ABHAY KATAILIHA, BILASPUR,BILASPUR V. INCOME TAX OFFICER, WARD-1(1), BILASPUR, BILASPUR

ITA 346/RPR/2024

AI Insights

The case involves Abhay Kataliha Medical Complex, which appealed against the order of the CIT(Appeals) that upheld an addition of Rs.5,99,000 as unexplained cash deposit under section 69A of the Income Tax Act, 1961. The addition was initially made by the Assessing Officer during the assessment year 2017-18, citing that the cash deposits made during the demonetization period were unexplained. The assessee contended that these deposits were from legitimate business sales. The CIT(Appeals) dismissed the appeal due to non-participation of the assessee, who had opted out of email communications and allegedly did not receive hard copies of notices. The tribunal, considering the circumstances, restored the matter to the CIT(Appeals) for a fresh hearing.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35808 (ITAT-RAIPUR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 21-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 29-07-2024
• Other Referred Cases: National Thermal Power Company Ltd. Vs. CIT, Dev Dutt vs. Union of India, CIT vs. B.N. Bhattacharya, M/s Chemipol vs. Union of India, Nandramdas Dwarkadas vs. State, Dr. P. Nalla Thampy Vs. Shankar, New India Assurance vs. Srinivasan
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAL AGRAWAL
• Assessee Lawyers: VEEKAAS S SHARMA
• Keywords: Set aside; Opportunity of being heard; Question of law; Corroborative evidences; Principle of natural justice; Audi alteram partem
• Section: 250; 133(6); 69A; 145(3)

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.346/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Abhay Kataliha Medical Complex Telipara, Bilaspur (C.G.)-495 001 PAN: DFMPK7495P .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(1), Bilaspur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Veekaas S Sharma, CA Revenue by : Shri Mohal Agrawal, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 21.11.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 25.11.2024 2 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/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)-5, Delhi, dated 30.05.2024, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 21.11.2019 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: “1. The learned Assessing Officer (AO) erred in making an addition of Rs.5,99,000 under section 69A of the Income Tax Act, 1961, as unexplained cash deposit, which was made during the period of demonetization (November 2016 to December 2016). The addition was made without properly considering the legitimate source of the cash deposit. 2. The AO failed to acknowledge that the cash deposit of Rs.5,99,000 was sourced from sales of goods conducted during the demonetization period. The appellant's business is engaged in wholesale trading of the medicine and the cash was legitimately received from customers as per the normal course of business operations. 3. The AO disregarded the evidence provided by the appellant to substantiate the cash deposit, including sale invoices and transaction records, which clearly show that the deposit was out of legitimate business sales. The appellant bad submitted these documents during the assessment proceedings but they were not considered properly. 4. The AO did not take into account the fact that during the demonetization period, businesses faced significant challenges and disruptions in banking operations. Many transactions were conducted in cash, and the appellant had complied with all the statutory requirements related to reporting and maintaining records. The appellant had also filed the returns and maintained books of accounts as required under law. 3 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 5. The CIT(A) upheld the addition without addressing the factual inaccuracies and the evidence submitted by the appellant. The CIT(A) did not provide a reasoned order addressing the merits of the appellant's submissions and the documentary evidence provided. 6. The addition made is arbitrary and unjustified, as it ignores the principles of natural justice and the proper examination of the appellant's evidence. The appellant had provided sufficient documentation to prove that the cash deposit was from legitimate business transactions, and the addition made is contrary to established legal principles and facts on record. 7. The learned CIT(A) failed to follow the precedent set by various judicial decisions where similar cases involving cash deposits during demonetization were held to be genuine if supported by adequate documentation and proof. The appellant's case falls squarely within these precedents and deserves similar treatment. 8. In light of the above facts and legal provisions, the addition of Rs.5,99,000 made under section 69A is incorrect and should be deleted. The appellant prays for relief from this addition and requests that the order of the CIT(A) be set aside. 