AMIT KUMAR CHHABRIYA, RAIPUR,RAIPUR V. ACIT, CENTRAL CIRCLE-1, RAIPUR, RAIPUR

ITA 150/RPR/2025

AI Insights

The case involves Amit Kumar Chhabriya, who appealed against the order of the Commissioner of Income Tax (Appeals), Raipur-3, which sustained an addition of Rs.47,72,000 as unexplained money under section 69A of the Income Tax Act, 1961. The addition was initially made by the Assistant Commissioner of Income Tax, Central Circle-1, Raipur, following a search operation that uncovered substantial cash and incriminating documents linked to Chhabriya. The primary legal contention was whether the assessment for the year 2019-20 should have been conducted under section 153C, considering the procedural implications of a search conducted on another individual, Harshad Rawal. The tribunal noted the absence of a thorough examination of the merits due to the ex parte nature of the proceedings before the CIT(A) and decided to remand the case for a detailed re-examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 313998 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Other Referred Cases: Kishore Kumar vs. [2015] 273 CTR 468 Madras, Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 taxmann.com 696 (Bom.), Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Set aside; Opportunity of being heard; Income from undisclosed sources; Rule of consistency; Retraction; Principle of natural justice; Validity of assessment
• Section: 143(3)

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR Įी पाथ[ सारथी चौधरȣ, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 150/RPR/2025 (िनधाŊरण वषŊ Assessment Year: 2019-20) Amit Kumar Chhabriya, M/s Bhagwandas Bhojraj Main Road, Gudiyari Kirana Market, Raipur-492 001, Chhattisgarh V s Assistant Commissioner of Income Tax, Central Circle-1, Raipur PAN : AEJPC9572N (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : None (Adjournment Application) राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 05.05.2025 घोषणा की तारीख/Date of Pronouncement : 06.05.2025 आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeal), Raipur-3, [in short “Ld. CIT(A)”], passed on 14.01.2025, under section 250 of the Income Tax Act, 1961 (in short “the Act”) for the Assessment Year 2019-20, which in turn arises from the order of Assistant Commissioner of Income Tax, Central Circle-1, Raipur (in short “Ld. AR”), u/s 143(3) of the Act, dated 19.03.2022. 2 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur 2. The grounds of appeal raised by the assessee are as under: Gr. No. 1 “On the facts & circumstances of the case and in law, assessment made u/s 143(3) dt. 19-3-22 for AY 19-20 is invalid; as per first proviso to sec 153C, date of search shall be the date of receiving the documents/material by the AO of the assessee (i.e., the other person) from the AO of the searched person (i.e., Harshad Rawal); notice issued u/s 153C dt.7-10-20 for AY 13-14 to 18-19 shall be considered the date of search for the assessee (i.e., the other person); thus, AY 19-20 ought to have been assessed u/s 153C as per first proviso to sec 153A(1)(b); assessment made u/s143(3) for AY 19-20 is invalid, void-ab-initio and is liable to be quashed.” Gr.No. 2 “On the facts and circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.47,72,000 as unexplained money u/s 69A; while it belonged to firm M/s. Bhagwandas Bhojraj (wherein the assessee is partner) which is used for business transactions (i.e., purchase of goods) of the firm and recorded in the books of account of the firm; there is no relevance of the money of Rs.47,72,000 with the assessee-Indl in his personal capacity; addition is unjustified and is liable to be deleted.” Gr.No.3 “On the facts and circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.47,72,000 made u/s 69A as unexplained money, merely on presumption & surmises without bringing any material/ evidence on record for alleged addition in the hands of assessee-Indl in his personal capacity; where the assessee was not found to be owner of any money etc.; addition of Rs.47,72,000 made u/s 69A is unjustified and is liable to be deleted.” Gr.No.4 “The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing.” 3 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur 3. Brief facts of the case are that the assessee filed his Return of Income u/s 139(1) of the Act on 30.09.2020 for the relevant assessment year, declaring total income at Rs.14,09,000/-. Further, in the search case of Harshad Raval Group, cash of Rs.1,72,50,000/- was intercepted by the police and warrants were executed u/s 132A of the Act on 21.02.2019. During the search action, Harshad Kumar Raval and Sagar Desai were found to be in possession of various mobile phones, which were examined in detail & various images, photos, sms etc. stored in the mobile phones were seized in the form of loose paper. Incriminating documents related to the assessee were also found from the person searched. Therefore, in the light of such facts, the case was picked up for scrutiny u/s 153C of the Act, to protect the interest of revenue. In the assessment proceedings Ld. AO observed that assessee made a cash payment of Rs.47,72,000/- to Shri Firoz for purchase of Khansari, regarding this transaction certain information