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Income Tax Appellate Tribunal, Conducted through E-Court, Rajkot
Before: SHRI WASEEM AHMED & SHRI SIDDHARTHA NAUTIYAL
आदेश आदेश/O R D E R आदेश आदेश
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Principal Commissioner of Income Tax, Jamnagar, dated 04/03/2022 arising in the matter of order passed under s. 263 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2017-18.
The only issue raised by the assessee is that the Ld. PCIT erred in holding the assessment order framed u/s 143(3) of the Act, as erroneous in so far prejudicial to the interest of revenue under the provision of section 263 of the Act.
At the outset, it was noticed that there was a delay in filing the appeal by the assessee for 282 days. The assessee has filed condonation petition stating that the appeal memo in requisite form in 3 sets was inadvertently sent to the Departmental Representative. As such the appeal was filed within the time specified under the provision of Act, which is evident from the courier receipt available on record. As per the courier receipt, the delivery was made to the office of the Departmental Representative of Income Tax Department dated 09/05/2022. But the assessee inadvertently failed to file the appeal to the Registry office of the ITAT at Rajkot though he was under the impression that the appeal was also filed before the ITAT Rajkot. Thus, the assessee was under the bona-fide belief that the appeal has been filed within the time. On further inquiry, it was found that the appeal has not been sent through courier to the office of the ITAT. Thereafter, the appeal was filed to the registry office of the ITAT with the delay of 252 days. In view of the above, the Ld. AR contended that there was genuine delay in filing the appeal before the ITAT and therefore the same deserve to be condoned.
4. On the contrary the Ld. DR considering the reason of delay in filing the appeal did not raise any serious objection, rather the Ld. DR left the issue at the discretion of the Bench.
We have heard the rival contentions of both the parties and perused the materials available on record. Considering the reason explained by the assessee for delay in filing the appeal, we are of the view that the mistake has been committed by the assessee inadvertently without any mala-fide intention. Accordingly, we condone the delay and proceed to adjudicate the issue on merit.
The facts in brief are that the assessee in the present case is an individual and filed its return of income declaring income at Rs. 2,89,870/- only. Thereafter, the case of the assessee was selected under limited scrutiny on account of large cash deposits in the bank account of the assessee. As per the record available with the revenue, there was cash deposits aggregating to Rs. 1.91 crores in the bank account bearing No. 31749236480 maintained with the SBI. However, the assessment was completed after considering the cash deposits during demonetization period at Rs. 11,69,500/- only. As such, the assessment was framed after making addition of Rs. 11,69,500/- vide order dated 23/09/2019.
Subsequently, the Ld. PCIT found that the assessment framed u/s 143(3) of the Act is erroneous in so far prejudicial to the interest of revenue on account of cash deposits in bank account of Rs. 1,74,28,150/- which has not been verified during the assessment proceedings except the verification of cash of Rs. 11,69,500/- only. Thus, the Ld. PCIT, proposed the assessment order as erroneous in so far prejudicial to the interest of revenue by issuing a show cause notice dated 03/02/2022, with a request to make reply by 16/02/2022. However, there was no response given by the assessee. Accordingly, the Ld. PCIT held the order of the AO as erroneous in so far prejudicial to the interest of revenue by observing as under:
On perusal of the assessment records, it is seen that the above case was selected for limited scrutiny through CASS to verify "Cash deposit during the year". It is noticed from the statement of assessee's bank account No.31749236480 that the assessee had made aggregate deposits/credits of Rs.2,29,82,399/- (including cash deposits of Rs.1,74,28,450/-) during the year under consideration. On going through the ITR, it is noticed that the assessee has shown sale receipt/turnover of Rs.7,56,780/- and shown net profit of Rs.3,11,370/-. However, it is seen that there are credits/deposit entries of Rs.2,22,25,619_/-including cash depsits which were not found fully disclosed in the return of income for the A.Y 2017-18. The AO has made addition only of Rs.11,69,500/- u/s 68 of the I.T. Act whereas the assessee has made aggregate cash deposits of Rs.1,74,28,450/- including the cash deposits of Rs.23,58,400/- during the demonetization period, i.e. 09/11/2016 to 31/12/2016. Further, it is seen that during the course of assessment proceedings, the assessee has not responded to the notices u/s 142(1) issued by the AO and also no any explanation is available on record regarding the cash deposits made by him in the bank account during the year under consideration. Thus short
addition of Rs.2,10,56,119/-(Rs.2,22,25,619/- Rs. 11,69,500/-) was made by the AO on account of unexplained cash deposits as well as credits remained unexplained and accordingly the same is required to be added u/s 69A of the I.T. Act arid to be taxed as per provision of section 115BBE of the I.T. Act.
As requested by the assessee through ITBA on 03.02.2022 for 10 days adjournment, this office has granted adjournment for 13 days and requested to submit the written submission by 16.02.2022. However, the assessee did not respond nor submitted the written submission by the due date given i.e.16.02.2022 and even after lapse of 15 days thereafter.
Therefore, it is seen that the AO during the course of assessment proceedings neither has verified nor inquired the above facts and also not mentioned anything in the assessment order in this regard. Accordingly, it is a case where assessment has been completed without any inquiry or verification. Therefore, to this extent the assessment order passed by the AO is erroneous and prejudicial to the interest of the revenue.
************************************************************** 7.1, therefore, hold that the assessment order dated 23.12.2019 finalized by the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 is erroneous and prejudicial to the interests of revenue within the meaning of section 263 of the Income-tax Act, 1961 and hence the order passed by the Assessing Officer u/s 143(3) dated 23.12.2019 is hereby set aside to the above extent of observations at Para-4. The Assessing Officer is directed to make fresh assessment after giving an opportunity of being heard to the assessee and frame the assessment considering the facts as also conducting proper and meaningful inquiry on the issues as discussed in Para-4.
Being aggrieved by the order of the Ld. PCIT, the assessee is in appeal before us.
The Ld. AR before us filed a paper book running from pages 1 to 140 and submitted that the AO during the assessment proceedings has verified deposits of cash in the bank account. The Ld. AR in support of his contention drew our attention to the findings given in the assessment order which is placed on record. Therefore, according to the Ld. AR, the assessment framed u/s 143(3) of the Act, cannot be held as erroneous in so far prejudicial to the interest of revenue on account of non-verification.
On the other hand, the Ld. DR contended that the assessee neither cooperated during the assessment proceedings nor in the proceedings u/s 263 of the Act. It was also pointed out by the Ld. DR that the case was selected under scrutiny to verify the large cash deposit of Rs. 1.91 crores whereas the AO without verifying the same has considered the cash deposits of Rs. 11,69,500/- in old demonetized currency of Rs.1000/- and Rs.500/- only. The Ld. DR vehemently supported the order of the Ld. PCIT.
We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the case was selected under scrutiny on account of large cash deposits of Rs. 1.91 crores but the AO has not verified the entire cash deposits during the proceedings except the cash deposits in old demonetized currency. Accordingly, we hold that the verification has not been done by the AO during the assessment proceedings with respect to the verification of cash deposits. It is a settled position of law that non-verification of the AO renders the assessment order as erroneous in so far prejudicial to the interest of revenue. In holding so, we draw support and guidance from judgment of Hon’ble SUPREME COURT OF INDIA in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income-tax reported in [2000] 109 Taxman 66 (SC) wherein it was held as under:
In the instant case, the Commissioner noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appeared that the resolution passed by the board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts the conclusion that the order of the ITO was erroneous was irresistible. Therefore, the High Court had rightly held that the exercise of the jurisdiction by the Commissioner under section 263(1) was justified.
11.1 In view of the above, after considering the facts in totality, we do not find any infirmity in the order framed u/s 263 of the Act. Thus, we declined to interfere in the order of the Ld. PCIT. Hence, the ground of appeal of the assessee is dismissed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the Court on 29/03/2023 at Ahmedabad.