JIVRAJBHAI RAMABHAI CHAUDHARY,BANASKANTHA vs. THE INCOME TAX OFFICER, WARD-3, PALANPUR

At the outset, it is noted that the appeal of the assessee has been filed late by 63 days before the Tribunal. To explain the delay, the assessee has filed application for condonation of delay in the form of affidavit sworn in by the assessee, Shri Jivarajbhai Ramabhai Chaudhary. In the application, the assessee submitted that the appellate order received from the NFAC was 2 forwarded to the Chartered Accountant's office for filing an appeal before the Tribunal. Upon enquiring about the status of the appeal, the assessee learnt that the Chartered Accountant had inadvertently failed to take immediate action. Upon realizing the oversight, the Chartered Accountant filed the present appeal, resulting in a delay of 63 days. The assessee contended that this delay was unintentional and beyond their control, and requested that it be condoned so the appeal could be adjudicated on its merits. The ld.DR raised no objection to the condonation of the delay.

Having considered the facts, I find that the assessee has provided a reasonable justification for the 63-day delay in filing the appeal, which was caused by the Chartered Accountant's oversight. As no mala fide intention can be attributed to the assessee, and in the interest of fairness and justice, I am inclined to condone the delay. Accordingly, the delay is condoned, and I proceed to dispose of the appeal on its merits.

Taking up now the appeal of the assessee for adjudication, the issue arising in the present appeal relates to addition made to the income of the assessee on account of cash found deposited in his bank account to the tune of Rs.14,98,000/- during demonetization period remaining unexplained. None appeared during assessment proceedings therefore the Assessing Officer, passed an exparte order under section 144 of the Act making addition on account of cash found deposited in the following bank accounts of the assessee:

Before the ld.CIT(A), the assessee contended that he was engaged in agency business in the name and style of “M/s.Babaramdev Sales”, involving cash transactions in respect of sale of goods i.e. namkeen, biscuits and general house-hold items. The assessee submitted that during the impugned year, he made a cash sale of Rs.1,24,74,758/- and sale proceeds were deposited in his bank account, which included the cash deposits during the demonetization period. The ld.CIT(A) perused the cash book submitted by the assessee, and found that at the beginning of the demonetization period i.e. 9.11.2016, there was and opening cash balance of Rs.7,27,307/-. He accordingly accepted the source of cash deposited during the demonetization period to be attributed to this opening cash balance, as at the beginning of the demonetization period, and directed the deletion of addition to the extent of Rs.7,27,307/-. Thus he confirmed addition of the balance Rs.7,70,693/-. The ld.CIT(A) further noted that the actual cash deposits during the demonetization period was Rs.15,36,000/- while the AO had considered cash deposits of only Rs.14,98,000/-. He, accordingly, added the balance of Rs.3,05,000/- to the income of the assessee and enhanced the assessed income by this extent.

Aggrieved by the same, the assessee has come up in appeal before the Tribunal.

The assessee has challenged the addition before me by raising the following grounds:

The ld.counsel for the assessee pointed out at Bar that the ground nos.1, 2 and 3 raised by the assessee, challenging validity of the assessment order passed under section 144 of the Act, did not arise from the order of the ld.CIT(A), since this ground was never raised before the ld.CIT(A). He, accordingly, was directed to file a revised grounds of appeal in this regard, and accordingly, revised grounds of appeal was filed by him, raising the following legal grounds vide letter dated 25.7.2024 as under:

The assessee has filed additional grounds also vide letter dated 29.4.2024 as under: “1. Assessment Order passed u/s 144 dated. 27.12.2019 is bad in law for want of Document Identification Number on the body of the assessment order as per the Circular No. 19 of 2019 and accordingly order passed by the Assessing Officer being contrary to mandate issued by CBDT is nullity. 2. The challenge to assessment order being a legal challenge is being taken up before the Hon'ble ITAT on the basis of the well laid down ratio by the Hon'ble Supreme Court in the case National Thermal Power Co Ltd. Vs. CIT - (1978) 229 ITR 383 (SC).”

The additional ground raised by the assessee were stated to be not pressed before me, and therefore, dismissed as not pressed.

Ground No.1, to 3 in the original grounds of appeals stand substituted by the revised grounds, now raised by the assessee vide letter dated 25.7.2024, therefore, in effect, in the present appeal the grounds to be dealt with by me are the revised grounds raised by the assessee vide its letter dated 25.7.2024 and grounds of appeal numbered 4 to 6 as reproduced above.

Ld.counsel for the assessee drew my attention to para 3.1 of the assessment order, wherein he pointed out that the AO noted that the assessee had not filed the return of income within the time stipulated in the notice under section 142(1) of the Act, and therefore, the return, if any filed by the assessee, is treated as invalid return. My attention was drawn to the para 7.1 of his order as under:

The ld.counsel for the assessee, thereafter drew our attention to the facts of the case, pointing out that the notice under section 142(1) of the Act was issued to the assessee, asking to file return of income on 8.3.2018. The assessee filed his return of income on 5.10.2018 i.e. after a lapse of seven months, and this return filed by the assessee was processed under section 143(1) of the Act by the CPC on 5.4.2019. All evidences to the effect were also filed before us. The ld.counsel for the assessee pointed out that the even the AO accepts the fact of the assessee having filed return of income in response to the notice under section 142(1) of the Act, though belatedly.

Referring to the above, he pointed out that the section 234A recognizes the filing of the belated returns in response to the notice under section 142(1) of the Act and mandates levy of interest thereon, thus, recognizing the belated returns filed as valid. He, therefore, stated that the order of the AO without issuing notice u/s 143(2) of the Act was not in accordance with the law, and needed to be quashed. In this regard he drew my attention to various decisions viz:

The ld.DR, on other hand, pointed out that the AO had stated that it had issued notice to the assessee prior to treating the return as invalid. And she drew my attention to the same in the paper book filed by the assessee at page no.28 as under:

She pointed out that the AO had treated the return as invalid in terms of section 139(9) of the Act and not for the reason that it was belated return. At this juncture, the ld.DR was asked to enlighten the Bench on the provision of section 139(9), which could lead to a return being treated as invalid. Ongoing through the provisions of section 139(9) of the Act, it transpires that as per the provision of the said section, a defective return, whose defects were not cured, was to be treated as an invalid return, and the defects specified in this regard under section 139(9) did not, by any stretch, include the defect of belated filing of the return, since logically, it is an in-curable defect. Since the case of the ld.DR was that the AO had invoked the provision of section 10 139(9) for treating the return as invalid, the DR was asked as to what specific reason the assessee’s return was treated as defective so as to invoke the provision. To this, the ld.DR had no reply forthcoming. Therefore, the arguments of the ld.DR that the AO had invoked section 139(9) of the Act for treating the return as invalid, needs to be rejected, as having no merit.

As for the contention of the ld.counsel for the assessee that the AO could not have treated the belated return filed by the assessee as defective return, I find merit in the same. The ld.counsel for the assessee has clearly brought out the provisions of law, which allow the return to be filed belatedly in response to notice u/s 142(1) of the Act, imposing or attracting only interest on the delay period of filing of the return. Thus, in fact, validating the return filed.

In the light of this provision in law of levy of interest on the belated filing of the return, I, therefore agree with the ld.counsel for the assessee that the belated return filed cannot be treated as invalid, since this would render the provisions of section 234A otiose. I draw support from the decision of the ITAT, Ahmedabad Bench in the case of Janak Kansara (supra), wherein the Bench was seized with an identical issue, whether the return filed in block assessment under section 158BC of the Act was belated and treated as invalid by the AO.The ITAT noted the provision under the block assessment scheme pari-materia to section 234A of the Act for levy of interest for delay in filing of the return for block assessment under section 158BFA of the Act, and noting so, therefore held that a belated return could not be treated as an invalid return. The relevant portion of the order at para 5 read as under: “5. We have heard the rival submissions and perused the orders of the lower authorities and the materials available on record. The undisputed facts are that a search and seizure operation under s. 132 of the Act was conducted in the case of the assessee. In pursuance to the same notice under s. 158BC was issued on 31st May, 2000 allowing 45 days time to the assessee to file the block return. No block return was filed within the time allowed under the notice. The return for block period was ultimately filed by the assessee on 10th Nov., 2000. Block assessment was completed by the AO on 30th Jan., 2001. The assessee contended before the CIT(A) that no notice being served on the assessee under s. 143(2) of the Act the order of the block assessment passed by the AO is invalid. The CIT(A) rejected this contention by holding that the return for the block period being filed by the assessee beyond the time-limit allowed under the notice issued under s. 15 SBC the block return was invalid and hence it is a case of non-furnishing of the return where assessment can be made only after issuance of notice under s. 142(1). The assessee on the above facts again contended before us that no notice under s. 143(2) was served upon him before finalization of the impugned order of block assessment. We find that the Revenue has not controverted this contention of the assessee and has brought no material before us to show that any notice under s. 143(2) was in fact served upon the assessee. Thus, in our considered view in the instant case the impugned order of block assessment was passed without issuance of any notice under s. 143(2) of the Act. The other aspect which requires our attention in fact was that whether the return for the block period filed beyond the time allowed under notice is valid or not. We find that the legislature vide provisions of s. 158BFA has envisaged the situation where the assessee can file valid block return beyond the time prescribed in the relevant notice. Sec. 158BFA provides for charging of interest for the period from the date of expiry of the time-limit provided in the notice till the date of furnishing of the return for block period. If it is taken that the return beyond the time prescribed in the notice is invalid or non est then the above enactment under s. 158BFA becomes redundant. It is an established rule of interpretation that one should not interpret a provision in such a manner so as to make what has been enacted in other provisions of the Act as redundant. The legislature does not enact anything in the statute without any meaning or purpose Thus, in our considered opinion a block return which is filed beyond the time-limit prescribed in the notice but before completion of the assessment is a valid return and the same cannot be ignored by the AO. Even in the instant case we find that the AO has duly taken into consideration the block return filed by the assessee. He has duly taken into consideration the income and the other facts disclosed by the assessee in the block return. From the assessment order it is not revealed that the AO has treated the return filed by the assessee as invalid or non est Thus, we find no force in the arguments of the learned Departmental Representative that in the instant case no valid return was filed by the assessee. In the above situation, the issue is squarely covered by the decision of the Hon'ble Gauhati High Court in the case of Smt Bandana Gogoi v. CIT (supra). In the said decision the Hon'ble High Court has held that a return filed for the block period cannot be interfered by the AO without issuance of notice under s. 143(2) of the Act. Hence, respectfully following the same we have no hesitation in cancelling the impugned order of block assessment. We order accordingly. This ground of appeal of the assessee is allowed.”

In the result, the appeal of the assessee is partly allowed.