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Facts
The assessee's appeal arises from an order passed by the CIT(Appeals) which upheld a reassessment order made ex-parte by the Assessing Officer. The reassessment was initiated under Section 147 for assessment year 2012-13, adding Rs. 31,31,360/- as unexplained income from cash deposits. The assessee contended that notices from the revenue authorities were not received due to a change in address from Agra to Bangalore.
Held
The Tribunal condoned the delay of 394 days in filing the appeal, finding reasonable cause for the delay, primarily the non-receipt of notices and the appellate order due to address change. The Tribunal observed that both the lower authorities passed ex-parte orders without proper adjudication on merits, violating principles of natural justice and statutory provisions.
Key Issues
Whether the ex-parte orders passed by the Assessing Officer and CIT(Appeals) are sustainable when the assessee did not receive proper notices, and whether the delay in filing the appeal should be condoned.
Sections Cited
147, 148, 144, 142(1), 143(2), 253(3), 282, 127, 250(6), 260A
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Income Tax Appellate Tribunal, AGRA (SMC
Before: SHRI RAMIT KOCHAR
assessment year 2012-13 has arisen from the appellate order dated 10.08.2022 [DIN & Order No. ITBA/NFAC/S/250/2022- 23/1044576936(1)], passed by learned Commissioner of Income-tax (Appeals), NFAC, Delhi, which appeal in turn has arisen from the reassessment order dated29.11.2019passed by Assessing Officer u/s.144 r.w.s. 147 of the Income-tax Act, 1961.
Grounds of appeal raised by the assessee in the memo of appeal filed with the Income Tax Appellate Tribunal, Agra Bench, Agra reads as under :
“1- BECAUSE the proceedings initiated u/s 147 and the notice issued u/s 148 is invalid, wrong, illegal, arbitrary, against the law and facts of the case, without proper reason to believe and bad in law. 2- BECAUSE in any view, the proceedings initiated u/s 147 and the notice issued u/s 148 is without any jurisdiction and appellant denies his liability to be assessed in terms of so called Notice dated 30.03.2019 said to be issued u/s 148. 3- Because there was no valid reason assigned by the 'AO' in the purported 'reasons to believe' and the reasons recorded by the 'AO' are no Reasons in the eyes of law as the same do not show any application of mind on the part of the Assessing Officer and are based on conjectures, surmises and in bad faith as merely because money had been deposited in bank account could not be basis for initiating proceedings u/sec 148, as deposits in bank account need not necessarily be out of income. The proceedings so initiated were illegal, bad in law and without jurisdiction. 4- BECAUSE in any view the Assessing Officer has grossly erred in treating the cash deposited as undisclosed income of the appellant without considering the facts of the case and legal position the law.
5- BECAUSE in any view the Assessing Officer has grossly erred in presuming that no return of income was filed for the year under consideration without considering the facts of the case and legal position the law. 6- BECAUSE in any view the impugned addition and impugned assessment order passed u/s 144 is wrong, illegal, arbitrary, bad in law, unjustified. contrary to facts and further without allowing proper and adequate opportunity of hearing and without serving the notices as per law. 7- BECAUSE in any view the assessment order passed by A.O. ex- parte without issuing and serving any notice U/s 143(2) to the assessee is arbitrary, illegal and against the facts of the case. 8- BECAUSE in any view the addition of Rs. 31,31,360/- being the total cash deposited in Bank Account, considering it as unexplained income,
2 | P a g e is grossly arbitrary, wrong, unjust, illegal and against the law and facts of the case. 9- BECAUSE the appellant craves leave to add or alter, any or more ground or grounds of Appeal, at the time of hearing of Appeal.”
At the outset, learned counsel for the assessee submitted that there is delay of 394 days in filing this appeal belatedly with ITAT, Agra Bench, Agra beyond limitation period as prescribed u/s. 253(3) of the Act.
It is submitted that the assessee has filed application for condonation of delay supported by affidavit of the assessee.The main bone of contention of the assessee is that the assessee had shifted from Agra to Bangalore .
The assessee has duly stated the Bangalore address in Form No. 35 filed before the ld. CIT(Appeals), but the CIT(Appeals) did not send any notice to the assessee’s Bangalore address during appellate proceedings, and even in the appellate order passed by ld. CIT(Appeals), the address of Agra is shown by ld CIT(A) in its appellate order. My attention was drawn to the application for condonation of delay as well as affidavit filed by the assessee, which are placed on record in file. It was submitted that when the assessee was filing its return of income for the assessment year 2023-24, the assessee came to know from the e-portal of Income Tax Department that the appellate order had been passed by ld. CIT(Appeals) dismissing the appeal of the assessee.Then immediate steps were taken for filing the appeal before the Tribunal. It was 3 | P a g e submitted that further delay has taken place keeping in view that the assessee has shifted to Bangalore from Agra, and prayers were made to condone the delay. It was further reiterated by learned counsel for the assessee that notices issued by CIT(Appeals) were not received by the assessee nor the appellate order passed by ld. CIT(A) was received by the assessee.
3.2 Learned Sr. DR, on the other hand, submitted that the matter is left to the discretion of the Bench so far as condonation of delay is concerned.
After hearing both the parties and going through the material on record, I am of the considered view that the delay of 394 days in filing this appeal belatedly by the assessee with ITAT beyond the time prescribed u/s 253(3) needs to be condoned, as the assessee has demonstrated reasonable and sufficient cause for delay in filing this appeal belatedly with ITAT. The assessee has duly filed an application praying for condonation of delay supported by an affidavit of the appellant to bring on record the facts surrounding the delay in filing this appeal belatedly beyond the time prescribed u/s 253(3) of the 1961 Act, and the department could not controvert the same.The reasons 4 | P a g e stipulated for aforesaid delay is shifting of the assessee from Agra to Bangalore. I have observed that in Form No. 35 , the assessee has mentioned Bangalore Address. The assessee has stated that he did not received any notices from CIT(A) nor the appellate order passed by ld. CIT(A) was received. The assessee has stated that emails received were overlooked. The ld. CIT(A) has stated Agra Address of the assessee in the appellate order passed by ld. CIT(A) and not the Bangalore Address. The assessee has claimed that when he was filing his return of income for assessment year 2023-24, he became aware of the appellate order passed by ld. CIT(A). It is stated that no notice nor appellate order passed by ld. CIT(A) was received by the assessee. For Service of notices and orders etc. Section 282 and Rule 127 are relevant.
If the technicalities are pitted against advancement of substantial justice, the courts will lean towards advancement of substantial justice unless malafide on the part of the assessee is at writ large. I do not find any malafide on the part of the assessee in filing this appeal belatedly as the assessee is not likely to gain by filing this appeal belatedly. Reference is drawn to the judgment and order of Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Enterpreneurship, Ludhiana v. CIT(E), Chandigarh (2024) LiveLaw (PH)106(Case No. CWP-21028-2023(O&M),wherein it was held that 5 | P a g e merely uploading of the communication (notice) in the Income Tax department e-portal is not sufficient mode of communication keeping in view principles of natural justice which are inherent in income tax proceedings as also keeping in view provisions of Section 282 of the 1961 Act and Rule 127 of the 1962 Rules. Reference is also drawn to the judgment and order of Hon’ble Supreme Court in the case of Collector of Land Acquisition , Anantnag v. Mst. Katiji & Ors. 1987 AIR 1353.Under thefacts and circumstances of the case, I condone the delay of 394 days in filing this appeal belatedly by the assessee with ITAT beyond the time prescribed u/s 253(3), and proceed to adjudicate the appeal on merits.
Brief facts of the case are that after making enquiries on the basis of AIR/NMS, reasons for reopening of the concluded assessment were recorded by the AO and case of the assessee was reopened by invoking provisions of Section 147. Notice u/s. 148 was issued by the Assessing Officer to the assessee on 30.03.2019 after taking approval from the competent authority, requiring the assessee to file return of income. In response to notice issued by the AO u/s. 148, the assessee did not file any return of income. Statutory notice u/s. 142(1) was issued on 25.07.2019, but the assessee did not make any compliance. Show cause notice u/s. 144 was also issued by the Assessing Officer on 15.11.2019, 6 | P a g e but no compliance was made by the assessee, which led to addition to the tune of Rs.31,31,360/- to the income of the assessee on account of cash deposits in the saving bank account maintained by assessee with ICICI Bank, Sanjay Place, Agra, which was treated by the Assessing Officer as an unexplained income of the assessee.The said reassessment order was passed by the AO u/s 144 read with Section 147 of the 1961 Act. Thus , it was an ex-parte reassessment order passed by the AO.
Assessee filed first appeal with ld. CIT(Appeals). CIT(Appeals) issued as many as four notices to the assessee, but there was no compliance on the part of the assessee and the CIT(Appeals) dismissed the appeal of the assessee ex-parte and the reassessment order passed by the AO was confirmed. Thus, this was an ex-parte appellate order passed by ld. CIT(A).
