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Facts
The assessee failed to file an Income Tax Return for AY 2017-18 and also did not explain cash deposits of Rs. 24.80 lakhs in their bank account. The Assessing Officer (AO) made additions under Section 69A and passed an ex-parte assessment order under Section 144. The CIT(A) also upheld the additions in an ex-parte order.
Held
The Tribunal noted that both the AO and CIT(A) passed ex-parte orders as the assessee's counsel was unwell and unable to provide a defense. While acknowledging the assessee's lethargy, the Tribunal decided to restore the matter to the AO to provide one more opportunity for a hearing on merits.
Key Issues
Whether the assessee should be granted another opportunity to present their case before the AO when ex-parte orders were passed due to the counsel's illness and lack of communication?
Sections Cited
69A, 144, 115BBE, 274, 271AAC, 139(1), 142(1), 253(5), 234A, 234B, 156, 271F, 272A(1)(d)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,’’SMC” JAIPUR
fu/kZkj.ko"kZ@AssessmentYear : 2017-18 M/s. Kirti Krishna Trademart Pvt Ltd. cuke The ITO Vs. Prem Villa, Near Sindhi Panchayat Ward- 2 Dharamshala, Anah Gate, Bharatpur 321001 Bharatpur LFkk;hys[kk la-@thvkbZvkjla-@PAN/GIR No.: AAECK 1021A vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assesseeby :Shri Rajeev Sogani, CA jktLo dh vksjls@Revenue by: Shri Gautam Singh Choudhary, JCIT-DR lquokbZ dh rkjh[k@Date of Hearing : 13/05/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: : 03 /06/2025 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against the order of learned National Faceless Appeal Centre, Delhi[ for short CIT(A) ]dated 17.08.2023 for the assessment year 2017-18 raising therein following grounds of appeal. ‘’1. In the facts and circumstances the case and in law, Id. CIT(A)/National Faceless Appeal Centre (NFAC) has erred in confirming the action of Id. AO in making additions of Rs 24,80,000 under Section 69A. The action of the Id CIT(A)/NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the additions of Rs. 24,80,000 made under Section 69A of the Income Tax Act, 1961.
2. In the facts and circumstances of the case and in law, Id. CIT(A)NFAC has erred in confirming the action of the Id. AO, in invoking provisions of Section 115BBE of the Income Tax Act, 1961. The action of the Id. CIT(A)/NFAC is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the invocation of Section 115BBE, as being not in accordance with the relevant law.
2.1 At the outset of hearing of the appeal, the Bench noticed that there is delay of 394 days in filing the appeal for which the Director of the assessee company has filed an application dated 28-11-2024 for condonation of delay with following prayers. ‘’1. The tax matters of assessee company were previously handled by Chartered Accountant Sunil Mittal, who was entrusted with all taxation and compliance matters, including the handling of assessment and appellate proceedings. The e- filing portal was registered with the email ID of the said CA, and all communications, including notices and orders, were sent to his registered email ID.
The said CA had been suffering from severe health issues during the relevant period. Due to his health condition, he was unable to providing timely communication of notices and orders to the assessee company. Despite our best efforts to obtain relevant evidence from the CA regarding his health condition, we were unable to do so. The CA, citing personal reasons, expressed his discomfort in divulging such details or providing the requested evidence to the assessee company 3. Assessee company was unaware of the issuance of notices and the subsequent appellate order passed by Id. CIT(A) as these were sent to the email ID of the CA. There was no effective communication from the CA during this period, further intensifying the situation.
Assessee company became aware of the matter upon receiving a physical notice under Section 274 r.w.s 271AAC(1) dated 29.10.2024. After receiving the notice, assessee company approached a Tax Consultant, who advised filing an appeal before the Hon'ble ITAT against the order passed by the NFAC. Consequently, the present appeal has been filed.
M/S. KIRTI KRISHNA TRADEMART PVT LTD VS ITO, WARD-2, BHARATPUR 5. I assure you that this delay was purely due to the unforeseen personal tragedy and not due to any wilful negligence or disregard for the law.
