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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-3’ NEW DELHI
Before: SMT DIVA SINGH
ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 19.02.2016 of CIT(A)-2, Gurgaon pertaining to 2011 - 12 assessment year.
However, at the time of hearing as on 26.09.2016 and 27.09.2016, no one was present on behalf of the Revenue. No petition seeking time was also placed before the Bench. Accordingly, on considering the material available on record and after hearing the Ld.AR, qua the grounds raised it was considered appropriate to proceed with the present appeal ex-parte qua Revenue respondent on merits.
The relevant facts of the case are that the assessee returned an income of Rs.1,53,470/- on 08.03.2012. The said return was selected for scrutiny under CASS after issuance of notice under section 143(2) and questionnaire etc under section 142(1). The assessee was represented by counsel, Sh.M.C Chaturvedi, Advocate. However, after filing his Power of Attorney, he remained absent on the date of hearing. Since no appearance on behalf the assessee was put by anyone else also, the Assessing Officer show caused the assessee why assessment should not be completed ex-parte under section 144 by making an addition of Rs.41,02,300/-. In the absence of any response, addition of the said amount was made in view of the fact that as per the savings bank account with Kotak Mohindra Bank Ltd. A/c No.02850150002683, the assessee was found to have made cash
I.T.A .No.-2208/Del/2016 deposits totaling Rs.41,02,300/- on various dates. The relevant details are reproduced hereunder:-
Date Amount 29.04.2010 2,500 17.05.2010 15,000 05.07.2010 35,000 14.07.2010 30,000 14.08.2010 55,000 15.09.2010 55,000 29.09.2010 15,000 16.10.2010 50,000 15.11.2010 50,000 11.01.2011 8,00,000 15.01.2011 9,90,000 05.02.2011 15,00,000 14.02.2011 52,400 15.02.2011 4,00,000 14.03.2011 52,400 Total 41,02,300 2.1. The Assessing Officer further found that in the Kotak Mahindra Bank Limited the assessee in its savings account had credited of Rs.19,178/-. An addition of the said amount was also made.
Aggrieved by this, the assessee came in appeal before the First Appellate Authority. A perusal of the record shows as per para 4.3 of the said order, the assessee filed an application for admission of additional evidence under Rule 46A claiming that the cash deposits were from the following sources:-
i. “Business receipts; ii. Sale proceeds of ancestral agricultural land. iii. Sale proceeds of plot in the name of his wife. iv. Sale proceeds of truck.” 3.1. The copy of the additional evidences were forwarded by the CIT(A) to the AO directing him to conduct necessary enquiries. As per the Remand Report extracted in para 4.5 of the CIT(A)'s order, the Assessing Officer reported that notice dated 09.12.2015 was issued to the assessee asking him to attend the office on 16.12.2015 to furnish documents in support of his contention, raised in the submissions dated 30.10.2015 before the CIT(A).
However, on the said date, no one was present on behalf of the assessee.
I.T.A .No.-2208/Del/2016 3.2. The submissions advanced on behalf the assessee extracted by the CIT(A) are reproduced hereunder:- a. "That Sh. Mahabir is an illiterate person, belonging to an agriculturist family, who learnt driving and started a small transport business, supplying building materials. The assessee does not know anything about income tax which has resulted in defaults. b. That the assessee has not filed any income tax return for the A. Y. 2011- 12 nor he has carried any civil contractor business in the name and style of M/s Shivam Enterprises during the year. c. That assessee is the only son of his father and lives in a joint family, which is engaged in agriculture. d. That there is sale of ancestral agricultural land at village Purushattam Pur, Distt.- Rewari, Haryana, to Sh. Mohit Gujral, MD, R/o 20, Gauri Apartments, 3-4, South End Lane, New Delhi-110011 & others, for which two cheques amounting to Rs.1,12,50,000/- and Rs.31,97,656/- were received and deposited in the bank account of Sh. Shambhu, father of the assessee, on 05.09.2007 and 23.08.2006 respectively. There were several cash withdrawals, out of which certain cash, kept at home are deposited in the bank account of the assessee during the year under consideration. A copy of the bank account reflecting cash withdrawals is enclosed for kind perusal. e. There is a sale of plot in the name of his wife Sumitra Devi at village Fajalwas, The- Manesar, Distt. Gurgaon, amounting to Rs, 8,60,000/-on 18.01.2011, whose sale proceeds are deposited in the account of the assessee. A copy of the sale deed dated 18.01.2011 is enclosed for kind perusal. f. There is a sale of truck, whose sale proceeds at Rs.10,50,000/- on 15.01.2011, are deposited in the account of the assessee, g. That there are business receipts as well agriculture receipts, deposited in the account of the assessee. h. That income of the assessee has been below taxable limit and his being village folk and ignorance have resulted in furnishing no details during assessment proceedings. " (emphasis provided) 3.3. The submissions were rejected in view of the following reasoning:- a. “During the course of assessment proceedings the assessee filed a reply- dated 3.3.2014 and also filed power of attorney dated 8.10.2012. On, both the documents the assessee has signed in English language. Hence, it appears incorrect that the assessee is an illiterate person. In the reply dated 3.3.2014 vide point no. 2 the assessee stated that "I am civil Contractor and gross receipts in the year was Rs.22,00,000/-". Thus, the plea of the assessee that "he is running a small transport business, supplying building materials etc." is an after-though. Hence, the plea taken by the assessee is liable to be rejected. b. A stated above in reply to point (a), it is a matter of record/fact that assessee was a civil contractor. Hence, the plea taken by the assessee is liable to be rejected. c. In the same reply dated 3.3.2014 vide point no. 3, the assessee stated as under:- "Regarding cash of Rs.41,02,300/- deposited in Kotak Mahindra Bank, this amount was deposited out of gross receipts from Civil Contractor Work and he has sold a property for Rs.42,50,000/-. This property was purchased by me in FY 1995-96 for Rs.16,90,000/-. I am enclosing herewith copy of purchase and sale of property. " Hence, the plea taken by the assessee in point no. (d) of the submissions that there as a sale ancestral at Rewari and cash was deposited out of this Page 3 of 8
I.T.A .No.-2208/Del/2016 amount, is an after-through and concocted story. Therefore, this please also is liable to be rejected. d. As stated above in reply to point (c), the plea taken by the assessee that there was sale of plot in the name of wife Sumitra Devi at Vill. Fajalwas and cash deposited out of this amount is also an after-thought. Hence, the same is also liable to be rejected. e. In respect of sale of truck at Rs.10,50,000/-. As stated above in reply to point (c) and (d), the plea taken by the assessee is an after-thought. Hence, the same is liable to be rejected.” (emphasis provided)
3.4. The assessee confronted with the Remand Report of the Assessing Officer as per record submitted that “it is a matter of fact that there was sale of ancestral agriculture land at village Purushattam Pur Distt. Rewari (HR), for which two cheques amounting to Rs.1,12,50,000/- and Rs.31,97,656/- were received and deposited in the bank account of Sh.Shambhu Father of the assessee, on 05.09.2007 and 23.08.2006 respectively.”
3.5. It was also submitted that a plot in the name of assessee’s wife, Smt. Sumitra Devi at Vg. Fajalwas The Manesar Distt. Gurgaon was sold on 18.01.2011 for Rs.8,60,000/-.
These sale proceeds were it was stated deposited in the account of the assessee. The said claim was stated to be supported by sale deed dated 18.01.2011.
3.6. Apart from that deposit of Rs.10,50,000/- was explained as the sale proceeds of truck deposited in the bank account of the assessee on 15.01.2011.
3.7. Considering the explanation, the CIT(A) was of the view that the assessee as per his reply dated 03.03.2014 claimed that the cash deposits were made out of gross receipts from civil contractor work and sale of property for Rs.42,50,000/- during the year which was purchased by him in financial year 1995-96 for an amount of Rs.16,90,000/-.
Considering the objections of the assessee denying the written submissions dated 03.03.2014 before the Assessing Officer, the CIT(A) reproduced the scanned copy of the said reply at page 8 of the impugned order and considering the same alongwith a Power of Attorney with regard to sale of immovable property dated 05.02.2011 which had been filed by the assessee and is forming part of the record wherein the assessee agreed to sell his property to Sh. Ritesh son of Sh. Mangal Singh for an amount of Rs.42,50,000/- out of which the assessee had received an amount of Rs.24,00,000/- on 15.01.2011 and the I.T.A .No.-2208/Del/2016 rest of the money i.e Rs.18,50,000/- on 05.02.2011 and considering another Power of Attorney dated 04.05.1995 between Sh. Sitaram, son of Sh. Ghanshyam Das and the assessee the CIT(A) concluded that the reply dated 03.03.2014 was filed by the assessee and duly signed by him. The observations of the Assessing Officer that none appeared on 03.03.2014 nor any written reply was filed, it was considered to be apparently an incorrect observation by the AO due to oversight. Accordingly, the explanation of the assessee was considered to be not supported by any evidences. Qua the claim of sale of plot belonging to the assessee's wife or the sale proceeds of a truck belonging to him were held to be not satisfactorily explained. Aggrieved by this, the assessee is in appeal before the ITAT.
The Ld. AR inviting attention to the record, submitted that before the Assessing Officer the assessee was not represented and if at all any Power of Attorney has been filed, it has been filed by someone not entrusted by him. The conclusions of the CIT(A) that the Assessing Officer made an incorrect observation in regard to the appearance on 03.03.2014 wherein it is held that “no one has appeared” as an observation by oversight it was assailed is based on no material and contrary to record. Addressing the copy of the scanned reply forming part of the impugned order reproduced at page 8, it was submitted that it was not his signature accordingly it was his prayer that the additions made applying an incorrect section may be deleted as it is section 69 which should have been invoked and not section 68. Moreover, the claim of the assessee that the deposits were from the sale proceeds of the truck and from the sale of the plot owned by his wife etc. have been dismissed without bringing out any reason as to what was the deficiency in the explanation and the evidence of the assessee. Accordingly it was his alternative prayer that the matter may be remanded as the assessee was not a civil contractor and the assessee had not authorized anyone to appear before the Assessing Officer and the written submissions allegedly stated to have been submitted on behalf of the assessee were not filed by him or for him.
I.T.A .No.-2208/Del/2016 5. On a consideration of the entirety of the peculiar facts and circumstances wherein the Ld. AR states that no written submissions were filed before the Assessing Officer and taking note of the fact that even the Assessing Officer notes that no one was present on behalf of the assessee on 03.03.2011, in these peculiar facts and circumstances the observations, reasoning and conclusion of the CIT(A) that the factual noting by the AO was an incorrect observation due to oversight cannot be upheld as it is contrary to record and the contradiction is not a minor contradiction. Accordingly in the interests of justice, the impugned order is set aside and the issues are restored back to the file of the CIT(A) with a direction to pass a speaking order in accordance with law. Whenever an assessee makes out a case that the tax authorities have arbitrarily whimsically and carelessly assessed income which never belonged to him on facts which were not applicable to him then it is the duty of the court to address such arguments if raised. However, the justice delivery system is not blind and does not operate in vacuum and thus unable to fathom and address where a so-called allegedly ignorant assessee considers it appropriate to take the system for a ride then the arms of justice are long enough to catch the errant person. The above observation has been made in order to ensure that there is a balance and perspective maintained by the tax authorities while deciding the issue and at the same time the taxpayer also proceeds and exercises his choices with due care and caution It is my unfortunate duty to notice that filing of affidavits at times is treated to be a very casual exercise wherein arguments and allegations at times may appear to be raised irresponsibility. The rampant and incorrect belief that filing of wrong affidavits is a harmless exercise with no serious consequences may be based on the fact that due to large number of cases clogging the courts the “state” may not have the will and manpower to proceed against each and every wrong affidavit filed by the parties. However the mere fact that the “state” for the time being may not have acted upon wrong affidavits, filed consciously and deliberately does not lay down the position of law that filing of affidavits is a casual, non serious, irresponsible exercise with no serious consequences. In the facts of the present
I.T.A .No.-2208/Del/2016 case the assessee insists that no one had been authorized on his behalf. Thereby stating that the Power of Attorney relied upon by the Revenue was not issued by the assessee in favour of any counsel. Then it goes without saying that any submissions advanced by the said counsel cannot and shall not bind the assessee. It may not be out of place to also address a scenario where the assessee having issued a Power of Attorney in favour of a counsel decides to take the position that the prayer made by the said counsel on his behalf before an authority was not the correct and did not address the true state of affairs.
An assessee can so plead relying upon facts and evidences addressing the true and actual state of affairs and can to my mind successfully insist that the issue be decided on the basis of the correct facts and not as wrongly argued by his authorized representative.
Judicial precedence in favour of the assessee may permit in certain cases to plead that his counsel was not authorized to place wrong facts on record, the courts can consider any such genuine prayer made on behalf of an assessee and if supported by facts and evidence, can direct that the issue be decided on the basis of the correct facts and evidence which supports the explanation brought on record. However when a taxpayer makes a prayer that no such authority was executed and also states that the submissions made on his behalf are not applicable to this case at all then the taxpayer is required to state the said fact by way of an affidavit conscious of the fact that whatever is stated therein is under penalty of perjury in case it is found to be untrue and incorrect. Thus in support of the argument that the counsel appearing before the AO was not authorized by him and the written submission filed were not on his instruction and the signatures in the scanned copy are not his the assessee in the facts of the present case is directed to file an affidavit or sworn document declaring that “I (certify, verify, or state) under penalty of perjury that the foregoing is true and correct. Executed on {date} “ or in like manner.
Accordingly, the impugned order is set aside and the issues are restored back to the CIT(A) with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.
I.T.A .No.-2208/Del/2016
In the result, the appeal of the assessee is allowed for statistical purposes. The order is pronounced in the open court on 17th of November, 2016.