NAVIN RAMESH MANSHANI,MUMBAI vs. ITO WARD 42(1)(3), MUMBAI

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ITA 3570/MUM/2024Status: DisposedITAT Mumbai08 November 2024AY 2018-20197 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that both the assessment order and the CIT(A)'s order were passed ex parte. The Tribunal found that the assessee had provided sufficient justification for his failure to present his case before the lower authorities, specifically citing the Covid-19 infection and quarantine. The Tribunal referred to Section 250(2)(a) of the Act, which grants the appellant the right to be heard. Considering the facts and circumstances, the Tribunal held that the ends of justice required the assessee to be given an effective opportunity of hearing. Consequently, the impugned order of the CIT(A) was set aside, and the matter was restored to the file of the Assessing Officer (AO). The AO was directed to provide an effective opportunity of hearing to the assessee, who was to present its case without delay when called upon. The issue regarding the addition under section 56(2)(x) and the charging of interest under sections 234A, 234B, 234C, and 234D were implicitly left undecided as the matter was remanded for fresh consideration by the AO.

What were the facts?

The assessee, Navin Ramesh Manshani, an individual engaged in trading electrical parts, filed his return for AY 2018-19 declaring Rs. 16,11,790. The assessment was selected for scrutiny, and notices under sections 143(2) and 142(1) were issued. The Assessing Officer (AO) sought explanations regarding the sale of property and the difference between stamp duty value and agreement value for a shop purchase. The assessee submitted documents. A show cause notice under section 143(3) was issued to an incorrect email address. The assessee was unaware of this notice, was diagnosed with Covid-19 on March 15, 2021, and quarantined. An ex parte assessment order was passed on March 20, 2021, adding Rs. 6,60,300 under section 56(2)(x) without affording an opportunity to submit explanations. The assessee's appeal before the CIT(A) was also dismissed ex parte due to non-response to multiple notices over two years.

What were the issues?

1. Whether the addition of Rs. 6,60,300/- under section 56(2)(x) of the Income Tax Act, 1961, by the Assessing Officer and confirmed by the CIT(A) is legally sustainable, considering the assessee's contention that the difference between the agreement value and stamp duty value was within the safe harbour limit of 10% of the agreement value as provided in section 56(2)(x)? (Question of law and fact, concerning Section 56(2)(x)). 2. Whether the assessment order passed under section 143(3) of the Act by the Assessing Officer, and consequently confirmed by the CIT(A), is illegal, bad in law, ultra vires, without jurisdiction, and liable to be annulled for not allowing a reasonable opportunity of hearing and not appreciating facts, submissions, and evidence properly? (Question of law and fact, concerning Section 143(3)). 3. Whether the charging of interest under sections 234A, 234B, 234C, and 234D of the Act is justified? (Question of law, concerning Sections 234A, 234B, 234C, 234D). Assessee's Contentions: The assessee argued that proceedings by both lower authorities occurred during the Covid period, and the assessee suffered from Covid and remained quarantined. They also contended that there was no proof of due service of notices from the CIT(A). The assessee claimed to have been prevented by a sufficient cause from presenting its case and requested the matter be restored to the AO for an opportunity to present its case. The assessee also argued that the difference of Rs. 6,60,300/- between the agreement value and stamp duty value was only 7.05% of the agreement value, which is within the safe harbour limit of 10% provided in section 56(2)(x). Revenue's Contentions: The Revenue, through the DR, supported the CIT(A)'s order, stating that the assessee was negligent and failed to respond or file any reply before the AO or CIT(A).

Which sections of the Income-tax Act were involved?

Section 56(2)(x),Section 143(3),Section 250,Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI. BR BASKARAN & SHRI. RAJ KUMAR CHAUHAN

For Appellant: Shri. Vimal Punmiya
For Respondent: Ms. Smitha V. Nair

O R D E R PER RAJ KUMAR CHAUHAN (J.M.): 1. This appeal is filed by the appellant/assessee against the order dated 17.11.2023 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)”], passed under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the A.Y. 2018-19, wherein the Ld.

Navin Ramesh Manshani; A.Y. 2018-19 CIT(A) has dismissed the appeal ex parte to decide the issue on merit as appellant/assessee has failed to file any response before the Ld. CIT(A).

2.

The facts in brief are that the assessee is an individual and is engaged in the business of Trading in Electrical parts and accessories and has filed return of income on 13.10.2018 declaring total income of Rs. 16,11,790/-. The said return was processed and intimation order u/s. 143(1) dated 13.12.2018 was passed. Subsequently, the return of income was selected for scrutiny. The notice u/s. 143(2) dated 29.09.2019 and also notice u/s. 142(1) on 20.01.2021 were issued to which submission was made by the appellant. Further details/explanation were called by the Ld. AO u/s. 142(1) regarding sale of property and further the appellant was called upon to explain the difference in stamp duty and value of and the agreement value of purchase consideration of the shop through the notice u/s. 142(1). The necessary documents were submitted by the appellant. Another show cause notice u/s. 143(3) on 17.03.2021 was issued but was sent on the email id which does not belong to the appellant. Therefore, the appellant was not aware of the show cause notice dated 17.03.2021, wherein he was instructed to submit the explanation before 19.03.2021, but the appellant was detected with Covid-19 on 15.03.2021 and remained Navin Ramesh Manshani; A.Y. 2018-19 quarantined. The assessment order u/s. 143(3) was passed on 20.03.2021 stating that the appellant has nothing to submit against the show cause notice but the appellant was not aware of the show cause notice having been issued. Further, sufficient opportunity was not given to the appellant to respond to the show cause notice and assessment was closed on 20.03.2021. The assessment order u/s. 143(3) dated 20.03.2021 had added income u/s. 56(2)(x) of the Act of Rs. 6,60,300/- without affording opportunity of making submission by the appellant.

3.

The appellant challenged the assessment order before the Ld. CIT(A) and the impugned order has been passed ex parte because various notices 5 times issued from 30.09.2021 to 06.11.2023 was not responded or not replied by the appellant as find mentioned in para no. 3 of the impugned order. The Ld. CIT(A) concluded by observing “the appellant has been given opportunity for last 2 years, however, there has been total non compliance to all the notices issued. So, the contentions raised vide grounds of appeal and the statement of facts cannot be taken on face value. Therefore, the above contention of the appellant are without merit and are hereby rejected and the appeal was dismissed.”

Navin Ramesh Manshani; A.Y. 2018-19 4. Aggrieved by the impugned order, the assessee is in appeal before us and has raised following grounds of appeal.

“01. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal) erred in confirming addition made by the learned Assessing Officer of Rs.660300/- under section 56(2)(x) of the Act. Provisions of the Act ought to have been properly construed and regard being had to facts of the case addition of Rs.660300/- should not have been confirmed. 02 On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal) ought to have appreciated that difference of Rs.660300/- between agreement value and value adopted by Stamp duty Authority is only 7.05% of agreement value, which is within the safe harbour limit of 10% as provided in section 56(2)(x) of the Act.

3. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming order made under section 143(3) of the Act by the learned Assessing Officer which is illegal, bad in-law, ultra vires, without jurisdiction and without allowing reasonable opportunity of the hearing, without appreciating facts, submission and evidences in their proper perspective is liable to be annulled. 04 The learned Commissioner of Income Tax (Appeals) erred in confirming charging of interest under section 234A, 234B, 234C and 234D of the Act.”

5.

We have heard the Ld. AR on behalf of the assessee and Ld. DR on behalf of the revenue. The Ld. DR supported the order of the Ld. CIT(A) stating that the assessee was negligent and has failed to respond and has not filed any reply or submission either before the Ld. AO or before the Ld. CIT(A).

Navin Ramesh Manshani; A.Y. 2018-19 6. The Ld. AR on the other hand argued that the proceedings by both the lower authorities have taken place during covid period and the assessee has suffered covid and remained quarantined. Further, there is no proof that there is notice issued by the Ld. CIT(A) has been duly served upon the assessee. It is argued that the assessee was prevented by sufficient cause from presenting its case before the lower authorities and therefore the matter may be restored to the file of the Ld. AO for providing opportunity to the assessee to present its case.

7.

We have considered the rival submissions. Section 250 sub section 2(a) of "the Act" provides as under:

“Section 250 (2) The following shall have the right to be heard at the hearing of the appeal: -

(a) The appellant, either in person or by an authorised representative;”

8.

It is evident from the assessment order as well as from the impugned order that both the orders are ex parte. It is to be noticed that there is sufficient justification given by the assessee/appellant for his failure to present his case before the lower authority as discussed above. In the Page | 5 Navin Ramesh Manshani; A.Y. 2018-19 given facts and circumstances the end of justice requires that the assessee/appellant needs to be given an effective opportunity of hearing for presenting its case before the Ld. AO.

9.

For these reasons, the impugned order of the Ld. CIT(A) is set aside and matter is restored to the file of the Ld. AO with the direction to provide an effective opportunity of hearing to the appellant/assessee who shall present its case before the Ld. AO without any delay, as and when he is called upon by the Ld. AO in that regard.

10.

In the result, appeal filed by the assessee is allowed for statistical purpose in the above terms.

Order pronounced on 08.11.2024

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