That subsequently, I filed the appeal before the Hon'ble bench, resulting in a delay of 409 days in filing the appeal. Delay in filing the appeal was neither intentional nor due to any negligence or mala fide intention on my part but was caused due to the reasons mentioned above, which were beyond my control. As per the provisions of Section 253(5) of the ITA, if there is sufficient cause for delay in filing of appeal, Hon'ble ITAT may condone such delay It is submitted that the delay was not deliberate. In view of above, it is humbly prayed that delay in filing of appeal may please be condoned. Reliance is placed on the following judicial pronouncement of the Hon'ble Supreme Court: Collector, Land Acquisition vs. Mst. Katiji [1987] 167 ITR 471 "The legislature has conferred the power to condone delay by enacting S.5 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on "merits" The expression "sufficient cause" employed by the legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the end of justice that being the life- purpose of the existence of the institution of courts." In view of above, a very humble prayer is made for condoning the delay.’’ To this effect, the Director Shri Krishna has filed an affidavit deposing therein the above facts. 2.2 On the other hand, the ld. DR objected to such inordinate delay but submitted that the Court may decide the issue as deemed fit and proper in the case. 2.3 After hearing both the parties and perusing the materials available on record, the Bench noticed that there is valid reason that the person M/S. KIRTI KRISHNA TRADEMART PVT LTD VS ITO, WARD-2, BHARATPUR handling the affairs becomes ill and that is why the assessee was prevented in filing the appeal before the ITAT. In this view of the matter, the delay is condoned as the assessee has sufficient reasons. 3.1 Apropos grounds of appeal, it is noticed from the assessment order that the assessee had made cash deposit amounting to Rs.16.00 lacs and other credit entries appearing in the bank account of Rs.8,80,000/- and thus making the total amount of Rs.24.80 lacs in the bank account during the year under consideration i.e. 2017-18 and the same remained unexplained. The AO noted that the assessee had not filed ITR, not declared its true income and not paid due taxes thereon. The assessee had failed to give any satisfactory explanation about the nature and source of cash deposits and thus the AO treated this unexplained money u/s 69A of the Act and added to the total income of the assessee for the reason that there was failure on the part of the assessee to furnish the Income Tax Return for the A.Y. 2017-18 and the AO had no option but to complete the assessment u/s 144 of the Act making addition of Rs.24.80 lacs with following observations. ‘’Assessed u/s 144 of the Income tax Act, 1961 at total income of Rs. 24,80,000/-. The amount of income tax is calculated @ 60% as per provisions of section 115 BBE of the I.T. Act, 1961. Interest u/s 234A and 2348 is charged as per Rules. Demand notice u/s 156 of the I.T. Act for the sum payable as shown in the ITNS attached and forming part of assessment order, issued. Penalty proceedings u/s 271AAC of the Income tax Act, 1961 in respect of income M/S. KIRTI KRISHNA TRADEMART PVT LTD VS ITO, WARD-2, BHARATPUR determined u/s 69A of the Income-tax Act, 1961, u/s 271F for failure to furnish the return of income as required u/s 139(1) of the I.T. Act, 1961 before the end of relevant assessment year and u/s 272A(1)(d) of the Income tax Act, 1961for non compliance of notice u/s 142(1) of the I.T. Act, 1961 are being initiated separately and noticed are being issued separately.
3.2 The ld. CIT(A) has passed an ex-parte order observing that the assessee had not furnished any evidence/ written submission to refute the addition mad in the assessment and thus remained unresponsive on these cash deposits during the course of appellate proceedings and hence the ld. CIT(A) upheld the addition of Rs.24.80 lacs made by the AO. 3.3 During the course of hearing, the ld. AR of the assessee submitted that the orders passed by the lower authorities are ex-parte orders for the reason that the counsel of the assessee company became unwell and was unable to furnish any reply before the AO. He further submitted that the cash deposits were out of the cash balances available in the last audited balance sheet for the A.Y. 2015-16 and submitted that the credit entries amounting to Rs.8,80,000/- were received out of old dues. Conclusively, the ld. AR of the assessee prayed before the Bench to restore the matter to the file of the AO to decide the issue afresh by providing one more opportunity to the assessee to advance the arguments on its merits. 3.3 On the other hand, the ld. DR relied upon the orders of the lower authorities.
M/S. KIRTI KRISHNA TRADEMART PVT LTD VS ITO, WARD-2, BHARATPUR 3.4 We have heard both the parties and perused the materials available on record. In this case, it is noted that the AO made total addition of 24.80 lacs by passing an ex-parte order. The additions were made on account of cash deposits of Rs.16.00 lacs and clearing entries of Rs.8.80 lacs in the bank account of the assessee company. In first appeal, the ld. CIT(A) has confirmed the action of the AO as the assessee failed to furnish any evidence or written submission to refute the addition made in the assessment order and the assessee was unresponsive on these cash deposits before him.It is an admitted fact that the assessee is ex-parte before the AO and before the ld. CIT(A). Therefore, he could not put forth his defense. It was the bounded duty of the assessee to appear before the statutory authorities as and when called for. It is noticed that various opportunities were provided to the assessee for settling the issue, but the assessee remained lethargic and unserious in pursuing his case. However, we are of the view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing opportunity of being heard to the assessee. Hence, the matter is restored to the file of the AO to decide it afresh by providing one more opportunity of hearing, however, the assessee will not seek any adjournment on frivolous M/S. KIRTI KRISHNA TRADEMART PVT LTD VS ITO, WARD-2, BHARATPUR ground and remain cooperative during the course of proceedings. Thus, the appeal of the assessee is allowed for statistical purposes. 3.5 Before parting, we may make it clear that our decision to restore the matter back to the file of the AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by AO independently in accordance with law. 4.0 In the result, theappeal of the assessee is allowed for statistical purposes Order pronounced in the open court on 03 /06/2025.
Sd/- Sd/- ¼Mk0 ,l- lhrky{eh ½ ¼jkBksMdeys'kt;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;dlnL;@Judicial Member ys[kklnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 03 /06/2025 *Mishra आदेश की प्रतिलिपिअग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- M/s. Kirti Krishna Trademart Pvt Ltd. ,Bharatpur 2. izR;FkhZ@ The Respondent- The ITO, Ward 2, Bharatpur 3. vk;djvk;qDr@ Theld CIT 4. विभागीय प्रतिनिधि] आयकरअपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File ( By order,
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