Still aggrieved, the assessee filed second appeal with ITAT. Ld. Counsel for the assessee has demonstrated that the orders passed by both the authorities below were passed ex-parte in the absence of the assessee. The assessee could not give response to the notices issued by the authorities below as the same were not received by the assessee 7 | P a g e as the assessee has shifted to Bangalore from Agra ,and even the Bangalore address was duly given in Form-35, but no notice/appellate order were received by the assessee at Bangalore address. It was further submitted that email sent by ld. CIT(A) were overlooked by the assessee due to technical reasons. Prayers were made to set aside the matter back to the file of ld. CIT(A) as the ld. CIT(A) has dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits. It was submitted that challenge to best judgment reassessment order was made by the assessee before ld. CIT(A) both on legal grounds as well on merits of the issues arising in the appeal, but the same were not adjudicated by ld. CIT(A) and the appeal filed by the assessee was dismissed ex-parte in limine without deciding on merits.
Ld. Sr. DR also submitted that the ld. CIT(Appeals) has passed exparte order in limine without deciding the issues arising in appeal on merits and the matter can be restored back to the file of CIT(Appeals) for de novo adjudication.
I have considered rival contentions and perused the material on record. I have observed that the case of the assessee was reopened by the AO u/s. 147 of the Act based on AIR/NMS that there were cash 8 | P a g e deposits to the tune of Rs. 31,31,360/- in the bank account maintained by the assessee with ICICI Bank, Sanjay Place, Agra. The AO recorded reasons for reopening of the concluded assessment,and after taking approval of the competent authority , notice u/s. 148 was issued to the assesseeby the AO asking the assessee to file return of income.
Assessee did not file any return of income in pursuance to notice u/s.
Statutory notice u/s. 142(1) and show cause notice u/s. 144 of the Act were issued by the Assessing Officer to the assessee, but no response was received from the assessee, which led to addition to the tune of Rs.31,31,360/- by the AO in the hands of the assessee as income of the assessee being unexplained cash deposits in the saving bank account of the assessee maintained with ICICI Bank, Sanjay Place, Agra, by best judgment re-assessment order passed by the AO u/s 147 read with Section 144. Thus, the assessee did not participated in the re- assessment proceedings.The ld. CIT(Appeals) also dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits as there was no compliance by the assessee during the appellate proceedings. Before me, it is demonstrated that the assessee has shifted to Bangalore from Agra, and the assessee has not received any notice from CIT(Appeals), which led to an ex-parte appellate order passed by the CIT(Appeals). I have also observed that 9 | P a g e the CIT(Appeals) has passed an ex-parte appellate order in limine without deciding the issues arising in appeal on merits. I have observed that the additions have been made during reassessment proceedings u/s 147 on account of unexplained cash deposits in the ICICI Bank, Sanjay Place, Agra to the tune of Rs. 31,31,360/- which remained unexplained.
The assessee has stated in Form No. 35 filed before ld. CIT(A) in statement of fact filed before ld. CIT(A) that the cash deposited in the ICICI Bank were from the business receipts from the business of trading of shoes and sandals. The assessee has also stated that the said business receipts were duly added to the business receipts declared in the return of income filed with the Revenue and has suffered taxation.
These plea and contentions of the assessee requires investigation of facts and enquiry/verifications. Both the authorities below has passed an ex-parte order in the absence of the assessee. Now, the assessee has come forward and the ld. Counsel for the assessee submitted that all details will be submitted to substantiate the contentions of the assessee.
The assessee has also raised both legal challenge to the invocation of reassessment proceedings u/s 147 as well raising challenge to the additions made on merits of the issue before ld. CIT(A), wherein as many as 11 grounds of appeal were raised before ld. CIT(A). I have also observed that the CIT(Appeals) has not made any enquiry during the 10 | P a g e course of appellate proceedings and has dismissed the appeal on account of non-compliance by the assessee to the notices issued by ld. CIT(A). The ld. CIT(A) did not adjudicated the issues and grounds raised before him on merits. The said appellate order is not in compliance with the provisions of section 250(6) wherein the CIT(Appeals) is required to state the points for determination, decision thereon and the reasons for the same. I have observed that the ld. CIT(A) is required and obligated to pass order in compliance with the provisions of section 250(6), as ld CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld.
CIT(A) simply dismiss the appeal merely because the assessee did not 11 | P a g e comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits, such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6), and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits. The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating that the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co- terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. The assessee is also directed to comply with directions of ld. CIT(A) , otherwise the ld. CIT(A) shall be free to adjudicate on merits in accordance with law.I clarify that I 12 | P a g e have not commented on the merits of the issues in the appeal. I order accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29.01.2025.