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Facts
The assessee, a widow, was aggrieved by the assessment order for AY 2018-19. She filed an appeal before NFAC, but there was a delay of 92 days due to surgery and recovery. NFAC dismissed the appeal without condoning the delay. The assessee appealed to the ITAT, again citing the delay due to medical reasons and her responsibilities as a sole caretaker.
Held
The Tribunal noted that the delay in filing the appeal before NFAC was not substantiated with documentary evidence, leading to its dismissal. However, considering the assessee's plea for another opportunity and in the interest of justice, the Tribunal decided to remit the issue to NFAC.
Key Issues
Whether the delay in filing the appeal before NFAC should be condoned based on the medical reasons provided by the assessee, and whether NFAC rightly dismissed the appeal without considering the condonation petition.
Sections Cited
250, 143(3), 147, 144B, 246A, 132, 148, 151, 148A(b), 148A(d), 143(2), 144B, 270A, 234A, 234B, 234C, 234D, 156
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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI CHANDRA POOJARI
Assessment Year: 2018-19 Takrar Ranganatha Rao Nagashree ITO 20, Singapore Gardens Ward-3(2)(1) Vs. Bangalore 560 062 Bangalore PAN NO.AAIPN8579M ASSESSEE RESPONDENT Assessee by : Shri Sreehari Kutsa, A.R. Revenue by : Shri Ganesh R. Ghale, Standing Counsel for Revenue. Date of Hearing : 14.02.2024 Date of Pronouncement : 14.02.2024 O R D E R
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by assessee is directed against order of NFAC for the assessment year 2018-19 dated 29.12.2023 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal:
1. The Order of the learned Commissioner passed under section 250 of the Act is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case.
2. The learned Commissioner of Income-tax (Appeals) erred in not condoning the delay of 92 days in the filing of the statutory appeal despite the appellant explaining that she had undergone surgery and was undergoing a recovery process and delay arose only on account of the recovery process in the facts and circumstances of the case.
Takrar Ranganatha Rao, Bangalore Page 2 of 8 3. The Appellant denies to be assessed to tax on total income as determined by the learned AO of Rs. 28,63,8807- as against the total income reported by the Appellant of Rs. 25,45,7907-on the facts and circumstances of the case.
4. The learned Commissioner of Income-tax (Appeals) ought to have appreciated that not condoning the delay and dismissal of the statutory appeal on mere technicalities would result in injustice to the Appellant and cause grave inconvenience and consequently the action of the Commissioner of Income Tax (Appeals) is contrary to law on the facts and circumstances of the case.
5. The learned Commissioner of Income-tax (Appeals) failed to appreciate that reason preferred by her constitutes sufficient cause for not being able to present the appeal within the limitation time and consequently passed a bad order in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) ought to have held that the Assessing Officer lacked the requisite jurisdiction to initiate and conclude the assessment proceedings and consequently the entire proceedings are bad at law in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) failed to appreciate that the notice u/s 148 is bad at law as it failed to inform whether the Assessing Officer intended to assess or reassess and therefore this non-application of mind is fatal to the entire proceedings, thereby rendering them bad at in the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) ought to have held that Assessing Officer having failed to issue mandatory notice under section 148A(b) and subsequent order under section 148A(d) of the Act, has rendered the proceedings void ab initio and hence the entire proceedings must fail on the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) ought to have held that the notice u/s 148 does not state clearly whether it is issued for the purpose of making an assessment or reassessment in the hands of the Appellant and consequently the notice is issued without due application of mind, making the notice bad at law on the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) failed to appreciate that the approval issued u/s 151 to the Assessing Officer is bad at law for the reason that the approval has been issued without verifying whether mandatory notice under section 148A(b) and subsequent order under section 148A(d) of the Act have been passed.
Takrar Ranganatha Rao, Bangalore Page 3 of 8 11. The learned Commissioner of Income-tax (Appeals) ought to have held that the notice under section 148 is issued on the premise/basis that a search has been conducted in the case of the appellant, or in the case of a person in respect of which the appellant is accessible under the Act on the date of issue of notice. The appellant contends that the notice reflects non- application of mind to the fundamental facts of the case, in as much as there was no search conducted in the case oappellant, or in the case of any other person in respect of whom/which the appellant is assessable. Therefore, the notice issued u/s 148 is bad at law since the said notice has been passed without issuance of mandatory notice u/s 148A(b) and passing of order u/s 148A(d) of the Act.
