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Income Tax Appellate Tribunal, “H” Bench, Mumbai
Before: Shri Ravish Sood & Shri N.K. Pradhan
O R D E R
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the CIT(A)-24, Mumbai, dated 02.03.2017, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income Tax Act, 1961 (for short „Act‟), dated 27.03.2015 for A.Y. 2011-12. The assessee has assailed the impugned order on the following grounds of appeal before us: “1. The Learned Commissioner of Income Tax (Appeals)-24, Mumbai erred in upholding Assessing Officer's view of treating unsecured loans of Rs.64,59,741/ - taken from 18 persons in the previous year as unexplained cash credit u/s 68 of the Income Tax Act, 1961.
2. The Learned Commissioner of Income Tax (Appeals) -24 erred in upholding the Assessing Officer's view in initiating penalty proceedings u/s 271(1) (c) and levying interest u/s 234A, 234B & 234C.
3. The appellant craves, leave to add, amend, modify or after all or any of the above grounds of appeal.”
P a g e | M/s Kalyanji Walji Pvt. Ltd. Vs. The Income Tax Officer-15(2)(1) 2. Briefly stated, the assessee company which is engaged in the business of Rail Travel Services Agents & Warehouse Services had e-filed its return of income for A.Y. 2012-13 on 27.09.2012, declaring its total income at Rs.27,788/-. Return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2).
During the course of the assessment proceedings it was observed by the A.O that a perusal of the “balance sheet” of the assessee company revealed, that „the assessee had raised certain „unsecured loans‟ during the year. On the basis of the aforesaid fact, the A.O called upon the assessee to submit the details as regards the loans raised during the year under consideration, and also to prove the identity, genuineness and creditworthiness of the persons who had advanced the said loans. In reply, the assessee filed the „ledger accounts‟ of the aforementioned parties which were found to be signed by the assessee. No other supporting documentary evidence was placed on record by the assessee company. Also, it was observed by the A.O, that many of the loans were accepted and repaid by the assessee in cash during the year under consideration. It was the claim of the assessee company that documentary evidence in support of the creditworthiness, identity and genuineness of the loan creditors could not be furnished, for the reason, that a fire accident had taken place at its business premises and the entire data was lost. However, the aforesaid claim of the assessee was not accepted by the A.O. As the assessee had failed to place on record any documentary evidence in support of its claim of having raised genuine loans from aforesaid parties, therefore, the A.O added the entire amount of such loans aggregating to Rs.64,59,741/- as unexplained cash credit under Sec.68 of the Act. As regards the claim of the assessee, that the requisite details could not be furnished because the same were lost in the course of the fire accident at its premises, it was observed by the A.O, that the said claim did not inspire any confidence. Also, the A.O held a strong conviction that it was beyond comprehension that the assessee would not be aware about the identity of the persons who had advanced an amount of more than Rs.80 lacs to it. Accordingly, on the basis of his aforesaid observations, the A.O after making an addition of Rs.64,59,741/- under Sec. 68, therein assessed the income of the assessee vide his order passed under Sec.143(3), dated 27.03.2015 at an amount of Rs.64,87,530/-.
P a g e | M/s Kalyanji Walji Pvt. Ltd. Vs. The Income Tax Officer-15(2)(1) 4. Aggrieved, the assessee carried the matter in appeal before the CIT(A). Observing, that the assessee despite having been afforded several opportunities had failed to put up an appearance, the CIT(A) for the said reason dismissed the appeal.
