SIDDHARTH PANDARINATH BHADALE,PUNE vs. ITO, PNE-W-(58)(91), PUNE

Assessment Year : 2018-19 Siddharth Pandarinath V The Income Tax Officer, Bhadale, s W-(58)(91), Pune. Near Ram Mandir, Saswad Road, Uruli Devachi, Pune – 412308. PAN: AIJPB1830E Appellant/ Assessee Respondent / Revenue Assessee by Shri Rushabh Shah – AR Revenue by Shri Rajesh Gawali – Addl.CIT(DR) Date of hearing 18/12/2024 Date of pronouncement 20/12/2024 आदेश/ ORDER

PER DR. DIPAK P. RIPOTE, AM:

1. On facts and circumstances prevailing in the case and as per the provisions scheme of the Income Tax Act, 1961 (the Act'), it be held that, addition of INR 2,07,32,700/- as the income of the Appellant by the Ld. Assessing Officer (AO') and upheld by Ld.Commissioner of Income-tax Appeals (CIT(A)) without hearing out the plea of the Appellant is improper, contrary to the provisions of the Act and against the principles of natural justice. The appellant be granted just and proper relief in this respect. Tax Effect: 70,47,045/- 2. On the facts and circumstances prevailing in the case, and as per the provisions and scheme of the Act, it be held that the CIT(A) erred in upholding the incorrect invocation of section 263 by the Commissioner of Income-tax (CIT"), overlooking the fact that the original assessment order was passed after thorough scrutiny by the Assessing Officer under Section 143(3) of the Act. All relevant facts and evidence were duly considered, and no irregularities or discrepancies were found during the original assessment process. The proceeding in the case of appellant is out of jurisdiction, improper, contrary to the provisions of the Act. It be held that proceedings initiated by the Assessing Officer is beyond the powers as per the provisions and scheme of the Act. Tax Effect: 70,47,045/- 3. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Income Tax Act, 1961 ('the Act'), it be held that the CIT(A) erred in upholding the additions made by the AO by invoking the provisions of section 56(2)(x) of the Act on account of purchase of immovable property at valuation below value fixed by the stamp duty authorities. The appellant provided comprehensive clarifications and supporting evidence to justify the difference which was not duly considered by the AO. Additions made may please be deleted and the Appellant be granted just & proper relief. Tax Effect: 21,80,394/- 4. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the CIT(A) erred in upholding the rejection of the Appellant's request by the AO to refer the valuation of the immovable property to the valuation officer appointed by the Income Tax Department under Section 55A of the Income Tax Act, 1961. This refusal is contrary to the principles laid down under Section 55A of the Income Tax Act, 1961, which allows for such a reference to ensure an accurate and fair valuation of the property. Accordingly, addition made on this ground and upheld by the CIT(A) ought to be deleted and the Appellant be granted just & proper relief in this regard. Tax Effect: 21,80,594/- 5. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the CIT(A) erred in upholding ad-hoc calculation of profit margins at 3% by the Ld. AO at the time of assessment proceedings, the Ld. AO had already accepted the business income offered to tax at the time of original assessment. The CIT has re-evaluated the same set of facts and evidence that were already presented and evaluated by the AO during the original assessment proceedings. This amounts to a mere change of opinion and not an identification of any error or omission in the original assessment order. Addition made on this ground and upheld by the CIT(A) ought to be deleted and the Appellant be granted just & proper relief in this regard. Tax Effect: 27,28,309/- 6. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the CITEA) erred in upholding ad-hoe calculation of profit margins at 3's by the Ld. AO. The Lil. AO has not heard the ples of the Appellant and explanation provided by the Appellant on margin and nature of business and without considering the submission of the Appellant added ad-hoc profits to the income of the Appellant. Addition made on this ground and upheld by the CIT(A) ought to be deleted and the Appellant be granted just & proper relief in this regard Tax Effect: 27,28,309/- 7. On the facts and circumstances prevailing in the case and as per the provisions and scheme of the Act, it be held that the CIT(A) erred in upholding the AO's addition by treating the amount of INR.62,90,500 received in the Appellant's savings bank account as concealed undisclosed credit. The Appellant had provided detailed explanations and evidence showing that the amounts received in the said account were representing the repayment of advance given to them, and the remaining amounts were transferred from another account (Cash Credit) of the appellant, which had already been accounted for The Ld. AO merely ignored the submission of the Appellant and passed the order adding it to the income without providing any explanation for such addition and the same is surprisingly upheld by the CIT(A). The addition of Rs.62,90,500 as income without considering the appellant's explanations and supporting documents is unjustified, arbitrary, and contrary to the principles of fairness and proper assessment. Addition made on this ground and upheld by the CIT(A) ought to be deleted and the Appellant be granted just & proper relief in this regard. Tax Effect: 21,38,141/- 8. That the appellant craves, leave to add, alter, amend or vary and/or withdraw any or all of the aforesaid grounds of appeal at the time of hearing of the above appeal.” Submission of ld.AR :

2. The ld.Authorised Representative(ld.AR) for the Assessee submitted that ld.CIT(A) has passed ex-parte order. Ld.AR invited our attention to the Affidavit of the assessee in which assessee has pleaded that assessee’s Erstwhile Representative has not informed Assessee about the Dates of Hearing. As a result, assessee could not file submission on time. Ld.AR further pleaded that there is no malafide intention in non-compliance of notices.

2.1 Ld.AR submitted that Assessee had filed Return of Income for A.Y.2018-19 on 29.03.2019. Scrutiny Assessment was completed in the case of assessee vide order dated 30.03.2021 passed under section 143(3) of the Act. Then, there was a Revision Order by ld.Principal Commissioner of Income Tax, Pune. As per the order under section 263 of the Act, the Assessing Officer passed assessment order dated 05.01.2024 which is the assessment order under consideration. Ld.AR submitted that during the year, Assessee has purchased land on 29.05.2017. The rate for the purpose of Stamp Duty was Rs.3,29,15,400/-, whereas assessee has actually entered into transaction at Rs.2,65,00,000/-. The Assessing Officer has added difference under section 56(2) of the Act. Ld.AR submitted that assessee had requested Assessing Officer to refer the issue to the District Valuation Officer(DVO), but AO rejected assessee’s request. Ld.AR further submitted that it is mandatory for AO to refer the issue to DVO, Assessee once objects. Ld.AR submitted that one more opportunity may be given, so that all the necessary details will be filed before the ld.CIT(A).

Submission of ld.DR : 3. Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of Assessing Officer and ld.CIT(A).

Findings & Analysis : 4. We have heard both the parties and perused the records. It is observed that ld.CIT(A) has dismissed the appeal of the assessee on account of non-compliance without discussing each and every ground of appeal raised by the assessee.

4.1 Assessee has filed a letter and an Affidavit explaining the reason for non-compliance before ld.CIT(A). The relevant paragraph of the letter filed by the assessee is reproduced here as under : “In connection to the said hearing we are hereby submitting that my case before the Assessing Officer and Commissioner of Income-tax (Appeals) (CTT(A)') was represented by Mr. Kashinath Pathare (Chartered Accountant) ('erstwhile consultant"). Unfortunately, due to an ongoing conflict between myself and my erstwhile consultant and lack of effective communication between us, I was not able to file even a single submission during the CIT(A) proceedings.

Non-response to any of the notices of the CIT(A) was unintentional and not to jeopardize the interest of the revenue by delaying/ avoiding the appeal process. Further, I had also executed an affidavit in that regards which was duly submitted before your goodself at the time of hearing.

I had no intention to hamper interest of the revenue and due to aforementioned reasons which were outside my control, I was not able to avail the opportunity to present my case.

Thank you for your understanding. Sd/- Siddharth Pandarinath Bhadale”

4.2 The substantial justice is more important than procedural aspects. There was a reasonable cause for non-compliance by Assessee before ld.CIT(A). Even otherwise, as per section 250 of the Act, ld.CIT(A) has to adjudicate each and every ground of the appeal.

4.3 The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF)(Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” Unquote.

4.4 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.

4.5 In view of the above, in the interest of justice, we set-aside the order of the ld.CIT(A) to ld.CIT(A) for denovo adjudication. Ld.CIT(A) shall provide opportunity to the assessee. Assessee shall file all the necessary documents before the ld.CIT(A). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.

4.6 We also direct the ld.CIT(A) to refer the issue of Valuation to DVO as held by The Hon’ble Kolkata High Court in the case of Sunil Kumar Agarwal vs. CIT 372 ITR 83, the relevant paragraph is as under : “6. For the aforesaid reasons, we are of the opinion that the valuation by the DVO, contemplated under s. 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub-Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the AO, discharging a quasi-judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him an option to follow the course provided by law.