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Facts
The assessee appealed against an order by the CIT(A) which sustained an addition of Rs. 48,75,500 under Section 68 of the Income Tax Act for cash deposits made during the demonetisation period, which the assessee claimed originated from sales. The CIT(A)'s order was passed ex parte due to the assessee's non-compliance with notices, attributed to an intention to opt for the Vivad se Vishwas Scheme, which ultimately could not be pursued due to lack of funds.
Held
The Tribunal acknowledged the assessee's non-compliance was due to a genuine attempt to opt for the Vivad se Vishwas Scheme and subsequent fund shortage. Finding a reasonable cause for non-compliance and considering the assessee's undertaking to respond, the Tribunal set aside the CIT(A)'s order and restored the matter for fresh consideration on merits.
Key Issues
Whether the CIT(A) was justified in passing an ex parte order sustaining an addition under Section 68 due to the assessee's non-compliance, where the non-compliance was due to an unfulfilled intention to opt for the Vivad se Vishwas Scheme.
Sections Cited
Section 68, Section 250
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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the assessee is directed against order dated 30.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2017-18, raising following grounds:
Nirchem Dyes and Chemicals Pvt. Ltd Nirchem Dyes and Chemicals Pvt. Ltd
The Commissioner of Income 1. The Commissioner of Income-tax (Appeals) at National Faceless tax (Appeals) at National Faceless Appeal Centre, Delhi (hereinafter referred to as the Appeal Centre, Delhi (hereinafter referred to as the CIT(A)) erred in CIT(A)) erred in framing an ex parte order. framing an ex parte order.
The CIT(A) erred in upholding the action of the Income 2. The CIT(A) erred in upholding the action of the Income 2. The CIT(A) erred in upholding the action of the Income-tax Officer - 7(2)(4), Mumbai (hereinafter referred to as the Assessing Officer) in 7(2)(4), Mumbai (hereinafter referred to as the Assessing Officer) in 7(2)(4), Mumbai (hereinafter referred to as the Assessing Officer) in making aggregate addition of Rs 48,75,500 under section 68 of the making aggregate addition of Rs 48,75,500 under section 68 of the making aggregate addition of Rs 48,75,500 under section 68 of the Act, on account of cash deposited in bank account during on account of cash deposited in bank account during on account of cash deposited in bank account during demonetisation period which arises out of sales. demonetisation period which arises out of sales. The appellants contend that on the facts and in the circumstances of The appellants contend that on the facts and in the circumstances of The appellants contend that on the facts and in the circumstances of the case and in law, the CIT(A) ought not to have upheld the the case and in law, the CIT(A) ought not to have upheld the the case and in law, the CIT(A) ought not to have upheld the impugned addition as he impugned addition as he has not appreciated the facts of the case has not appreciated the facts of the case inasmuch as the cash deposited in the bank account is arising out inasmuch as the cash deposited in the bank account is arising out inasmuch as the cash deposited in the bank account is arising out of sales duly recorded in the books of account. of sales duly recorded in the books of account. 2. At the outset, the At the outset, the Ld. counsel for the assessee submitted that Ld. counsel for the assessee submitted that the assessee could not comply the the assessee could not comply the notices issued by the Ld. CIT(A) notices issued by the Ld. CIT(A) for the reason that assessee was contemplating to opt for Vivad se for the reason that assessee was contemplating to opt for Vivad se for the reason that assessee was contemplating to opt for Vivad se Vishwas Scheme. However, due to shortage of the fund, the Vishwas Scheme. However, due to shortage of the fund, the Vishwas Scheme. However, due to shortage of the fund, the assessee could not assessee could not opt for Vivad se Vishwas Scheme, opt for Vivad se Vishwas Scheme, therefore, could not respond to the notices is could not respond to the notices issued by the Ld. CIT(A). He sued by the Ld. CIT(A). He gave an undertaking on behalf of the assessee on behalf of the assessee that in case matter is that in case matter is restored back to the file of the Ld. CIT(A), a to the file of the Ld. CIT(A), all the notices and queries ll the notices and queries raised by the Ld. CIT(A) raised by the Ld. CIT(A) would be duly responded.
We have heard rival submission of We have heard rival submission of the parties and perused the the parties and perused the relevant material on record. We find that due to non-compliance on relevant material on record. We find that due to non relevant material on record. We find that due to non the part of the assessee before the Ld. CIT(A), the Ld. CIT(A) the part of the assessee before the Ld. CIT(A), the Ld. CIT(A) the part of the assessee before the Ld. CIT(A), the Ld. CIT(A) sustained the addition made by the Assessing Officer observing as sustained the addition made by the Assessing Officer observing as sustained the addition made by the Assessing Officer observing as under:
“During the course of ap “During the course of appellate proceedings, the appellant was pellate proceedings, the appellant was given numerous opportunities in form of hearing notices u/s 250 of given numerous opportunities in form of hearing notices u/s 250 of given numerous opportunities in form of hearing notices u/s 250 of the Act, the same are tabulated in para 04 above. In response to the Act, the same are tabulated in para 04 above. In response to the Act, the same are tabulated in para 04 above. In response to Nirchem Dyes and Chemicals Pvt. Ltd Nirchem Dyes and Chemicals Pvt. Ltd these notices the appellant did not make any submissions and only these notices the appellant did not make any submissions and only these notices the appellant did not make any submissions and only sought adjournment sought adjournment three times. Each time adjourments were three times. Each time adjourments were granted by this office by ample time. The first adjoumment was granted by this office by ample time. The first adjoumment was granted by this office by ample time. The first adjoumment was made on 04.01.2021 wherein the appellant had submitted that they made on 04.01.2021 wherein the appellant had submitted that they made on 04.01.2021 wherein the appellant had submitted that they were contemplating to opt for vivaad se vishwas scheme. However, were contemplating to opt for vivaad se vishwas scheme. However, were contemplating to opt for vivaad se vishwas scheme. However, after lapse of almost t after lapse of almost three years the assessee had not given any hree years the assessee had not given any proof for filing any Forms of VsVs Scheme. Further, it was also proof for filing any Forms of VsVs Scheme. Further, it was also proof for filing any Forms of VsVs Scheme. Further, it was also verified through CPC2.0 that the VsVs was not opted by the verified through CPC2.0 that the VsVs was not opted by the verified through CPC2.0 that the VsVs was not opted by the appellant till the date of passing of this order. Similarly, the appellant till the date of passing of this order. Similarly, the appellant till the date of passing of this order. Similarly, the appellant sought adjournme appellant sought adjournment 2 more times which were duly nt 2 more times which were duly provided by this office. However, the appellant did not make any provided by this office. However, the appellant did not make any provided by this office. However, the appellant did not make any submission despite giving enough opportunity. Thus, it is clear that submission despite giving enough opportunity. Thus, it is clear that submission despite giving enough opportunity. Thus, it is clear that the appellant has no any contention to prove its point. Further, the the appellant has no any contention to prove its point. Further, the the appellant has no any contention to prove its point. Further, the appellant has failed appellant has failed to prove the point that why there were cash to prove the point that why there were cash sales made only for two months in the entire year. Also, assessee sales made only for two months in the entire year. Also, assessee sales made only for two months in the entire year. Also, assessee failed to substantiate the cash book with supporting vouchers. The failed to substantiate the cash book with supporting vouchers. The failed to substantiate the cash book with supporting vouchers. The assessee could not produce cross verification from the third parties. assessee could not produce cross verification from the third parties. assessee could not produce cross verification from the third parties. These details were neither furnished during the assessment ails were neither furnished during the assessment ails were neither furnished during the assessment proceedings as well as during appellate proceedings. In absence of proceedings as well as during appellate proceedings. In absence of proceedings as well as during appellate proceedings. In absence of any explanation/evidence from the appellant, I do not find any any explanation/evidence from the appellant, I do not find any any explanation/evidence from the appellant, I do not find any reason to interfere with the order of the Assessing Officer. reason to interfere with the order of the Assessing Officer. reason to interfere with the order of the Assessing Officer. Therefore, the Therefore, the order of the Assessing Officer is upheld and the order of the Assessing Officer is upheld and the ground no.1 and 2 of the appeal are dismissed.” ground no.1 and 2 of the appeal are dismissed.” 3.1 Before us, the Ld. counsel for the assessee has explained the Before us, the Ld. counsel for the assessee has explained the Before us, the Ld. counsel for the assessee has explained the reason for non-compliance as the assessee was contemplating to compliance as the assessee was contemplating to compliance as the assessee was contemplating to opt for ‘Vivad Se Vishwas Sche Vivad Se Vishwas Scheme’ and settle the dispute. However, and settle the dispute. However, due to shortage of the fund, the assessee could not opt for the said due to shortage of the fund, the assessee could not opt for the said due to shortage of the fund, the assessee could not opt for the said scheme. Meanwhile, , the Ld. CIT(A) pass the impugned. In our the Ld. CIT(A) pass the impugned. In our opinion, there is a reasonable opinion, there is a reasonable cause for non-compliance before the compliance before the Ld. CIT(A). Further, in Ld. CIT(A). Further, in view of the undertaking by the Ld. counsel view of the undertaking by the Ld. counsel for the assessee and in the interest of substantial justice, we set for the assessee and in the interest of substantial justice, we set for the assessee and in the interest of substantial justice, we set aside the order of the Ld. CIT(A) and restore t de the order of the Ld. CIT(A) and restore the matter back to him he matter back to him for deciding afresh after considering submission of the assessee. for deciding afresh after considering submission of the assessee. for deciding afresh after considering submission of the assessee. The grounds of the appeal of the assessee are ds of the appeal of the assessee are accordingly accordingly allowed for statistical purposes. for statistical purposes.
Nirchem Dyes and Chemicals Pvt. Ltd Nirchem Dyes and Chemicals Pvt. Ltd
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nced in the open Court on 04/06 /06/2024.