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As is discernible from the assessment order, the assessee had failed to substantiate the identity, genuineness and creditworthiness of the 18 persons (mentioned in the assessment order) from whom it had claimed to have raised loans aggregating to Rs.64,59,741/- during the year under consideration. Accordingly, the A.O treating the aforesaid amount of Rs. 64,59,741/- as an unexplained cash credit under Sec.68, added the same to the income of the assessee. Aggrieved, the assessee had assailed the assessment order in appeal before the CIT(A). We find that as the assessee had failed to put up an appearance in the course of the proceedings before the CIT(A), therefore, for the said reason, he had without adverting to the merits of the case had dismissed the appeal, observing as under:
“2.4.2 From the above, it is observed that several opportunities of hearing were afforded to the appellant and there has been no proper compliance which shows that the appellant has no interest to pursue or prosecute the appeal. The notices have been duly served on the appellant and acknowledgements placed on record. But there was no response from the appellant/the AR nor was filed anything in support of the appeal. Though it has sought adjournment on various occasions, it did not comply with the appeal proceedings. It is the appellant which filed this appeal aggrieved by the assessment order and the appellant is expected to not only pursue the appeal but effectively prosecute the appeal before the appellate authority if it is genuinely aggrieved by the assessment order. In view of the facts and circumstances narrated above, the appeal filed by the appellant does not deserve any merit consideration and has to be dismissed. Hence, I have no other option but to dismiss the appeal. Reliance is placed on the decision of the Hon‟ble Chandigarh Tribunal in the case of Susham Singla (33 ITR 449)(2014). In this case it was held that where none was present on behalf of the appellant for hearing, neither any adjournment was sought. the appeals filed by the assessee was to be dismissed. Honbie Cochin Bench of the ITAT in its decision (43 Taxmann.com 176) observed that the assessee's appeal can be dismissed where the assessee had failed to show that there was a reasonable cause for non-appearance on the date of hearing of appeal. Also, the Hon‟ble jurisdictional High Court in a recent judgment in the case of Bharat Petroleum Corporation Ltd (359 [[R 371) (2014) upheld the dismissal of the appeal by the Tribunal for not prosecuting the appeal filed before the Tribunal. Similarly, Hon‟ble Bombay High Court in the case of Jayantilal S. Shah (53 Taxman 229) upheld the decision of the Tribunal in favour of the Revenue. In this case the assessee sought an adjournment in certain proceedings before the Tribunal which was granted and on the adjourned date chose not to attend the proceedings. The Tribunal's rejection of the assessee's petition without further opportunity of being heard was upheld by the Bombay High Court. Reliance is also placed on the decision of the Hon‟ble Delhi court in the case of Multiplan India P. Ltd 381TD 320(1991)(Delhi).
P a g e | M/s Kalyanji Walji Pvt. Ltd. Vs. The Income Tax Officer-15(2)(1) In the light of the facts of the case and the decisions of the cases cited above, I dismiss the appeal.”
The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the assessee appellant despite having been put to notice about the fixation of appeal before us, had failed to put up an appearance, therefore, we proceed with as per Rule 24 of the Appellate Tribunal Rules, 1962 and dispose off the appeal after hearing the respondent revenue.
The ld. Departmental representative (for short „D.R‟) had erlied on the orders of the lower authorities.
We have given a thoughtful consideration and are unable to persuade ourselves to subscribe to the manner in which the appeal had been disposed off by the CIT(A). On a perusal of the order of the CIT(A), we find, that he had summarily dismissed the appeal of the assessee for non-prosecution and had failed to apply his mind to the issue which was specifically raised by the assessee before him. In our considered view, once an appeal is preferred before the CIT(A), it is obligatory on his part to dispose off the same on merit. We are of a strong conviction that it is not open for the CIT(A) to summarily dismiss the appeal on account of non- prosecution of the same by the assessee. A perusal of Sec.251(1)(a) and (b), and also Explanation to Sec.251(2) reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. Our aforesaid view is fortified by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthara (HUF) (2016) 240 taxmann 133 (Bom). In the aforementioned case, the Hon‟ble jurisdictional High Court had observed 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 obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the P a g e | M/s Kalyanji Walji Pvt. Ltd. Vs. The Income Tax Officer-15(2)(1) AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s. 251(1)(a) and (b) and Explanation to Sec. 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.