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Facts
The assessee, engaged in a small business of phone recharge and SIM cards, did not file an income tax return for AY 2017-18, claiming income was below the taxable limit. Despite multiple notices under section 142(1) of the Income Tax Act, 1961, the assessee failed to comply. The Assessing Officer (AO) made an ex-parte assessment by treating 5% of total bank deposits as income.
Held
The Tribunal noted that the assessee consistently failed to comply with statutory notices, leading to an ex-parte assessment. However, considering the assessee's prayer for an opportunity to present their case, the Tribunal decided to restore the matter to the AO for fresh adjudication, without commenting on the merits of the dispute.
Key Issues
Whether the ex-parte assessment was justified due to non-compliance with notices, and whether the assessee should be granted another opportunity to present their case.
Sections Cited
144, 142(1), 234A, 234B, 133(6), 250, 36
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1314/JPR/2024
fu/kZkj.k o"kZ@Assessment Year : 2017-18 Wasim Akram cuke Income Tax Officer, S/o Bashir Khan, Vs. Ward-2, Jalalsar, Fatehpur, Sikar. Sikar. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BIUPA8140G vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Mrs. Vipula Kumari, C.A. jktLo dh vksj ls@ Revenue by : Shri Gautam Singh Choudhary, JCIT a lquokbZ dh rkjh[k@ Date of Hearing : 17/02/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 29/04/2025 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M.
This appeal is filed by the assessee against the order of the Ld. Addl/JCIT(A)-10, Mumbai dated 28.08.2024 for the assessment year 2017-18, which in turn arise from the order dated 13.12.2019 passed under section 144 of the Income Tax Act, 1961[hereinafter referred to as “Act” ] by the ITO, Ward-2, Sikar.
The assessee has raised following grounds:- “1. It is submitted that appeal of the appellant was not discussed on merits. It was rejected on the ground that the appellant was in India for the period from Wasim Akram , Sikar 10.11.2019 to 04.12.2019. And the appellant was deliberately not complying with the statutory notice issued to him, even though these notices were served upon him electronically, through speed post.
2. In this regard, the appellant want to say that he was come to India on 10.11.2019 and return back on 04.12.2019, during this 25 days period he was very busy to meet his family & friends and to attend family functions. Because, he had to go back to abroad after completion of his holidays. The appellant is a resident of a small village and not well educated, hence, he did not check email accounts on regular basis. During this period he did not received the notices issued by the department, otherwise he would definitely submit reply of notices. Therefore, it is humbly requested that this case should be discussed on merits of the case.
3. Further, in respect of non-filing of Income tax return it is submitted that a general understanding is lies in general public that the books of accounts and an income-tax return (ITR), is required to be filed only if the taxable income exceeds the basic exemption limit for a relevant financial year. The appellant is also a resident of a small village and not well educated, hence, he also thought that the books of accounts and an income-tax return (ITR), is not required to be filed as his income did not exceeds the basic exemption limit in the Financial Year 2016-17.
4. Further, it is submitted that Assessing officer himself noted in the demand order that appellant was doing business of phone recharge, sim card etc. on discount basis which may vary between 2 to 3% as per market norms. But the Assessing Officer has considered income @of 5% of the total deposits in Canara Bank Account No.3384201000019, as the appellant has failed to comply with notices u/s 142(1) of the Act.
5. In this regard, it is submitted that the appellant failed to comply with the notices issued by the department due to non-receipt of these notices and unawareness of provisions of Income tax Act. There is no Liability to pay Income Tax on the appellant in the financial year 2016-17 as the income of the taxpayer is below the taxable limit. It is also accepted by the assessing officer that the taxpayer was doing a small business in a small village i.e. trading of sim cards, phone recharge coupons etc. And trading business of sim cards and phone recharge coupons are done on the basis of very low commission @ 2%- 3%. When we calculate the commission amount at the rate of 3% of total deposits, the actual commission received in the Financial Year 2016-17 was Rs. 3,60,227/- and after deducting expenses of Rs. 1,30,000/- (for Shop rent, worker salary, electricity bill and other miscellaneous expenses), the actual Wasim Akram , Sikar income for the Financial Year 2016-17 was Rs. 2,30,227/-, which is below the taxable income. Hence, the taxpayer did not file income tax return and did not maintain the books of accounts. When all the transactions are recorded in the bank account, then nothing was suppressed.
6. Thus the very basis on which the order has proceeded is wrong and on this ground alone the order deserves to be set aside. Further, the findings of the Assessing officer that the appellant was not serious and his attitude was non- cooperative, is wholly incorrect and in disregard of the fact that there was reasonable cause for alleged non-compliance on the dates fixed for hearing. The appellant’s business of phone recharge was not in good condition, because the same was running is a small village. Hence he appointed a sales man for this business and he himself, went to Dubai for job.”
