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Facts
The assessee had cash deposits of Rs. 20,00,000/- in her bank account for A.Y. 2012-13, leading to an addition under Section 69A by the AO, partially upheld by the CIT(A) to Rs. 17,00,000/-. The assessee sought an adjournment for her appeal before the CIT(A) but the appeal was dismissed ex-parte without the rejection of the adjournment being communicated.
Held
The Tribunal found that the CIT(A) violated the principles of natural justice (audi-altram-partem) by proceeding ex-parte and disposing of the appeal without considering or rejecting the assessee's adjournment request. The matter was therefore remanded back to the CIT(A) for re-adjudication.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order in violation of natural justice by not addressing the assessee's adjournment request.
Sections Cited
Section 147, Section 143(3), Section 69A, Section 250, Section 44AB, Section 139, Section 133(6)
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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR
Before: SHRI RAVISH SOOD
आदेश / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 22.10.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 10.12.2019 for the assessment year 2012-13. The assessee has assailed the impugned order on the following grounds of appeal:
“1. On the facts and in the circumstances of the case, the order passed by the Learned CIT (Appeal) is absolutely perverse and unsustainable inasmuch as the notice u/s 250 dated 18.09.2024 was issued seeking response of the assessee by 24.09.2024 on which date the assessee had duly submitted the response and sought for adjournment and requested for re-fixation of the hearing after 31.10.2024 in the wake of limitation period for Tax Audit u/s 44AB and Return of income u/s 139 of the Income Tax Act, 1961, however, the Learned CIT (Appeal) passed an ex-parte order without dealing with the grounds on merit vide order dated 22.10.2024 that too without rejecting the adjournment application of the assessee which renders the order passed by the Learned CIT (Appeal) in undue haste to be wholly irrational and unjustified as the principles of natural justice have been grossly violated. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be set aside.
2. On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in making addition of 220,00,000 u/s 69A of the Income Tax Act, 1961 and the Learned CIT (Appeal) has erred in confirming the said addition to the extent of Rs.17,00,000 on several grounds, more particularly, when the assessee is not found to be the owner of money to the tune of Rs. 17,00,000/- which represented aggregate amount of gifts received by the assessee from her relatives who have confirmed the transaction in response to notice u/s 133(6) issued by the Learned A.O and also by way of duly notarized affidavit, thus, the preconditions of Section 69A are not fulfilled which renders the addition to be wholly arbitrary illegal and unjustified. It is prayed that the addition of Rs.17,00,000/- made by invoking Section 69A may kindly be deleted.
3. On the fact and in the circumstances of the case, the Learned A.O has erred on facts and in law in making addition of Rs.20,00,000/- by invoking Section 69A and the Learned CIT (Appeal) has erred in confirming the same to the extent of Rs.17,00,000/- inasmuch as the sum of Rs.17,00,000/- is duly recorded in the Balance sheet of the assessee and therefore, the invocation of Section 69A is contrary to facts and law and hence, liable to be deleted. It is prayed that the addition of Rs.17,00,000/- may kindly be deleted.
4. On the facts and in the circumstances of the case, the Learned AO has erred on facts and in law in making addition of Rs.20,00,000/- on account of unexplained money by invoking Section 69A of the Income Tax Act, 1961 and the Learned CIT (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the addition to the extent of Rs.17,00,000/-, hence, it is prayed that the addition of Rs.17,00,000/-confirmed by the Learned CIT (Appeals) may kindly be deleted.
5. The Appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of Appeal.”
Also, the assessee has raised additional grounds of appeal which reads as under:
“On the facts and in the circumstances of the case, the assessment order passed u/s.147 r.w.s. 143(3) is bad in law as the learned A.O has erred in facts and in law in passing assessment order u/s.147 r.w.s 143(3) dated 10.12.2019 without communicating reason to believe recorded by learned A.O, despite specific request submitted by the assessee vide letter dated 18.07.2019, thus, such assessment order passed without communication of reason to believe despite specific request by the assessee is liable to be quashed.”
As the assessee based on the additional grounds of appeal has assailed the validity of the jurisdiction that was assumed by the A.O for framing the impugned assessment, the adjudication of which would not require looking any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. My aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC).
Succinctly stated, the assessee had filed her return of income for A.Y.2012-13 on 13.09.2012, declaring an income of Rs.3,06,000/-. Thereafter, the A.O based on information that the assessee had made cash deposits of Rs.20,00,000/- in her bank account, initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 29.02.2019 was issued to the assessee.
During the course of assessment proceedings, as the assessee had failed to come forth with any explanation as regards the source of the cash deposits of Rs.20,00,000/- made in her bank account during the subject year, therefore, the A.O held the entire amount of cash deposits as her unexplained money u/s. 69A of the Act. Accordingly, the A.O vide his order passed u/s. 147 r.w.s. 143(3) of the Act, dated 10.12.2019, determined the income of the assessee at Rs.23,06,000/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
“4. During the course of appellate proceedings the appellant has filed written submissions electronically which has been carefully considered for the disposal of the present appeal.
5. All the grounds raised by the appellant are against the addition made by the AO of Rs.20,00,000/- u/s 69A of the Act to the income of the appellant and the same is adjudicated as under: 5.1 In the present case, return of income for the AY 2012-13 was filed by the appellant on 13/09/2012 declaring the total income at Rs. 3,06,000/-. After recording the reason that the income has escaped assessment the case of the appellant was reopened u/s 147 of the Act. During the assessment proceedings it was noted by the AO that the appellant has deposited cash of Rs.20,00,000/- in her bank account maintained with the Bank of India. Accordingly the appellant was asked to explain the nature and the source of the aforesaid cash deposited made. In response initially it was submitted by the appellant that the appellant has received cash gifts totalling Rs.17,00,000/- from her 3 relatives. However, the appellant failed to furnish cogent evidences in respect of the plea made. Subsequently the appellant sated that the cash deposited of Rs.20,00,000/- was out of her personal savings. Hence in the absence of cogent evidences as well as satisfactory explanation the AO has added Rs.20,00,000/- u/s 69A of the Act to the income of the appellant. 5.2 During the appellate proceedings the appellant contended almost on the same tune as contended during the assessment proceedings. It was claimed by the appellant that the cash deposited of Rs. 20,00,000/- was sourced out from the funds
received of Rs 17,00,000/- from her relatives and remaining amount of Rs 3,00,000/- was sourced out from appellant own savings and from her business income. 5.3. 5.3 All the facts of the case, findings of the AO during the assessment proceedings as well as the submissions made by the appellant have been taken due cognizance of. The appellant contended that the source of the cash deposits totaling Rs 20,00,000/- in her bank account was a combination of personal savings, income from business, and gifts received from relatives. However, upon thorough examination, it is observed that the appellant has failed to provide any substantial or cogent evidence to corroborate these claims. Specifically, the appellant asserted that Rs 17,00,000/- was received as gifts from relatives and claimed that supporting documents such as Income Tax Returns (ITRS). affidavits, and gift deeds would be submitted to substantiate the genuineness of these gifts. However, despite these assertions, the appellant failed to produce any of the promised documents. In the absence of such crucial evidence, the claim regarding Rs.17,00,000/- as gifts from relatives cannot be accepted. Further, it is pertinent to note that the Ld. AO, in his order, rightly pointed out that the appellant not only failed to substantiate the receipt of the gifts. The appellant's explanation remained vague and unsupported by any documentary evidence, such as bank statements, business records, or personal savings accounts that could reasonably justify such a significant cash deposit. Moreover, the burden of proof lies with the appellant to establish the legitimacy of the source of cash deposits, which she has failed to discharge. In light of the above, it is clear that the appellant has not furnished any reliable or verifiable evidence to substantiate her claim regarding the source of the cash deposits. However, on the other hand, considering the principles of natural justice, it is reasonable to accept the explanation in respect of the source of the remaining amount of Rs.3,00,000/-, which the appellant claims that the sane was deposited from past savings and from the income earned during the year. As this part of the explanation seems plausible and no contrary evidence has been presented, the source of Rs.3,00,000/- can be accepted as satisfactorily explained. Therefore, out of the total cash deposits of Rs.20,00,000/-, only the sum of Rs.3,00,000/- is considered explained, while the remaining amount of the 35,00,000/- remains unexplained due to the lack of supporting evidence. In view of the above facts the addition made by due to the Rs.20,00,000/- is restricted to Rs.17,00,000/- and accordingly the grounds raised by the appellant stands partly allowed.
6. In the result the appeal is Partly Allowed.”
The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal.
I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
Shri Veekaas S Sharma, Ld. Authorized Representative (for short ‘AR’) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(Appeals) had dismissed the appeal in violation of the basic principles of natural justice. Elaborating on his contention, the Ld. AR submitted that though the assessee vide her letter dated 24.09.2024 that was uploaded in the e-filing account on the same date had requested the CIT(Appeals) for an adjournment and sought for fixation of the same after 31.10.2024, but the latter had most arbitrarily without intimating the rejection of her request had proceeded with and disposed off the appeal vide his order dated 22.10.2024. Elaborating further on his contention, the Ld. AR submitted that the failure on the part of the CIT(Appeals) to intimate the assessee about rejection of her application for adjournment was in gross violation of the principles of natural justice i.e. audi-altram- partem. The Ld. AR submitted that as the assessee had remained divested of an opportunity to assail the addition made by the A.O in the course of first appellate proceedings, therefore, the matter in all fairness be restored to the file of the CIT(Appeals) with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee. The Ld. AR in order to buttress his claim had taken me through the “screen shot” of the acknowledgement letter that was uploaded on e-filing account of the assessee dated 24.09.2024, Page 3 of APB.
Per contra, Smt. Anubhaa Tah Goel, Ld. Sr. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by her that as the CIT(Appeals) had adopted a liberal approach and scaled down the addition of Rs.20 lacs made by the A.O to Rs.17 lacs, therefore, it is incorrect on the part of the assessee to state that the appeal had been dismissed by the first appellate authority by adopting a arbitrary approach.
Admittedly, it is a matter of fact borne from record that the assessee had in the course of the appellate proceedings vide her letter dated 24.09.2024 sought for an adjournment with a specific request to fix the matter after 31.10.2024. I find substance in the claim of the Ld. AR that as the CIT(Appeals) without intimating the rejection of the application for adjournment to the assessee had proceeded with and disposed off the appeal vide his order dated 22.10.2024, therefore, she had remained divested of an opportunity to contest the impugned addition made by the A.O.
Ostensibly, I find that the CIT(Appeals) without considering the aforesaid request of the assessee for adjournment much the less intimating to her that the same had been declined had proceeded with and disposed of the appeal. My aforesaid observation is fortified by the fact that in the order of the CIT(Appeals) there is no whisper of the adjournment letter dated 24.09.2024 (supra) that was filed by the assessee requesting for adjournment of the appeal after 31.10.2024.
As observed by me hereinabove, failure on the part of the CIT(Appeals) to consider the assessee’s request for adjournment of her case vide letter dated 24.09.2024 (supra) is discernible from the records. Also, I find that the CIT(Appeals) had disposed of the appeal on 22.10.2024 but the request for adjournment of the assessee was uploaded much prior i.e. on 24.09.2024. It is not the case that the CIT(Appeals) after considering the aforesaid request letter dated 24.09.2024 had rejected the same and proceeded with the matter. Considering the totality of the facts involved in the present case, I am of the view that the matter in all fairness requires to be restored to the file of the CIT(Appeals) with a direction to him to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee who shall remain at a liberty to raise the additional ground of appeal which has been raised before me. At the same time, the assessee is directed to duly comply with the notices that would be issued by the CIT(Appeals) in the set-aside proceedings, failing which, the latter may dispose of the appeal after considering the material available on record.
In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations.