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Income Tax Appellate Tribunal, DELHI BENCH: “C”, NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
Date of hearing 30.04.2019 Date of pronouncement 30.04.2019 ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against order dated 08/09/2017 passed by the Ld. Commissioner of Income-tax (Appeals)-11, New Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2009-10 raising following grounds:
1. That the learned Commissioner of Income Tax (Appeals) 11, New Delhi has grossly erred both in law and on facts in upholding the initiation of proceedings u/s 147 of the Act and assumption of jurisdiction to frame an assessment u/s 147/143(3) of the Act despite the fact that there was no material on record to form “reason to believe” that income of the appellant had escaped assessment and thus both deserve to be quashed as such.
2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in proceedings to dispose of the appeal ex-parte without granting any fair and proper opportunity of being heard to the appellant.
2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that there was reasonable cause for the appellant for not causing appearance on the dates fixed for hearing and as such disposal of the appeal without granting fair, meaningful and proper opportunity is untenable. 2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that non appearance of the appellant on the date of hearing was neither intentional nor deliberate and is not a case where applicant is not interested in prosecuting its appeal. 3 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in upholding the addition of Rs. 15,59,350/- representing cash deposits and held to be unexplained cash credit u/s 68 of the Act.
That the learned Commission of Income Tax (Appeals) has erred both in law and on facts in upholding the addition of Rs. 6,87,628/- representing the alleged unexplained expenditure incurred on credit card by the appellant 5. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in sustaining an addition of Rs.42,69,738/- representing loan advance to M/s Associated Switchgears and Project Ltd and incorrectly held to be unexplained cash credit u/s 68 of the Act.
That both the authorities below have framed the orders without granting sufficient proper opportunity to the appellant and therefore the same are contrary to principles of natural justice and hence vitiated.
That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding the levy of interest of Rs. 21,34,443/- u/s 234B of the Act and Rs. 427/- u/s 234C of the Act respectively. Commissioner of Income Tax (Appeals) has erred both on facts and in law in upholding both the notice issued u/s 148 of the Act and assessment framed u/s 147/143(3) of the Act, which were without jurisdiction and thus be quashed as such. It is also prayed that, it be held that order disposing of the appeal ex-parte by the learned Commissioner of Income Tax (Appeals) be set-aside and further prayed that, additions alongwith interest levied may kindly be deleted and. appeal of the appellant be allowed.
Briefly stated facts of the case are that return of income was filed by the assessee on 30/03/2011, declaring total income of Rs.2,56,099/-. Subsequently, the Assessing Officer reopened the assessment proceeding under section 147 of the Income-tax Act, 1961 (in short ‘the Act’), by way of issue of notice under section 148 of the Act on 29/03/2016. The assessee submitted that return of income filed in regular course (i.e. on 30.03.2011) might be treated as return of income filed in response to notice under section 148 of the Act. The objections raised by the assessee against the reopening were also disposed of by the Assessing Officer vide letter dated 03/05/2016. After issuing statutory notices and considering submission of the assessee, the Assessing Officer in assessment order dated 16/12/2016 made following additions to the returned income: 1. Unexplained cash deposited in bank account of Rs.15,59,350/- 2. Unexplained source of payment of credit card bills mounting to Rs.6,87,628/- 3. Unexplained source of loan given to M/s associated switchgears and Project Ltd home Rs.42,69,738/- 4. This allows of expenses incurred in relation to car amounting to Rs.2,96,083/-. 2.1 Aggrieved, the assessee filed appeal before the Ld. CIT(A). The Ld. CIT(A) in the impugned order dated 08/09/2017 noted that no compliance of the notices issued by him were made by the assessee and accordingly, he dismissed the appeal of the assessee ex parte. The relevant part of the order of the Ld. CIT(A) is reproduced as under: “4. In order to give proper opportunity to the appellant to present his case and to defend the grounds of appeal taken by him, the case was posted for hearing on various dates, the details of which are as under:
Date of Date of Status Notice hearing fixed 07.04.2017 15.05.2017 On the request of Sanjay Satpaj & Associates, CA firm, the case was adjourned to 06.06.2017. On 06.06.2017, again on similar request, the case was adjourned to 12.07.2017 and on 12.07.2017, the hearing was again adjourned to 10.08.2017 on request. On 10.08.2017, there was no compliance. 16.08.2017 25.08.2017 No compliance despite the fact that it was clearly conveyed that this was the last opportunity. The notice was sent through e-mail. | 4.1 As can be seen from the above details, the appellant has been provided reasonable number of opportunities but he has chosen not to avail any of these. No written submission has been made by the appellant, in support of the grounds taken during the appeal. It appears that the appellant is not keen to pursue the appeal and no material/argument has been brought on record by the appellant against the order of the AO and in support of the grounds taken in appeal. Reference is made to the decision of Hon’ble Supreme Court in the case of CIT vs. BN Bhattacharya (1997) 118 ITR 461 (SC), in which the Hon’ble Apex Court while dealing with, the issue of prosecution of appeal has stated that- “Preferring an appeal means more than formally filing it but effectively pursuing it” The Delhi Tribunal in CIT vs. Multiplan India Pvt. Ltd. as: reported in 38 ITD 320 (Delhi) when faced with a similar situation of non- prosecution of appeal, dismissed the appeal of revenue. 4.2 In view of these facts. I am of the opinion that no interference is called for in the AO’s order and therefore, the grounds of appeal are dismissed and the addition made by the AO is confirmed.” 2.2 On merits, the Ld. CIT(A) simply upheld the additions without any reasoning. Hence, the assessee is before us.
3. Before us, the Ld. counsel of the assessee submitted that the appeal has not been decided on merit by the Ld. CIT(A) and if opportunity is granted, the assessee will produce all the necessary documents in support of its claim. The ld. counsel has undertaken to appear before the Ld. CIT(A) and coordinate in appellate proceedings.
4. On the contrary, the Ld. DR opposed restoring of the matter to the Ld. CIT(A) and submitted that assessee has already been provided sufficient opportunity by the Ld. CIT(A), but same has not been availed by the assessee, and thus, no further opportunity should be provided to the assessee.
We have heard the rival submission of the parties and perused the relevant material on record, including the impugned order of the Ld. CIT(A). The Ld. CIT(A) has dismissed the appeal due to non-prosecution of the appeal by the assessee. In terms of section 250 and 251 of the Act, first appellate authority is conferred with the powers to decide an appeal against an order of assessment by confirming, reducing, enhancing or annulling the assessment, after hearing both the parties, i.e., the assessee and the Assessing Officer. Even, the power to set–aside an assessment order has been taken away from the first appellate authority by the amendment brought to the statute in Finance Act, 2001, w.e.f. 1st June, 2001. Therefore, while deciding an appeal filed by the assessee under section 246A of the Act, learned Commissioner (Appeals) has to act within the parameters laid out in section 251(1)(a) of the Act. Interpreting the aforesaid statutory provision, the Hon’ble Bombay High Court in Prem Kumar Arjundas Luthra (HUF) (ITA No.2336 of 2013, dated 25.04.2016; [2017] 297 CTR 614, has held as under:- “8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the Section 251 (1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.”
6. We note that in the instant case, the Ld. CIT(A) has provided various opportunities to the assessee, but same could not be availed by the assessee and the Ld. CIT(A) has dismissed the appeal. Before us, the Ld. counsel of the assessee has undertaken to appear before the Ld. CIT(A) and cooperate in the appellate proceedings. In view of the interest of substantial justice and undertaking given by the Ld counsel, we feel it appropriate to restore the issues involved in the appeal back to the file of the Ld. CIT(A) for deciding afresh as the learned CIT(A) has not exercised 251(1)(a) of the Act. Accordingly, we set aside the impugned order of the learned CIT(A) and restore all the issues raised in the present appeal to the learned CIT(A) for de-novo adjudication. Consequently, the appeal filed by the assessee before the learned CIT(A) is restored back to its original position. It is open for the assessee to raise all such issues before the first appellate authority for contesting the assessment order passed by the Assessing Officer. Needless to mention, the learned CIT(A) must afford reasonable opportunity of being heard to the assessee as well as to the Assessing officer before deciding the appeal. With the aforesaid observations, the grounds raised
are allowed for statistical purposes.
11. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 30th April, 2019.