VIKAS SHARMA, DURG,DURG vs. INCOME TAX OFFICER-1(2), BHILAI, DURG

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ITA 255/RPR/2023Status: DisposedITAT Raipur15 September 2023AY 2015-16Bench: SHRI RAVISH SOOD (Judicial Member)8 pages
AI SummaryAllowed

What did the Tribunal hold?

The ITAT found that the CIT(A) failed to consider the assessee's adjournment request and dismissed the appeal ex-parte. Consequently, the ITAT set aside the CIT(A)'s order and restored the matter for fresh adjudication, directing the CIT(A) to provide a reasonable opportunity of being heard to the assessee.

What were the facts?

The assessee's case was selected for limited scrutiny, but the AO conducted a complete scrutiny assessment and made additions for unexplained cash credits under Section 68 and alleged income from share trading. The CIT(A) dismissed the assessee's appeal ex-parte, stating non-compliance, despite the assessee having filed an adjournment request.

What were the issues?

The key issues were the CIT(A)'s ex-parte dismissal without considering an adjournment request, the AO exceeding the scope of limited scrutiny, and the validity of additions for unexplained cash credits and alleged income from share trading.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 143(2),Section 68

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Income Tax Appellate Tribunal, RAIPUR BENCH “SMC”, RAIPUR

Before: SHRI RAVISH SOOD

For Appellant: shri Sidharth Parakh &
For Respondent: Shri Satya Prakash Sharma, Sr. DR
Hearing: 13.09.2023Pronounced: 15.09.2023

आदेश / ORDER

PER RAVISH SOOD, JM:

1.

The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 30.05.2023, which in turn arises from the order passed by the AO under Sec. 143(3) of the Income- tax Act, 1961 (in short ‘the Act’) dated 22.12.2017 for assessment year 2015- 16. The assessee has assailed the impugned order on the following grounds of appeal:

“1) That order of CIT(A) is bad-in-law, illegal and void-ab-initio. 2) That CIT(A) has erred in confirming jurisdictional defect done while conducting assessment proceeding as to notice u/s 143(2) was issued by non-jurisdictional ITO-1(4), Bhilai within stipulated time and on transfer of the case to remove said jurisdictional defect JAO ITO-1(2), Bhilai, had issued notice u/s 143(2) after the stipulated time period. 3) That CIT(A) has erred in confirming action of the AO in conducting complete scrutiny assessment without converting "Limited Scrutiny Assessment" to "Complete Scrutiny Assessment" in the manner as prescribed by hon'ble CBDT. 4) That CIT(A) has erred in not allowing a reasonable opportunity of being heard to the assessee by disregarding the assessee's request for adjournment filed on 19.05.2023. 5) Without prejudice to ground nos. 1 to 4, CIT(A) has erred in dismissing appeal without deciding appeal on merit of the case properly and judicially. 6) Without prejudice to ground nos. 1 to 4, on the facts and in circumstances of the case CIT(A) has erred in confirming the addition of Rs. 10,20,000/- made by the Assessing Officer for alleged unexplained cash credits u/s 68 without considering the facts and 3 Vikas Sharma Vs. ITO-1(2), Bhilai circumstances of the case properly and judicially. Hence, the assessee prays that the addition of Rs. 10,20,000/- be deleted. 7) Without prejudice to ground nos. 1 to 4, on the facts and in circumstances of the case CIT(A) has erred in confirming addition of Rs.4,57,027/- made by the Assessing Officer for alleged income from share trading by working out said income as difference between opening and closing balances of bank account held with ICICI Bank without considering the facts and circumstances of the case properly and judicially. Hence, the assessee prays that the disallowance of Rs.4,57,027/- be deleted. 8) Without prejudice to ground nos. 1 to 4, on the facts and in circumstances of the case CIT(A) has erred in not allowing set off of loss of Rs. 50,40,087/- incurred by the assessee on total value of transactions amounting to Rs. 13.18 crores as per CIB information as mentioned in assessment order. 9) The assessee reserves the right to add, amend, or alter/withdraw any ground/grounds of appeal at the time of hearing.”

2. Succinctly stated, the assessee had e-filed his return of income for the A.Y.2015-16 on 13.02.2016, declaring an income of Rs.3,57,840/-. Subsequently, the case of the assessee was selected for limited scrutiny under CASS for examination of security transactions.

3.

Assessment was, thereafter, framed by the A.O vide his order passed u/s.143(3) of the Act dated 22.12.2017 wherein income of the assessee was determined at Rs.18,34,867/- after, inter alia, making two additions /disallowances:

Sr. Particulars Amount No. 1. Addition of two cash deposits (sic) made in (i) on 06.06.2014 : Rs.4,50,000/- assesse’s savings bank account No.018601528554, ICICI Bank (ii) on 13.06.2014 : Rs.5,70,000/- Total Rs.10,20,000/-

4 Vikas Sharma Vs. ITO-1(2), Bhilai

2.

Addition towards “closing stock” as on 31.03.2015 Rs.4,57,027 and “Opening balance” as on 01.04.2014 of [Rs.6,72,378 (-) Rs.2,15,351/-] assesse’s savings bank account with ICICI Bank

4.

Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. Ostensibly, as the assessee had neither complied with the notices that were issued on three occasions nor had sought any adjournment, the CIT(Appeals), holding a conviction that the assessee was not interested in pursuing his appeal proceeded with and upheld the view taken by the A.O.

5.

The assessee, being aggrieved with the order of the CIT(Appeals), has carried the matter in appeal before me.

6.

Shri Sidharth Parakh, Ld. Authorized Representative (for short ‘AR’) for the assessee at the very outset submitted that the CIT(Appeals) had most arbitrarily dismissed the assessee's appeal. Elaborating on his contention mentioned above, it was submitted by the Ld. AR that though the assessee had requested for an adjournment of the hearing of appeal that was fixed for 19.05.2023 and had uploaded the aforesaid request letter, the CIT(Appeals) had summarily discarded the same and proceeded with the matter, which resulted in the dismissal of the appeal based on a perverse observation that the assessee had failed to comply with the notices which were issued to him.

5 Vikas Sharma Vs. ITO-1(2), Bhilai The Ld. AR, to fortify his aforesaid claim, had taken me through the e- proceedings Response Acknowledgement No. 156204221190523, which was uploaded with the office of the CIT(Appeals) for seeking an adjournment of the hearing of the appeal.

6.1 Apropos the merits of the case, it was averred by the Ld. AR that though the case was selected for “limited scrutiny” for examination of security transactions carried out by the assessee, the A.O had traversed beyond the scope of his jurisdiction and made additions on the issues that did not fall within the scope and realm of the reasons for which, the case was picked up for scrutiny assessment. Carrying his contention further, it was submitted by the Ld. AR that neither of the additions made by the A.O. were related to the reasons for which the assessee’s case was selected for “limited scrutiny”. It was, thus, the claim of the Ld. AR that as the A.O. had grossly erred in traversing beyond the scope of his jurisdiction, the impugned additions made by him could not be sustained and were liable to be struck down on the said count itself. The Ld. AR, in support of his aforesaid contention, has placed his reliance on the following judicial pronouncements:

(i) M/s. Su-Raj Diamond Dealers Pvt. Ltd. Vs. Pr. CIT (2020) 203 TTJ 137 (Mum.) (ii) Aryadeep Complex Pvt. Ltd. Vs. Pr. CIT, dated 05.08.2023

6 Vikas Sharma Vs. ITO-1(2), Bhilai

7.

The Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities.

8.

I have heard the ld. Authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, and considered the judicial pronouncements pressed into service by the Ld.AR to drive home his contentions.

9.

Admittedly, it is a fact borne from the record that the assessee, during the proceedings before the CIT(Appeals), had moved an application seeking adjournment vide his letter dated 19.05.2023 (copy available on record). However, there is no whisper of the request above of the assessee for adjournment of its case in the order of the CIT(Appeals). Instead, we find that the CIT(Appeals) had categorically observed that the assessee, despite having been put to notice, had neither complied with the same nor had sought an adjournment. Considering the facts above, the CIT(Appeals), holding a conviction that the assessee was not interested in pursuing his appeal, proceeded with and disposed of the appeal based on an ex-parte order.

10.

As observed by me hereinabove, failure on the part of the CIT(Appeals) to consider the assessee's request for adjournment of his case on 19.05.2023 is discernible from the record. Also, I find that the CIT(Appeals) had not 7 Vikas Sharma Vs. ITO-1(2), Bhilai disposed of the appeal on the same date, i.e. on 19.05.2023, when his office had received the application, but the impugned order was passed by him much after that on 30.05.2023. It is not the case that the CIT(Appeals) had, after considering the aforesaid request letter dated 19.05.2023 rejected the same and proceeded with the matter. Considering the totality of the facts involved in the present case, I am of the view that the matter, in all fairness, requires to be restored to the file of the CIT(Appeals) with a direction to him to re- adjudicate the same after affording a reasonable opportunity of being heard to the assessee. At the same time, the assessee is directed to duly comply with the notices that would be issued by the CIT(Appeals) in the set-aside proceedings, failing which, the latter may dispose of the appeal after considering the material available on record.

11.

In the result, the assessee's appeal is allowed for statistical purposes in terms of the observations above.

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