3. The brief facts of the case are that the assessee is an individual and carrying on a small business of phone recharge, sim card etc. Income of the assessee was below the taxable limit thereafter he did not file return of income tax for the A.Y. 2017-18. Notice u/s 142(1) of the I.T. Act, 1961 was issued on 12/03/2016, which was served upon the assessee by registered post requiring the assessee to furnish true and correct return of income on or before 21/03/2018. The reason for issuing the notice u/s 142(1) was that the assessee has made cash deposits in the bank accounts during the demonetization period. But, the assessee did not comply with this notice. As per information gathered from the banks, it has been noticed that the assessee has made cash deposits during the year under consideration amounted to Rs.1,20,60,562/- including cash amount of Rs.12,33,950/- was deposited during the demonetization period. Because Wasim Akram , Sikar of failure on the part of the assessee in not complying with the statutory notice u/s 142(1) of the I.T. Act, 1961 issued on 12/03/2018, notices u/s 142(1) of the I.T. Act, 1961 were issued on 23/04/2019, 15/05/2019, 20/08/2019, 28/08/2019, 04/09/2019. But all the notices remained not complied with. Looking to the non cooperative attitude of the assessee, a final show cause notice was issued to the assessee to explain the case. However, again, the show cause notice issued remained not complied. In view of the above facts, I am left with no other alternative except to complete the assessment ex-parte as per provisions of section 144 of the I.T. Act, 1961, on the basis of material available on record. On perusal of the case records, it is noticed that the assessee has deposited cash almost on daily basis. It appears that the assessee after depositing cash in Canara Bank transferred the amount through NEFT to Bharti Hexacom Limited. The total cash deposited during the year under consideration including demonetization period is of Rs.1,20,07,563/- which includes some other receipts also. It appears that the assessee is doing business of phone recharge, sim card etc. on discount basis which may vary between 2 to 3% as per market norms. Since the assessee has failed to comply with notices u/s 142(1) of the IT Act, 1961 income may be considered @ of 5% of the total deposits in Canara Bank account No.3384201000019. As such, the income of the assessee is worked at the rate of 5% of total cash
Being aggrieved, from the said order of assessment, the assessee has filed an appeal before the Ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving following findings on the issue:-
“6. Findings and decision: 6.1. Ground Nos 1 & 2 raised by the appellant pertain to issue i.e. the A.O.'s action in making addition of Rs. 6,00,380/- on account unexplained cash deposit by the appellant in the assessment order passed on 13.12.2019 u/s. 144 of the Act. 6.1.1. I have carefully considered Form No. 35, statement of facts, submission/details uploaded in the system and the grounds of appeal raised. Submissions of the appellant are carefully considered and order passed on 13.12.2019 u/s 144 passed by the AO is also perused. The appellant's submissions are not found to be acceptable in view of the following reasons:- (I). In this case, the appellant has not filed his return of income for the year under consideration. As per the information and bank account statements obtained under the provisions of section 133(6) of the Act, from CANARA Bank, the appellant was having bank account, bearing No. 3384201000019. On perusal of above bank statements for the period from 01.04.2016 to 31.03.2017, it has been noticed that there has been following cash deposits in said accont:- Cash deposit during Demonetization Rs. 12,33,950/- Cash deposit during the year Rs. 1,20,07,563/- Thus, as per information gathered, it has been noticed that the appellant has made cash deposits during the year under consideration amounted to Rs.1,20,60,562/- including cash amount of Rs. 12.33,950/- deposited during the demonetization period. Here this is pertinent to reproduce the copy of show cause notice dated 25.11.2019, issued to the appellant, as under:-
Wasim Akram , Sikar …………………………………………… On perusal of the aforesaid show cause notice dated 25.11.2019, the following facts are crystal clear in the case of the appellant:- (a). A notice u/s. 142(1) of the Act dated 12.03.2018 was issued to the appellant through ITBA portal, requiring him to furnish his return of income for the assessment year 2017-18 on or before 31.03.2018. This notice was served upon the appellant through speed post. However, the appellant has failed to comply with this notice. (b). Another notice u/s 142(1) of the Act dated 23-04-2019 was issued to the appellant and was served upon to the appellant through speed post as well as through Inspector, requiring him to furnish certain details/information, bank account etc. The date of compliance was fixed on or before 08.05.2019. In response to this notice to the appellant requested adjournment of fifteen days so next date of hearing in your case was fixed on 23.05.2019. However, again no compliance to the above statutory notice was made by him till the date of compliance. In this regard a letter dated 28/05/2019 was written to the appellant and duly served upon the appellant and the same is reproduced as under:- ………………………….. (c). Further, notice u/s 142(1) of the IT Act, 1961 alongwith questionnaire was also issued to him on 06/06/2019 and the same was duly served upon the appellant. The date of hearing was fixed on 14/06/2019 but no compliance has been made by to the appellant on the given date. (d). Again a notice u/s 142(1) of the Act alongwith questionnaire was issued to the appellant on 20/08/2019 and the same was duly served upon the appellant. The date of hearing was fixed on 26/08/2019 but again no compliance has been made by to the appellant on the given date. (e) Again a notice u/s 142(1) of the Act along with questionnaire was issued to the appellant on 28/08/2019 and the same was duly served upon the appellant. The date of hearing was fixed on 02/09/2019 but again no compliance has been made. (II). Here this is pertinent to mention that the notices u/s 142(1) of the Act were served upon the appellant electronically as well as through ward Inspector and the appellant was required to furnish the evidence/information online electronically in 'E-Proceeding' facility through your account in 'e- filing' website of Income Tax Department. However, the appellant has not submitted the required information and details/evidence to the A.O.
Wasim Akram , Sikar (III). Admittedly, the appellant was in India for the period from 10.11.2019 to 04.12.2019. The aforesaid detailed show cause notice dated 25.11.2019 was issued and served upon the appellant, while he was in India, duly intimating him that this was last and final opportunity to furnish the requisite details, documents and accounts on or before 29.11.2019, failing which assessment in his case will be completed as ex-parte assessment under the provisions of section 144 of the Act on the basis of material available. However, the appellant has not submitted the required details, documents and evidence to the A.O. (IV). In view of the above discussion, it is clear that the appellant was deliberately not complying with the statutory notice issued to him, even though these notices were served upon him electronically, through speed post as well as Inspector of A.O.'s office with the request to furnish his return of income or with the request to furnish certain details/information/bank account etc which were necessary for proceeding ahead for completion of proceedings initiated in his case for the assessment year 2017-18. 6.1.2. In view of the above facts, A.O. was left with no other alternative except to complete the assessment ex-parte as per provisions of section 144 of the Act on the basis of material available on record. On perusal of the case records, it was noticed that the appellant has deposited cash almost on daily basis. The total cash deposited during the year under consideration including demonetization period is of Rs. 1,20,07,563/- which included some other receipts also. A.O. noted that appellant after depositing cash in Canara Bank transferred the amount through NEFT to Bharti Hexacom Limited. A.O. further noted that the appellant was doing business of phone recharge, sim card etc. on discount basis which may vary between 2 to 3% as per market norms. Since the appellant has failed to comply with notices u/s 142(1) of the Act, A.O. has rightly considered income @ of 5% of the total deposits in Canara Bank Account No.3384201000019. As such, total income of Rs. 6,00,380/- of the assessee was rightly worked out at the rate of 5% of total cash deposited in Canara Bank amounted to Rs.1,20,07,563/- and the A.O rightly passed the assessment order on 13.12.2019 u/s. 144 after making addition of Rs. 6,00,380/- on account unexplained cash deposit by the appellant thereby assessing total income at Rs. 6,00,380/-. 6.1.3. In view of the detailed reasons given above, the Ground Nos. 1 and 2 of appeal taken by the appellant are dismissed. 6.2. Ground No. 3 and 4: These ground relates to levy of interest u/s 234A and 234b. Charging of interest is mandatory as held in the case of CIT Vs. Anjum Wasim Akram , Sikar M. H. Ghaswala 252 ITR 1. Therefore, this Ground Nos 3 and 4 of appeal are dismissed. 6.3. Ground No. 5: This ground relates to the appellant's right to add, alter, amend or delete any of the above grounds of appeal
. Since this right was never exercised by the appellant during the appellate proceedings, this ground has become infructuous, so treated as dismissed. Therefore, this Ground No 5 of appeal is dismissed.
7. In the result, the present appeal is DISMISSED.”
5. Aggrieved from the order of the ld. CIT(A) the assessee has preferred this appeal before us on the grounds as reiterated in para 2 above. To support the various contention so raised by the ld. AR of the assessee in the written submission, he also relied upon the following evidences:- S. No. Particulars Page No.
Copy of assessment of order u/s 144 1-5 2. Copy of computation sheet 6-9 3. Copy of CIT(Appeals) 10-11 4. Copy of Form 35 12-21 5. Copy of profit & loss A/c Balance sheet 22-23 6. Copy of passport 24-28 7. Copy of authorization letter 29 8. Copy of order u/s 250 30-45 9. Copy of form 36 46-48 10. Copy of challan 49 11. Copy of last update on portal 50 12. Copy of Email address send to old emial on 19.02.2024 51 13 Copy of Email address send to old emial on 16.07.2024 52 14. Copy of Email address send to old emial on 19.08.2024 53
During the course of hearing, the ld. AR for the assessee prayed that the Ld. CIT(A) and the AO has passed the ex-parte order and the Wasim Akram , Sikar assessee was not provided adequate opportunity of being heard. Thus, the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. AO in the interest of equity and justice.
Per contra, Ld. DR objected to the prayer of the assessee and submitted that even the assessee did not represent case before the ld. AO and therefore, in that case the Bench feels the matter may be restored to the file of the Assessing Officer.
We have heard both the parties and perused the materials available on record. The bench noted from the order of ld. CIT(A) that the appeal of the assessee was dismissed by the ld. CIT (A) for want of non- prosecution of the appeal. The assessee did not appear or filed any reply to the notices which were issued by the ld. AO during the assessment proceedings, finally the assessee completed ex-parte assessment. However, the Bench feels that the assessee because of any reasons could not advance his arguments/submissions to contest the case before the lower authorities and the ld. AR for the assessee also prayed to give one more opportunity to submit the evidences concerning the issue in question, with grounds so raised by the assessee, to decide it afresh by providing one more opportunity of hearing, however, the assessee will
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 29/04/2025.