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Income Tax Appellate Tribunal, ‘B’ BENCH PUNE
Before: HON’BLE SHRI G. D. PADMAHSHALI & HON’BLE SHRI VINAY BHAMORE
ORDER PER G. D. PADMAHSHALI, AM; This bunch of three appeals is instituted by the assessee challenging separate DIN & Orders ITBA/NFAC/S/250/2023- 24/1058961612(1), 1058962328(1) & 1058962638 all dt. 21/12/2023 passed by the first appellate authority [‘Ld. NFAC/ CIT(A)’ hereafter] u/s 250 of the Income-tax Act, 1961 [‘the Act’ hereafter] which in turn confirms the separate order of assessments passed u/s 143(3) r.w.s 147, 144 & 147 r.w.s. 144B of the Act respectively for assessment year 2010-11, 2016-17 & 2017- 18 [‘AY’ hereafter].
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Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 At the outset of hybrid hearing, it transpired that, facts 2. involved in this bunch of appeals and issue dealt therein are common & identical, therefore on rival parties’ request these three appeals for the sake of brevity & convenience are heard together for being disposed-off by common & consolidated order.
Briefly stated facts of the cases are that; The assessee is an individual who engaged in the business 3.1 activities as facilitator for buying & selling of land mainly in Raigad District of Maharashtra.
ITA 0296/PUN/2024 A survey action u/s 133A of the Act was conducted on M/s 3.2 Veracity Landmark Developers Pvt Ltd. [‘VLDPL’ hereafter] which was engaged in purchases of agricultural plots/lands from formers through mediator like assessee for their sale in small/plot basis after its development. From the documents impounded, the Ld. DDIT (Inv.) forwarded the information to the Ld. AO that VLDPL had made two payments to the assessee (1) a cash of ₹1,75,73,107/- and (2) a cheque of ₹45,00,000/-. Upon receipt of such information the case of the assessee after recording reasons & obtaining prior approval was reopened u/s 148 of the Act.
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Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 In response notice issued u/s 148 of the Act the assessee 3.3 returned his income reiterating the income originally declared by him on 30/03/2012. The said return was subjected to scrutiny u/s 143(2) of the Act. After considering the written submission & evidential material placed on record by the assessee, the Ld. AO vouched that, the amount of ₹45,00,000/- received by cheque was recorded in the books account maintained by the assessee unlike the entire amount of cash of ₹1,75,73,107/- hence same was added u/s 69A of the Act as unexplained money and was brought to tax accordingly while framing assessment u/s 143(3) r.w.s 147 of the Act by an order dt. 26/12/2017.
Vide appeal instituted on 23/01/2018 the assessee 3.4 challenged the aforestated addition on both legal as well as on merits, which the Ld. NFAC dismissed the same ex-parte in the absence of cogent evidence in support of grounds raised.
ITA 0298/PUN/2024 & 0297/PUN/2024 For assessment year 2017-18 the assessee failed to file his 3.5 return of income, therefore was identified as non-filer. On the basis of information that the assessee deposited huge amount of cash ₹42,00,000/- into his bank account maintained with ‘IDBI ITAT-Pune Page 3 of 8
Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 Bank Ltd.’ [‘IDBI’ hereafter], the Ld. AO by notice issued 142(1) of the Act called upon the assessee to furnish return of income. From profit & loss account, balance-sheet, cash book, bank book and other evidential documents etc., submitted on record by the assessee the Ld. AO pin-pointed that the assessee in-spite having taxable income did fail to file valid return u/s 139 of the Act. In the event the assessment in this case was completed u/s 144 of the Act to the best of judgement whereby the Ld. AO beside bringing to tax an amount ₹32,10,000/- specified bank notes [‘SBN’ hereafter] as unexplained money u/s 69A of the Act and also brought to tax other regular income earned by the assessee from sources viz; (a) business income of ₹4,29,336/- u/s 44AD of the Act, (b) rental income from house property of ₹34,80,914/- & (c) income from other sources ₹36,597/- .
While determining the aforestated income, the bank 3.6 statements for assessment year 2016-17 also came under scrutiny wherefrom it revealed to the Ld. AO that, in AY 2016-17 the assessee had also deposited cash of ₹23,50,000/- into his same IDBI bank account 117102000011459. In view thereof the Ld. AO after recording the reasons & obtaining prior approval from ITAT-Pune Page 4 of 8
Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 competent authority the case of the assessee for assessment year 2016-17 was also reopened u/s 148 of the Act.
The assessee’s explanation that, previous cash withdrawal 3.7 made for ensuring timely advance payments to farmer against purchases of agri-land when remained unutilized or returned owning to cancellation were re-deposited into IDBI bank account, in the absence of concrete document did not inspire the Ld. AO. In the event entire amount of cash deposit made during the year under consideration was added to returned income as unexplained money u/s 69A of the Act and framed the assessment accordingly u/s 147 r.w.s. 144B of the Act.
Vide separate appeals instituted on 12/12/2019 & 3.8 28/04/2022 the assessee challenged the aforestated assessments, which the Ld. NFAC dismissed ex-parte in the absence of cogent evidence in support of grounds raised in appeals.
By three separate appeals instituted u/s 253(1) of the Act before the Tribunal, the aggrieved assessee challenged the impugned action of Ld. NFAC first on the ground of violation of principle of natural justice and later on merits.
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Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 Without touching grounds & merits of these cases, we have 5. heard the rival parties on the limited issue of ex-parte dismissal of appeal by the Ld. NFAC and subject to rule 18 of ITAT-Rules, 1963 perused material placed on record.
From the impugned orders, we observed that, during the 6. course of first appellate proceedings the Ld. NFAC invariably in all these three cases vide two bullet notices dt. 25/09/2023 & 19/10/2023 issued one after another instantaneously called upon the assessee to comply & produce requisite details in less than a period of seven days. Ostensibly, these two opportunities of hearing granting the appellant assessee allowing less than a reasonable period of fifteen days in each case in our considered view clearly suggest these were only a paper opportunity granted to create audit trail and not with an intent to seek real compliance. This period of seven days allowed to appellant to comply in our considered opinion is not a reasonable period, because the opportunity of being heard should be real, reasonable and effective, the same should not be for namesake, it should not be a mere paper opportunity. This is so held in ‘CIT v. Panna Devi Saraogi’ [1970] 78 ITR 728 (Cal.).
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Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 In the case of ‘Smt. Ritu Devi v. CIT’ [2004] 141 Taxman 559 7. (Mad.), time of just few days was given to the assessee to furnish reply which was also held as denial of real opportunity. It shall be worthy to underlined that the opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard. In ‘E. Vittal v. Appropriate Authority’ [1996] 221 ITR 760 (AP), it is held that, where a decision is based upon a document in a proceeding, copy of the same should be provided to the affected party according reasonable period to negate, otherwise, it would violate the principles of natural justice as the opportunity of being heard should be an effective opportunity and not an empty formality, as the denial of reasonable opportunity renders the action void.
In view of the aforestated discussion, we are of considered view that, the action of the Ld. NFAC is suffered from sufficiency of reasonable opportunity to the appellant to adduce necessary evidential material in support of his claim made and to represent effectively vis-à-vis to comply with the requirements sought.
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Prakash Arjun Desai Vs DCIT/ITO to 298/PUN/2024 Placing reliance on Hon’ble High court of Patna judgement 9. in ‘St. Paul’s Anglo Indian Education Society’ (2003) 262 ITR 377 (Pat)’, we are mindful to hold that the impugned adjudications are unjustified as the appellant was deprived of reasonable opportunity and time to produce all relevant documents to substantiate his claims as made in the returns of income filed vis- à-vis grounds of appeals raised. In the event we deem in all the fairness and in larger interest of justice necessary to accord one more real opportunity to the appellant to comply with notices and contest these cases on merits. In view of this, without offering any comments on merits of the cases, we set-aside these impugned orders and remit them back to the Ld. NFAC with a direction deal therewith de-novo and pass separate speaking orders u/s 250(6) of the Act preferable in three effective hearing opportunities.
In result, these three appeals of the assessee are PARTLY ALLOWED FOR STATISTICAL PURPOSES. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday, 01st October, 2024.