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Facts
The assessee appealed against an order of the National Faceless Appeal Centre, Delhi, which upheld an addition of INR 2,14,50,000 made by the Assessing Officer. This addition was on account of alleged unexplained cash credit. The assessee had challenged an earlier order passed under section 147 read with section 144B of the Income Tax Act, 1961.
Held
The Tribunal noted that the assessee had not complied with notices and failed to provide proper opportunity for hearing. The lower appellate authority dismissed the appeal ex-parte. The Tribunal, considering the grounds of appeal relating to natural justice and opportunity of hearing, set aside the order and restored the matter to the file of the CIT(A).
Key Issues
Whether the assessee was denied proper opportunity for hearing and if the reopening proceedings under section 147 were valid.
Sections Cited
Section 68 of the Income Tax Act, 1961, Section 147 of the Income Tax Act, 1961, Section 144B of the Income Tax Act, 1961, Section 132(4) of the Income Tax Act, 1961, Section 148 of the Income Tax Act, 1961, Section 143(2) of the Income Tax Act, 1961, Section 142(1) of the Income Tax Act, 1961, Section 271(1)(b) of the Income Tax Act, 1961, Section 250 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 591/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2013-14 Subhash Hiralal Sanchati cuke CIT(A)-National Faceless Appeal 6/2132, Office No. 301 G. 3rd Fllor Centre- Delhi. Vs. Imbusheri Hamindrapura, Surat. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BPWPS2215D vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Parth Patni (C.A) (V.C.) jktLo dh vksj ls@ Revenue by : Srhi Anup Singh (Addl. CIT) lquokbZ dh rkjh[k@ Date of Hearing : 29/08/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 30/10/2024 vkns'k@ ORDER PER: DR S Seethalakshmi, JM This is an appeal filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [ for short “CIT(A) ], dated 28.02.2024 for the assessment years 2013-14 in the case of the above named assessee. That of the ld. CIT(A) in turn arise because the assessee challenged the order dated 11.03.2022 passed under section 147 read with section 144B of the Income Tax Act, 1961 (here in after “ Act”), by the National Faceless Assessment Centre, Delhi.
Subhash Hiralal Sanchati. 2. The assessee has raised the following grounds: - “
Ground 1. On the fact and in the circumstance of the case, the National Faceless Appeal Centre - CIT (A) ('Ld. CIT (A)) has erred in law and in facts in upholding the addition of INR 2,14,50,000 made by the learned Assessing Officer on account of alleged unexplained cash credit under Section 68 of the Act. Ground 2. It is submitted that, in the facts and the circumstances of the case, and in law, the appellate order so framed be held as bad and illegal. Ground 3. The Ld. CIT (A) erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order. Ground 4. Without prejudice to the above, the principles of natural justice is violated as the appellant has not been granted the opportunity to conduct cross examination. Ground 5. Without prejudice to the above - Reopening u/s 147 of the Act: The Ld. CTT (A) erred in confirming the action of the A.O. without considering the fact that the reopening proceedings are bad in law. It is submitted that reopening proceedings are void-ab-initio as post the first appellate stage, there is a fresh re-opening proceedings launched for the same year on the very same issue thereby rendering impugned assessment null and void.
Subhash Hiralal Sanchati. Ground 6 Non applicability of Section 68 of the Act On the facts and in the circumstances of the case, the Learned CIT(A) erred by upholding the addition without appreciating the documentary evidence submitted duly substantiating the genuineness and creditworthiness of the transactions. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above ground of appeal at any time before or at time of hearing of the appeal, so as to enable the honourable Income Tax Appellate Tribunal decide this appeal according to the law.”
3. The brief fact as culled out from the records are that as per information received from ACIT, Central Circle, 1(2), Ahmedabad and details available on INSIGHT Portal, it has been noticed that the assessee firm has transactions of Rs. 2,14,50,000/- with the shell companies managed by Shri Shivpal Vora which do not have real business and was operated only to provide accommodation entry in the books of account during the year under consideration. During the course of search operation several incriminating documents were found and seized which reveal that Shri Shivpal Vora was involved in accommodation entry business and was charging commission towards the same. Shri Shivpal Vora has also admitted in his statement u/s 132(4) of his involvement in providing accommodation entries. The assessee, Shri Subhash Sancheti Subhash Hiralal Sanchati. Prop. M/s Paramount Diamond is one of them and has transactions with M/s Money Gems which is merely a paper concern as per findings of search action in the case of Sh. Shripal Vora. Further, during the post search investigation it has been gathered such concern which after receiving cash deposited in its bank account and therefore, transferred to various concerns of Sh. Shirpal Vora for further onward transfer of finds in the form of unsecured loans were not found at the given addresses. The premises of the other entities were found locked and that no real business was carried out from such business. Therefore, the assessee was the beneficiary with the shell companies managed by Shri Shivpal Vora and was operated only to provide accommodation entry through the bank statements. Thus, the transaction amount of Rs. 2,14,50,000/- is an unexplained income of the assessee generated from accommodation entries of shell companies during the financial year 2012-13. Therefore, the amount of Rs. 2,14,50,000/- is the unaccounted income of the assessee during the F.Y. needs to be verified as per records and is to be brought to tax. Hence, it was believed that Rs. 2,14,50,000/- chargeable to tax has escaped assessment within the meaning of section 147 of the I.T. Act, 1961 for the A.Y. 2013-14 and after due approval of the competent authority, notice u/s 148 of the IT. Act, 1961 dated 31/03/2021 was Subhash Hiralal Sanchati. generated and issued to the assessee for filing the return of income within 30 days from the service of this notice. The assessee has filed ITR for the A.Y. 2013-14 on 12/04/2021 declaring total income of Rs. 5,16,430/- against the notice u/s 148. Therefore, a notice u/s 143(2) of