was sought by the Ld. AO from the assessee, but he was unable to explain the source of cash, therefore, he admitted amount of Rs.47,72,000/- as unaccounted income over and above his regular income declared by the assessee and addition was made to the income of the assessee. Later on, assessee retracted from the statements recorded u/s 131(1A) which is not accepted by the Ld. AO, therefore, after deliberation it is observed by the Ld. AO that the retraction cannot be accepted in absence of any corroborative evidence, thus, the sum of Rs.47,72,000/- falls 4 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur within the ambit of section 69A as unexplained money of the assessee and is liable to be taxed in accordance with provisions of section 115BBE of the Act. 4. Aggrieved with the aforesaid addition, the assessee preferred an appeal before the Ld. CIT(A), wherein the assessee remain absent in compliance to the notices of hearing and opportunities granted by the Ld. CIT(A). Accordingly, the appeal of assessee has been dismissed on exparte basis and the addition made by the Ld. AO was sustained with the following observations: During the appeal proceedings, no explanation has been furnished by the appellant at this stage on the findings and conclusion of the Ld. AO. In absence of any explanation & on the basis of facts gathered and discussed by the Ld. AO, considering entire facts in the assessment order. During the assessment proceedings, the assessee has submitted the replied that the purchase of Khansari had not materialized in real at all. While retracting from the statement given earlier, the assessee could not produce any corroborative evidence in support of his retraction. Further, in his concluding para of the statement recorded on oath, the assessee had agreed and also given his consent that the statement given by him is correct and has also put his signature. As per decision pronounced in the case of Kishore Kumar b. [(2015)] 273 CTR 468 Madras], it is held by the Hon'ble Supreme Court that \"where assessee himself stated about his undisclosed income in sworn statement recorded during search, addition could be made on the basis of admission without scrutinizing documents. SLP against the decision is dismissed by Hon'ble Supreme Court 5 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur as reported in [2015] 62 taxmann.com 215(SC).” Hence this retraction cannot be accepted in absence of any corroborative evidence. I find that La. AO is justified in assessing the total income of the appellant as discussed above. when repeated opportunity in this regard was provided clearly shows that the appellant is not interested in pursuing the appeal. In these circumstances, I have no option but to confirm the addition made by the Ld. AO and dismiss the grounds of appeal of the appellant. Respectfully, following the view taken in the case cited above, the appeal filed by the appellant deserves to be dismissed. Therefore, appeal on these grounds are dismissed, 5. Ground Na. 3:- This ground is general in nature and hence, no adjudication is required. 6. In the result, appeal is dismissed. 5. Being aggrieved with the aforesaid order of Ld. CIT(A), assessee preferred an appeal before us, which is under consideration for the present case. 6. At the very threshold of the hearing, it is noticed that the assessee had made request seeking adjournment of the case, however, on perusal of case records, it is observed that the appeal of assessee is dismissed in limine by the Ld. CIT(A), without adverting to the merits of the issues and material available on record, on exparte basis, only for the reason that the assessee 6 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur had put up any representation and have not furnished any submission before him. Accordingly, the request for adjournment submitted by the assessee has been rejected and the matter is taken up for hearing. Following the principle of consistency, as this Tribunal had adopted a consistent view in the cases, where the appeals are disposed of by the First Appellate Authority on exparte basis, one more opportunity is provided to the assessee and the matters are restored the matter back to the file of Ld. CIT(A) for fresh adjudication with proper deliberation on the merits of facts. Following the similar analogy flowing from the decision of this Tribunal in the case of Brajesh Singh Bhadoria Vs. Dy./ Asstt. Commissioner of Income Tax, Central Circle-2, in IT(SS) No. 1 to 6,8 & 9/RPR/2025 dated 20.03.2025, wherein it has been decided to restore the matter back to the file of Ld. CIT(A), the present matter deserves to be set aside to the file of Ld. CIT(A), for the sake of clarity the relevant observations in the case of Brajesh Singh Bhadoria (supra), are extracted hereunder: 7. We have considered the submissions of the parties herein and analyzed the facts and circumstances involved in all the captioned appeals. After careful perusal of the documents on record, we find that the assessee had assailed the legal ground as aforestated, however, the fact of the matter is that on perusal of the respective orders of the Ld. CIT(Appeals) for all the years before us, it is also evident from Para 3 that there has been no compliance by the assessee before the said authority and as such, an ex-parte order was passed for the concerned years in appeal. Admittedly, as per record, sufficient opportunities had been provided 7 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur to the assesse, however, there was no compliance by the assessee. In effect, rights and liabilities of the parties herein are yet to be adjudicated substantially at the level of the first appellate authority. Though in the impugned orders, discussion has been done as per material available on record by the Ld. CIT(Appeals) but they are only Form 35, statement of facts, grounds of appeal and the assessment order. However, due to non-compliance by the assessee, there are no submissions, evidence and documents submitted for adjudication by the assessee before the Ld. CIT(Appeals). That as per Para 3 of the Ld. CIT(Appeals) order, there has been no compliance on the part of the assessee for submitting detailed explanations regarding the grounds of appeal for the years under consideration which clearly shows that the grounds of appeal raised before the first appellate authority has not been substantiated on merits through corroborative evidence /submissions. 8. That in such scenario we are of the considered view that the Income tax Act is within the ambit of welfare legislation which are completely different from that of the penal legislation, therefore, benefit of doubt whenever arises, it has to be interpreted in favour of the assessee tax payer within the parameters of law and facts. There may be circumstances beyond control of the assessee because of which, the assessee may not have been able to represent his case on the given dates of hearing before the Ld. CIT(Appeals). Though it is correct that there was no compliance from the side of the assessee, however, nothing is there on record which suggests any deliberate non-compliance or malafide conduct of the assessee. That further, if one final opportunity is provided to the assessee to represent his case before the first appellate authority, the position of the revenue will also not be jeopardized. 9. Recently, the Hon’ble High Court of Bombay in the case of Vijay Shrinivasrao Kulkarni Vs. Income-tax Appellate Tribunal (2025) 171 8 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur taxmann.com 696 (Bom.), dated 04.02.2025 observed that in the case the Assessing Officer had passed an ex-parte order and when the matter went on appeal before the Ld. CIT(Appeals)/NFAC, it had also dismissed the matter ex- parte due to non-compliance by the assessee’s authorized representative, when the matter came up before the ITAT, it had failed to address the infirmity regarding the fact that the assessee was not afforded proper opportunity of being heard and the matter was dismissed ex-parte by the Ld. CIT(Appeals)/NFAC which amounted to violation of principles of natural justice, and instead ITAT decided the case on merits, in such circumstances, the Hon’ble High Court of Bombay held that passing of an order on merits by the ITAT even when the impugned order was passed ex-parte amounts to violation of principles of natural justice and accordingly, the said matter was remanded to ITAT for passing a fresh order in accordance with law after hearing the parties. The legal principle as enshrined in the present judgment is crystal clear that the principles of natural justice i.e. the right to be heard is to be provided and accordingly, the matter had to be substantially adjudicated by the appellate authority. Therefore, if the impugned order of the Ld. CIT(Appeals)/NFAC is an ex-parte order, the only recourse in conformity with the aforesaid judicial pronouncement is to remand the matter back to the file of the Ld. CIT(Appeals)/NFAC for fresh adjudication in terms with the principles of natural justice providing one final opportunity to the assessee. 10. In the aforesaid case, the Hon’ble High Court of Bombay had referred to a judgment of the Hon’ble Supreme Court in the case of Delhi Transport Corporation vs. DTC Mazdoor Union AIR 1999 SC 564, wherein the Supreme Court inter-alia held that Article 14 guarantees a right of hearing to a person who is adversely affected by an administrative order. The principle of audi-alteram partem is a part of Article 14 of the Constitution of India. In light of such decision, the petitioner ought to have been granted an opportunity of being heard which, 9 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur partakes the characteristic of the fundamental right under Article 14 of the Constitution of India. 11. The Hon’ble High Court of Bombay in the aforesaid case had referred to a decision of the Hon’ble Supreme Court in the case of Commissioner of Income Tax Madras v. Chenniyappa Mudiliar 1969 1 SCC 591, wherein the Supreme Court in interpreting the section 33(4) of the Income Tax Act, 1922 has held that the appellate tribunal was bound to give a proper decision on question of fact as well as law, which can only be done if the appeal is disposed off on merits and not dismissed owing to the absence of the appellant. Reverting to the facts of the present case the grounds of appeal were simply filed before the Ld.CIT(Appeals) they were not substantiated or corroborated through submissions and filing of documentary evidences since the assessee had not complied before the Ld.CIT(Appeals) on the dates of hearing. Therefore, as per framework of the Act there must be adjudication on merits by the first appellate authority and one final opportunity be provided to the assessee to represent his matter on merits in the interest of natural justice. 12. There may even be a situation where the Ld. Counsel for the assessee may assail a legal ground before the Tribunal following the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) with a contention that irrespective of the order of the Ld. CIT(Appeals) being ex-parte, the Tribunal may decide the legal issue that has been raised by the Ld. Counsel. In our view, the decision of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (supra) provides that any legal issue which goes to the root of the matter and is established through legal principles, the assessee can take up and raise such legal issue at any appellate forum irrespective of whether the assessee had raised 10 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur such legal issue at the sub-ordinate level or not, however, it always depends on facts and circumstances of each case whether the Tribunal would decide the legal ground or in a case where the question is of natural justice and ex-parte order by the Ld. CIT(Appeals) the Tribunal would remand it back to Ld. CIT(Appeals) providing final opportunity to a bonafide assessee. The Tribunal as the highest fact finding authority must be certain enough that the impugned order before it has been passed on merits and is a speaking order where the assessee has also complied during the process of litigation. In case, where the order of the Ld. CIT(Appeals) itself is ex-parte and some legal ground is raised and if the Tribunal decides such legal ground where in fact principles of natural justice is left unanswered due to the fact that the impugned order before the Tribunal is ex- parte and there was no compliance by the assessee in such scenario the Tribunal would also be usurping the power of the Ld. CIT(Appeals) which is also a statutory authority as per the Act. This is due to the reason that as per framework of the Act, Ld. CIT(Appeals) is the first appellate authority where an appeal by assessee it would be substantially decided through a speaking order by the Ld. CIT(Appeals). When this part is over and either party is aggrieved second appeal lies before the ITAT. Now if for every ex-parte order passed by the Ld. CIT(Appeals), of course due to non-compliance by the assessee, if the Tribunal adjudicates a legal ground, for instance validity of assessment or reassessment order and answers it in favour of the assessee then it would create an easy route for assessee getting redressal from Tribunal even without bothering to comply with hearing notices before the Ld. CIT(Appeals). This would dismantle the structure of the Act which is definitely not the intention of the legislature. Here in this situation, where the benefit of doubt is given to the assessee since he had not complied with the hearing notices before the Ld. CIT(Appeals) which resulted in passing of an ex-parte order by the Ld. CIT(Appeals), in such scenario, as per the scheme of the Act and following the principles of natural justice, the only course 11 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur of action is to remand the matter back to the file of the Ld. CIT(Appeals) for adjudication on merits providing one final opportunity to the assessee. 13. In view thereof, we set aside the respective orders of the Ld. CIT(Appeals) for all the years and remand the same to their file for denovo adjudication on merits. At the same time, we direct the assessee that this being the final opportunity, there must be compliance on merits before the first appellate authority. Needless to say, the Ld. CIT(Appeals) shall provide reasonable opportunity of being heard to the assessee and pass an order in terms of Section 250(4) and (6) of the Act within three months from receipt of this order. 7. In view of aforesaid facts and circumstances, respectfully following the aforesaid decision in the case of Brajesh Singh Bhadoria (supra), the matter is restored back to the file of Ld. CIT(A) for denovo adjudication, within a period of 3 months from the receipt of this order. 8. Needless to say, the assessee shall be afforded with reasonable opportunity of being heard in the set aside appellate proceedings. The assessee is also directed to cooperate and assist proactively in the set aside proceedings, failing which the Ld. CIT (A) would be at liberty to decide the case in accordance with the mandate of law. 9. In result, appeal of the assessee is allowed for statistical purposes, in terms of over aforesaid observations. 12 ITA No. 150/RPR/2025 Amit Kumar Chhabriya Vs ACIT, Central Circle-1, Raipur Order pronounced in the open court on 06/05/2025. Sd/- (PARTHA SARATHI CHAUDHURY) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 06/05/2025 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Amit Kumar Chhabriya, Raipur 2. ŮȑथŎ / The Respondent- ACIT, Central Circle-1, Raipur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // सȑािपत Ůित True copy // "