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Facts
The assessee filed an appeal before the Tribunal, which was delayed by 177 days. The delay occurred because the notices from the CIT(A) were sent to an incorrect email address, and the assessee was unaware of the proceedings. The assessee's bank deposits during the demonetization period and other credits were treated as unexplained income by the AO under Section 69A of the Income Tax Act, 1961, and added to his total income.
Held
The Tribunal condoned the delay in filing the appeal due to lack of proper communication and opportunity of hearing. It was held that principles of natural justice require a party to be given sufficient opportunity to be heard. The matter was restored back to the AO for fresh adjudication.
Key Issues
Whether the assessee was denied adequate opportunity of hearing by the lower authorities and if the delay in filing the appeal should be condoned. Whether the additions made by the AO on account of cash deposits and credits are to be sustained.
Sections Cited
144, 69A, 139(1), 142(1), 133(6)
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Before: MS. SUCHITRTA RAGHUNATH KAMBLE & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 25.05.2024 by the National Faceless Appeal Centre, Delhi/ Commissioner of Income-tax (Appeals), [in short, ‘NFAC/CIT(A)’] for assessment year (AY) 2017-18, which in turn assessment order passed by Assessing Officer (in short, “AO”) u/s 144 of the Act on 30.09.2019.
The ground of appeal raised by the assessee is as under:
1. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in making addition of Rs.12,98,000/- on account of cash deposit made during the A.Y 17-18 Sunilkumar C Patel demonetization period treated as alleged unexplained money u/s.69A of the Income tax Act, 1961.
2. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in making addition of Rs.57,04,300/- on account of cash deposit made during the year other than demonetization period treated as alleged unexplained money u/s.69A of the Income tax Act, 1961.
3. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has erred in confirming the action of the AO in making addition of Rs.2,66,676/- on account of credit made during the year treated as unexplained money u/s.69A of the Income tax Act, 1961.
4. On the facts and in the circumstances of the case as well as the law on the subject, the Ld. CIT(A) has not offered adequate opportunities to hear, hence the case may please be set aside and restored back to the CIT(A) or AO.
5. It is, therefore, prayed that the above addition may please be deleted as learned members of the Tribunal may deem it proper.
6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal.”
3. In the instant case, appeal filed by the assessee is delayed by 177 days. The assessee has filed an affidavit for condonation of delay in filing of appeal before this Tribunal. In the affidavit, it has been stated that during the filing of appeal before CIT(A), his consultant had clearly mentioned the Email ID: jagashethca1@gmail.com for communication of hearing notices since assessee is not conversant with online mode of income tax proceedings; however, during appellate proceedings before CIT(A), all notices for hearing were issued on Email ID: patelsanip200534@gmail.com, which had been created by assessee’s erstwhile tax consultant for the purpose of filing of return of income only and was not used for any correspondence for long time. The assessee was unaware of dismissal of appeal by CIT(A), NFAC, Delhi. Besides, assessee was also not informed about the aforesaid hearing notices and order of CIT(A) by A.Y 17-18 Sunilkumar C Patel his previous consultant due to which he could not take necessary steps to file second appeal before the Tribunal, in stipulated time. Subsequently, when he came to know about the CIT(A)’s order, then he immediately downloaded the same and filed appeal before this Tribunal. The assessee submitted that the delay in filing appeal was neither wilful nor deliberate, but due to the circumstances beyond his control. He requested that in the interest of justice, the delay may be condoned and appeal may be decided on merit.
4. On the other hand, Ld.Sr. DR for the Revenue opposed the prayer of the assessee for condonation of delay. She, however, submitted that the Bench may decide the issue as it thinks fit.
We have heard both parties on this preliminary issue of condonation of delay. In the affidavit, it is submitted by the assessee that all notices issued by CIT(A) were sent on email address of his previous tax consultant, who had not communicated the assessee about the fate of appeal due to which delay of 177 days has occurred in filing appeal before the Tribunal. Considering all these facts, we find that the assessee was unaware of the proceedings due to which he was unable to file appeal before the Tribunal in time. Hence, the reasons given in the affidavit for condonation of delay are reasonable and the same would constitute sufficient cause for delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing, in the interest of justice. Now coming to merit of the case.
A.Y 17-18 Sunilkumar C Patel 6. The facts of the case in brief are that as per the available information, the assessee had made cash deposits of Rs.1,57,000/- in his bank account with Surat District Central Co-operative Bank, Kamrej Branch, Surat, Rs.9,06,000/- in his bank account with the Bank of Baroda, Kamrej Branch, Surt and Rs.2,35,000/- in his bank account with Axis Bank, Navagam, Surat during the demonetization period, i.e. 09.11.2016 to 30.12.2016. The assessee had not filed his return of income for AY 2017-18 within the time stipulated u/s.139(1) of the Act. Therefore, notice u/s.142(1) of the Act was issued to the assessee requesting him to file return of income for AY 2017-18, on or before 31.03.2018, however, assessee did not file the return of income. During the assessment proceedings, notices u/s.133(6) of the Act were issued to all the Managers of the bank branches where assessee was maintaining his bank accounts. On examination of the details furnished by the Branch Managers, it was noticed by the AO that assessee had made total cash deposits of Rs.70,02,300/- and received funds other than cash of Rs.2,66,676/-. Due to non-compliance by assessee several notices issued by AO and AO completed the ‘best judgement assessment’ u/s. 144 of the Act and treated aforementioned cash and credits amounting to Rs.72,68,976/- as unexplained money u/s 69A of the Act and added it to the total income of the assessee. Order u/s.144 of the Act was passed on 30.09.2019 wherein total income of the assessee was determined at Rs.72,68,976/-. Aggrieved by the addition made by AO, the assessee filed appeal before the Ld. CIT(A). In appellate A.Y 17-18 Sunilkumar C Patel proceedings, the CIT(A) issued several notices of hearing. The assessee did not file any written submission nor evidence nor sought any adjournment in response to the above notices. Thereafter, the CIT(A) has referred to Form-35 and assessment order and observed that there is no material on record to warrant interference in the order of AO. He, therefore, dismissed the appeal of assessee by relying on the decision of the Hon’ble Apex Court in the case of ‘Kale Khan Mohammed Hanif Vs. CIT’ [1963] 50 ITR 1 (SC).
Further aggrieved by the order of Ld. CIT(A), the assessee has filed present appeal before this Tribunal. The Ld. AR submitted the paper book containing various details and relied on various decisions in favour of assessee’s concerned. The L:d. AR assailed the impugned order by contending that assessee could not represent his case before Ld. CIT(A) and the order being an ex parte order, stood vitiated on account of violation of principles of natural justice. The Ld. AR submitted that during the appellate proceedings, the assessee could not appear before the AO and Ld. CIT(A) due to circumstances beyond its control. Adequate opportunity of hearing was not given to the assessee; therefore, Ld. AR contended that one more opportunity should be given to the assessee to plead his case before the AO.
On the other hand, Ld. Sr. DR for the Revenue submitted that assessee was negligent during the assessment as well as appellate proceedings; hence, appeal of the assessee should be dismissed.
A.Y 17-18 Sunilkumar C Patel 9. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee has been negligent and non cooperative during the assessment proceedings. Consequently, AO had to complete the ‘best judgement assessment’ u/s.144 of the Act. Subsequently, the CIT(A) has upheld the order of the AO and dismissed the appeal by observing that the appellant was totally non-compliant. The Ld. AR submitted that the appellant could not appear before the CIT(A) since notices were sent in wrong e-mail id. instead of the e-mail id given in Form-35. The Ld. AR requested for one more opportunity should be allowed in the interest of justice and fair play. We find that appellant could not plead his case before the CIT(A) who has passed the ex parte order due to non-compliance by the assessee before him. We are of the view that one more opportunity should be given to the assessee to plead his case. It is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to the payment of cost of Rs.5,000/- (Rupees five thousand only) by the assessee to the credit of the ‘PM National Relief Fund’ within three weeks from receipt of this order. Subject to the payment of above cost, we set aside the order of Ld. CIT(A) and restore the matter back to the file of AO for fresh adjudication and to pass a speaking order after affording sufficient opportunity of being heard to the assessee. The assessee is also directed to A.Y 17-18 Sunilkumar C Patel furnish explanation and relevant details before the AO expeditiously without seeking valid reason. For statistical purposes, the appeal of the appellant is treated as allowed.
In the result, appeal of the assessee is allowed for statistical purposes.