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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”] passed under section 250 of the Income Tax Act, 1961 (in short “the Act”), dated 19.03.2025, for the Assessment Year 2018-19, which in turn arises from the order u/s 147 r.w.s. 144B of the Act, dated 24.02.2023 passed by the Assessment Unit, Income Tax Department, Delhi (in short “Ld. AR”),
That under the facts & the law, the Ld. AO erred in not considering the Ground that the Appellant Partnership Firm dissolved and there was no business and no income, which the Ld. CIT (A) erred in confirming the same. Prayed that Appellant Partnership Firm was not having any business and as such no income during the year, the Assessment Order is bad in law and be annulled.
That under the facts & the law, the Ld. CIT(A) erred in passing the Order u/s 250 dated 19.03.2025 ex-parte & without considering the merits of the case, voluminous records such as facts narrated on appeal memo in Form No 35 before Ld. AO, the explanation filed during assessment proceedings. Prayed that the order passed by the Ld. CIT(A) is not in accordance with the law, the disallowance u/s 40A(3) at Rs. 89,15,360/- deserves to be deleted.
That under facts & the law, the Ld. CIT(A) further erred in not considering the fact that the appellant i.e. Moti Aloo Bhandar, which was a Partnership firm having two partners, dissolved due to retirement of one partner, namely Shri Jitendra Chawlani on 31.03.2017 & from 01.04.2017 Shri Suresh Chawlani became proprietor of above firm. The Ld. CIT(A) further erred in not considering the fact that the business was not carried by the Partnership firm & it was carried by Shri Suresh Chawlani and Appellant did not have any interest in above business after 31.03.2017 and did not have any income. Ld. AO and Ld. CIT(A) further erred 111 observing that only because change in constitution was informed to Bank subsequently, Appellant was liable to explain the transaction in Bank Account. Prayed that the appellant partnership firm doesn’t have any business, doesn’t own any bank a/c & therefore the disallowance of Rs. 89,15,360/- is without jurisdiction, not considering the fact & the same be deleted.
4. That under the facts & the law, without prejudice to above, Shri Suresh Chawlani has maintained books of a/c, who continued to run the business under same i.e., Moti Aloo Bhandar, as its proprietor from 01.04.2017 wherein books are audited. There is no default u/s 40A(3). As such provisions of 40A(3) for disallowance of Rs.89,15,360/- is otherwise also not applicable & the disallowance be deleted.
That under the same facts of the case, for AY 2019-20, proceedings u/s 148A was dropped vide order u/s 148A(d) dated 26.03.2023, for the same reason by the Ld. AO prayed the disallowance be deleted.
Moti Aloo Bhandar vs. ITO-1, Korba 3. Concisely stated, the assessee in present case is a firm, had not filed its Return of Income (ROI) for the AY 2018-19. Further, Ld. AO observed that, as per information received from Insight Portal under the head “non-filing of return (NMS)”, which suggested that income chargeable to tax has escaped assessment for the FY 2017-18 relevant to assessment year 2018-19, regarding the following transactions: Information Source Amount Amount Description Description (Rs.) Cash Deposits State Bank of Aggregate gross 2,63,42,800 (including India amount received through bearer’s from person in cheque) in cash current account Cash State Bank of Aggregate gross 3,00,000 withdrawals India amount received including from person in through bearer’s cash cheque) in current account Total 2,66,42,800
In view of aforesaid information, the assessee was issued notices on several occasion and which are partly complied with. In due course, an order u/s 148(A)(d) of the Act was passed on 29.03.2022, consequently, the notice u/s 148 of the Act was issued. However, the assessee did not comply to the notice issued. Therefore, the assessment was completed with (i) an addition of Rs. 9,05,150/- on account of non-declaration of sale transaction in the bank account of assessee firm and (ii) Addition / Moti Aloo Bhandar vs. ITO-1, Korba disallowance of expenditure incurred in cash amounting to Rs.89,15,360/- u/s 40A(3) of the Act was made. Accordingly, the assessed income of the assessee, has been determining at Rs.98,20,510/-.
Aggrieved with the aforesaid additions, assessee preferred an appeal before the Ld. CIT(A), however, before the First Appellate Authority, the assessee remain persistent non-compliant on various occasion when the opportunities to respond was provided by the Ld. CIT(A). The appeal of assessee, therefore, has been decided on the basis of facts available on record by dismissing the grounds of appeal raised by the assessee.
5. Since the assessee remain non-compliant before the First Appellate Authority, the Ld. CIT(A) had observed about the assessee’s non- responsive behaviour, in terms of following observations:
4. Appellant Submissions: During the appellant proceedings, Notices were issued from time-to-time, in response to which the appellant had not filed any submissions. The appellant was provided many opportunities to file submissions, however, the appellant has not filed any supporting documents/evidences. 5.1 It is pertinent that in order to decide this appeal in a timely manner a number of notices/ communications through ITBA portal were sent to the appellant, viz. Communications dated 21.02.2025., 28.02.2025 and 05.03.2025. However, there evidently has been no response from the appellant till date. There is no gain saying that once the appeal is filed by Moti Aloo Bhandar vs. ITO-1, Korba the appellant, it is obligatory on its part to purposefully and co-operatively pursue the same in a worthwhile manner, which the appellant has evidently failed to do. It clearly appears that the appellant's compliance or rather lack of it, the appellant has not even bothered to pursue this appeal in any productive manner. Hence, in view of the aforesaid total non- compliance/non prosecution of the instant appeal on the part of the appellant, the instant appeal is adjudicated and disposed off, as under, ex- parte, primarily on the basis documentation available on record.
5.2 Firstly, it is stated at the outset, that in the situation as obtained in the instant case, as evidently seen from the above, this appeal is liable to be dismissed in terms of the ratio of the judgements of the Hon'ble Apex Court and the various High Courts including the Hon'ble Apex Court which held in CIT v. B. N. Bhattarcharjee and Another (10 CTR 354) that an appeal means an effective appeal and that to "prefer an appeal" would mean effectively prosecuting an appeal."Purposefully and constructively interpreted, preferring an appeal means more than formally filing it but effectively pursuing it and if-a party retreats before the contest begins, it is as good as not having entered the fray.
5.3 It is pertinent to add here that laws assist those who are vigilant and not those who sleep over their rights. This principle is embodied in the well-known maxim "Vigilantibus non dormientibus jura subveniunt". It means equity comes to the aid of the vigilant and not the slumbering. In all actions, suits and other proceedings at law and in equity, the diligent and careful plaintiff is favoured and prejudicial of him who is careless. Viewed thus, it is presumed that the appellant has no further cogent reasoning or/and evidence to substantiate the grounds taken in this impugned appeal. It is trite that the onus is on person making the claim, and the primary responsibility/onus/burden for proving the claim made before the Moti Aloo Bhandar vs. ITO-1, Korba tax authorities (Assessing Officers/Appellate Authorities) lies with the assessee/appellant. In the present case, the appellant has not been able to even discharge the primary onus/burden statutorily & judicially cast upon him to substantiate the claims made in the grounds of appeal inspite of adequate time and opportunities granted to the appellant.
5.4 It is, thus, evident that the appellant's has no evidence to substantiate the grounds taken and it has not even once argued with any supporting, relevant and cogent arguments/averments, constraining me to, therefore, go through the extremely brief non-speaking submission filed along with the impugned appeal decide on the merits while adjudicating the same.
5.5 In this case, the JAO found through INSIGHT Portal that the appellant h made cash deposits of Rs. 2,63,42,800/- in his bank account maintained with SBI Bank. The JAO passed the order u/s. 148A(d) of the act on 29.03.2022 and issued notice u/s. 148 of the act. The case was transferred to Faceless Assessment Unit completion of assessment proceedings. The AO issued notice u/s. 142(1) of the act. Further, the AO issued show cause notice on 09.02.2023, however the appellant not comply to the notice issued. Therefore, the AO completed the assessment proceedings and made addition of Rs. 9,05,150/- as the income of the appellant Further, the AO made disallowances of cash expenses of Rs. 89,15,360/- u/s. 40A of the act and added the same to the total income of the appellant.
