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Facts
Search and seizure proceedings were conducted in a third party's premises, where incriminating materials related to the assessee and cash of Rs. 20,45,400/- were seized, followed by a survey action u/s 133A. The Assessing Officer completed the assessment u/s 144, and the Ld. CIT(Appeals) subsequently dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal condoned an 8-day delay in filing the appeal. It set aside the ex-parte order of the Ld. CIT(Appeals) and remanded the matter back for de-novo adjudication, granting the assessee a final opportunity to present its case on merits, emphasizing the need for detailed verification regarding potential fraud and tax evasion.
Key Issues
Whether the ex-parte dismissal of the appeal by the CIT(Appeals) due to non-compliance was justified, and if the case should be remanded for re-adjudication on merits considering potential fraud and natural justice principles.
Sections Cited
132(1), 133A, 143(2), 144, 250(4), 250(6)
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI ARUN KHODPIA
आदेश / ORDER
PER ARUN KHODPIA, AM:
This appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals), Raipur-3 dated 14.01.2025 for the assessment year 2020-21 as per the grounds of appeal on record.
At the very outset, it is noted that the appeal is time barred by 8 days. The Ld. Counsel for the assessee submitted that the said delay had been condoned by the Tribunal vide its order sheet entry dated 21.05.2025 observing as follows: “At the very outset, the Ld. Counsel for the assessee submitted that the appeal is time barred by 8 days. The Ld. Counsel has filed condonation application a/w. affidavit in support thereof wherein it is stated that due to some communication gap between office staff, the delay had occurred. The Ld. Sr. DR did not raise any objection. Considering the fact that the delay is not inordinate and it is bonafide, we condone the same relying on the judgments of the Hon’ble Supreme Court in the cases of Vidya Shankar Jaiswal Vs. ITO, Ward-2, Ambikapur, Civil Appeal Nos……………../2025 [Special Leave Petition (Civil) Nos. 26310-26311/2024, dated 31.01.2025 and Inder Singh Vs. the State of Madhya Pradesh, Civil Appeal No…………/2025, Special Leave Petition (Civil) No.6145 of 2024, dated 21st March, 2025. The matter stands adjourned to 09.06.2025. Parties informed in the open Court.”
The brief facts in this case are that search proceedings were conducted in the premises of Anirban Basu and Ors. It was submitted by the Ld. Counsel that in the case of Anirban Basu, during the search and seizure proceedings u/s.132(1) of the Income Tax Act, 1961, total cash of Rs.20,45,400/- had been seized. During the course of proceedings, incriminating materials related to the assessee was seized and subsequently, survey action u/s. 133A of the Act has also been conducted in the case of the assessee. The assessee filed return of income on 06.02.2021 declaring total income of Rs.11,59,630/- and notice u/s. 143(2) of the Act has been issued on 18.08.2021. The A.O completed the assessment u/s. 144 of the Act on 30.03.2022.
Thereafter, the assessee preferred an appeal before the Ld.CIT(Appeals). It is noted that as per Para 3 of the impugned order, the Ld.CIT(Appeals) vide an ex-parte order had dismissed the appeal of the assessee due to non-compliance by the assessee. For the sake of clarity, Para 3 of the Ld.CIT(Appeals) order is culled out as follows: “3. The appeal was fixed for hearing on 20.08.2024. Again , the appeal was fixed for hearing on 02.01.2025 vide this office notice dt.27.12.2024. When none attended nor any request for adjournment were received. It is quite evident from the chronology of event that despite several opportunities being granted from time to time, there has been absolutely no compliance on the part of the assessee to give detailed explanation regarding ground of appeal taken for the year under consideration. This clearly shows that the appellant is not keen to pursue the above mentioned appeal.”
In this regard, the Ld. Sr. DR has fairly conceded that the matter may be adjudicated denovo on merits before the first appellate authority providing one final opportunity to the assessee.
We have heard the submissions of the parties herein and carefully considered the contents in the documents/material available on record. As per the aforesaid examination of the entire spectrum of the matter in the interest of natural justice, we deem it fit and proper to provide one final opportunity to the assessee to represent his case on merits before the Ld. CIT(Appeals).
In the overall spectrum of the ex-parte order being passed due to non-compliance by the assessee before the Ld.CIT(Appeals), we refer to the order of the ITAT, “Division Bench”, Raipur in the cases of Brajesh Singh Bhadoria Vs. Dy./ACIT, Central Circle-2, Naya Raipur, IT(SS)A Nos.1 to 6, 8 & 9/RPR/2025, dated 20.03.2025 wherein the Tribunal had dealt with similar issue on the same parameters of ex-parte order passed by the Ld. CIT(Appeals) and remanded the matter back to the file of the Ld. CIT(Appeals).
Respectfully following the aforesaid order on the ex-parte issue, we are providing one final opportunity to the assessee to represent his case before the first appellate authority. Accordingly, we set-aside the order of the Ld. CIT(Appeals) and remand the matter back to his file for denovo adjudication as per law while complying with the principles of natural justice.
Before parting the facts on record suggests that this is not simply an ex-parte matter as has been examined afore-stated wherein incriminating materials pertaining to the assessee have been found during the course of search and seizure proceedings in third party’s premises, it is now therefore onus on the part of the Ld. CIT(Appeals) to verify and examine in detailed manner whether any fraud has been committed by the assessee towards the department. That though on the ground of natural justice, one final opportunity has been given to the assessee but the genesis of the entire facts and circumstances needs proper verification by the department so to find out whether any lawful taxes remain unpaid to the department due to any sham transactions falling within purview of tax evasion amounting to fraud to the revenue and in such case, fraud vitiates everything including natural justice.
The application of principle of fraud was even considered by the Hon'ble Supreme Court in the case of Badami (deceased) by her LRs v. Bhali in Civil Appeal No.1723/2008, dated 22/05/2012 wherein the Hon'ble Supreme Court has held as follows:-
"20. In S. P. Chengalvaraya Naidu (dead) by L.Rs. v. Jagannath (dead) by L.Rs. and others AIR 1994 SC 853 this court commenced the verdict with the following words:- "Fraud-avoids all judicial acts, ecclesiastical or temporal"
It had been held that the courts of law are meant for imparting justice between the parties and one who comes to the court, must come with clean hands. A person whose case is based on falsehood has no right to approach the Court.
In another decision of the Hon’ble Supreme Court in the case of Smt. Shrist Dhawan v. M/s. Shaw Brothers AIR 1992 SC 1555, it has been held that fraud and collusion vitiates even the most solemn proceedings in any civilized system of jurisprudence including natural justice. Further, the Hon’ble Supreme Court in the case of Mc Dowell & Company Ltd. Vs. CTO [1985] 154 ITR 148 (SC) has held that "Tax planning may be legitimate provided it is within the framework of law, Colourable devices cannot be part of tax planning....".
Therefore, in our considered view, in the present matter it is the responsibility of the revenue authorities to investigate the matter in detailed manner as per law whether there is tax planning or tax evasion as per the transactions entered into by the assessee. If tax evasion is determined by the revenue in such circumstances additions are to be sustained in the hands of the assessee.
As per the aforesaid observations, we are of the considered view that there needs to be detailed verification and enquiry of the facts in the case of the assessee by the Ld. CIT(Appeals) and after doing such exercise, the Ld. CIT(Appeals) shall pass a speaking order in terms with Section 250(4) & (6) of the Act after complying with the principles of natural justice. The assessee is also directed to respond to all the hearing notices issued from the office of the Ld. CIT(Appeals) since this is the final opportunity to the assessee to represent the matter on merits.
As per the above terms, the grounds of appeal raised by the assessee stands allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18th day of June, 2025.