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Facts
The assessee is aggrieved by the order of the CIT(A) which affirmed the assessment order. The assessment was selected for limited scrutiny, and the assessee filed his return. Notices were issued, and the assessee was asked to furnish details regarding cash deposits and their sources. The assessee provided a reply but without supporting documentary evidence.
Held
The Tribunal held that the assessment order was passed in violation of the principles of natural justice. The assessee was not provided with a reasonable opportunity of being heard, specifically regarding the video conferencing, as the password was not received, and the opportunity to participate was lost. The court cited several judgments regarding the importance of natural justice.
Key Issues
Whether the assessment order was passed in violation of the principles of natural justice due to lack of a reasonable opportunity of being heard, particularly in relation to online hearing arrangements.
Sections Cited
143(3), 144B, 143(2), 142(1), 68, 271AAC(1), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM& SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 213/JPR/2024
vkns'k@ORDER PER: NARINDER KUMAR, J.M.
Present appeal has been filed by the assessee, named above. He is feeling dissatisfied with the order dated 19.01.2024 passed by Learned CIT(A), pertaining to assessment year 2018-19.
Vide impugned order, Learned CIT(A) has affirmed the assessment order dated 22.08.2021 passed by Learned Assessing Officer, National Sh. Prashant Chelani vs. ITO Faceless Assessment Centre, Delhi, U/s 143(3) r.w.s. 144B of the Income Tax Act (hereinafter referred to as “ the Act”).
As is available from the assessment order, case of the assessee was selected for limited scrutiny on 03.07.2018, after the assessee filed his return of income declaring total income of Rs. 4,03,610/-. Notice u/s 143(2) of the Act is stated to have been issued and served upon the assessee on 28.09.2019, through e-filing account, registered e- mail ID, with intimation regarding its issuance, by way of SMS alert sent at the registered mobile of the assessee.
As is available from the assessment order, following two issues were to be examined:- “1. Large cash deposits in Bank Accounts; 2. High Value cash deposits reported in SFT (Business cases)”.
Notice u/s 142(1) of the Act, dated 12.12.2019 is stated to have been issued to the assessee calling upon him to furnish computation of income, bank account details, bank statements, source of cash deposits with documentary evidences, cash flow statement, cash books and source of cash deposits. To said notice, the assessee filed reply dated 23.09.2020, but, without any supporting documentary evidences.
Sh. Prashant Chelani vs. ITO 6. After dealing with the submissions on behalf of the assessee and the material made available, the Assessing officer arrived at the conclusion in para 8 which is reproduced as under:- Total Income returned by the Rs.4,03,610/- assessee as per ITR Additions as discussed in Para 7 Rs. 24,21,33,950/- Total Assessed Income Rs. 24,25,37,560/- Accordingly, Show cause notice was issued to the assessee on 30.04.2021, proposing the above mentioned addition. The assessee filed his responses thereto. Ultimately, the Assessing Officer concluded the assessment, as per the draft assessment order which was sent to the assessee as show cause notice dated 30.04.2021. As regards penalty proceedings u/s 271AAC(1) of the Act, it may also be mentioned that the Assessing officer observed that the assessee could not prove the source of fund and genuineness of cash credits for Rs. 24,21,33,950/-. Treating said amount as “unexplained cash credit” and having regard to the addition made u/s 68 of the Act, penalty proceedings u/s 271AAC(1) of the Act were initiated separately.
Sh. Prashant Chelani vs. ITO 7. The assessee challenged the abovesaid assessment order, before Learned CIT(A). Vide impugned order u/s 250 of the Act, Ld. CIT(A) dismissed the grounds raised by the assessee and affirmed the assessment order, while observing in the manner as :- “ 4.5 The basic criteria of proving the identity and creditworthiness of the parties who gave the money has not been discharged by the appellant. During the appellate proceedings also the appellant is unable to prove the identity or creditworthiness of the parties. As the appellant has failed to submit the identity and creditworthiness of the aforesaid parties the nature of transaction automatically becomes non-genuine. The appellant has not submitted the transaction wise details for verification. Considering the non-compliance and circumstantial evidence in the case. The ground taken by the assessee is dismissed and the action of the AO is confirmed.
5. As a result, the appeal is dismissed.”
Hence, this appeal.
Arguments heard. File perused.
Learned AR of the assessee has submitted that this is a case where no reasonable opportunity of being heard was provided by the Assessing Officer to the assessee before framing of the assessment order. In this regard, our attention has been drawn to letters of request dated 16.08.2021 Sh. Prashant Chelani vs. ITO and 20.08.2021 from the Authorized Representative of the assessee to the Assessing Officer, NeAC, Delhi.
