SHRI HIMMATSINH P RAJPUT,VADODARA vs. THE ITO, WARD-4(1)(3), VADODARA

In response to the notice of hearing, the learned Counsel for the assessee seeks an adjournment on the ground that it has been listed for the first time; however, after perusing the impugned order of learned First Appellate Authority, I do not find it fit to grant adjournment on this case because the learned First Appellate Authority has dismissed the appeal in limine without adjudicating the issues on merits. Therefore, with the assistance of learned Departmental Representative, I have gone through the record carefully and proceed to decide the appeal on merits.

The brief facts of the case are that the assessee has filed his return of income on 09.06.2013. His case was selected for scrutiny assessment and a SMC- ShriHimmatsinh P. Rajput Vs. ITO For AY: 2013-14 2 notice under Section 143(2) of the Income-tax Act, 1961 (‘the Act’ in short) was issued and served upon the assessee. It emerges out from the record that when the Inspector from the Department went to serve the notice upon the assessee, he did not accept the notice and rather behaved rudely with the Inspector. Thereafter, by way of an ex-parte assessment order, the income of the assessee has been determined at Rs.21,36,510/- as against Rs.4,19,510/- returned by the assessee. In this way, the learned Assessing Officer has made an addition of Rs.17,17,000/- with the aid of Section 69A of the Act on account of unexplained cash deposits in the account.

Dissatisfied with this assessment order, the assessee went in appeal before the learned CIT(A). In the statement of facts, he has pleaded that under some misconception of facts, he assumed that the Inspector who approached the assessee as a fraud under the garb of Income-tax authority and he therefore misbehaved with him; however, he tendered apologies for the mistake. Somehow, it emerges out from the record that the learned CIT(A) has also dismissed the appeal of the assessee ex-parte as the assessee failed to appear before him on number of occasions in spite of serving of several notices. A perusal of the record would indicate that the assessee is also a negligent person as he did not conduct the proceedings before the Income Tax Authorities diligently. However, sub-clause (6) of Section 250 contemplates that learned First Appellate Authority would frame the point of dispute and thereafter record reasons on those points. If I go through the impugned order, then it would reveal that the learned First Appellate Authority has not formulated any points and simply dismissed the appeal for want of prosecution. It is pertinent to observe that even if the assessee failed to appear before the learned First Appellate Authority, then also, on the basis of the assessment record, the learned First Appellate Authority has to decide the appeal on merits. Thus, it reveals that the negligence happened from both the sides. The order of the learned CIT(A) is also, therefore, not sustainable.

It is pertinent to observe that whenever any irregularity is crept in the proceedings, then that irregularity has to be removed and proceedings deserve to be instituted from that stage. However, if I set aside the issue to the file of the learned CIT(A), then it would only give rise to multiplicity of the litigation, because the learned CIT(A) would have to call for a remand report from the Assessing Officer which is also an ex-parte order and again the proceedings would be instituted at two stages. Therefore, in the given circumstances, I deem it appropriate to set aside both the impugned orders and restore the issue to the file of the learned Assessing Officer. The learned Assessing Officer shall re-adjudicate the issue regarding the cash deposits in the HDFC Bank afresh after providing due opportunity of hearing to the assessee. It is further observed that the observation made by me above will not injure or impair the case of the Assessing Officer and will not cause any prejudice to the defence/ explanation of the assessee. The assessee will be at liberty to file any details before the learned Assessing Officer for giving explanation of the source of deposits in the HDFC bank. However, as discussed above, I find that the assessee was also negligent in conducting the proceedings; therefore, he is directed to co-operate with the Department and submit the requisite details; otherwise the Assessing Officer will be at liberty to proceed in the matter in accordance with law. With the above observations, this appeal of the assessee is allowed for statistical purposes.