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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Ramit Kochar
THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Ramit Kochar, Accountant Member ITA No. 714/Ahd/2023 Assessment Year 2014-15
Mrs. Divya The Income Tax Bhalchandra Patel, Officer, 13, Rajyash Ward-3(3)(1), Richmount, Opp. Pratyaksh Kar Jayantilal Bus Stop, Bhavan, Behind Bopal Ambli Road, v. Stock Exchange , Bodakdev, Ahmedabad Panjara Pole, -380058, Gujarat Ambawadi, PAN: AHFPP4721P Ahmedabad- (Appellant) 380014, Gujarat (Respondent)
Assessee by: Shri Vivek Chavda, AR Revenue by: Smt. Trupti Patel, Sr. D.R. & Shri Sanjay Jain, Sr. DR
Date of hearing : 04.07.2024 & 11-07-2024 Date of pronouncement : 11-07-2024 आदेश/ORDER
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This appeal in ITA No. 714/Ahd/2023 for assessment year 2014-15 filed by the assessee before Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad , has arisen from the appellate order dated 12/07/2023 passed by ld. Commissioner of Income-tax(Appeals), NFAC, New Delhi u/s. 250 of the Income-tax Act, 1961 vide DIN and Order No. ITBA/NFAC/S/250/2023-24/1054298633(1), which in turn has arisen from the assessment order dated 13-10-2017 passed by ld. Assessing Officer u/s. 147 r.w.s 143(3) of the 1961 Act.
The grounds of appeal raised by the assessee in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad, reads as under:-
“1.1 The order passed u/s. 250 on 12.07.2023 for A.Y.2017-18 by NFAC, Delhi upholding the addition of Rs.27,00,000/- made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the eccentric(sic. entire) facts and evidence available with regard to the impugned additions. 1.3 The Ld. CIT(A) has grievously erred in law and on facts in not carrying out any inquiry with regard to the applicability of the provisions of Income tax Act and thereby violated the principle of natural justice. The CIT(A) has kept on sending the notices on Emails rather than sending physically which could not be served to the appellant. Therefore, the appellant shall be granted opportunity to produce additional evidences. 2.1 The Ld. CIT(A) has grievously erred in law and or on facts in reopening the case under section 147.
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2.2 The Ld. CIT(A) has failed to appreciate that the reopening under the section 147 in the instant case is wholly illegal, unlawful and beyond the jurisdiction of assessing officer. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.27,00,000/- u/s 69 as unexplained investment. 3.2 That the Ld. CIT(A) ought not to have upheld addition of Rs.27,00,000 as unexplained investment u/s 69. 4.1 The Ld. CIT(A) has grievously erred in law and or on facts in not granting opportunity of being heard via video conferencing. 4.2 The Ld. CIT(A) has failed to appreciate that granting opportunity of being heard via video conferencing facility is mandatory in the new regime of Faceless appeal process. It is therefore prayed that the addition made by Ld. AO and upheld by the CIT(A) may please be deleted in the interest of natural justice considering the eccentric facts of the case.”
The brief facts of the case are that the assessee has purchased an immovable property (shop) , and as per Revenue the assessee paid cash of Rs.27,00,000/- to the seller. The assessee had filed return of income for the impugned assessment year , declaring total income of Rs.9,49,510/-. Since as per Revenue, there is an escapement of income by way of under assessment, the A.O. invoked provisions of Section 147 , and notice u/s. 148 dated 24/03/2017 was issued to the assessee by the A.O. requesting assessee to file return of income in pursuance to notice u/s. 148 , which was claimed by the AO to have been duly served on the assessee.. Reasons for re-opening were also provided to the assessee. The
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AO also issued statutory notices u/s 142(1) to the assessee , which was claimed by the AO to have been duly served on the assessee. The assessee filed reply to the notices, but as per A.O. the submissions were not clearly seen. The A.O. issued show cause notice dated 14/09/2017 asking the assessee as to why the addition should not be made u/s. 69 of the Act to the tune of Rs.27,00,000/- as unexplained investment made by the assessee towards purchase of immovable property (shop) and making payment in cash to seller. The assessee did not reply to the said show cause notice , and the addition was made to the income of the assessee by the A.O. to the tune of Rs. 27,00,000/- being payments made by the assessee in cash to seller for purchase of immovable property(shop) by treating it as an unexplained investment u/s 69 of the 1961 Act, vide assessment order dated 13.10.2017 passed by the A.O. u/s. 147 r.w.s. 143(3) of the Act.
Aggrieved , the assessee filed first appeal with ld. CIT(A) , and the assessee raised ground of appeal and also stated in statement of fact filed before Ld. CIT(A) , that the assessee never paid cash of Rs.27,00,000/-. The Ld. CIT(A) issued notices to the assessee but there was no reply/submissions received by ld. CIT(A) from the assessee. The ld. CIT(A) dismissed the appeal of the assessee ex-parte in limine by holding that the assessee is not interested in pursuing its
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appeal. The ld. CIT(A) affirmed the assessment order passed by the A.O. as the assessee has not submitted any reply / evidence during the course of appellate proceedings in support of its appeal filed with ld. CIT(A) by the assssee.
Still aggrieved,the assessee filed second appeal with the Tribunal , and none appeared before the Tribunal when this appeal was called for hearing before the SMC Bench on 04.07.2024. The assessee has filed adjournment application which stood rejected by the Bench, and the appeal was heard by SMC Bench after hearing ld. Sr. DR. Thereafter, the matter was fixed for clarification as this appeal was filed belatedly by the assessee by 7 days beyond the time prescribed u/s 253(3), and no affidavit/application for condonation of delay was filed. Now, the ld. Counsel for the assessee appeared before the SMC Bench and has filed affidavit/application dated 19.04.2024 executed by the assessee praying for condonation of delay in filing this appeal belatedly with ITAT beyond the time prescribed u/s 253(3). The prayers were made to condone the delay as it is averred in the affidavit/application for condonation that due to illness of the assessee which required medical treatment, the appeal was filed belatedly by 7 days. The Ld. Sr. D.R. submitted that the assessee did not comply with the notices issued by Ld. CIT(A) , and hence Ld. CIT(A) dismissed the appeal of the assessee for non-prosecution , and
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affirmed the assessment order passed by the A.O. However, the Ld. Sr. D.R. fairly submitted that the ld. CIT(A) has not decided the issue on merits and in fairness the matter can be set aside back to the file of Ld. CIT(A) for fresh adjudication of the appeal of the assessee, and the assessee may be directed to comply with the directions/ notice of hearing issued by Ld. CIT(A).
At the outset, it is observed that the assessee has filed this appeal belatedly by 7 days with ITAT , beyond the time prescribed u/s 253(3). The assessee has filed an application supported with affidavit dated 19th April, 2024 praying for condonation of delay of 7 days in filing this appeal belatedly with ITAT. The assessee has averred that it is because of her illness which required medical treatment which led to filing of this appeal belatedly by the assessee by 7 days, and prayers are made to condone the delay of 7 days. The ld. Departmental Representative objected to delay in filing this appeal belatedly but left the matter to the Bench to be decided. I have gone through the application filed for condonation of delay supported by an affidavit executed by the assessee , both dated 19.04.2024 (placed on record in file), and I have observed that the assessee filed this appeal belatedly by 7 days beyond the time prescribed for filing the appeal with ITAT u/s 253(3), and the assessee has prayed for condonation of
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delay by filing an application/affidavit dated 19.04.2024. The assessee has claimed that it is because of her illness which required medical treatment which led to delay in filing this appeal in time with ITAT. I do not find any malafide on the part of the assessee in filing this appeal belatedly with the Tribunal , as the assessee is not likely to gain anything by filing this appeal belatedly by 7 days . In my considered view, the assessee has shown reasonable and sufficient cause for filing this appeal belatedly. When technicalities are pitted against the substantial justice, the Courts will lean towards advancement of substantial justice rather than technicalities, unless the malafide on the part of the assessee is at writ large. Under the facts and circumstances, I do not find any malafide on the part of the assessee in filing this appeal belatedly, and in the interest of justice, I condone the delay of 7 days and proceed to adjudicate this appeal on merits in accordance with law. Reference is drawn to the decision of Hon’ble Supreme Court in the case of Collector of Land Acquisition, Anantnag v. Mst. Katiji (1987 AIR 1353(SC)).
6.2 On merits, I have considered the contentions raised by ld. Sr. DR during hearing before SMC on 04.07.2024, and perused the material on record. I have observed that the assessee has filed return of Income u/s. 139 declaring income of Rs. 9,49,510/- on 30.08.2014. It was observed by Revenue
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that the assessee has purchased an immovable property (shop) and the payment of Rs. 27,00,000/- was made by the assessee to seller in cash. The Revenue invoked provisions of Section 147/148 and reopened the assessment of the assessee, and notice dated 24.03.2017 u/s. 148 was issued by AO to the assessee , requiring assessee to file return of income in response to the aforesaid notice . Reasons recorded for reopening of the assessee were supplied by the AO to the assessee. The assessee filed reply before the A.O. , but as per the A.O. the figures in the reply were not clearly visible . Show cause notice was also issued by the AO, which was not replied by the assessee , which led to the additions to the income in the hands of the assessee to the tune of Rs. 27,00,000/- u/s. 69, made by AO towards unexplained investment in the property (shop) by making of payment by the assessee in cash to the seller for purchase of the aforesaid shop of which sources could not be explained by the assessee. The assessee filed first appeal with ld. CIT(A). The Ld. CIT(A) issued notices to the assessee but there was no compliance by the assessee, and the ld. CIT(A) dismissed the appeal of the assessee ex parte in limine without adjudicating the issues arising in the appeal before ld. CIT(A) on merits. It is observed that the assessee has claimed before Ld. CIT(A) in the grounds of appeal as well in Statement of fact that the assessee never paid cash of Rs. 27,00,000/- for purchase of the immovable
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property(shop). The Ld. CIT(A) did not call for the assessment record nor made any independent inquires or verifications directly or through A.O. , but dismissed the appeal of the assessee ex-parte in limine without adjudicating the issues arising in the appeal as is required u/s. 250(6). Thus, the ld. CIT(A) dismissed the appeal of the assessee for non- prosecution by affirming the assessment order passed by the A.O. , by holding that the assessee is not interested in prosecuting its appeal and no documents/evidences are filed by the assessee to support its appeal filed with ld. CIT(A). As per Section 250(6), the Ld. CIT(A) has to specify the point for determination, decision of the Ld. CIT(A) and the reasons thereof for his decision. But, in this case, the Ld. CIT(A) has simply dismissed the appeal of the assessee without adjudicating issue arising in the appeal. The assessee has specifically raised grounds of appeal that the assessee never paid cash of Rs. 27,00,000/- for purchase of immovable property , and the Ld. CIT(A) was under duty to investigate these facts by calling for assessment records and/or asking A.O. to make further inquiry in the matter, to unravel truth. In the statement of facts filed before the Tribunal, the assessee has stated that the assessee has purchased immovable property being office No. B-404, Dev Auram, Ahmedabad, for a consideration of Rs.22,81,400/- which was paid through banking channel and no cash was paid by the assessee. The
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assessee has also stated in SOF that she assigned the work to the tax consultant who failed to attend the office of the A.O. and to file replies. It is further stated in SOF filed before ITAT that e-notices issued by the Ld. CIT(A) via e-mail could not be tracked by the assessee as she is not a frequent user of email account , and hence the assessee could not reply. It is also stated that the ld. CIT(A) failed to give opportunity of hearing through video conferencing, and the appellate order was passed by ld. CIT(A) ex-parte and principle of natural justice has been breached.The opportunity of cross-examination was also not granted to cross-examine the person whose statement has been relied upon. I have also observed that the assessee has raised legal challenge to re-opening of assessment by the AO by invoking provisions of Section 147, which has also not been adjudicated by ld. CIT(A). The reopening of the assessment by invocation of Section 147 was done by the AO on the ground that the assessee has paid cash of Rs. 27,00,000/- for purchase of immovable property(shop), but it is a claim of the assessee that no cash whatsoever was paid for purchase of the aforesaid property and all payments were made through banking channel. The claim of the assessee requires verification and if the same is found to be true , then the whole edifice/premise on which Section 147 was invoked by Revenue will collapse. The CIT(A) ought to have make independent inquiries and verifications of the claim of the
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assessee before dismissing the appeal of the assessee. The CIT(A) did not adjudicate issues arising in the appeal on merits, and simply dismissed the appeal of the assessee by upholding the addition made by the Assessing Officer , by holding that the assessee is not interested in prosecuting its appeal and no documents/evidences are filed by the assessee before ld. CIT(A) to support its contentions/challenge to assessment order. The power of ld. CIT(A) are co-terminus with the power of Assessing Officer which even includes power of enhancement(Section 251(1)(a)). The ld. CIT(A) is required to adjudicate the issues on merit in accordance with law , as is provided u/s. 250(6). The ld. CIT(A) has to state point for determination, his reasons for decision and the decision thereof as provided u/s 250(6). The CIT(A) has power to make such inquiries as he thinks fit and may also direct AO to make such enquiries and report to ld CIT(A), as is provided u/s 250(4), and to adjudicate issues arising in the appeal before him on merits in accordance with law. The CIT(A) could have called for assessment records and also information from third parties u/s. 133(6) such as seller of the property or the office of the Sub-Registrar where the said shop is registered , in case there is non-compliance on the part of the assessee. There are other powers vested with ld. CIT(A) as is provided under the 1961 Act. The ld. CIT(A) has not rebutted the claim of the assessee, but dismissed the appeal of the assessee on ground
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of non filing of documents/details etc. by the assessee. The ld. CIT(A) is required and obligated to pass order in compliance with the provisions of section 250(6), as ld CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issue are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in
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violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld , and that the assessee has not submitted details/documents is not sufficient . The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. The ld. CIT(A) shall pass the order in compliance with the provision of section 250(6) of the Act on merit in accordance with law, in set aside proceedings , after giving opportunity to both the parties in compliance with principles of natural justice. The assessee on his part is also directed to comply with the direction/notices of CIT(A) , and in case of failure of the assessee, the ld. CIT(A) shall be free to pass such order as deemed fit ex-parte in accordance with law on merits and after complying with the provisions of section 250(6) of the Act. Thus, the appeal of the assessee is allowed for statistical purposes and the matter is restored back to the file of ld.
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CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law. I clarify that I have not commented on the merits of the issues in the appeal. Thus, the appeal of the assessee is allowed for statistical purposes. I order accordingly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11-07-2024 at the Conclusion of the hearing in the presence of both the parties, and reduced to writing and signed on 18th July, 2024
Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Ahmedabad : Dated 18/07/2024 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद