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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:
This captioned appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeal), NFAC, Delhi, [in short “Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short “the Act”), dated 19.03.2024, for the Assessment Year 2017-18, which in turn arises from the order of National Faceless Assessment Centre, Delhi (in short “Ld. AO”) u/s 147 r.w.s. 144 r.w.s. 144B of the Act, dated 30.03.2022.
The revised grounds of appeal along with the additional around of appeals raised by the assessee are as under:
Revised Gr. No. 1 “On the facts and circumstances of the case and in law, ld. CIT(A) has erred in sustaining addition of Rs.1,30,48,500 made u/s 69A on cash deposits into bank i.e., cash credit A/c, i.e,, used in trading business of paddy in vill-Kurud; addition of Rs.1,30,48,500/-.”
Revised Gr. No. 2 On the facts and circumstances of the case and in law, ld. CIT(A) has erred in sustaining addition of Rs.1,30,48,500 made u/s 69A on cash deposits into bank; while correct amount of cash deposits into bank in AY17-18 IS Rs.86,04,500 which is also sourced from cash withdrawal made from bank accounts of the assessee & from sale proceeds of stock; addition of Rs.1,30,48,500 is unjustified & is liable to be deleted.”
Revised Gr. No. 3 On the facts and circumstances of the case and in law, ld. CIT(A) has erred in applying sec 115BBE, which is unjustified & is liable to deleted.”
Additional Gr.No.1 "On the facts and circumstances of the case and in law, reopening u/s 148 is invalid; reasons are wrongly recorded; it is on wrong & incorrect facts; there is no live link/ nexus between the information of cash deposits of Rs.1,30,48,500 & formation of reasons to believe for alleged escaped income of Rs.1,30,48,500; it is reason to suspect merely for verifying the cash deposits into bank; in absence of pre-requisite condition for assuming jurisdiction u/s 147, reopening u/s148 would be invalid; liable to be quashed; relied on Well Trans Logistics India P Ltd (2024) (Del HC); Lakhmani Mewaldas ( I976) (SC); Meenakshi Overseas (P) Ltd (2017) (Del HC); Mohanlal ChampalaI Jain (2019) (Born HC); Shamshad Khan (2017) (Del HC); Mumtaz Haji Mohmad Memon (2018) (Guj)."
Additional Gr.No.2: “On the facts and circumstances of the case and in law, sanction granted u/s 151 (2) by Addl. CIT is invalid as he has not cared that reasons are wrongly recorded on incorrect facts; he has granted sanction without verifying the facts; without application of mind in a mechanical & routine manner; in absence of a valid approval granted u/s 151(2) by Addl. CIT as mandated by law u/s 151 which is sine qua non for a valid reopening u/s148/147; reopening u/s 148/147 would be invalid; is liable to be quashed; relied on Kalpana Shantilal Haria (2017) (Born HC); Sea Glimpse Investments (P) Ltd (2021) (Bom HC).”
Briefly stated, the assessee is an individual and had not filed his return of income for the assessment year 2017-18. Whereas it is noticed by the department that the assessee had deposited cash of Rs.1,30,48,500/-, also withdrawn cash amounting to Rs. 49,50,000/- in his bank account maintained with Bank of Baroda during the year under consideration. Accordingly, the case of the assessee was reopened and notice u/s 148 of the Act dated 28.03.2021 was served. The assessee did not file any return of income in response to the notice u/s 148 of the Act. Subsequently, notices u/s 142(1) dated 13.12.2021, 02.12.2021 and 17.01.2022, were issued and also a show cause notice u/s 144 was issued, however, assessee remain non-compliant. The assessee also failed to respond to show cause notice cum draft assessment order issued by the AO. In absence of any explanation and submission by the assessee regarding nature and source of cash deposits of Rs.1,30,48,500/- in his aforesaid bank account, the AO treated it as unexplained Income u/s. 69A of the Act and the assessment was completed with the said addition.
Aggrieved with the order of Ld. AO, assessee filed an appeal before the Ld. CIT(A), however, the assessee remain non-compliant before the Ld. CIT(A), therefore, the appeal of the assessee is dismissed in absence of any explanation by the assessee, wherein his relevant observations are as under: 5. The notices u/s 250 of the Act dated 01.08.2013, 07.02.2024 and 29.02.2024 issued and delivered electronically to furnish ground wise written submission along with supporting documentary evidences, but the appellant failed to file written submission to substantiate his claim. It is also noted that the AO has also passed the ex-parte order of assessment for the year under consideration under section 144 of the Act due to non-filing of details called for by the AO. It can, therefore, be reasonably inferred that appellant has nothing substantial in support of his claims, as per Grounds of Appeal.
5.1. There is a well-known dictum of law "VIGILANTIBUS, NO DORMENTIBUS, JURA SUBVENIUNT" which means law will help only those who are vigilant. Law will not assist those who are careless of his/her right. In order to claim one's right, s/he must be watchful of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Law confers rights on persons who are vigilant of their rights.
5.2. The Hon'ble Madhya Pradesh High Court in the case of Estate of Late Tukojirao Holkar vs. CWT (223 ITR 480) has held as under:
“if the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to enable hearing of the reference, the court is not bound to answer the reference." 5.3. Similarly, the Hon'ble Punjab & Haryana High Court in the case of New Diwan Oil Mills vs. CIT (2008) 296 ITR 495) returned the reference unanswered, since the appellant remained absent and there was no assistance from the appellant.
5.4 The Hon'ble Supreme Court in the case of CIT vs. B. Bhattachargee & Another (118 ITR 461 at page 477-478) held that the appeal does not mean, mere filing of the memo of appeal but effectively pursuing the same. 5.5. In the given circumstances the appeal is decided on merit on the basis of documents that have been submitted by the appellant as part of the appeal memo. i.e., grounds of appeal, statement of facts, assessment order etc.
9.6 The appellate proceedings are first line of remedy to those who think that the injustice has been done by the AO. However, the appellant failed to avail the same non-complying. From the assessment order, it is evident that there was non-compliance of notices before the AO as well and therefore, the AO had to pass the order. During the appellate proceedings also, the appellant has not availed of the opportunities given. The appellant failed to bring on records any facts or documents which can explain how the order of the AO is erroneous.
Aggrieved with the aforesaid findings by the Ld. CIT(A), assessee preferred an appeal before the ITAT, which is under consideration in the present case.
Before us, Ld. AR on behalf of the assessee have submitted that the notice issued by the Ld. CIT(A) are not received by the assessee, therefore, the assessee remain oblivious of the proceedings and accordingly, could not attend the same before the First Appellate Authority, therefore, it is requested to allow one more opportunity to the assessee and the matter may be restored back to the file of Ld. CIT(A) for fresh adjudication, wherein the assessee will remain proactive and compliant without fail.
7. Per contra, Dr. Priyanka Patel, (in short “Ld. Sr. DR”) vehemently supported the orders of revenue authorities. However, had not objected towards restoration of the matter for denovo adjudication by the First Appellate Authority.
8. We have considered the rival submissions and perused the material available on record. On a perusal of the facts and circumstances and material available before us, we find that the matter before us, is against an ex-parte order passed by the Ld. CIT(A), though have discussed the facts as per material available with him, however, the decision of Ld. CIT(A) was without considering the submissions by the assessee. As the decision of Ld. CIT(A) was totally inspired by the findings of Ld. AO, with no submission / explanations on behalf of the assessee, may be on account of non- compliance by the assessee, however, in the interest of justice as we have adopted a view that said matters should remitted back to the file of Ld. CIT(A) for fresh adjudication with a final opportunity to the assessee for the sake of substantial justice. Our aforesaid view is supported 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, wherein under identical facts and circumstances, findings of this Tribunal were as under:
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 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 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.
10. 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.
11. 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 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 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 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.
As per the above terms, all the grounds of appeals stands allowed for statistical purposes.
9. In view of aforesaid facts and circumstances, respectfully following the aforesaid decision in the case of Brajesh Singh Bhadoria (supra), 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.
Needless to say, the assessee shall be afforded with reasonable opportunity of being heard in the set aside appellate proceedings. The assessee is also directed to cooperate and assist proactively in the set aside proceedings, failing which the Ld. CIT (A) would be at liberty to decide the case in accordance with the mandate of law.
In result, appeal of the assessee is partly allowed for statistical purposes, in terms of over aforesaid observations.
Order pronounced in the open court on 02/04/2025.