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Facts
The assessee did not file income tax returns for Assessment Year 2015-16. The Assessing Officer (AO) issued notices, but the assessee did not respond. The AO assessed income based on bank credits and expenditures, treating them as unexplained. The assessee claims non-receipt of notices due to change of advocate and personal illness, and that the bank account used for assessment was closed prior to the relevant period.
Held
The Tribunal noted that the assessee failed to appear for hearings, and an adjournment was rejected. However, considering the facts, especially the claims of non-receipt of notices and the possibility of a closed bank account being used for assessment, the Tribunal restored the quantum and penalty appeals to the Assessing Officer for fresh adjudication.
Key Issues
Whether the assessment and penalty orders are liable to be quashed for lack of proper service of notice and opportunity of being heard, and whether the assessment was based on incorrect factual premise regarding a closed bank account.
Sections Cited
133(6), 69A, 69C, 147, 144, 144B, 271(1)(c), 206, 44AD, 140A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI ANADEE NATH MISSHRA
1. These appeals have been preferred by the assessee against separate orders, both dated 27.05.2024, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2015-16.
The brief facts of the case are that the Income Tax Department was in possession of information that the assessee had not filed the return of income for the year under consideration although the assessee had undertaken various financial transactions with various entities. The Assessing Officer (AO) issued statutory notices to the assessee. However, the assessee did not respond to the notices issued by the AO.
The AO, thereafter, issued notice under section 133(6) of the Income Tax Act, 1961 (hereinafter called “the Act’) to Bank of India and obtained Bank Account Statement of Account No.702120110000128 relating to the assessee for the year under consideration. As per the Bank Statement furnished by the Bank, the total credits in the assessee’s Bank Account was of Rs.90,76,952/-. Since the nature and source of the total credits, amounting to Rs.90,76,952/- had remained unproved, the AO treated the same as unexplained money and added the same to the income of the assessee under section 69A of the Act.
2.1 Moreover, the expenditure, totaling to Rs.8,41,179/- relating to various entities were also treated as unexplained expenditure and added the same also to the income of the assessee under section 69C of the Act.
3. The AO completed the assessment under section 147 read with section 144/144B of the Act, computing the income of the assessee as under:
Income as per return : Nil Addition u/s. 69A of the Act. : Rs.90,76,952/- Addition u/s. 69C of the Act. : Rs.8,41,179/- Total income determined : Rs.99,18,131/-
4. The AO also initiated penalty proceedings under section 271(1)(c) of the Act for the reason that the assessee had concealed the particulars of his income and imposed a penalty of Rs.30,64,702/-, vide order dated 16.08.2023.
5. Aggrieved, the assessee preferred appeals against the orders passed by the AO in quantum proceedings as well as penalty proceedings under section 271(1)(c) of the Act. However, both the appeals before the NFAC came to be dismissed for the reason of delay in filing of the appeals before the NFAC.
6. Now, the assessee has approached this Tribunal challenging the dismissal of his appeals by the NFAC by raising the following grounds of appeals:
GROUNDS OF APPEAL IN ITA NO.440/LKW/2024:
1. Respected Madam/Sir, The learned Assessing Officer passed the assessment order u/s.147/144 of the Income Tax Act 1961 by serving notices and order on mail id.SWECSEMRI@GMAIL.COM belongs to my previous advocate, who had filed my Income Tax return till the A.Y. 2013-2014 and after that my business got down day to day and the income become almost much below exemption limits. After A.Y.2013-2014, I stopped filing of Income Tax return and lost all contacts with my previous advocate. In the year 2019-2020 again my business grew slowly. so I filed Income Tax return accordingly with my new advocate. That the order u/s. 147/144 of A.Y.2015- 2016 was sent to the mail of my previous advocate and since I am not in his contact so that I did not have any information regarding order.
2. Apart from above, proprietor of the firm Reeta Devi was ill from long time and was under the medical treatment of Medical Officer, CHC, Lalganj, Raebareli w.e.f.20/03/2023. The medical officer certifies that during 20/03/2023 to 15/09/2023 she is in my treatment and during above period she is unable to perform her duties and advised complete bed rest. In between the learned Assessing Officer sent notices through speed post letter no.RU659281302IN, RU659281293IN, EU601355050IN on wrong address i.e. BARWALIYA, LALGANJ, RAEBARELI is evident/verifiable from the cover page of envelope on which the postman reported that the receiver lives in BANNAMAU, LALGANJ on 26/07/2023, then this letter distributed by Lalganj head post office and these above letters received on 28/08/2023, but due to illness and inability to perform her duties and she was not in a position to move and was on bed up to 15/09/2023 and unable to meet her advocate to file appeal before the Hon'ble’ble CIT(Appeals).
