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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 17.11.2023 of the Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2017-18.
The assessee has raised the following grounds of appeal :- “On facts and in law, 1.
1. The learned CIT(A) has erred in rejecting the application for Condonation of Delay for delay of 60 days in filing of an appeal before CIT(A) on the ground that the reasons given by the appellant make belief and therefore has not condoned the delay and thereby rejected the appeal.
2. The learned CIT(A) has erred in dismissing appellant's appeal and confirming the action of the AO of making addition of Rs.1,74,61,831/- under various sections which are tabulated below without providing sufficient and proper opportunity to the appellant and without verifying whether the notices were served to the appellant or not: Sr. Nature of Addition Amount No. 1 Addition on account of disallowance of 15% of 19,66,923/- Unexplained Purchases U/Sec.69C of the Act 2 Addition on account of Unsecured Loans U/Sec.68 29,43,859/- of the Act 3 Addition on account of Capital introduced for the 37,86,301/- year under consideration U/Sec.68 of the Act 4 Addition on account of Sundry Creditors U/Sec.68 9,14,685/- of the Act 5 Addition on account of Loans & Advances 38,55,644/- U/Sec.69 of the Act 6 Addition on account of Cash Deposits U/Sec. 69A 35,00,000/- of the Act 7 Addition on account of disallowance of 15% of 4,94,419/- Unexplained Expenses U/Sec.37(1) of the Act Total 1,74,61,831/-
The learned CIT(A) failed to appreciate that the various notices fixed for hearing were not received by the appellant.
The learned CIT(A) failed to appreciate that he ought to have verified whether proper notice has been served or not, before passing ex-parte order Therefore, the appellant urges that the Order passed by the CIT(A), be set-aside. 5. The learned CIT(A) has further erred in dismissing appellant's appeal on merits in a summary manner only on the basis of observations of the AO given in the assessment order and thereby passing ex-parte order. 6. The learned CIT(A) as well as the learned AO has further erred in making addition of Rs.1,74,61,831/- under various sections without pointing out any defects or shortcomings in the submissions made and documents submitted by the appellant during the assessment proceedings. 7. The appellant craves leave to add, alter, amend, or delete any of the above grounds of appeal.”
3. It is a case of ex-parte assessment framed u/s 144 of the Income Tax Act, 1961 (the “Act”). The assessee e-filed its return of income on 02.02.2018 declaring total income at Rs.10,85,430/-. The return was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny through CASS. Statutory notice(s) u/s 143(2) and 142(1) of the Act along with questionnaire were issued and served upon the assessee. The assessee failed to respond to the said notice(s), however, he made a manual submission of the Financial Report on 18.09.2019. The Ld. Assessing Officer (“AO”) issued a show cause notice on 25.11.2019 which was duly served on the assessee detailing therein the reasons for resorting to ex-parte assessment. The compliance to the show cause notice was to be made by 28.11.2019. The assessee did not furnish any reply to the said show cause notice which led the Ld. AO complete the assessment ex-parte u/s 144 of the Act on 30.11.2019 assessing the income at Rs.1,85,47,261/- by recording his findings and observations in respect of various additions made by him as under : “03. (a) On Perusal of Profit & Loss account is noted that the assessee nas claimed purchases to the extent of Rs.1,31,12 821/- As the assessee failed to furnish the details of party wise purchases, copies of ledger extracts, copies of sample bills, 15% of purchases which works out to Rs.19,66,923/- is disallowed as unexplained expenditure within the meaning of section 69C of the Income-tax Act. 1961. (b) On Perusal of balance sheet, it is noted that during the year under consideration, unsecured loans raised have been claimed at Rs.2,47.60.610/- as against unsecured loans of Rs.2,18,16,751/- claimed in the immediately preceding year i.e. AY. 2016-17 As such, during the year under consideration, the assessee has raised fresh unsecured loans to the extent of Rs.29,43,859/-. As the assessee failed to furnish the details of confirmation, the amount of Rs.29,43,859/- is being added to the income of the assessee within the meaning of section 68 of the Income-tax Act, 1961. (c) It is noted that during F.Y. 2016-17, the assessee has claimed fresh capital introduction to the extent of Rs.37,86,301/- As the assessee failed to provide credible evidence explaining the sources of such fresh capital introduction, the amount of Rs.37,86,301/- is added to the total income of the assessee as unexplained credit within the meaning of section 68 of the income-tax Act, 1961. (d) On Perusal of balance sheet, it is noted that during the year under consideration, sundry creditors have been claimed at Rs.23.66,314/- as against sundry creditors of Rs.14:51.629/- claimed in the immediately preceding year i.e. AY 2016-17 As such, during the year under consideration, the assessee has raised fresh sundry creditors to the extent of Rs.9,14,685/ As the assessee has not justified these creditors, by not providing the requisite supporting documents, an amount of Rs.9,14,685/- is added to the total income of the assessee as unexplained sundry creditors within the meaning of section 68 of the Income-tax Act, 1961. (e) It is noted during the year under consideration, the assessee has claimed to have paid loans & advances to the extent of Rs.1,84,48,381/- as against Rs.1,45.92,737/- claimed in the earlier year AY 2016-17 Thus, during the year under consideration, the assessee has paid fresh loans & advances to the tune of Rs.38,55,644/- As the assessee has not justified such loans & advances, by not providing the nature of such advances, confirmations thereof, the amount of Rs.38,55,644/- is added to the total
income of the assessee as unexplained investments within the meaning of section 69 of the Income-tax Act, 1961. (f) On perusal of the Bank Account statement of the assessee viz., Kotak Bank, it is seen that there is cash deposit of Rs.35,00,000/- during the demonetization period. Since the assessee failed to furnish the source of the cash deposit, an amount of Rs.35,00,000/- is added to the income of the assessee u/s 69A of the Income-tax Act, 1961. (g) On perusal of Profit & Loss account, it is noted that the assessee has claimed indirect expenses to the tune of Rs.32,96, 130/- as against Rs.18,42,623/- claimed in the earlier year. Thus, there is a considerable rise in such expenses which has also reduced the net profit margin compared to the earlier year. As the assessee has failed to justify these overhead expenses, an amount out of such expenses being 15% i.e. Rs.4,94,419/- is disallowed and brought to tax within the meaning of section 37(1) of the Income-tax Act, 1961.”
Aggrieved, the assessee carried the matter before the Ld. CIT(A). The appeal was late by 66 days. In Form No. 35, the assessee gave the reasons for the delay stating as under : “The assessee was not aware of the fact that their case has been selected for Scrutiny under section 143(2). The communication took place through e- mail and the e-mail id mentioned on the Income Tax e-filing portal belongs to the Chartered Accountant and not to the assessee. The Chartered Accountant is no longer associated with the firm and he neither replied to the notices issued by the department nor did he communicate the fact to the assessee that scrutiny proceedings have been initiated. The assessee has received demand order in physical form on 27/02/2020 and has immediately responded to the notice and hereby request your good self to kindly accept the Appeal against the order passed by Learned Assessing Officer.”
4.1 The Ld. CIT(A) did not condone the delay observing that the assessee has made contradictory averment that the impugned order of assessment was not communicated to him by his Chartered Accountant to whom the order was e-mailed. According to the Ld. CIT(A) this reason was not only contradictory to the date of acceptance of the order admitted by the assessee himself but also a reason which was make believe and without any support of any evidence. He further observed that the assessee has not shown any intent to comply with the statutory notice(s) during the assessment as well as the appellate proceedings. Relying on the various judicial precedents, he rejected the appeal of the assessee being time barred. On merits the Ld. CIT(A) dealt with the each of the additions made by the Ld. AO by observing as under : “5.4 Ground no. 1 : This ground fails for want of production of the books of account or any documentary evidence at the time of regular assessment and in the present proceedings. This ground is therefore, dismissed. 5.5 Ground no. 2, 3 and 4: These grounds relates to fresh credit in the account of the assessee it is trite law that onus is on the assessee to prove the identity of the persons from whom the credit has been received, there creditworthiness and also the genuineness of the transactions. The assessee has failed to discharge this onus cast on him. All the three grounds are therefore dismissed. 5.6 Ground no. 5: This ground fails for want of production of the books of account or any documentary evidence at the time of regular assessment and in the present proceedings. This ground is therefore, dismissed. 5.7 Ground no. 6: This ground fails for want of production of the books of account or any documentary evidence at the time of regular assessment and in the present proceedings in Roshan Di Hatti Vs. CIT [1977] 107 ITR 938 (SC). it was held that the onus of proving the source of money found to have been received by an assessee is on him, if he disputes, it is not liable to tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation and in the absence of such proof the revenue is entitled to treat it as taxable income. Further, it was held that where the nature of and source of a receipt whether it be of money or of the property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. In Kale Khan Mohammad Hanif vs CIT [1963] 50 ITR 1 (SC), one of the questions referred was relating to the burden of proof, of the source of cash credit. It was held that the onus of proving the source of the sum of money found to have been received by the assessee is on him, if he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provision of the Act. Clearly in the present case the assessee has failed to discharge this onus cast on him. This ground is therefore, dismissed. 5.8 Ground no.7: The assessee has not produced before me any material on the basis of which this ground can be adjudicated. The ground is dismissed in view of the above circumstances.”
Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that the Ld. CIT(A) has rejected the application for condonation of delay on the ground that the reasons given by the assessee are make believe without appreciating the reasons provided by the assessee for the said delay. He submitted that the delay before the Ld. CIT(A) was caused due to the fact that the notice(s) u/s 142(1) and u/s 250 of the Act were received on the e-mail id of the previous Chartered Accountant and the personal e-mail id of the assessee. Since, the assessee does not access his e-mail id frequently and the previous Chartered Accountant also did not inform him regarding the assessment proceedings as well as proceedings before the Ld. CIT(A), the assessee failed to respond to the said notice(s). He further submitted that the Ld. CIT(A) ought to have verified whether proper notice has been served or not before passing the ex-parte order. The Ld. CIT(A) dismissed the appeal on merits in a summary manner only on the basis of observation of the Ld. AO given in the assessment order without himself going into the merits of the case. He submitted that given an opportunity the assessee is in a position to furnish all the requisite supporting documents/evidence to substantiate its case before the Ld. CIT(A). He therefore, urged that the matter may be sent back to the file of Ld. CIT(A) with a direction to condone the delay of 66 days in filing the appeal before him and to decide the issue raised by the assessee afresh on merits.
The Ld. DR, however, relied on the order of Ld. CIT(A) and submitted that for the above stated reasons given by the Ld. CIT(A) he was fully justified in not condoning the delay and dismissing the appeal of the assessee as the assessee was given sufficient opportunities to present his case before the Ld. AO/Ld. CIT(A).
We have heard the Ld. Representatives of the parties and perused the records. We observe that there was non-compliance of notice(s) of hearing and the Ld. CIT(A)/NFAC dismissed the appeal of the assessee being time barred. We further observe that on merits of the case, the Ld. CIT(A) has confirmed the additions made by the Ld. AO for the reason that the assessee has failed to furnish the requisite supporting documents /evidence in support of its claim. The Ld. CIT(A) has passed the impugned order ex-parte in concurrence of the order of Ld. AO without himself going into the merits of the case. Thus, in our view his order is in violation of the provisions of section 250(6) of the Act.
On the facts and in the circumstances of the case, we deem it fit in the interest of justice and fair play to set aside the order of Ld. CIT(A) and restore the matter back to his file with a direction to condone the delay in filing the appeal before him and to adjudicate the issue(s) raised by the assessee on merits afresh and pass speaking order on merit after allowing reasonable opportunity of being heard to the assessee who shall provide the requisite support in terms of submitting the relevant documents / evidence as may be required/called upon. We order accordingly.
In the result, the appeal of assessee is allowed for statistical purpose.
Order pronounced in the open court on 07th October, 2024.
Sd/- Sd/- (R.K. Panda) (Astha Chandra) JUDICIAL MEMBER VICE PRESIDENT पुणे / Pune; दिन ांक / Dated : 07th October, 2024. रदि
आदेश की प्रधिधलधप अग्रेधर्ि / Copy of the Order forwarded to : अपील र्थी / The Appellant. 1. प्रत्यर्थी / The Respondent. 2. 3. The Pr. CIT concerned. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, “ए” बेंच, 4. पुणे / DR, ITAT, “A” Bench, Pune. ग र्ड फ़ इल / Guard File. 5. //सत्य दपि प्रदि// True Copy// आिेश नुस र / BY ORDER,
िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय अदिकरण ,पुणे / ITAT, Pune