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Facts
The assessee's bank accounts showed significant cash deposits, but no ITR was filed for AY 2017-18 and there was non-compliance with AO notices. The AO made an assessment of Rs. 1.39 Crores under section 69A for unexplained cash deposits and by applying a profit rate on banking channel deposits. The assessee's appeal, along with a delay condonation application, was dismissed by the CIT(A) due to non-prosecution without considering the merits of the case.
Held
The Tribunal found that the assessee deserved a reasonable opportunity to be heard, noting claims of non-receipt of physical notices and late receipt of the assessment order. It set aside the CIT(A)'s order and remitted the matter back to the AO for a fresh de-novo assessment, with instructions for the assessee to comply and the AO to provide reasonable opportunities for hearing.
Key Issues
Whether the CIT(A) erred in not condoning the delay and dismissing the appeal without considering merits, and whether the assessment by AO was valid given claims of lack of proper notice and opportunity to be heard.
Sections Cited
Section 249(3), Section 142(1), Section 144A, Section 69A, Section 133(6), Section 115BBE, Section 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI AVDHESH KUMAR MISHRA
Appellant by Shri Subhash Singhal, CA Respondent by Sh. Subhash Kumar, Sr. DR Date of Hearing 03/09/2024 Date of Pronouncement 11/09/2024 ORDER
PER AVDHESH KUMAR MISHRA, AM
This appeal for the Assessment Year (hereinafter, the ‘AY’) 2017-18 filed by the assessee is directed against the order dated 25.11.2023 passed by the Commissioner of Income Tax (Appeals) National Faceless Appeal Centre (NFAC), New Delhi [hereinafter, the ‘CIT(A)’].
Following grounds were raised in this appeal: -
1. The ld. CIT(A) erred in not condoning the delay in filing of appeal for technical reasons and rejecting the appeal simply for this reason without going into the merits of the case. The discretion given in sec. 249(3) should be liberally and judiciously exercised 167 ITR 471 (SC) etc. As copy of asstt. Order was not received, on application AO provided certified copy on 26/02/2020 and appeal was filed on 03.03.2020. It is not late.
The appellant’s counsel wrongly filed the date of asst. Order also as the date of service of asst. Order whereas; the copy asst. Order was obtained by moving an application before the ITO for the reason that asst. Order was not received. The accidental omission by assessee’s the then counsel in filling form 35 must not lead to rejection of appeal. The copy of asst. Order attached with form 35 speaks for this fact.
The CIT(A) is duty bound, even in case of exparte rejection ofappeal, to consider andadjudicate all grounds of appeal on merits also as per AO file etc. Summary rejectionof all grounds of appeal without discussing any of them in CIT(A) order, is not correct/justified-101 STC 273(MAD) etc.
4. AO direct notice in paper format or otherwise was not issuedtothe appellant. Beingunaware the appellant could not respond to any notice. For default of counsel, thetaxpayer be not penalized. All the notices as noted on page 4 of CIT (A) order wereon I.T. Portal only and were not in the knowledge of the appellant who is notconversant with new technique of viewing I.T. Portal.
5. The case law of 118 ITR 461 (SC) is regarding settlement proceedingscaseu/s245Aandnot for normal appeal. ITAT, Delhi in several cases is not strictly following thesame and have restored the matter back to CIT(A) for fresh disposal of appeal. It isprayed accordingly to cancel the order of CIT (A) and restore back the matter forfresh adjudication on merits/facts.
The error in Form 35 is rectifiable and the error in Point2(c) i.e. 02.12.2212 is to be corrected. Kindly allow the assessee to correct the same by way of a letter without filing a fresh Form 35.
This is a case where ITR for the year stands filed on 28/12/2017 and taxes to the tune of Rs 92660 were paid. The assessment is made as if no ITR had been filed. No mandatory notice u/s 143(2) to assume jurisdiction was ever issued by the AO making the assessment order null and void. Forms 35, Col. 8 contain all these details, ignored by CIT (A).
The ITO has collected 2 bank statements u/s 133 (6) directly from banks and has used tern in making the additions in this case. He has not provided the copy thereof to the appellant granting him the opportunity to consider, explain and provide necessary evidences. As per decided case laws, the AO is debarred from using such information collected behind the bank of the appellant unless he had provided them to the assessee before assessment. Principal Natural Justice is adversely affected. And there is no other evidence on file of ITO.
The ITO erred in making an addition of Rs. 1,39,01,040/- u/s 69A for cash deposited in the bank accounts of the appellant before and partially during the demonetisation period. The AO simply relied on input on I.T. portal without verifying the facts from bank or the appellant. It is against the established rule of evidence and not justified. Withdrawals from same bank were rerouted and the turnover declared all were in cash which went into bank. Nature of business justified cash deposits into bank.
The appellant is entry operator and in his case entire deposits have been wrongly treated as income whereas the precedent of decided cases say that only 0.50% percent thereof be kindly adopted as income and not the entire amount as income- (2022) 99 ITR 45(SN) Ahd. Trib etc. Reduction for cash withdrawals must be given.
The appellant denies the imposition of additional tax u/s 115BBE in this case. In view of relief which hon'ble ITAT will grant on other grounds of appeal, this will eliminate/ reduce the tax calculations u/s 115BBE. Similarly levy of penal interest is also challenged.”
3. The relevant facts giving rise to this appeal are that the Assessing Officer (hereinafter, the ‘AO’), based on the information that the appellant/assessee, who deposited cash of Rs.19,18,000/- in his bank account maintained with the HDFC Bank and Rs.9,86,000/- in the bank account maintained with the ICICI Bank, had not filed any Income Tax Return (hereinafter, the ‘ITR’) for the relevant year. Therefore, the AO issued notice under section 142(1) of the Income Tax Act, 1961 (hereinafter, the ‘Act’) to the appellant/assessee to file his ITR. However, the appellant/assessee did not ensure any compliance. Thereafter the AO conducted inquiries from various banks and found that the appellant/assessee had deposited cash aggregating to Rs.1,27,14,060/- during the relevant year in different bank accounts. Consequentially, the AO show caused the appellant/assessee to explain the source and nature of these deposits in the bank accounts. However, there was no compliance. It is 4 evident from the para-3 of the assessment order that the appellant/assessee did not make any compliance during the assessment proceedings. Besides, the above-mentioned cash deposits, there were credits/deposits of Rs.1,48,37,252/- through banking channel in the appellant/assessee’s bank accounts. Thus, the aggregate of cash deposits and deposits through banking channel was Rs.2,75,51,312/-. Since no compliance was ever made by the appellant/assessee during the assessment proceedings; therefore, the AO not only taxed entire cash deposits of Rs.1,27,14,060/- as unexplained cash deposits under section 69A of the Act but also worked out profit of Rs.11,86,980/- by applying the profit rate of 8% of Rs.1,48,37,252/-; credits/deposits through banking channel. Thus, the AO completed the assessment at Rs.1,39,01,040/- after seeking direction of the Range head under section 144A of the Act. Aggrieved, the appellant filed appeal along with the condonation delay application before the Ld. CIT(A), who did not condone the delay due to non-prosecution. Consequentially, the appeal was dismissed. There was no adjudication on merit.
The Ld. Authorised Representative (hereinafter, the ‘AR’) contended that the appellant/assessee neither made any compliance before the AO nor before the Ld. CIT(A) as the appellant/assessee could not receive any correspondence, in physical form, from them. Almost all the notices and the orders were uploaded on ITBA/ITD System. To which, the appellant/assessee was not well acquainted with. Further, it was submitted that the 5 appellant/assessee was of the belief that there was no delay in filing of the appeal before the CIT(A) as he had not received any copy of the assessment order until the then Counsel informed him. So, he applied for the copy of the assessment order. The AO provided him the copy of the order on 26th Feb, 2020 and thereafter he filed appeal within the statutory time period before the CIT(A). Otherwise also it was submitted that by filing late appeal, the assessee could not derive any benefit. He prayed for condonation of delay of 60 days. For deciding the case on merit, the Ld. AR prayed for remitting the matter back to the AO on the reasoning that both the assessment and appellate orders were passed on ex parte basis.
The Ld. Sr. Departmental Representative (hereinafter, the ‘Sr. DR’) with the help of facts mentioned in the assessment order and appellate order submitted that reasonable opportunities of being heard were provided to the appellant/assessee by the AO and the Ld. CIT(A) but the appellant/assessee tactfully ensured noncompliance to avoid the proper investigations. Hence, he prayed for upholding of orders of the lower authorities.
We heard both the parties at length and perused the material available on record. In the interest of justice and facts in entirety, we are of the considered opinion that the appellant/assessee deserves reasonable opportunity of being heard to make shortcomings or non-compliances. In view thereof, without offering any comment on merit of the case, we deem it fit to set aside the impugned order and remit the matter back to the file of the AO for de-novo consideration. The appellant/assessee should ensure compliances during the set-aside proceeding before the AO. The AO is also required to provide reasonable opportunities of being heard to the appellant/assessee before deciding the case on merit.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in open Court on 11 September, 2024.