3. Therefore the proprietor of the firm Reeta Devi was unable to file appeal in time. The assessee is keeping in mind that the first time any letter sent by Income Tax department has received on 28/08/2023, then after knowing and receiving the facts by Income Tax department for the first time, the assessee keeping in mind that the appeal has to be filed within 30 days after receiving information from Income Tax Department. Therefore the assessee written the receiving date 28/08/2023 which is the receiving date of speed post letter sent by Income Tax department for the first time after passing assessment order. The assessee has no knowledge of assessment order passed by NEAC Delhi on 27/02/2023. The assessment order has not received because the mail id.SWECSEMRI@GMAIL.COM belongs to my previous advocate and due to illness as detailed above, the appellant was unable to file appeal before Hon,ble CIT (Appeals) well in time.
4. Considering the facts and circumstances of the case the Hon,ble Court requested to consider that the appeal filed before the Hon,ble CIT (Appeals )is within limitation.
5. The learned Assessing Officer assessed the income for the financial year 2014-2015 corresponding to the assessment year 2015-2016 on the basis of bank statement of account no. 702120110000128 Bank of India, whereas the account no.702120110000128 Bank of India which was in the name of Mahima Brick Field was operative upto 13/11/2013 and this account no. 702120110000128 Bank of India closed w.e.f. 14/11/2013. This fact has verified by Bank of India, Lalganj, Raebareli through certificate dated 13/05/2024.It is very much clear that the account no. 702120110000128 Bank of India has no any transaction w.e. f. 01/04/2014 to 31/03/2015, because the account no.702120110000128 Bank of India closed on 14/11/2013. Therefore, the order passed by learned Assessing Officer is without facts and deserves to be quashed.
6. That the appellant maintain cash credit account no 702130110000046 Bank of India during the year under consideration. But the learned Assessing Officer assessed the income for the financial year 2014-2015 corresponding to the assessment year 2015-2016 is on the basis of closed account no. 702120110000128 Bank of India. The attached statement of cash credit accounts no 702130110000046 Bank of India shows following credit entries:- Through cash deposits(sale of bricks) Rs.56,19,000.00. Through Bank transfer, RTGS/NEFT(Sale of bricks)= Rs.18,59,975.00. Through closure proceeds of FDR = Rs. 1,05,952.00. Total = Rs. 75,84,927.00.
7. The appellant firm purchased coal from different 3 parties at Rs.8,41,179/- which is raw fuel for manufacturing of bricks. This fact is verifiable from form 26AS (copy enclosed) shows that the following parties collected tax at source u/s.206 CJ of the Income Tax Act: Name of collector Jannat Business associates Pvt. Ltd, Taxable Value 1,03,958.40 TCS Deducted 1,040.00 Name of collector: Kamruzama Khan Taxable Value 3,50,010.96 TCS Deducted 3,500.00, Name of collector: Moonlight commercial private Ltd. Taxable Value 3,87,209.78 TCS Deducted 3,872.00. Total Taxable Amount 8,41,179.14 Total TCS Amount 8,412.00 8. That the above grounds of appeal shall be argued in detail at the time of hearing of appeal and the appellant craves leave to submit additional grounds of appeal if any and or amend, vary, modify, alter the grounds of appeal at or before the time of hearing.
9. As per below computation of income for the year under consideration, the firm has already accepted the turnover and deposited the due taxes also:- 1-Net profit from business u/s. 44AD of IT Act, 1961. Through cash sales Rs.56,19,000/- @8% Rs.4,49,520.00. Through bank transfer sales Rs. 18,59,975/-@6% Rs. 1,11,599.00. Net Profit From Business Rs. 5,61,119.00 2- Interest on saving bank account Rs. 2,127.00 Gross Taxable Income Rs.5,63,246.00 Deductions u/s VI A Less: U/s. 80-C LIC Rs. 13,328.00 Less: U/s. 80-TTA Rs. 2,127.00. Total Deductions u/s VI A Rs. 15,455.00 Net Taxable Income Rs. 5,47,790.00. Tax Payable Income Tax Rs. 34,558.00 Less: TCS Rs. 8412.00 Net Tax Payable Rs, 26,146.00. Paid u/s. 140A Rs.35,000.00. GROUNDS OF APPEAL IN :
The learned Assessing Officer passed the assessment order u/s.147/144 of the Income Tax Act 1961 by serving notices on mail id.SWECSEMRI@GMAIL.COM belongs to my previous advocate, who had filed my Income Tax return till the A.Y. 2013-2014 and after that my business got down day to day and the income become almost much below exemption limits. After A.Y.2013-2014, I stopped filing of Income Tax return and lost all contacts with my previous advocate. In the year 2019-2020 again my business grows slowly. so I filed Income Tax return accordingly with my new advocate.
2. That the order u/s.271(1)(c) of the Income Tax Act, 1961 for the A.Y.2015-2016 was passed by the learned Assessing Officer on 16/08/2023 on the notice sent through speed post letter no.RU659281302IN and RU659281293IN at wrong address Reeta Devi, Barwaliya, Lalganj, Raebareli-229001 on wrong address, the Postman reported on envelope that Reeta Devi is residing at Bannamau, Lalganj, Raebareli and then the letter was distributed by Postman, Lalganj and received on 28/08/2023 and 30/08/2023.After receiving speed post letter no. RU659281302IN and RU659281293IN on 28/08/2023 and due to illness and inability to perform her duties, she was not in a position to move and was on bed up to 15/09/2023 and unable to meet her advocate to file appeal before the Hon,ble CIT(Appeals). On 16/09/2023 the proprietor of the firm meet her Advocate to file appeal against the order u/s. 147/144 and penalty order u/s. 271(1)(c).
On 16/09/2023 the appeal prepared and appeal fees has been deposited against the order u/s.147/144 and the appeal filed on 16/09/2023 and on next day the appeal against penalty order u/s. 271(1)(c) prepared and filed on 17/09/2023. Therefore the proprietor of the firm Reeta Devi was unable to file appeal in time.
The notices u/s.271(1)(c)sent through speed post letter no. RU659281302IN and RU659281293IN received on 28/08/2023 and 30/08/2023 which is verifiable from envelope of speed post letter and certificate issued by Post Master, Lalganj, Raebareli, but learned Assessing Officer passed the order on 16/08/2023 without giving opportunity of being heard.
The appellant never availed opportunity of being heard neither before the learned Assessing Officer nor before Hon,ble CIT(Appeals) as the penalty notice sent by the learned Assessing Officer received on 28/08/2023 but the penalty order passed by the learned Assessing Officer on 16/08/2023 and notice u/s.250 of the Income Tax Act 1961 sent by Hon,ble CIT(Appeals) fixing the date of compliance on 28/05/2024 but the order u/s.250 of the Income Tax Act, 1961 passed by Hon,ble CIT (Appeals) on 27/05/2024.
The learned Assessing Officer assessed the income for the financial year 2014-2015 corresponding to the assessment year 2015-2016 on the basis of bank statement of account no. 702120110000128 Bank of India, whereas the account no.702120110000128 Bank of India which was in the name of Mahima Brick Field was operative upto 13/11/2013 and this account no. 702120110000128 Bank of India closed w.e. f. 14/11/2013. This fact is verifiable from certificate issued by Bank of India, Lalganj, Raebareli on 13/05/2024.It is very much clear that the account no. 702120110000128 Bank of India has no any transaction w.e.f. 01/04/2014 to 31/03/2015, because the account no.702120110000128 Bank of India closed on 14/11/2013. Therefore the order passed by learned Assessing Officer on the basis of account no.702120110000128 Bank of India is without facts and deserves to be quashed.
7. The appellant firm purchased coal from different 3 parties at Rs.8,41,179/- which is raw fuel for manufacturing of bricks. This fact is verifiable from form 26AS (copy enclosed) shows that the following parties collected tax at source u/s.206 CJ of the Income Tax Act :- Name of collector Jannat Business associates Pvt. Ltd, Taxable Value 1,03,958.40 TCS Deducted 1,040.00. Name of collector: Kamruzama Khan Taxable Value 3,50,010.96 TCS Deducted 3,500.00, Name of collector: Moonlight commercial private Ltd. Taxable Value 3,87,209.78 TCS Deducted 3,872.00. Total Taxable Amount 8,41,179.14 Total TCS Amount 8,412.00 8. That the above grounds of appeal shall be argued in detail at the time of hearing of appeal and the appellant craves leave to submit additional grounds of appeal if any and or amend, vary, modify, alter the grounds of appeal at or before the time of hearing.
None was present on behalf of the assessee when the appeals were called out for hearing. Application seeking adjournment in both the appeals were placed before us. However, we reject the same and looking into the facts of the case, we proceed to adjudicate the appeals ex-parte qua the assessee.
The Ld. Senior D.R. had no objection to the restoration of the quantum appeal to the file of the Assessing Officer.
We have heard the ld. D.R. and have also perused the material on record. Looking into the facts of this case, we are of the considered view that the Assessee deserves one last opportunity to present her case and, therefore, on the facts of the case, we restore the file relating to the quantum proceedings to the Office of the AO with the direction to provide one more opportunity to the Assessee to present her case. We also caution the Assessee to fully comply with the directions of the AO in the set-aside proceedings when called upon to do so, failing which, the AO would be at complete liberty to pass the order in accordance with law, based on material available on record even if it is ex-parte qua the Assessee.
Since the quantum appeal has been remitted to the file of the AO, as above, the penalty appeal in AO, to be decided afresh in accordance with law, based on the result to be arrived at by the AO in the quantum matter.
In the result, both the appeals are treated as allowed, for statistical purposes.
Order pronounced in the open Court on 24/01/2025.