Loading judgment…
Facts
The assessee filed a revised return of income declaring a total income. During assessment proceedings, the Assessing Officer (AO) made an addition of unexplained cash credit from loan transactions and disallowed the interest component. The CIT(A) dismissed the assessee's appeal ex-parte for failing to substantiate the case.
Held
The Tribunal noted that the appeal proceedings were initiated after a considerable delay and during the pandemic. Considering the facts and the delay, the Tribunal decided to remit the matter back to the CIT(A) for a fresh adjudication.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without considering the assessee's submissions and if the penalty levied is valid.
Sections Cited
271(1)(c), 143(3), 68, 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2023-24/1058913085(1), dated 20.12.2023 passed against the assessment order by Deputy Commissioner of Income Tax - 10(2)(2), Mumbai, u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 21.03.2016 for AY 2013-14.
Rajesh Jugraj Madhani, AY 2013-14
Grounds taken by the assessee are reproduced as under:
1. “On the facts and circumstances of the case, CIT(A) erred in confirming the Penalty levied u/s. 271(1)(c) of the Act of Rs.1,52,084. 2. a) On the facts and circumstances of the case, the AO erred in leving the penalty though the AO has not specified under which limb, the penalty proceedings were initiated in the notice issued u/s.271(1)(c) dated 30/03/2022. The penalty levied under such circumstances is bad in law.
b) It is well settled law that the penalty proceeding Initiated without specifying the particular limb of the proceedings is bad in law. 3. a) On the facts and circumstances of the case and in law, the AO wrongly issue of the notice u/s. 271(1)(c) of the Act though no proceedings have been initiated in the assessment order which is a required to be initiated & mentioned in the assessment order. b) The AO erred in issuing notice u/s.271(1)(c) on 30/03/2022 i.e. after the assessment order passed on 03/03/2022. 4. a) On the facts and circumstances of the case and in law. the assessment order passed u/s. 147 is bad in law since order dated 03/03/2022 is digitally signed on 30/03/2022 and DIN was taken on unsigned order. It is not clear as to date of taking DIN. b) The penalty order passed u/ 271(1)(c) on bad assessment order which is bad in law is void ab initio.
5. On the facts and circumstances of the case and in law, the CIT(A) erred in confirming the penalty without considering detailed submission and judgements cited during the appeal proceedings. The order passed by the CIT(A) without considering the merits of the case is bad in law. 6. a) On the facts and circumstances of the case and in law, there is no concealment of Particulars of Income as the full particulars of Income were available before the department in the Form 26AS and AIS.
b) The appellant submits that no addition has been made in the Return of Income filed, therefore, no penalty can be levied. c) The appellant further submits that several judicial pronouncements have held that bonafide mistakes do not constitute the concealment of Income.”
In ground No. 1 and 2, assessee has contested that Ld. CIT (A) has passed an ex parte order and without dealing the appeal on merits ignoring the submissions and documents filed by the assessee in the Rajesh Jugraj Madhani, AY 2013-14 course of assessment proceedings. Accordingly, we first deal with these two grounds taken by the assessee.
Brief facts are that assessee filed his return of income on 31.7.2030 reporting total income at nil. The return was revised on 31.03.2015 reporting total income at ₹ 1,18,90,340/-. During the course of assessment proceedings, assessee was called upon to fur- nish the details of unsecured loans taken from 29 parties totalling to ₹ 6,45,60,000/-. Assessee furnished the required details and documents to establish the identity, creditworthiness and genuineness of the transaction of these loans. Assessee also claims that he has filed con- firmations in respect of few parties along with PAN, copies of income tax returns and bank statement. However, ld. Assessing Officer disre- garded the submissions made by the assessee and made an addition of ₹ 6,39,10,000/- from 25 parties as unexplained cash credit u/s. 68 of the Act. As a consequential effect of treating these loans as unex- plained cash credit, ld. Assessing Officer also disallowed interest com- ponent in respect of these loans amounting to ₹ 35,04,689/-. Ag- grieved, assessee went in appeal before the Ld. CIT(A).
It is worth noting a fact that assessment order was passed on 21.03.2016 and assessee filed his appeal before the CIT(A) on 26.04.2016. Order passed by Ld. CIT(A) is dated 20.12.2023 for which the first notice of hearing was issued on 12.03.2020 i.e., almost after 4 years of the filing of appeal by the assessee. Subsequent three notices fixing the date of hearing were issued during the pandemic of COVID- 19. Last notice was issued on 28.11.2023 requiring assessee to file his submission latest by 05.12.2023. The appeal of the assessee was dis- missed by holding that he failed to substantiate his case and provide any plausible explanation or evidence to support his claims during the appellate proceedings. Aggrieved, assessee is in appeal before the tri-
Rajesh Jugraj Madhani, AY 2013-14 bunal challenging the approach adopted by Ld. CIT(A) passing an ex parte order and not considering the submissions which formed part of the assessment records.
Ld. counsel for the assessee submitted for remitting the matter back to the file of Ld. CIT(A) for denovo meritorious adjudication of the grounds taken by the assessee at the first appellate stage.
Per contra, Ld. Sr. DR submitted that assessee failed to substan- tiate his claim and therefore Ld. CIT(A) had no option but to dismiss the appeal ex parte.
We have heard the rival contentions and perused the material on record. From the assessment order, we note that assessee had made his submissions on the explanations called for in respect of loan transactions undertaken by the assessee. We also take note of the fact that appellate proceedings were initiated after almost 4 years of the institution of appeal and thereafter much of the time had gone during the period of pandemic.
Considering the facts on record and the circumstances of the case we are inclined to accept to prayer made by the Ld. counsel of the assessee to submit the matter back to the file of Ld. CIT(A) for de novo meritorious adjudication. We direct the ld. CIT(A) to provide reasonable opportunities to the assessee for making his submissions and also call for remand report from the Assessing Officer, if so required. We direct the assessee also, to be diligent in attending the hearings fixed for the appeal and assist in its expeditious and effective disposal. Assessee should not seek adjournments unless warranted by compelling reasons.
Rajesh Jugraj Madhani, AY 2013-14
In the result, the appeal of assessee is allowed for statistical purposes. Order is pronounced in the open court on 21 June, 2024