The learned Commissioner of Income-tax (Appeals) ought to have held that a plain reading of the reasons as disclosed in notice u/s 143(2) of the Act, the Appellant contends the same shows only a belief in the existence of the reasons for income escaping assessment and the same cannot be a reason to believe that income has escaped assessment. Therefore, notice u/s 143(2) has been issues' without application of mind.
The learned Commissioner of Income-tax (Appeals) failed to appreciate that the impugned order passed u/s 143(3) r.w.s.147 r.w.s. 144B of the Act by the Assessing Officer is bad in law and void-ab-initio in as much *as, the said assessment order has been passed without considering the submission made by the appellant.
The Appellant has been denied fair opportunity of hearing and right to cross examine the material relied upon by the Assessing Officer and therefore the impugned order along with demand notice is bad at law on the facts and circumstances of the case.
The learned Commissioner of Income-tax (Appeals) failed to appreciate that the learned Assessing Officer is not justified in making an addition of Rs. 3,18,090/- as purported failure of the appellant to disclose the entire interest receipts from the fixed deposits on the facts and circumstances of the case.
Without prejudice, the learned Assessing Officer ought to have granted more time and principles of natural justice are violated on the facts and circumstances of the case.
Without prejudice to the right to seek waiver with the Honourable Chief Commissioner of Income Tax/ Director General of Income Tax, the appellant denies itself liable to be charged to interest under section 234A, 234B, 234C & 234D since it is not in accordance with the law as the rate, amount and the method of calculating interest is not discernible from the order of assessment.
The learned Commissioner of Income-tax (Appeals) failed to appreciate that the learned Assessing Officer is not justified in initiating Takrar Ranganatha Rao, Bangalore Page 4 of 8 penalty proceedings under section 270A of the Act on the facts and circumstances of the case. 19. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 20. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.
Facts of the case are that the Assessee being aggrieved by the assessment order passed under section 143(3) rws 147 rws 144B of the Act by the Officer for the Assessment Year 2018-19 dated 14/03/2023, has preferred an appeal before the prescribed appellate authority viz., NFAC under the provisions of Section 246A of the Act. The Assessee is an individual and has been duly filing her obligations under the income tax act. For the assessment year (for short A.Y.) 2018-19 relevant for the financial year 2017-18, the assessee filed her return of income regularly on 11/07/2018 declaring total income of Rs. 25,45,790/-. A search action was conducted under section 132 of the Act in the case of M/s Sirivaibava Souharda Pathina Sahakari Niyamitha on 02/12/2021, a cooperative society in which the Assessee had made some investment. During the course of search information was gathered by the office of Assistant Director of Income Tax, Investigations, DDIT/ADIT(Inv.) 3(1), that the Assessee has made a fixed deposit of Rs. 24,00,000/- during the financial year 2017-18 relevant to the assessment year 2018-19. Pursuant to the search action the Assessee was issued notice under section 148 of the Act on 23/03/2022 on the claim that prior approval under section 151 of the Act has been obtained from the specified authority. However, a copy of the prior approval was not supplied initially to the Assessee. It was only after several requests made by the Assessee a copy of the prior approval from the Principal Commissioner of Income Tax, Bengaluru-3 under section 151 of the Act on 22/03/2023 was supplied. The Assessee submitted her objections to the notice issued under section 148 of the Act and filed income tax returns under protest in response to notice issued under section 148.
Takrar Ranganatha Rao, Bangalore Page 5 of 8 2.1 The ld. A.R. for the assessee submitted that the Assessee was issued notice under section 148 without following the procedure under section 148A namely issue of notice under section 148A(b), calling for submission of the Assessee in that regard and thereafter passing of order under section 148A(d) of the Act. The learned AO issued notice under section 143(2) r.w.s. 147 r.w.s. 144B of the Act on 27/12/2022 requesting for further clarification with regard to the return of income filed under protest by the Assessee. The Assessee filed her objections to the said notice on 11/01/2023. The learned AO rejected the objections filed by the Assessee by issuing a letter dated 27/01/2023 by rejecting the said objections taking shelter under proviso (c) to section 148A. The learned AO issued a letter dated 06/02/2023 calling for details relating to source of the investment made in M/s Sirivaibava Souharda Pathina Sahakari Niyamitha, with a direction to the Assessee to provide the said details in 5 days and attached a copy of the prior approval obtained from the Pr. Commissioner of Income Tax, Bengaluru-3. In response to the said letter the Assessee requested for a copy of reasons recorded for initiating assessment proceedings against her. The learned AO issued a letter dated 14/02/2023 calling for information and further informed the Assessee that reasons recorded for re-opening of the assessment as per the amended provisions of the Act was already sent along with the Approval (vide page no.2) of the appropriate authority and directed the Assessee to provide information as called for in the notice issued under section 142(1) of the Act on 23/09/2022. In response to the said letter the Assessee provided the information sought for by the learned AO and further stated that the primary issue in the assessment proceeding is that the Assessee has made fixed deposits of Rs.24 lacs in Siri Vaibhava cooperative Bank, which consists of 2 fixed deposits of Rs.15 lacs and 9 lacs each and both of them constitute renewal of fixed deposit and no fresh fixed deposit is made. And the fixed deposits maintained by the Assessee was lost due to the fraud of the cooperation bank being exposed and that the Assessee lost her hard earned money.
Takrar Ranganatha Rao, Bangalore Page 6 of 8 2.2 The ld. A.R. submitted that the Assessee is a widow who lost her husband at an early age and had to fend for herself and her children all on her own. The Assessee's situation was misused by M/s Sirivaibava Souharda Pathina Sahakari Niyamitha and was lured to make FD with them for attractive returns. After losing all her savings in the said co-operative bank, she is left with little to fend for and support her children. And thereby requested the learned AO to appreciate that there is no income that has escaped in her case. The learned AO however proceeded to issue the show cause notice proposing to bring to tax the interest arising out of the fixed deposits in the hands of the Assessee based on the purported information that the Assessee had received interest amounts at 15% for part period of FY 2017-18 and thereafter @13% up to 31.03.2018. The Assessee replied to the show cause notice stating that that the principal amount of fixed deposits having been lost, by virtue of the bank defrauding the customers, the Assessee being one among them - therefore the interest receipts constitute a capital receipt in so far as it amounts to repayment of the principle. The ld. A.R. further stated that since the fixed deposits themselves were made in the name of Assessee only for the name sake and whereas they essentially represented the funds belonging to her mother as well as her children, therefore the interest does not belong to the Assessee and therefore they do not accrue or arise in the hands of the assessee and hence not taxable. The ld. A.R. relied on the principles of "diversion of income by overriding title", the Supreme Court has held in the case of Sitaldas Tirathdas 1961 AIR 728 that mere "receipt of money in the hands of an assessee does not make that money the income of the assessee and where the persona! receive the money but is not beneficiary of the said money the same does not constitute of income u/s 4 and cannot be made part of the total income u/s 5 of the Income Tax Act". Therefore the income even if received does not constitute the income of the Assessee. 2.3 The ld. A.R. submitted that the learned AO completed the assessment under section 143(3) r.w.s 147 r.w.s 144B of the Act by determining the Takrar Ranganatha Rao, Bangalore Page 7 of 8 total income at Rs. 28,63,880 and thereby making an addition of Rs. 3,18,090. The learned AO issued the notice of demand u/s 156 of the Act raising a demand of Rs. 1,83,832. The learned AO further issued notice for Penalty under section 274 r.w.s. 270A of the Act on 14/03/2023. Being aggrieved by the Assessment order and the notices issued subsequent to the said order the assessee preferred the appeal before NFAC.
Before ld. CIT(A), there was a delay of 92 days in filing the appeal. The assessee has explained before NFAC that assessee is a widow and she has undergone surgery and recovery of the same took time. However, NFAC has observed that these facts have not been substantiated by documentary evidence and not condoned the delay and dismissed the appeal in limine. Hence, once again, the assessee has filed appeal before us on both counts, challenging the dismissal of appeal without condoning the delay as well as on merit of addition made by the ld. AO. The assessee has once again filed an affidavit explaining the delay stating that when the assessment order was passed, she has undergone surgery in February, 2023 and being the sole caretaker of her old aged father & mother, she could not concentrate on anything other than herself, work and parents, as a result of which there has been a delay in filing the appeal before NFAC. According to her, NFAC without pointing out the defects in her condonation petition dismissed the appeal in limine. Hence, the ld. A.R. has requested this bench to remit the issue to the file of ld. CIT(A) to consider the condonation petition and thereafter decide accordingly.
The ld. D.R. has strongly opposed the argument of ld. A.R. and submitted that assessee cannot beautify the condonation petition at the stage of second appellate proceedings deviating from the earlier reason advanced before NFAC.
We have heard the rival submissions and perused the materials available on record. Admittedly, there was a delay in filing