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Facts
The appellant filed an ITR for AY 2016-17, declaring an income of Rs. 6.41 lakhs. During scrutiny, the AO identified undisclosed investments in share transactions, leading to an addition of Rs. 25.32 lakhs for unexplained investment, and an assessed income of Rs. 31.74 lakhs. The CIT(A) subsequently dismissed the appellant's appeal ex-parte due to non-compliance with notices.
Held
The Tribunal remitted the matter back to the Assessing Officer for fresh adjudication, emphasizing the importance of providing the assessee with a more effective and meaningful opportunity of being heard. The assessee is directed to cooperate in the proceedings and is permitted to submit all relevant documents and evidence.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without providing a proper opportunity of hearing, and whether the AO was justified in making an addition for undisclosed share transactions and initiating penalty proceedings under sections 271A and 271B of the Income Tax Act.
Sections Cited
143(3), 44AD, 271A, 271B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC’: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI SUDHIR PAREEK
This appeal by Assessee is directed against the order of National Faceless Appeal Centre , Delhi [for short hereinafter referred to as the “(NFAC)”]/ CIT(A) dated 19.10.2023 for Assessment Year 2016-17 on the following grounds of appeal: -
ITA No.- 3295/Del/2023 Rajesh Sahni
“1. The order of Ld. A.O. is based on personal whims and fancies without ascertaining the facts and circumstances of the case. Hence liable to be quashed.
2. That the Ld. CIT(A), NFAC has erred on facts and in law in passing the ex-party order without proving opportunity to the appellant to explain the case and sustain the claim.
That the Ld. Assessing Officer erred in concluding that the assessee has invested in share transactions during the period. but not disclosed in his ITR, through correct, doesn't make any difference in the taxable income of the assessee since the assessee has suffered losses under the head Income from capital gains as well as under the head Income from business and profession (speculative income).
That the Ld. Assessing Officer is not justified in treating the amount of Short Term Capital Loss and speculative loss of share transactions as per broker statement, as the business income of the assessee and levying tax thereon and creating the demand. The conclusion is based on unlawful and illogical observations, applying incorrect principles of taxation and without calling for necessary and sufficient information.
5. That the Ld. Assessing Officer erred in concluding that the assessee was required to maintain books of accounts and has not maintained the same considering the fact that the assessee has declared the income from business and profession in terms of provisions of section 44AD of the Act. Accordingly, initiation of penalty proceedings u/s 271A is unjustified and unlawful.
ITA No.- 3295/Del/2023 Rajesh Sahni
6. That the Ld. Assessing Officer has acted in illegal manner in concluding that the assessee had turnover in shares more than the limits prescribed in section 44AD of the Income Tax Act, 1961 and thus, it was mandatory to get the books of accounts compulsory audited as the investment in shares cannot form part of turnover. Accordingly, initiation of penalty proceedings u/s 271B is unjustified and unlawful.
7. That the appellant craves leave to add, amend, modify, rescind, supplement or alter any of the grounds of appeal before the appeal is finally adjudicated upon.”
Brief facts of the case may be summarized as that the appellant filed his return of Income at Rs. 6,41,730/- on 30.03.2017. The case was selected for scrutiny through CASS.
During the assessment proceedings, the AO observed that during the relevant assessment year, the appellant had invested in share transactions but not disclosed in his ITR. The assessment u/s 143(3) of the Act was made vide order dated 30.12.2018 at assessed income of Rs.31,74,504/- after making an addition of Rs.25,32,774/- on account of unexplained investment.
ITA No.- 3295/Del/2023 Rajesh Sahni 4. At the outset, the Ld. Counsel for the assessee stated that the appeal has been dismissed by Ld. CIT(A)/ NFAC in passing ex-parte order without providing opportunity to the appellant to explain the case and sustain the claim.
Heard rival submissions and carefully scanned the material available before us.
We have carefully considered the order of the CIT(A). We find that the appeal has been dismissed due to the non-compliance of the notices.
Per contra, Learned Departmental Representative (hereinafter referred to as ‘Ld. DR’) relied on the order passed by both lower authorities and stated that sufficient opportunity provided to assessee before passing impugned order.
By hearing both side and perusing material placed before us, we are of the humble opinion that justice should not only done but it appears to be done and in order to achieve the noble goal of justice and before reaching any conclusion it is expedient to consider, all the material/ documents in existence and produced and whatever it is, if one more opportunity provided to assessee /appellant, object of justice will be served to some extent. Thus, for Page 4 of 6
ITA No.- 3295/Del/2023 Rajesh Sahni this purpose, we are inclined to remit back the matter to Ld. AO with the direction to decide afresh.
Consequently, matter is remitting back to the Ld. AO with the direction to decide the matter afresh after affording more effective, meaningful and sufficient opportunity of being heard to the assessee. At the same time, assessee / appellant shall co-operate in proceedings and will not seek unnecessary adjournments for ensuring expeditious disposal of the matter. Assessee / appellant is at liberty to file / submit any documents / evidence etc. in support of his claim.
In the result, this appeal is allowed as indicated above for statistical purpose.
Order pronounced in the Open Court on 31 .05.2024