the Act of the case was issued on 30/06/2021 by JAO for compliance on or before 15/07/2021 to furnish reply and supporting document of the returned income. The case was assigned to this office by NaFAC. Further, a notice u/s 142(1) dated 24/11/2021 along with questionnaire was issued and served on the assessee giving an opportunity of being heard and fixed for compliance on 04/12/2021. In response to, assessee has filed written submission requiring reason recorded of reopening of the case u/s 147. Therefore, assessee was provided one more opportunity by issuing a notice u/s 142(1) of the I.T. Act along with reason recorded for reopening of the case u/s 147 and questionnaire on 22/12/2021 and fixed for compliance on or before 31/12/2021. No compliance was made from the assessee. Keeping in view of the fact that the assessee is not complying the notice deliberately. a show-cause notice dated 21/01/2022 was issued to the assessee for compliance on 27/01/2022 for initiation of penalty Subhash Hiralal Sanchati. proceedings u/s 271(1)(b) of the IT. Act, 1961 as to why an order imposing penalty of Rs. 10,000/- per default should be passed for non- compliance of departmental notices. In response to, assessee filed written submission along with copy of computation of income, copy of financial statement of assessee's firm, copy of Form-26AS for AY 2013-14 and copy of bank account statement of M/s Money Gems for the year under consideration. The assessee also stated that they are in the business of diamond trading of polished and rough diamonds in the name of Paramount diamonds during the year. During the year, the assessee was given loan to M/s Money Gems of Rs. 2,14,50,000/- and regarding sources of fund, have received fund from our client M/s. Gold Dust Corporation against sale of diamond which reflected in bank account statement for the year under consideration. Therefore, penalty proceedings u/s 271(1)(b) of the I.T. Act. 1961 was dropped.
Being aggrieved by the order of the AO, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) observed that various notices were issued on 16.11.2022, 17.01.2024, 31.01.2024 and 07.02.2024 and requiring the assessee to file the details in support of grounds taken by the assessee. Since the assessee has not complied with “5.3a) As noticed from the assessment order ample opportunities had been provided to the appellant to explain the genuineness of the alleged transaction, however, the appellant had failed to substantiate the same through substantiating documentary evidences. b) Further, during appellate proceedings also there has been no response by the appellant, even after allowing ample opportunities since inception of this appeal on 09.04.2022 i.e. even after passing of almost 2 years. c) It is settled law that mere filing of an appeal is not a sufficient exercise of the rights available to the appellant and the same must be duly pursued in an effective manner. d) Since there is non-compliance and no submission has been received, I am of the considered opinion that the appellant has no interest in pursuing the instant appeal. d) The continued non-compliance leads to the conclusion that the appellant is not keen on prosecuting its appeal. Considering the facts and circumstances, and relying on the decision of the Hon'ble, ITAT, Delhi Bench, in the case of CIT Vs Multiplan India Ltd. reported in 38-ITD-320 and the judgement of the Hon'ble Madhya Pradesh High Court in the case of Estate of Late Tukoji Rao Holker Vs. CWT (1997) reported in 223-ITR-480, I have no other alternative except to decide the appeal of the appellant ex-parte. 5.4 During appellate proceedings there has been no response by the appellant either on own instance or against the notices u/s 250 of the Act. It is clear that the appellant has nothing to say or provide documentary evidences in support of grounds raised. In these facts and circumstances, I am constrained to be in agreement with the finding of the Assessing Officer and hold that the appellant is Subhash Hiralal Sanchati. unable to substantiate its claims and is not able to controvert the assessment order. The addition made by the Assessing Officer is therefore confirmed. 5,4 The appellant has not been able to defend the grounds raised
. Hence, grounds raised are rejected.
6. In the result, the appeal is Dismissed.”
5. Aggrieved from the order of the ld. CIT (A) the assessee has preferred this appeal before us on the grounds as reiterated in para 2 above. During the course of hearing, the ld. AR for the assessee prayed that the matter be remanded back to the file of the Ld. CIT(A) to decide all the issues that are raised.
Per contra, ld. DR objected to the prayer of the assessee and submitted that even the assessee did not represent case before the ld. CIT(A) and now they are praying for equity and justice. Therefore, in that case if the Bench feels the matter may be restored to the file of the Assessing Officer so as to have the appreciation of the proper facts.
We have heard both the parties and perused the materials available on record. The bench noted from the order of ld. CIT(A) that the appeal of the assessee was dismissed by the ld. CIT (A) by holding that the assessee did not comply with the hearing notices and has not filed any submission. The Bench further noted from the grounds of appeal of the Subhash Hiralal Sanchati. assessee wherein the assessee contended by raising a specific ground that “The ld. CIT(A) erred in not granting proper, sufficient and adequate opportunity of being heard to the Appellant while framing the appellate order. Without prejudice to the above, the principles of natural justice is violated as the appellant has not been granted the opportunity to conduct cross examination.” Considering the specific ground of the assessee that he should be given one more chance to submit the evidence concerning the issue in question, which has apparently merits to be decided after having verified the contention by ld. CIT(A). Thus, with grounds so raised by the assessee, in our considered view the matter is required to be set aside to the file of the ld. CIT(A), who will decide the issue afresh by providing sufficient opportunity of hearing to the assessee. Thus, the matter is restored back to the file of the ld. CIT(A) who will decide the issue based on evidence and submission of the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. CIT(A).
7. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(A) shall in no way be construed as having any reflection or expression on the merits of the dispute, which In the result, the appeal filed by the assessee is allowed for statistical purposes.