5.6 It is pertinent to note that even during the instant appellate proceeding neither appellant nor his representative filed any submissions in response to notices issued from time-to-time and had in fact chosen to remain silent and failed substantiate or cooperate by filing the details called for, which shows the appellant not interested in pursuing his appeal. However, it was noted that despite Moti Aloo Bhandar vs. ITO-1, Korba several opportunities were given to the appellant, he has not responded for the reasons b known to him. Needless to mention that in order to prove their point, the appellant should substantiate and back his point by providing relevant details, which he h failed to do so.
5.8 In view of the above, in the pertaining and circumstances of the case, I find no infirmity in the action of the AO for making addition of Rs. 9,05,150/- and disallowances of cash expenses of Rs. 89,15,360/- u/s. 40A(3) of the act. In this view of the matter, the decision of the AO is upheld. Consequently, the Grounds of the appellant are dismissed.
5.9 Before parting, it is trite that an appellate authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No. 3791 of 2013 (O&M) dated 0'1.05.2014] and in the absence of any reasonable, cogent and valid arguments/contentions advanced by the appellant in the instant appeal to counter the AO's decision as contained in the assessment order, as mentioned earlier, the additions/disallowances made by the AO is sustained in terms of the observations herein-above.
The aforesaid facts qua the non-compliance by the assessee, thereby passing an ex-parte order by the Ld. CIT(A) are confronted to the assessee (petitioner) as well as revenue (respondent) and thereby clarified that the matter is covered by the order of this tribunal in the case of Brajesh Singh Bhadoria Vs. Dy./ Asstt. Commissioner of Income Tax, Central Circle-2, in IT(SS) No. 1 to 6, 8 & 9/RPR/2025 dated 20.03.2025, Moti Aloo Bhandar vs. ITO-1, Korba therefore, the present matter merits to be restored back to the file of Ld. CIT(A). After deliberations, as conceded by both the parties, the impugned order of Ld. CIT(A) is set aside, and the grounds of present appeal are restored to the file of Ld. CIT(A) for denovo adjudication. For the sake of clarity the relevant observations in the case of Brajesh Singh Bhadoria (supra), are extracted hereunder: 7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld. CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the Moti Aloo Bhandar vs. ITO-1, Korba grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions.
That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non- compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized.
Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex- parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by Moti Aloo Bhandar vs. ITO-1, Korba the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee.
In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi- alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, partakes the characteristic of the fundamental right under Article 14 of the Constitution of India.
The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is Moti Aloo Bhandar vs. ITO-1, Korba disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice.
12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld. CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte Moti Aloo Bhandar vs. ITO-1, Korba and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex-parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld. CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld. CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee.
In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first Moti Aloo Bhandar vs. ITO-1, Korba appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order.
In view of the aforesaid facts and circumstances, respectfully following the decision in the case of Brajesh Singh Bhadoria (supra), as conceded by both the parties herein, the matter is restored back to the file of Ld. CIT(A) for denovo adjudication, within a period of 3 months from the receipt of this order.
8. Needless to say, the assessee shall be afforded with reasonable opportunity of being heard, in the set aside appellate proceedings. The assessee, as conceded before us through its authorized representative is directed to cooperate and assist proactively in the set aside proceedings, failing which the Ld. CIT (A) would be at liberty to decide the appeal in accordance with the mandate of law.
Order pronounced in the open court on 18/06/2025.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (ARUN KHODPIA) �ाियक सद� / JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 18/06/2025 Vaibhav Shrivastav आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant- Moti Aloo Bhandar, Korba 2. ��थ� / The Respondent- ITO-1, Korba 3. The Pr. CIT, Raipur (C.G.) िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, 4. Raipur 5. गाड� फाईल / Guard file.