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Facts
The assessee's appeal pertains to the assessment year 2015-16, concerning an addition of Rs. 63,83,787 made by the AO. The AO rejected the opening capital of Rs. 89,43,566 and estimated it at Rs. 10,00,000. The CIT(A) sustained the addition.
Held
The Tribunal noted that the impugned order was passed before the date fixed for hearing and that the CIT(A)'s findings were based on surmises and conjectures. Therefore, the Tribunal set aside the order and restored the grounds to the file of the CIT(A) for fresh adjudication.
Key Issues
Whether the addition made by the AO on account of discrepancies in the opening capital was justified. Whether the appellate order was passed in a summary manner before the date of hearing.
Sections Cited
68, 143(2), 250
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Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI KUL BHARAT & SHRI NIKHIL CHOUDHARY
PER KUL BHARAT, VICE PRESIDENT.: This appeal, by the assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)-2, Lucknow dated 06.02.2020, pertaining to the assessment year 2015-16. The assessee has raised the following grounds of appeal: -
1. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in arbitrarily confirming the addition of Rs.63,83,787/-, u/s 68 of the I.T. Act, which was made by the A.O. by estimating the capital balances of earlier two years (A.Y.2013-14 & A.Y.2014-15) and thereby reducing the capital balance as on 01-04-2014 disclosed at Rs. 89,435,566/- to Rs.25,59,779/-, on the basis of presumption, surmises and conjectures.
1. 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in passing the impugned appellate order in a summary manner on 06-02-2020 before the next date of hearing which was fixed for 10-02-2020 and the appellate order is illegal as such.
Page 2 of 5 3. That the appellant craves permission for amending the aforesaid grounds of appeal and /or for raising fresh grounds of appeal.”
2. At the time of hearing, no one attended the proceedings on behalf of the assessee. It is seen from the records that Shri Shailendra Misra, Advocate, who represented the assessee has withdrawn his “Vakalatnama”. Thereafter, despite multiple opportunities, there is no representation on behalf of the assessee. The assessee has been given multiple opportunities, however, even the notice sent through the Ld. Departmental Representative could not be served for want of the assessee’s current address. The assessee ought to have been vigilant about the case filed by him and also produced the latest address. In the absence of any intimation regarding the current address, the notices sent to the last known address have been returned unserved and is treated to be valid service. The assessee’s counsel has also withdrawn his “Vakalatnama” stating that there is no instructions from the assessee. Consequently, the assessee could not be contacted. Under these facts, the present appeal is being taken up for hearing in the absence of the assessee and same is being decided on the basis of materials available on records.
3. The present appeal is barred by 23 days. The assessee has filed an application seeking condonation of delay in filing of this appeal. For the sake of clarity, the relevant contents of application are reproduced hereinbelow: - “1. That the appellant-assessee received through e-mail, the order u/s 250 of the I.T. Act,1961 dated 06-02-2020 for A.Y. 2015-16, passed by the Commissioner of Income Tax (A) - 2, Lucknow, on 06-03-2020.
That the limitation for filing of instant appeal was expiring on 05-05- 2020, but the filing of appeal has been postponed by the Hon’ble ITAT, vide order dated 30-03-2020, with effect from 15" March,2020 till further orders (A copy of the relevant office order is submitted herewith as annexure ‘A’) In view of the facts and circumstances mentioned above it is requested that the delay in filing of the appeal may very kindly be condoned.”
Page 3 of 5 4. It is stated that the impugned order was passed on 06.02.2020 and was received by the assessee on 06.03.2020. Accordingly, the appeal was required to be filed on or before 05.05.2020. However, in view of the order of the Hon’ble Supreme Court in Civil Writ Petition No. 3 of 2020, dated 08.03.2021, the period of limitation stood extended. We, therefore, respectfully following the judgment of the Hon'ble Supreme Court Civil Writ Petition No. 3 of 2020, hereby condone the delay in filing the appeal and admit the same for hearing on merits.
The only effective ground is with regard to the confirmation of addition of Rs.63,83,787/- u/s 68 of the Income Tax Act, 1961 (“Act”, for short).
The facts giving rise to the present appeal are that in this case, the assessee filed his return of income on 28.09.2015, declaring total income at Rs.18,83,080/-. Thereafter, the case was selected for limited scrutiny through Computer Assisted Scrutiny System (CASS). Accordingly, a notice u/s 143(2) of the Act was issued and served upon the assessee. In response thereto, the Ld. Authorized Representative of the assessee attended the assessment proceedings. Thereafter, the case was transferred to other Assessing Officer who had also issued statutory notices. In response thereto, the Ld. AR for the assessee attended the proceedings. After considering the materials available on record, the Assessing Officer made assessment by making addition of Rs.63,83,787/- on account of discrepancies in the opening capital account and closing account of the assessee. Aggrieved against this addition, the assessee preferred an appeal before the Ld. CIT(A) there was no effective representation on behalf of the assessee before the Ld. CIT(A) who sustained the addition and dismissed the appeal of the assessee. Now, the assessee is in appeal before this Tribunal.
Page 4 of 5 7. Apropos to the grounds of appeal against the addition, the Ld. Departmental Representative (DR) supported the orders of the lower authorities and contended that the assessee grossly failed to reconcile the discrepancies. Therefore, the authorities below were justified in making the addition and sustaining the same.
We have heard the Ld. DR and perused the material available on records. We find that the Ld. CIT(A) dismissed the appeal of the assessee, inter alia, by observing as under: - “4. During the course of appellate proceedings A.R of the appellant filed written submission which is placed on file. In submission the A.R has asserted that the appellant was an agriculturalist and main source of his income was through agricultural activities till financial year tear 2011-12 relevant to A.Y. 2012-13. Since agricultural income was exempted income under the income tax Act, the appellant did not file any return of income till 2012-13. There after started business of real estate and filed income tax returns since A.Y. 2013-14 being no audit case. The case of A.Y. 2015-16 attracted under audit category. Decision: 5. Grounds No. 1, 2, 3 and 4: The only issue involved is addition of Rs.63,83,797/- made by the AO by rejecting the claim of opening capital of Rs.89,43,566/- as on 01.04.2014 and estimating the opening capital of Rs.10,00,000/- for the AY 2013-14. All the grounds are taken up together.”
It is the case of the assessee that the impugned order was passed prior to the date fixed for hearing. It is seen from the findings of the lower authorities that the contention of the assessee has been dismissed purely on the basis of surmises and conjectures. The Ld. CIT(A) has not given any clear finding as to why the agricultural income declared by the assessee is not acceptable. Therefore, looking to the facts of the case, we deem it fit and proper to set aside the impugned order and restore the grounds to the file of the Ld. CIT(A) who would decide the grounds afresh after giving due opportunity to the assessee to sub-serve the interest of natural justice. s one of the grievances of the assessee is that the impugned order was passed on 06.02.2020 even though the appeal was fixed for hearing on Page 5 of 5 10.02.2020. Grounds raised
in this appeal are allowed for statistical purpose.
10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/10/2025.