AAQIL AHMED,BILASPUR V. INCOME TAX OFFICER, WARD-1(2), BILASPUR

ITA 392/RPR/2024

AI Insights

The case involves Aaqil Ahmed, the appellant, who contested the orders of the Income Tax Officer (ITO) and the CIT(Appeals) regarding unexplained cash deposits and additional income assessed during the demonetization period in 2016. The ITO made additions under sections 69A and 115BBE of the Income-tax Act, 1961, citing unexplained cash deposits and treating certain deposits as business income. The CIT(Appeals) dismissed the appeal ex-parte due to non-prosecution by the appellant. The Tribunal found that the CIT(Appeals) erred in dismissing the appeal without addressing the substantive issues and directed a re-examination of the case on its merits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35778 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 23-08-2024
• Other Referred Cases: Commissioner of Income-tax (Central) Nagpur Vs. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.4om 407 (Bombay)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: S.R. RAO
• Keywords: Set aside; Business income; Opportunity of being heard
• Section: 144; 250; 69A; 246A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 392/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Aaqil Ahmed H. NO.3/37, Mungeli Naka, Nehru Nagar, Bilaspur-495 001 (C.G.) PAN: AACPQ5545Q .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(2), Bilaspur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri S.R. Rao, Advocate Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 01.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the ADDL/JCIT(A), Agra, dated 25.06.2024, which in turn arises from the order passed by the A.O under Sec. 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 14.12.2019 for the assessment year 2017- 18. The assessee has assailed the impugned order on the following grounds of appeal: “1. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income-tax (Appeals), NFAC has erred in deciding the appeal ex-parte without proper service of the notice as per provisions of the Act and without deciding any of the grounds of appeal raised in form 35 and without following the principles of natural justice and against the principles of law decided in the case of Commissioner of Income-tax (Central) Nagpur Vs. Premkumar Arjundas Luthra (HUF) [2016] 69 taxmann.4om 407 (Bombay). 2. In the facts and circumstances of the else and in law, learned Commissioner of Income Tax (Appeals), NFAC has erred in upholding order of learned Assessing Officer making addition of Rs.6,48,000/- as unexplained money u/s.69A of the Income-tax Act, 1961 and charging the same to higher rate of tax u/s.115BBE of the Act. 3. In the facts and circumstances of the case and in law, learned Commissioner of Income Tax (Appeals), NFAC has erred in upholding order of learned Assessing Officer making addition of Rs.7,76,773/- as income from commission being business income. 4. The impugned order is bad in law and on facts. 5. The appellant reserves the right to add, alter, omit all or any of the grounds of appeal with the permission of the Hon'ble appellate authority.” 3 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 2. Succinctly stated, the assessee had not filed his return of income for the year under consideration, i.e. A.Y.2017-18. As per information available on AIMS Module of ITBA, it was observed by the A.O that the assessee had during the demonetization period, i.e. 09.11.2016 to 30.12.2016 made cash deposits in his bank account no. 32202718902 with State Bank of India aggregating to Rs.12,88,000/- ,as under: Sl. No. Date of deposits Cash deposits 1. 10/11/2016 Rs.90,000/- 2. 11/11/2016 Rs.3,55,000/- 3. 15/11/2016 Rs.2,93,000/- 4. 03/12/2016 Rs.1,60,000/- 5. 09/12/2016 Rs.1,00,000/- 6. 14/12/2016 Rs.2,00,000/- 7. 15/12/2016 Rs.50,000/- 8. 17/12/2016 Rs.40,000/- Total Rs.12,88,000/- 3. The A.O, observing that the assessee had failed to explain to his satisfaction on the basis of irrefutable documentary evidence the source of the cash deposits of Rs. 6,48,000/- (out of Rs. 12,88,000/-) made during the demonetization period in his bank account, viz. (i). On 11.11.2016: Rs.3,55,000/-; and (ii). On 15.11.2016: Rs.2,93,000/-, thus made an 4 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 addition of the same u/s. 69A of the Act. Also, the A.O observed that during the subject year there were total credits of Rs. 3.10 crore (approx.) in the bank account of the assessee, as under:: Name of the bank Bank A/c. No. Total credits in the bank a/c. during the F.Y.2016-17 Total cash deposited during the financial year 2016-17 Cash deposited from 09/11/2016 to 30.12.2016 State Bank of India 32202718902 Rs.3,10,21,277/- Rs.1,13,97,464/- Rs.12,88,000/- The A.O after necessary deliberations estimated the gross commission of the assessee from the multi-facet services that were provided by him to his customers, viz. (i). paying online RTO tax; (ii). RTO work like driving license & registration of vehicles etc. at 10% of the total credits in the bank account during the subject year, i.e. Rs.31,02,128/- (10% of Rs.3,10,21,277/-), therein worked out the net commission at 25.04% of Rs.31,02,128/- i.e. Rs.7,76,773/- and made a consequential addition of the same. Accordingly, the A.O vide his order passed u/s. 144 of the Act, dated 14.12.2019 after, inter alia, making the aforesaid additions determined the income of the assessee at Rs.14,24,770/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee despite having been afforded sufficient opportunity had failed to participate in the proceedings 5 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 before the first appellate authority, therefore, the latter was constrained to dismiss the appeal vide an ex-parte order. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 7. As observed by me hereinabove, the CIT(Appeals) had though disposed off the appeal for non-prosecution, but while so doing had failed to apply his mind to the issues which did arise from the impugned order and were specifically assailed by the assessee before him. I am unable to persuade myself to accept the manner in which the appeal of the assessee has been disposed off by the CIT(Appeals). In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with 6 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s. 251(1)(a) and (b) and Explanation to Sec. 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.” 7 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 8. I, thus, not being able to persuade myself to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. Needless to say the CIT(Appeals) shall afford a reasonable opportunity of being heard to the assessee in the course of the de-novo appellate proceedings. The grounds of appeal raised by the assessee are disposed off in terms of the aforesaid observations. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024 SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // 8 Aaqil Ahmed Vs. ITO, Ward-1(2), Bilaspur ITA No. 392/RPR/2024 Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "