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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI VINAY BHAMORE
आदेश / ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the ex parte order of the CIT(A) dated 12.03.2024 for the assessment year 2010-11.
Briefly, the facts of the case are that the assessee is an individual deriving income under the head “Salary”. No regular return of income under the provisions of section 139(1) for the A.Y. 2010-11 was filed. The assessment was reopened and notice u/s.148 of the Act was issued to the appellant. Based on the NMS information available with the Department, the Assessing Officer (AO) noticed that the assessee had deposited cash in ICICI bank on various dates aggregating to Rs.12,39,000/-. The assessee was called upon to submit his
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explanation for the source of cash deposits made. In response, the assessee submitted the explanation stating that he along with others sold property situated at Mauje Devlali, Nashik, received sale consideration of Rs.4,07,000/- through bearer cheque which was encashed and deposited in the ICICI bank. He also stated that assesse’s mother-in-law was co-owner and her 50% share amounting to Rs.2,03,000/- was inherited by assessee’s wife Mrs. Tejali Kulthe against the said sale of property. On perusal of the sale deed, the AO accepted the explanation of the assessee to the extent of Rs.4,07,000/- holding that the said cash deposit was made out of sale consideration. However, the AO added the balance of amount Rs.8,32,000/- as undisclosed income of the assessee. In addition, on perusal of ITS data available with the Department, the AO also made addition of Rs.3,92,119/- being the salary received from his employers namely Veena Industries Limited and Indo Asian Fusegear Ltd. on account of failure of the assessee to file the return of income.
Aggrieved by the above assessment order, an appeal was filed before the CIT(A)/NFAC who vide impugned order dismissed the appeal in limine for non-prosecution.
Being aggrieved, the appellant is in appeal before this Tribunal in the present appeal.
The ld. Authorised Representative for the assessee submits that the assessee’s case was not represented properly before the authorities which resulted in passing of the ex parte orders. Further, he submitted that the notices were not served upon the assessee by Post as envisaged u/s.282(1) of the Act and Rule 127(1) of the Income-tax Rules, 1962. He further submits that the evidences furnished before the Assessing Officer during the assessment proceedings were not considered. In the
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circumstances, the ld.AR prayed for one more opportunity to the assessee, as the assessee is in a position to substantiate the evidences relating to source for cash deposit and TDS deduction etc..
On the other hand, the ld. Departmental Representative placing reliance on the orders of the authorities submit that no interference by this Tribunal is called for
We heard the rival submissions and perused the material on record. Admittedly, the AO also completed the assessment u/s.144 r.w.s.147 of the Act. Further, we find that in the instant case the hearing notices were sent through ITBA portal by the CIT(A). In our considered opinion, it is not a valid method and manner of service of notice as specified under the provisions of section 282(1) of the Act. Therefore, it is crystal clear that the notices were not served upon the appellant. To fortify our view, we would like to make a reference to a decision rendered by the Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship Vs. CIT (Exemptions) (2024) 463 ITR 560 (P&H), wherein the Hon’ble High Court after making reference to provisions of 282(1) held that service of notice through ITBA portal is not valid service and remanded the matter to AO for denovo disposal of case. The relevant paragraphs of the judgment are reproduced below : “7. We are afraid that we cannot subscribe to the submissions as advanced by the learned counsel for the Revenue-respondent. The provisions of section 282(1) of the Act of 1961 and rule 127(1) of the Income-tax Rules, 1962 provides for a method and manner of service of notice and orders which read as follows : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. In view of the above, it is essential that before any action is taken, communication of the notice must be done in terms of the provisions as enumerated hereinabove. The provisions do not mention communication to be “presumed” by placing notice on the e-
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portal. A pragmatic view has to be adopted always in these circumstances. An individual or a company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income-tax provisions and the same are required to be necessarily followed. 9. Having noticed as above, this court is of the firm view that the petitioner has not been given sufficient opportunity to put up its please with regard to the proceedings under section 12A(1)(ac)(iii) of the Act of 1961 and as it was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter. 10. In view of the above, the writ petition is allowed and the order dated January 16, 2023 (annexure P-5) is quashed and set-aside. The Department would provide an opportunity of hearing to the petitioner and they will also allow the petitioner to appear personally for the purpose and pass a speaking order independent of the order passed earlier by them on January 16,2023. The same shall be done expeditiously provided the petitioner file his reply within a period of three weeks.”
In view of the above legal position, we are of the considered opinion that the notice(s) of hearing were not served properly to the appellant.
A mere perusal of the impugned order also reveals that the CIT(A) had also dismissed the appeal of the appellant in limine without going into the merits of the issues. It is a trite law that the NFAC should have dealt with the merits of the issue in appeal, even in the case of ex-parte order. From the perusal of the impugned order, it would reveal that the CIT(A) had not gone into the merits of the issue in appeal, merely dismissed the appeal for non-prosecution, which is contrary to the settled position of law. The Hon’ble Bombay High Court in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) Bombay)/[2017] 297 CTR 614 (Bombay) has held 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,
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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 a ssessee 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. Infact the CIT(A) is obliged to dispose of the appeal on merits. Infact 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.
Thus, the Hon’ble Bombay High Court has categorically held that CIT(A) has to decide the appeal on merit and CIT(A) does not have any power to dismiss appeal for non-prosecution. Considering the entirety of the facts and circumstances and submissions of the assessee, we are of the considered opinion that it is a fit case for remand of the matter to the file of the CIT(A)/NFAC for de novo consideration in accordance with law after affording due opportunity of hearing to the assessee.
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In the result, the appeal filed by the assessee is partly allowed. Order pronounced on this 23rd day of July, 2024.
sd/- sd/- (VINAY BHAMORE) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Pune / Dated : 23rd July, 2024. Satish
आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The Pr. CIT concerned. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “SMC” ब�च, 4. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 5. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.