As is available from the text of the copy of letter dated 16.08.2021 from the AR of the assessee to the Assessing Officer, it was brought to the notice of the Assessing Officer that the assessee had attempted to access the video-conferencing-link on the given date, but, the login was not successful, the reason being that no password was received by him. And, that is why, another opportunity for participation through video-conferencing was sought. At the same time, the assessee requested that password may be sent at the registered e-mail ID. Text of another letter dated 20.08.2021 from the AR of the assessee to the Assessing Officer would also reveal that password had not yet been received and Learned AR of the assessee kept on waiting for the same so as to participate in the proceedings through video conferencing.
It is significant note that the assessee filed S.B. Civil Writ Petition No. 10299/2021 before the Hon’ble High Court of Judicature for Rajasthan Bench at Jaipur on the ground that for 20.08.2021 i.e. the date of hearing, the assessee had not received password.
Sh. Prashant Chelani vs. ITO Thereupon, vide order dated 17.09.2021, Hon’ble High Court ordered issuance of notices and at the same time stayed, till further orders, recovery of demand pursuant to the assessment order dated 22.08.2021.
On the other hand, Learned DR submitted that since the matter is sub-judice before the Hon’ble High Court, it would be appropriate to wait for outcome of the Writ Petition .
Learned A.R for the assessee has informed us, in the course of arguments, that the Writ Petition is still pending before Hon’ble High Court and that there is no order of stay as regards the proceedings before this Appellate Tribunal.
Suffice to mention that as observed above, Hon’ble High Court has not stayed proceedings in this appeal before this Appellate Tribunal, and faced with this situation, Learned DR has further submitted that in the given situation, this Appellate Tribunal may, if so desired, dispose off the appeal in accordance with law.
So, we deem it just and appropriate to dispose of the appeal.
In view of the text of copies of the letters dated 16.08.2021 and 20.08.2021, referred to above, from Learned AR of the assessee to the Assessing Officer it becomes evident that he had not been provided Sh. Prashant Chelani vs. ITO password for participation in the proceedings through video conferencing, and as such requested that same may be provided. There is nothing on record to suggest that password for participation in the video conferencing to the assessee, was provided to the AR of the assessee. Even otherwise, had any password been made available to the assessee, he would not have filed Writ Petition before the Hon’ble High Court. So, we find that this is a case where assessment order dated 22.08.2021 can safely be held to have been passed in violation of the principles of natural justice.
As regards principles of natural justice, as observed by Hon’ble Apex Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262] the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. Also reference is made to decision in ITO v. Madnani Engg. Works Ltd. [(1979) 2 SCC 455 .
Sh. Prashant Chelani vs. ITO In Swadeshi Cotton Mills v. Union of India [(1981) 1 SCC 664], Hon’ble Apex Court very lucidly explained the meaning and scope of the concept of “natural justice”. Referring to a catena of decisions, it was observed thus:- “Rules of natural justice are not embodied rules. Being means to an end and not an end in themselves, it is not possible to make an exhaustive catalogue of such rules. But there are two fundamental maxims of natural justice viz. (i) audi alteram partem, and (ii) nemo judex in re sua. The audi alteram partem rule has many facets, two of them being (a) notice of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle—as distinguished from an absolute rule of uniform application—seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for Sh. Prashant Chelani vs. ITO utmost promptitude. In short, this rule of fair play must not be jettisoned save in very exceptional circumstances where compulsive necessity so demands. The court must make every effort to salvage this cardinal rule to the maximum extent possible, with situational modifications. But, the core of it must, however, remain, namely, that the person affected must have reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise.”
In Kesar Enterprises Ltd. v. State of U.P., (2011) 13 SCC 733, Hon’ble Apex Court, observed that the underlying principle of natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly i.e. fair play in action. Result 18 In view of the discussion and the reasons recorded above, the impugned order passed by Learned CIT(A) and the assessment order passed by Learned Assessing Officer deserve to be set aside.
Consequently, the appeal is allowed for statistical purposes, and while setting aside the impugned order passed by Learned CIT(A) and the impugned assessment order passed by Learned Assessing Officer the Sh. Prashant Chelani vs. ITO matter is restored to the files of the Assessing Officer, with the direction to decide the same afresh, of course, after providing to the assessee, reasonable opportunity of being heard. Order pronounced in the open court on 22/04/2024.