedings was submitted to be bad in law and on facts in as much as that the conditions envisaged U/s 147 have not been fulfilled and there is no valid assumption of juri iction as per law. 3). He has erred in law and facts in not considering the detailed written submission dated 07/09/2022 in response to appeal hearing notice dated 24/08/2022 duly uploaded on 07/09/2022 vide Ack. No. 475935971070922 in as much as that in the submission the re-assessment proceedings was seriously disputed legally even though appeal order has been passed on 27/04/2023. 4). He has also erred in law and facts in not considering and appreciating the legal decisions of various courts as detailed in submission dated 07/09/2022 in support of erroneous initiation of re-assessment proceedings. 5). He has erred in law and facts in confirming additions / disallowances made by the A.O. as detailed below which were seriously disputed. (a). Addition on account of cash deposit in bank as per para -5 of assessment order Rs.1,58,92,277/- (b). Disallowance of 30% expenses of Rs.2,05,90,256/- as per para 6 of assessment order (c). Addition of liabilities as per para-7 of assessment order Rs.4,00,133/- (d). Depreciation as per para-8 Rs.1,00,973. 6). He has erred in law and facts in confirming the order of A.O. without considering the facts mentioned in the written submission and without referring to the said submission and by wrongly applying the decision of Roshan Di Hattti and Kale Khan Mohammad Hanif on the point of burden of proof in as much as that the said decisions are not applicable to the facts of the assessee. 7). He has erred in law and facts in upholding charging of interest U/s 234A of Rs.1,21,40,459/- and U/s 234B of Rs.1,21,40,459/- without appreciating the facts of the assessee. 8). on the facts the return Income of Rs.5,90,250/- ought to have been accepted. 9). the appellant craves leave to add, to alter and/or to modify any grounds of appeal."
ITA No.356/Ahd/2024 for AY 2016-17 “1). The learned CIT (A), NFAC has grievously erred in law and facts in upholding the addition of Rs.3,33,43,656/- made by the A.O. to the return income of Rs.1,33,480/-without properly appreciating the facts and explanation of appellant. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 7 2). He has previously erred in law and facts in upholding the ex-party order U/s 143(3) r.w.s.147 without considering and appreciating the fact that the assessment order passed by A.O. resorting to re-assessment proceedings was submitted to be bad in law and on facts in as much as that the conditions envisaged U/s 147 have not been fulfilled and there is no valid assumption of juri iction as per law. 3). He has erred in law and facts in not considering the detailed written submission dated 07/09/2022 in response to appeal hearing notice dated 24/08/2022 duly uploaded on 07/09/2022 vide Ack. No.475939241070922 in as much as that in the submission the re-assessment proceedings was seriously disputed legally even though appeal order has been passed on 27/04/2023. 4). He has also erred in law and facts in not considering and appreciating the legal decisions of various courts as detailed in submission dated 07/09/2022 in support of erroneous initiation of re-assessment proceedings. 5). He has erred in law and facts in confirming additions/disallowances made by the A.O. as detailed below which were seriously disputed. (a). Addition on account of cash deposit in bank as per para 5 of assessment order Rs.89,92,000/- (b). Disallowance of 30% expenses of Rs.93,28,551/- as per para 6 of assessment order (c). Addition of liabilities as per para-7 of assessment order Rs.1,15,20,579/ (d). Addition of liabilities as per para-8 Rs.35,02,526.- 6). He has erred in law and facts in confirming the order of A.O. without considering the facts mentioned in the written submission and without referring to the said submission and by wrongly applying the decision of Roshan Di Hattti and Kale Khan Mohammad Hanif on the point of burden of proof in as much as that the said decisions are not applicable to the facts of the assessee. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 8 7). He has erred in law and facts in upholding charging of interest U/s 234A of Rs.7,74,798/- and U/s 234B of Rs.7,74,798/- without appreciating the facts of the assessee. 8). on the facts the return Income of Rs.1,33,480/- ought to have been accepted. 9). the appellant craves leave to add, to alter and / or to modify any grounds of appeal."
ITA No.357/Ahd/2024 for AY 2017-18 “1). The learned CIT (A), NFAC has grievously erred in law and facts in upholding the addition of Rs.5,67,70,140- made by the A.O. considering the credit entries including cash in HDFC bank account No. 12292560001105 amounting to Rs.5,67,70,140/- as unexplained money U/s 69A of I.T. Act, 1961. 2). He has previously erred in law and facts in upholding the ex-party order U/s 144 r.w.s.147 without considering and appreciating the erroneous contention of the A.O who has alternatively treated the credits in the bank accounts of Rs.5,67,70,140/- as unexplained cash credit U/s 68 of I.T. Act. 3). He has erred in law and facts in upholding the addition made by the A.O. without appreciating the fact that bank deposits by itself cannot be treated as unexplained income either U/s 69A or U/s 68 of the Act. 4). He has also erred in law and facts in upholding the application of provision of Section 115BBE of the act to the facts of the assessee in as much as that the said provision is not applicable to the appellant. 5). He has erred in law and facts in upholding charging of interest U/s 234A of Rs.1,09,63,725/- and U/s 234B of Rs.1,40,33,568/- aggregating Rs.2,49,97,293/-without appreciating the facts of the assessee. 6). on the facts the assessee no additions ought to have been made. 7). the appellant craves leave to add, to alter and/or to modify any grounds of appeal." During the course of hearing, the Ld. Authorised Representative for the assessee submitted that the reassessment proceedings for all the ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 9 captioned assessment years were initiated merely on the basis of information received from the Investigation Wing relating to cash deposits in bank accounts without independent application of mind by the AO. It was argued that in all cases, the AO has mechanically reproduced identical reasons for reopening, without recording separate satisfaction for each assessment year, thereby violating the settled principles laid down by various other judicial precedents. The AR further submitted that no independent inquiry or verification was undertaken by the AO prior to formation of belief, and the action under Section 147 was based on borrowed satisfaction. It was also highlighted that even in the reasons recorded for reopening, reference was made to unrelated assessment years, and there were apparent inconsistencies between the facts mentioned in the assessment orders and the actual financial records of the assessee. It was further submitted that detailed objections and legal submissions were filed before the Ld. CIT(A) in response to the notices issued, but the same were not adjudicated, and the appeals were dismissed ex-parte in a cryptic and non-speaking manner.
The Departmental Representative fairly agreed that in the interest of justice, the matter may be restored to the file of the CIT(A) for a proper adjudication on merits.
We have heard the rival contentions, perused the orders of the lower authorities, the affidavit for condonation of delay, the written submissions filed during the course of hearing, and the case records. The appeals before us relate to reassessment proceedings initiated under Section 147 of the Act for AYs 2013-14 to 2016-17, and an ex-parte best judgment assessment under Section 144 for AY 2017-18. Various additions have been made under sections ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 10 69, 69A, and disallowance of expenses and liabilities, along with initiation of penalty proceedings.
1 The assessee has challenged the validity of reassessment on multiple legal grounds that the reasons recorded are identical for multiple years without year-specific facts, no independent application of mind was undertaken by the Assessing Officer, the reopening is based merely on information received from the Investigation Wing relating to cash deposits in bank accounts without any inquiry or verification, in some years (AYs 2014- 15, 2015-16, and 2016-17), there is no separate set of reasons, and the AO has merely copied the reasons recorded for AY 2013-14 and reference has also been made in the reasons and assessment order to incorrect facts pertaining to different assessment years. The assessee has relied upon several judicial precedents to support the contention that reassessment based on borrowed satisfaction and mechanical recording of reasons is invalid.
2 We find from the record that the Ld. CIT(A), in all the appeals for AYs 2013-14 to 2016-17, has summarily rejected the legal challenge without dealing with the assessee's objections in a reasoned manner. The finding of the CIT(A) does not meet the requirement of a speaking order. Further, it is apparent that the assessee had filed written submissions in response to the appeal notices and raised the legal issue in detail, which have not been adjudicated by the CIT(A). In such circumstances, where vital legal issues are raised and are supported by prima facie credible contentions, the appellate authority is expected to adjudicate the same on merits. The ex-parte orders passed without dealing with these issues rendered the appellate process ineffective. In view of the above, we consider it just and proper to set aside ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 11 the orders of the Ld. CIT(A) for AYs 2013-14 to 2016-17 and restore the matters back to his file for fresh adjudication of all grounds, including the legal challenge to the reopening, after affording reasonable opportunity to the assessee.
3 In AY 2017-18, the assessment has been framed ex-parte under Section 144 based on alleged unexplained cash deposits of Rs.89,92,000/- during the demonetisation period in HDFC Bank. The assessee did not file a return or respond to statutory notices. The addition has been made under Section 69A and taxed under Section 115BBE. The assessee submitted before us that proper opportunity was not granted and that the facts relied upon by the AO actually pertain to AY 2013-14, which were mechanically adopted in AY 2017- 18. 8.4 Given that the assessment is ex-parte and substantial factual contentions have been raised disputing the correctness of the addition, we deem it appropriate to restore the matter to the file of the AO for de novo assessment after affording reasonable opportunity to the assessee to explain the nature and source of cash deposits.
5 In view of the foregoing discussion, without going into the merits, the orders of the Ld. CIT(A), for AYs 2013-14 to 2016-17 are set aside and the matters are restored to his file for fresh adjudication of all issues on merits, including the legal challenge to reopening. The assessment for AY 2017-18 is set aside and restored to the file of the AO for de novo assessment after granting adequate opportunity to the assessee. ITA Nos.353 to 357/Ahd/2024 Asst. Years: 2013-14 to 2017-18 12
6 We make it clear that the assessee shall cooperate in the appellate and assessment proceedings, failing which the concerned authorities shall be at liberty to pass orders in accordance with law.
In the result, all the appeals of the assessee are allowed for statistical purposes. Order pronounced in the Open Court on 8th April, 2025 at Ahmedabad. (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, दिनांक/Dated 08/04/2025 S. K. Sinha, Sr. PSआदेश की प्रतिलिपि अग्रेषित/