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Facts
The assessee's appeals were directed against three separate orders of the Ld. CIT(A) for assessment years 2013-14 and 2017-18. The Ld. CIT(A) decided the appeals ex-parte due to non-compliance by the assessee. The assessee claimed that during assessment and appellate proceedings, he was prevented from furnishing documents due to their confiscation by the CBI in connection with an independent matter.
Held
The Tribunal found that the assessee had a reasonable and sufficient cause for not producing documents before the subordinate authorities, as his books of accounts and relevant documents were confiscated by the CBI. Therefore, in the interest of substantial justice, the Tribunal set aside the orders of the lower authorities.
Key Issues
Whether the ex-parte orders passed by the Ld. CIT(A) due to non-compliance by the assessee should be set aside when the assessee provides a valid reason (CBI confiscation of documents) for non-compliance.
Sections Cited
143(3), 147, 144
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Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SANDEEP SINGH KARHAIL
These appeals by the assessee are directed against three These appeals by the assessee are directed against three These appeals by the assessee are directed against three separate orders passed by the Ld. Commissioner of Income-tax separate orders passed by the Ld. Commissioner of Income separate orders passed by the Ld. Commissioner of Income (Appeals) – 49, Mumbai [in short ‘the Ld. CIT(A)’]. 49, Mumbai [in short ‘the Ld. CIT(A)’]. The f The first appeal for assessment year 2013 for assessment year 2013-14, is arising from the order of the Ld. is arising from the order of the Ld. CIT(A) dated 31.01.2024. The other (A) dated 31.01.2024. The other two appeals for 2017 for 2017-18 are arising, firstly from the order of t from the order of the Ld. CIT(A) dated 21.02.2024 he Ld. CIT(A) dated 21.02.2024 in relation to order u/s 143(3) of the Income relation to order u/s 143(3) of the Income-tax Act, 1916 (in short tax Act, 1916 (in short ‘the Act’) dated 28.12.2019) and second ‘the Act’) dated 28.12.2019) and secondly arising from the arising from the order of the Ld. CIT(A) dated 21.01.2024 in relation to order u/s 147 of the the Ld. CIT(A) dated 21.01.2024 in relation to order u/s 147 of the the Ld. CIT(A) dated 21.01.2024 in relation to order u/s 147 of the Act passed by the Assessing Officer on 29.03.2022. In all these Act passed by the Assessing Officer on 29.03.2022. In all these Act passed by the Assessing Officer on 29.03.2022. In all these appeals, common issues in dispute are issues in dispute are involved and therefore, same involved and therefore, same were heard together and disposed off by way of t were heard together and disposed off by way of this consolidated his consolidated order.
At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that the assessee was prevented by sufficient cause for appearing before the assessee was prevented by sufficient cause for appearing before the assessee was prevented by sufficient cause for appearing before the Ld. CIT(A) and therefore, the order of the Ld. CIT(A) being ex- the Ld. CIT(A) and therefore, the order of the Ld. CIT(A) being ex the Ld. CIT(A) and therefore, the order of the Ld. CIT(A) being ex parte, same might be set aside same might be set aside for deciding afresh.
On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) On the contrary, the Ld. Departmental Representative (DR) objected and submitted that assessee did not comply either before objected and submitted that assessee did not comply either before objected and submitted that assessee did not comply either before the Assessing Officer or before the Ld. CIT(A) and therefore, appeal the Assessing Officer or before the Ld. CIT(A) and therefore, appeal the Assessing Officer or before the Ld. CIT(A) and therefore, appeal should be decided on merit. should be decided on merit.
Mayur Deepakbhai Chavda Mayur Deepakbhai Chavda 3 1499 & 1498 /MUM/2024 ITA Nos. 1500, 1499 & 1498 /MUM/2024
We have heard rival submission of the parties and perused the ve heard rival submission of the parties and perused the ve heard rival submission of the parties and perused the relevant material on record. We find that in all the three appeals, relevant material on record. We find that in all the three appeal relevant material on record. We find that in all the three appeal the Ld. CIT(A) has decided the appeals ex the Ld. CIT(A) has decided the appeals ex-parte due to non parte due to non- compliance on the part of the assessee of the various notices compliance on the part of the assessee of the various notices compliance on the part of the assessee of the various notices issued. In relevant assessments, assessments, also no compliance was made by also no compliance was made by the assessee and therefore, the assessment orders have been the assessee and therefore, the assessment orders the assessee and therefore, the assessment orders passed u/s 144 of the Act. For ready reference, the finding of the passed u/s 144 of the Act. For ready reference, the finding of the passed u/s 144 of the Act. For ready reference, the finding of the Ld. CIT(A) in assessment year 2013 Ld. CIT(A) in assessment year 2013-14 is reproduced as under: 14 is reproduced as under:
“7.7 During the course of appellate proceedings, as stated above, sufficient he course of appellate proceedings, as stated above, sufficient he course of appellate proceedings, as stated above, sufficient time and opportunity was granted to the appellant to present his case time and opportunity was granted to the appellant to present his case time and opportunity was granted to the appellant to present his case However, the appellant has chosen not to avail of the same. In the grounds However, the appellant has chosen not to avail of the same. In the grounds However, the appellant has chosen not to avail of the same. In the grounds of appeal, the appellant has contended that the of appeal, the appellant has contended that the reopening of assessment reopening of assessment u/s. 147 of the Act was bad in law. The appellant has also contested the u/s. 147 of the Act was bad in law. The appellant has also contested the u/s. 147 of the Act was bad in law. The appellant has also contested the addition of Rs.277.29 Cr. made by the AO. However, as stated above, no addition of Rs.277.29 Cr. made by the AO. However, as stated above, no addition of Rs.277.29 Cr. made by the AO. However, as stated above, no submissions have been made to substantiate these grounds of appeal. A submissions have been made to substantiate these grounds of appeal. A submissions have been made to substantiate these grounds of appeal. A total amount of R total amount of Rs.277.29 Cr. was found credited in the bank account of the s.277.29 Cr. was found credited in the bank account of the appellant during the period relevant to the assessment year under appellant during the period relevant to the assessment year under appellant during the period relevant to the assessment year under consideration. The onus was on the appellant to explain the nature and consideration. The onus was on the appellant to explain the nature and consideration. The onus was on the appellant to explain the nature and source of these credits, with necessary supporting documenta source of these credits, with necessary supporting documenta source of these credits, with necessary supporting documentary evidences. The AO had provided sufficient time and opportunity to the appellant to provided sufficient time and opportunity to the appellant to provided sufficient time and opportunity to the appellant to furnish his explanation in this regard, but the appellant failed to do so. furnish his explanation in this regard, but the appellant failed to do so. furnish his explanation in this regard, but the appellant failed to do so. During appellate proceedings also, the appellant merely kept on filing letters During appellate proceedings also, the appellant merely kept on filing letters During appellate proceedings also, the appellant merely kept on filing letters requesting for a requesting for adjournments in response to the notices of hearing issued, djournments in response to the notices of hearing issued, which showed that he had no intention to file any written submissions and which showed that he had no intention to file any written submissions and which showed that he had no intention to file any written submissions and he was only trying to delay the finalization of the appellate proceedings. If he was only trying to delay the finalization of the appellate proceedings. If he was only trying to delay the finalization of the appellate proceedings. If the appellant had any details/documents relati the appellant had any details/documents relating to the amount of ng to the amount of Rs.277.29 Cr. found credited his bank account in his possession, he should Rs.277.29 Cr. found credited his bank account in his possession, he should Rs.277.29 Cr. found credited his bank account in his possession, he should have furnished the same for explaining the nature and sources thereof. have furnished the same for explaining the nature and sources thereof. have furnished the same for explaining the nature and sources thereof. However, despite being granted sufficient time and opportunity, the However, despite being granted sufficient time and opportunity, the However, despite being granted sufficient time and opportunity, the appellant failed to fu appellant failed to furnish any such details/documents explaining the rnish any such details/documents explaining the nature and source of the said credits during the course of assessment nature and source of the said credits during the course of assessment nature and source of the said credits during the course of assessment proceedings and even during appellate proceedings. proceedings and even during appellate proceedings. The appellant's failure appellant's failure to furnish the same during both the assessment proceedings and to furnish the same during both the assessment proceedings and to furnish the same during both the assessment proceedings and the appellate proceedings leads to the inescapable conclusion that he is not in appellate proceedings leads to the inescapable conclusion that he is not in appellate proceedings leads to the inescapable conclusion that he is not in possession of any such details/documents. Accordingly, after considering possession of any such details/documents. Accordingly, after considering possession of any such details/documents. Accordingly, after considering the facts and circumstances of the case, I find no reason to interfere with the the facts and circumstances of the case, I find no reason to interfere with the the facts and circumstances of the case, I find no reason to interfere with the order of the AO, which order of the AO, which is upheld. Consequently, all the grounds of appeal is upheld. Consequently, all the grounds of appeal taken by the appellant are DISMISSED. taken by the appellant are DISMISSED.” 4.1 Identical observations have been made by the Ld. CIT(A) in Identical observations have been made by the Ld. CIT(A) in Identical observations have been made by the Ld. CIT(A) in other two appeals.
Mayur Deepakbhai Chavda Mayur Deepakbhai Chavda 4 1499 & 1498 /MUM/2024 ITA Nos. 1500, 1499 & 1498 /MUM/2024 4.2 Before us, the Ld. counsel for the assessee has filed an Before us, the Ld. counsel for the assessee has filed an Before us, the Ld. counsel for the assessee has filed an affidavit on behalf of affidavit on behalf of the assessee. The relevant part of the said the assessee. The relevant part of the said affidavit is reproduced as under: affidavit is reproduced as under:
“4) I state and submit that there was CBI proceedings in an independent I state and submit that there was CBI proceedings in an independent I state and submit that there was CBI proceedings in an independent matter to which I was subjected to, and in those proceedings, the Central matter to which I was subjected to, and in those proceedings, the Central matter to which I was subjected to, and in those proceedings, the Central Bureau of Investigation had vis Bureau of Investigation had visited my office and seized all the records, ited my office and seized all the records, files, tax invoices and other relevant documents on March 06, 2017. Copy of files, tax invoices and other relevant documents on March 06, 2017. Copy of files, tax invoices and other relevant documents on March 06, 2017. Copy of Search list having details of property seized by police officers under the Search list having details of property seized by police officers under the Search list having details of property seized by police officers under the provision of section 103 or 165, Criminal Procedure Code being provision of section 103 or 165, Criminal Procedure Code being provision of section 103 or 165, Criminal Procedure Code being annexed as Annexure 1 along with this affidavit for your perusal. Annexure 1 along with this affidavit for your perusal. 5) It is pertinent to note that I have been exonerated in the said CBI It is pertinent to note that I have been exonerated in the said CBI It is pertinent to note that I have been exonerated in the said CBI proceedings and a closure report has been filed by Central Bureau of proceedings and a closure report has been filed by Central Bureau of proceedings and a closure report has been filed by Central Bureau of Investigation in the above Investigation in the above matter. 6) Above docum 6) Above documents seized were released on February 14, 2023 and the ents seized were released on February 14, 2023 and the same were again seized on April 22, 2023. Copy of Production cum seizure same were again seized on April 22, 2023. Copy of Production cum seizure same were again seized on April 22, 2023. Copy of Production cum seizure memo is attached herewith as Annexure 2 for your perusal. memo is attached herewith as Annexure 2 for your perusal. 7) I would further like to submit that my case was reopened for releva I would further like to submit that my case was reopened for releva I would further like to submit that my case was reopened for relevant assessment year on March 31, 2021. assessment year on March 31, 2021. 8) During the course of Reassessment proceedings as well as during the 8) During the course of Reassessment proceedings as well as during the 8) During the course of Reassessment proceedings as well as during the course of appellate proceedings before CIT(A), no submission could be made course of appellate proceedings before CIT(A), no submission could be made course of appellate proceedings before CIT(A), no submission could be made as all the documents were seized by CBI as stated above. Hence, there wa as all the documents were seized by CBI as stated above. Hence, there wa as all the documents were seized by CBI as stated above. Hence, there was noncompliance of Notices before Assessing officer and CIT(A). noncompliance of Notices before Assessing officer and CIT(A). noncompliance of Notices before Assessing officer and CIT(A).” 4.3 Upon review of the aforementioned testimony of the assesee, it Upon review of the aforementioned testimony of the assesee, it Upon review of the aforementioned testimony of the assesee, it is observed that the books of accounts and relevant documents is observed that the books of accounts and relevant documents is observed that the books of accounts and relevant documents pertaining to the assessment year were confiscated by the Central pertaining to the assessment year were confiscated by the Cent pertaining to the assessment year were confiscated by the Cent Bureau of Investigation and subsequently returned. In the Bureau of Investigation and subsequently returned Bureau of Investigation and subsequently returned circumstances, we find that e find that there is a reasonable and sufficient there is a reasonable and sufficient cause for which the assessee was prevented in producing the cause for which the assessee was prevented in producing the cause for which the assessee was prevented in producing the documents before the documents before the subordinate authorities. Therefore, i Therefore, in the facts and circumstances of the case in the interest of and circumstances of the case in the interest of substantial and circumstances of the case in the interest of justice, we feel it appropriate we feel it appropriate to set aside the order set aside the orders of the lower authorities in all the three appeals in all the three appeals and restore the matter back to the matter back to Mayur Deepakbhai Chavda Mayur Deepakbhai Chavda 5 1499 & 1498 /MUM/2024 ITA Nos. 1500, 1499 & 1498 /MUM/2024 the file of the Assessing Officer with the direction to the assessee to the file of the Assessing Officer with the direction to the assessee to the file of the Assessing Officer with the direction to the assessee to file the entire necessary document in support of its claim. The Ld. necessary document in support of its claim. The Ld. necessary document in support of its claim. The Ld. Assessing Officer is directed to Assessing Officer is directed to adjudicate the issue in dispute the issue in dispute involved in these appeals in these appeals in accordance with law.
In the result, all the three appeals of the assessee are allowed In the result, all the three appeals of the assessee are allowed In the result, all the three appeals of the assessee are allowed for statistical purposes. for statistical purposes.