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Facts
A search and seizure operation under section 132 of the Income Tax Act was conducted at the assessee's premises following the discovery of demonetized currency. The Assessing Officer completed the assessment under section 144, making substantial additions for unexplained money, expenditure, investment, and undisclosed money under sections 69 and 69A. The assessee's appeal to the CIT(A) was dismissed for want of prosecution without addressing the merits, leading to the current appeal before the ITAT.
Held
The Income Tax Appellate Tribunal found that both the Assessing Officer and the CIT(A) denied the assessee a reasonable, adequate, and effective opportunity of being heard, including not providing necessary loose papers. Therefore, the tribunal set aside the order of the CIT(A) and remanded the matter back to the Assessing Officer for fresh adjudication, with directions to provide all relevant documents and ensure proper opportunity of hearing.
Key Issues
Denial of reasonable opportunity of hearing during assessment and appeal; Validity of additions made for unexplained money, expenditure, investment, and undisclosed money under sections 69 and 69A without providing loose papers or proper hearing.
Sections Cited
132, 153A, 143(2), 142(1), 144, 69A, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI SUDHIR PAREEK
This appeal is preferred by the Assessee against the order dated 18.05.2022 passed by the Learned Commissioner of Income Tax (Appeal) (hereinafter referred to as ‘Ld. CIT(A)’)/, Kanpur-4, for the Assessment Year (‘AY’) 2018-19.
ITA no.-3044/Del/2022 Sanjeev Mittal 1.1 The assessee has raised the following grounds of appeal:
“1. Loose Papers were not provided to appellant due to which appellant was unable to reply to Learned Assessing Officer: That on the facts and in the circumstances of the case, it is hereby submitted that irrespective of various reminders to Learned Assessing officer on 23/12/2019, 31/05/2022 and 22/09/2022, set of loose papers were not provided to the appellant due to which it was unable for appellant to reply to Assessing Officer. Therefore it is wrong in deciding the appeal without allowing reasonable, adequate and effective opportunity of hearing by the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer.
2. Wrong addition made on account of Unexplained Money: That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer is wrong and unjustified in confirming Rs 25,04,90,000 as unexplained money under section 69A. The additions were made without taking submissions on record and not providing an opportunity to submit additional details as the set of loose papers were not provided to the appellant. However appellant has stated in his reply filed on 25/07/2018 that the said the said cash seized doesn't belongs to him and was recovered from premises named as C-1 which was rented to Shri Praveen Maheshwari.
3. Wrong addition made on account of Unexplained Expenditure That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer is wrong and unjustified in confirming Rs 1,46,50,000 on account for unexplained expenditure under section 69 A. Appellant was forged by an individual who has taken some amount from appellant on account for processing fees for sanctioning of a loan, but the said individual was a fraud and was not returning amount taken from the appellant even after many reminders. Therefore appellant has drafted a complaint application to SHO Thana Partapur on his office computer with much more excessive Page 2 of 8 ITA no.-3044/Del/2022 Sanjeev Mittal amount as taken by that person with an intension that it might create a pressure on the individual and he might return back the said amount, but the amount was never returned and on the basis of this soft copy complaint letter only, addition of such excessive amount was added back by Learned Assessing officer and confirmed by Learned Commissioner of Income Tax (Appeals) without allowing reasonable, adequate and effective opportunity of hearing which is bad in law.
4. Wrong Addition made on account for Household and Personal Expenditure of the family That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer is wrong and unjustified in confirming and adding Rs 30,00,000 on account for unexplained expenditure under section 69 Yearly Credit Card and electricity bills were added as monthly expenses and added back to income by Learned Assessing Officer and later confirmed by Learned Commissioner of Income Tax (Appeals). The said addition were made without taking submissions on record and not providing an opportunity to submit additional details as the set of loose papers were not provided to the appellant and due to which appellant was unable to recognize tags assigned to various set of loose papers.
5. Wrong Addition made on account for Unexplained Investment: That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer is wrong and unjustified in confirming and adding Rs 13.00,422 on account for unexplained investment under section 69. Payments made or received on account for business transactions were treated as loan entries and addition were made without taking submissions on record and not providing an opportunity to submit additional details which is bad in law 6. Wrong Addition made on account for Undisclosed Money: That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) and Learned Assessing Officer is wrong and unjustified in confirming and adding Rs 35,00,00,000 on account for undisclosed money under section 69 A, However it was intimated to the investigation unit by the appellant vide reply dated 25/07/2018 that in order to get peace of mind of his family members, the appellant has Page 3 of 8 ITA no.-3044/Del/2022 Sanjeev Mittal accepted the said amount, but the same was ignored by Learned Assessing order and confirmed by Learned Commissioner of Income Tax (Appeals) addition were made without taking submissions on record and not providing an opportunity to submit additional details which is bad in law.
7. That the Learned Assessing Officer mentioned in the Assessment Order that notice u/s 153A(1)(a) was issued and served on the assessee, As per law notice u/s 153A(1)(a) is not issued in the year of search and seizure, however it is mentioned in the assessment order which is bad in law.
8. That the appellant craves leave, to add, alter, adduce or amend any ground or grounds on or before the date of hearing of the appeal.”
At the outset, when the matter was called for hearing on 27.08.2024, none appeared on behalf of the assessee. Neither there was any adjournment sought.
Brief facts of the case are that the search and seizure operation u/s 132 of the Act was conducted on 29.12.2017 at the residential premise C-1, Rajkamal Enclave, Delhi Road, Meerut on discovery of old Demonetized Currency of Rs. 25,00,00,000/- by Meerut Police. The search operation was further carried out on 06.12.2018 at A-20, Rajkamal Enclave, Meerut (residence) and at Kiran Building Office premise, Rajkamal Arcade, Meerut (Main Office). Notice u/s 153A of IT Act was issued but no return was Page 4 of 8
ITA no.-3044/Del/2022 Sanjeev Mittal filed in compliance to the same. Later on, notices u/s 143(2) and 142(1) of the Act along with questionnaire were also issued and AO completed the assessment by assessing the income at Rs.
61,99,91,782/- u/s 144 of IT Act.
We have heard the Learned Senior Departmental Representative (Ld. Sr. DR) and carefully perused the material available on record.
Upon considering the submissions of the Ld. Sr. DR and reviewing the facts of the case, we note that the assessee has raised the contentions about the denial of reasonable, adequate and effective opportunity of being heard before the Ld. CIT(A) and the AO and also assessee has submitted that “irrespective of various reminders of Ld. AO on 23.12.2019, 31.05.2022 and 22.09.2022, set of loose papers were not provided to the appellant due to which it was unable for the assessee to reply to Assessing Officer.”
From the bare perusal of impugned order dated 18.05.2022, the Ld. CIT(A) dismissed the appeal of assessee for want of prosecution only by simply incorporate the order of the Ld. AO, instead of disposed off the grounds raised before him on merits. It
ITA no.-3044/Del/2022 Sanjeev Mittal is submitted by the assessee / appellant that while making alleged addition, the Ld. AO didn’t cared about the submissions on record and also not provided effective and meaningful opportunity to submit additional details.
So, looking to the overall facts and circumstances and in the interest of justice, we are inclined to adjudicate the appeal on its merits. However, we find it appropriate to restore the matter to the file of the Ld. Assessing Officer for fresh adjudication. The Ld. AO is directed to provide the necessary documents, which is necessary and relevant to decide the matter, to the assessee and afford a reasonable, adequate, and effective opportunity of being heard, as proper verification is required with respect of the additions made.
In the light of the above, we set aside the order of the Learned CIT(A) and remand the matter back to the AO with the direction to decide the matter afresh after giving proper, effective and reasonable opportunity of being heard and so, the appeal of the assessee is deserves to be allowed.
ITA no.-3044/Del/2022 Sanjeev Mittal 9. Consequently, appeal of the assessee is allowed as indicated above for statistical purpose.
Order pronounced in the Open Court on 22.10.2024