9. That the dealer craves leave to add, amend, alter and delete any grounds of appeal during the hearing.” Also, the assessee has raised additional grounds of appeal which reads as under: “Additional Ground of Appeal No.1: \"On the facts and in the circumstances of the case, the Learned A.O has erred on facts and in law in making addition of Rs.5,99,000/- by invoking Section 69A in respect of transaction which is duly recorded in the books of accounts on account of cash deposit in the bank account undisputedly and admittedly out of sale proceeds of medicines in the regular course of business on several grounds, more particularly, when the books of accounts have been duly accepted and not rejected u/s 145(3) of the Income Tax Act, 1961, hence, the addition is liable to be deleted. It is prayed that the addition may kindly be deleted as the books of accounts stands accepted and transaction is duly recorded being sale proceeds of goods.\" 4 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 Additional Ground of Appeal No. 2: \"On the facts and in the circumstances of the case,; the order passed by the Learned CIT (Appeal), NFAC is unsustainable and liable to be set aside as the same is an unreasoned ex-parte order without going to the merits of the case and owing to violation of principles of natural justice inasmuch as no hard copy of the notices u/s 250 were served on the assessee despite assessee having opted out of communication of notices through e-mail which resulted into non-deliberate noncompliance to notices u/s 250: consequently, the order passed by the Learned CIT (Appeal) is liable to be set aside as no proper opportunity of being heard was afforded. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be set aside\" As the assessee by raising the aforesaid additional grounds of appeal has sought our indulgence for adjudication of a legal issue which involves purely a question of law, and would not require looking any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. My aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 2. Succinctly stated, the assessee had filed his return of income for A.Y.2017-18, on 31.03.2018 declaring an income of Rs.3,66,190/-. The return of income filed by the assessee was processed u/s.143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 5 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 3. Assessment was thereafter completed by the A.O vide his order passed u/s.143(3) of the Act, dated 21.11.2019, wherein after making an addition of Rs.5,99,000/- u/s. 69A of the Act, the income of the assessee was determined at Rs.9,65,190/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee despite having been afforded five opportunities, viz. on 11.01.2021, 29.08.2023, 28.02.2024, 11.03.2024 and 12.04.2024 had failed to participate in the proceedings before the first appellate authority, therefore, the latter was constrained to proceed with the matter and dismissed the appeal. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under: “Determination and Decision 5. In this case, the appellant has not effectively pursued the appellate proceedings, rather not pursued his case at all, despite the service of notices as mentioned in para 3 above. Notices as mentioned above were sent, but there was no response from the appellant. 5.1 Finally a notice dated 04.04.2024 was sent to the appellant requiring compliance on 12.04.2024 whereby it was specifically stated that a final opportunity is given to furnish to the appellant to file written submission /evidence & proof in support of his contention on or before the scheduled date as mentioned in the said notice, failing which it shall be presumed that the appellant has no explanation to offer/no proof or evidence in support of his contention, and appeal would be decided accordingly. 5.2 All the notices were delivered. The same is evidenced from the details available on the e-filing portal. There was no response whatsoever not even with the purpose to seek an adjournment. 6 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 6. In this regard, reliance is placed in the case of Dev Dutt vs. Union of India and others reported in (2008) 8 SCC 725, the Hon'ble Supreme Court held asunder: \"Natural justice are not codified nor are they unvarying in all situations, rather they are flexible. It has to be adhered from both ends i.e. from the assessee as well as from the authority. They may, however, be summarized in one word : `fairness'. In other words, what they require is fairness by the authority concerned. Of course, what is fair would depend on the situation and the context. Lord Eher M.R. in Voinet vs. Barrett (1885) 55 L.J. QB 39, observed: \"Natural justice is the natural sense of what is right and wrong.\" In this context, we may refer to observations of the Hon'ble justice Krishna lyer J.,..... opportunity should be real and not ritualistic, effective and not illusory and must be followed by a fair consideration of the explanation offered and the materials available, culminating in an order which discloses reasons for the decision sufficient to show that the mind of the authority has been applied relevantly and rationally and without reliance on facts not furnished to the affected party. Natural justice, must warn, cannot be perverted into anything unnatural or unjust cannot therefore be treated as a set of dogmatic prescriptions applicable without reference to the circumstances of the case. The question merely is, in all conscience have you been fair in dealing with' that man? if you have been not arbitrary, not absent-minded; not unreasonable or not unspeaking, you cannot deny that there has been no 'natural justice' breached, rather fullest natural justice has been followed but it is the person who has not availed any chances for the reasons best known to him.\" 6.1 From non-compliance on the part of the appellant to various statutory notices issued from time to time, it is evident that appellant is persistently intransigent in not complying. The appellant has failed to display any action that can lead to believe that appellant would co-operate in the Proceedings. In these circumstances, it is to believe that the appellant is not interested in pursuing his own case. Appellant has failed to discharge the primary onus cast upon him to furnish the details required to complete the proceedings in the case. There. is a well-known dictum of law Vigilantibus Non Dormientibus Jura Subveniunt which means that the law assists only-those who are vigilant and not those who are careless of their right. To claim one's right, he must be watchful of his right. Only those persons, who are watchful and careful of using his rights, are entitled to 7 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 benefits of law. Law confers rights on persons who are vigilant of their rights. The appellant has failed to discharge his duty and has scant regard for due process of law. 6.2 It is further important to delve into the judicial pronouncements on this issue which are elaborated below: In the case of CIT vs. B.N. Bhattacharya reported at 118 ITR 461 it was held that appeal does not mean merely filing of appeal but effectively pursuing it.\" The decision of the Hon'ble High Court of Mumbai in the case of M/s Chemipol v/s. Union of India {Central Excise Appeal No.62 of 2009) clearly states, that every court judicial body or authority, which has a duty to decide a matter between two parties, inherently possesses the power to dismiss the case in default. For the sake of reference, the relevant extract of the judicial pronouncement rendered by the Hon'ble High Court of Mumbai quoting decision of Hon'ble Supreme Court in the case of Nandramdas Dwarkadas AIR 1958 MP 260. is reproduced below: \"Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses.\" 6.3 The principle that every court that is to decide on a matter of dispute, inherently possesses the power to dismiss the case for default, has been upheld by the Hon'ble Supreme Court in case of Dr. P. Nalla Thampy Vs. Shankar (1984 (Supp) SCC 63 and the case of New India Assurance vs. Srinivasan (2000) 3 SCC 242. In the latter case, the Apex Court has held as under:-\"That every court or judicial body- or authority, which has a duty to decide a list between two parties, inherently possesses the power to dismiss a case in default. Where a case is called up for hearing and the party is not present, the court or the judicial or quasi judicial body is under no obligation to keep the matter pending before it or to pursue the matter on behalf of the complainant, therefore, the court will be will without its jurisdiction to dismiss the complaint for non prosecution. So also, it would have the inherent power and jurisdiction to restore the complaint on good cause being shown for the non appearance of the complainant.\" 8 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 7. The facts of the case as noted above are that the appellant has not perused the appeal despite being granted opportunities as elaborated in para 5 above. details, documents or submissions have been provided to come to a conclusion other than those arrived at by the assessing officer in the assessment order. During the appellate proceedings the appellant was give opportunities to put forth his case, but he did not upload any response despite service of notice(s). The appeal is being decided on the basis of material available on record. DECISION 7.1 The only effective ground in this appeal is w.r.t addition of Rs.5,99,000/- on account of unexplained cash deposits made by the appellant during the year under consideration. In this regard, it is reiterated that during the course of assessment proceedings, it was noticed that the appellant was engaged in the business of wholesale trading of medicine. Information u/s 133(6) of the Act was collected from the respective bank. On perusal of the bank account statement it was noticed that the appellant had deposited cash to the tune of Rs.98,88,000/- in his bank accounts maintained with Canara Bank. Out of the total cash deposits of Rs.98,88,000/-, an amount of Rs.13,57,000/- was deposited during demonetization period. During assessment proceedings, the .appellant was asked to provide the nature and sources of these cash deposits. In response,- the 'appellant stated that these cash deposits were made put of the sale proceeds of -business. Therefore, after making detailed analysis of the sales made vis-a-vis the material available on record, it was construed that the appellant was unable to provide any valid documentary evidence to support his contention that amount to the extent of Rs.5,99,000/- was made out of the sale proceeds. Furthermore, during appeal proceedings too, the appellant has not furnished any supporting evidence as the appellant has stayed non-responsive despite repeat opportunities. Hence, I find no reason to interfere with the order of AO. The ground of appellant is dismissed. 8. In the result, the appeal is dismissed.” 9 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 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. Shri Veekaas S Sharma, Ld. Authorized Representative (for short ‘AR’), submitted that the failure on the part of the assessee to participate in the proceedings before the CIT(Appeals) had occasioned for no fault on his part. Elaborating on his contention, the Ld. AR submitted that the assessee appellant in memorandum of appeal filed before the CIT(Appeals) i.e. in “Form 35”, had specifically opted out of service of notices /communications from his office through email. The Ld. AR in order to buttress his aforesaid contention had drawn my attention to “Form 35”. The Ld. AR had also filed an “affidavit” dated 20.11.2024 wherein it is stated by the assessee that no hard copy of notices was ever served upon him. For the sake of clarity, the contents of the “affidavit” dated 20.11.2024 are culled out as under: 10 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 11 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 Carrying his contention further, the Ld. AR submitted that as the assessee had remained divested of an opportunity to put up an appearance before the CIT(Appeals), therefore, he could not demonstrate his case on merits before the CIT(Appeals). The Ld. AR further submitted that in case the assessee would have been validly put to notice about the fixation of the appeal, then he would have come forth before the CIT(Appeals) with an explanation as regards the impugned addition of Rs.5,99,000/- that was made by the A.O u/s.69A of the Act. It was submitted by the Ld. AR that in the totality of the facts involved in the present case the matter in all fairness be restored to the file of the CIT(Appeals) for fresh adjudication after affording a reasonable opportunity of being heard to the assessee appellant. 12 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 8. Per contra, the Ld. DR relied on the orders of the lower authorities. 9. I have thoughtfully considered the contentions advanced by the Ld. Authorized Representatives of both the parties in the backdrop of the orders of the lower authorities. Admittedly, it is a matter of fact borne from record that the assessee in the memorandum of appeal i.e. in “Form 35” had specifically opted out of service of notices /communications from the office of the CIT(Appeals) through email. For the sake of clarity, the relevant extract of the “Form-35” is culled out as under: However, I find that despite the fact that the assessee had opted to received notices/communications from the office of the CIT(Appeals) in a mode otherwise then through email but on no occasion any physical/hard copy of any notice intimating the fixation of the appeal on either of the five occasions i.e. on 11.01.2021, 29.08.2023, 28.02.2024, 11.03.2024 and 12.04.2024 was ever served upon him. Considering the aforesaid facts, I find substance in the Ld. AR’s contention that the assessee for no fault on his part had remained divested of an opportunity to participate in the 13 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 proceedings before the CIT(Appeals) and defend his case on merits qua the addition of Rs.5,99,000/-that was made by the A.O u/s. 69A of the Act. 10. I am of the view that as the assessee had for no fault on his part remained divested of an opportunity to participate in the appellate proceedings before the CIT(Appeals), and thus, defend his case, which is in violation of principles of natural justice i.e. audi alteram partem, therefore, the matter in all fairness requires to be restored to the file of the CIT(Appeals) for fresh adjudication after affording a reasonable opportunity of being heard to the assessee. As the matter is restored to the file of the CIT(Appeals), therefore, the assessee is directed to participate in the set- aside proceedings. Thus, the additional grounds of appeal No.2 is allowed for statistical purposes in terms of the aforesaid observations. 11. As I have restored the matter to the file of the CIT(Appeals) for fresh adjudication, therefore, I refrain from adverting to the merits of the case as had been assailed by the assessee before me vide Grounds of appeal No.1 to 8 a/w. additional ground of appeal No.1, which, thus, are left open. 14 Abhay Kataliha Vs. ITO, Ward-1(1), Bilaspur ITA No. 346/RPR/2024 12. In the result, appeal of the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 25th day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 25th November, 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 // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "