ARCHANA,PATNA V. ITO, WARD- 4 (1), PATNA

ITA 338/PAT/2023

AI Insights

The case involves an appeal by Archana against the order of the Commissioner of Income Tax (Appeals) which confirmed the reassessment made by the Assessing Officer under sections 147, 144, and 144B of the Income Tax Act, 1961 for the Assessment Year 2013-14. The reassessment was based on information from the DDIT(Inv), Patna, leading to the addition of Rs. 36,33,868 to Archana's income, which was alleged to be unexplained money under section 69A of the Act. The CIT(A) dismissed the appeal primarily due to the assessee's non-compliance and failure to provide satisfactory explanations or evidence regarding the source of the deposits. The ITAT found procedural flaws in the CIT(A)'s decision-making process, particularly the dismissal of the appeal without a substantive examination of the grounds raised.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 46666 (ITAT-PATNA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Other Referred Cases: Ajji Basha Vs. CIT, Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Opportunity of being heard; Principle of natural justice; Competent authority
• Section: 147; 148; 144; 143(2); 250; 251; 133(6); 69A; 234B; 246A

Judgement Text

"आयकर अपीलीय अधिकरण पटना पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH AT KOLKATA [वर्चुअल कोटु] [Virtual Court] श्री संजय शर्मा, न्यमययक सदस्य एवं श्री राक ेश ममश्रा, लेखा सदस्य क े समक्ष Before Shri SONJOY SARMA, JUDICIAL MEMBER & Shri RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 338/PAT/2023 Assessment Year: 2013-14 Archana Vs. ITO, Ward-4(1), Patna (Appellant) (Respondent) PAN: AFYPA0862P Appearances: Assessee represented by :None. Department represented by:Sh. Ajay Kr. Shukla, JCIT (Sr. DR). Date of concluding the hearing: December 18th, 2024 Date of pronouncing the order : January 7th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2013-14 dated I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 2 of 9 06.10.2023, which has been passed against the assessment order u/s 147/144/144B of the Act, dated 29.03.2022. None appeared on behalf of the assessee and the appeal was heard with the assistance of the ld. Sr. DR. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “1.1 For that in the facts and circumstances of the case the learned CIT(A) has erred in confirming the order as passed by learned Assessing Officer u/s 147 rws 144 rws 144B of the Act. The reassessment proceeding u/s 147 of the I. T. Act, 1961 is without properly appreciating / considering that no valid material has been brought on record for reassessment proceeding on which the department recorded the reasons for issuance of notice for reassessment for the Assessment Year in question. There was no application of mind much less judicial mind for arriving at the conclusion that the income of the assessee has escaped assessment. The learned Assessing Officer has not examined the case other than the angle of Assessing Officer. The reassessment proceeding has been initiated at the instance of superior which is not valid in the eyes of law. The reassessment proceeding has been initiated for making roving and fishing enquiry. The order of assessment as sustained u/s 147 rws 144 rws 144B is arbitrary, unjustified, without jurisdiction, void ab-initio, bad in law, vitiated in law and invalid. The order as passed u/s 147 is fit to be quashed / cancel / annulled. 1.2 For that the order of the assessment has been completed without service of notice u/s 143(2). The assessee duly filed her return of income showing total income of Rs. 2,01,350/- on 31.03.2014. The order of assessment as passed is without service of notice u/s 143(2) is arbitrary and bad in law. The order of assessment as passed is fit to be cancelled / annulled. 2. For that in the facts and circumstances of the case the learned CIT(A) is not justified in passing the ex-parte order. The assessee has duly made the submission by way of statement of facts and grounds of appeal. Further, the Assessing Officer has also erred in passing the order u/s 144 of the Act. There has been due compliance with the departmental notices from time to time as evident from the record. The order as passed by lower authorities being ex-parte order is arbitrary, unjustified, void ab-initio and bad in law. The order of assessment as passed is fit to be annulled. 3. For that in the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 36,33,868/- as made by the Assessing Officer u/s 69A of the Act on account of alleged unexplained money. There is no I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 3 of 9 unexplained money. The provisions of section 69A is not applicable in as much as all the deposits in bank accounts either cash or transfer entry are in respect of business transactions. In the return of income the assessee has shown Rs. 2,39,500/- as net profit from business on the gross turnover of Rs. 29,93,750/-. The business activity is duly established in this case. The learned CIT(A) has not examined the case other than the angle of the Assessing Officer and the case law relied upon is not applicable and distinguishable. The addition of Rs. 36,36,868/- is arbitrary, unjustified, void ab-initio, bad in law and vitiated in law. The addition as sustained is fit to be deleted. 4. For that in the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of Rs. 36,33,868/- as made by the Assessing Officer as alleged total unexplained money u/s 69A of the Act; instead of applying net profit rate. The debits in bank accounts are against the purchases made which are evident from bank account itself. The difference, if any are explained and the entire difference could not be added as income. The deposits in bank accounts are in respect of business activity. The learned CIT(A) has not examined the case other than the angle of the Assessing Officer. The addition of Rs. 36,36,868/- as sustained is arbitrary, unjustified, void ab-initio, bad in law and vitiated in law. The addition as sustained is fit to be modified / deleted / set-aside. 5. For that the learned CIT(A) has failed to adjudicate following grounds in proper perspective:- (a) For that in the facts and circumstances of the case, the learned Assessing Officer is not justified in not allowing the bona fide and legitimate claim of deduction under Chapter VIA The deduction as claimed in ITR is fit to be allowed. (b) For that in the facts and circumstances of the case, the charge of interest u/s 234A at Rs. 1,04,247/- and 234B at Rs. 10,23,516/- is arbitrary, unjust and bad in law. The interest may be quantified in view of jurisdictional High Court decisions. The interest as charged / quantified is fit to be deleted / modified. 6. For that the appellant reserves her right to file detailed submission at the time of hearing. 7. For that the appellant craves leave to urge, add or alter any other ground or grounds at the time of hearing.” 3. The brief facts of the case of the assessee are that the assessee originally filed a return of income for the Assessment Year in question on 31.03.2014, declaring a total income of Rs. 2,01,350/-. The case was reopened under section 147 on the basis of information received from the DDIT(Inv), Patna and the notice under section 148 of the Act was I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 4 of 9 issued after obtaining due approval from the competent authority. The Assessing Officer added Rs. 36,33,868/- to the assessee's income based on total credits in the three bank accounts, invoking section 69A of the Act. The assessee contends that these deposits are related to business transactions and should not be treated as unexplained income. The assessee claims to be maintaining business records showing that all bank transactions are part of the business turnover and argues that only the profit margin should be considered for taxation, not the entire deposits. Additionally, the assessee has disputed the observation by the DDIT(Inv), Patna, that no turnover was disclosed, clarifying that a net profit of Rs. 2,39,500/- was shown against a gross turnover of Rs. 29,93,750/-. The assessee also claims that the Assessing Officer did not allow legitimate deductions under Chapter VIA. Aggrieved with the assessment order, the assessee preferred an appeal before the Ld. CIT(A), who vide order dated 06.10.2023 dismissed the appeal after observing as follows: “5.3 It is worth mentioning that the appellant has been habitually non-compliant. Even in the present appellate proceedings, he has remained non-compliant. Even in the present appellate proceedings, despite the service of notices on the mail id given by the appellant himself in Form 35, while filing this appeal and also having confirmed that the notices/communication may be sent on this email, the appellant has remained non-compliant and has not filed even a letter seeking an adjournment. 5.4 Due to the non-compliant attitude of the appellant, the appeal has to be decided on merits and facts available on record. I have carefully perused the grounds of appeal, statement of facts and the assessment order to look for any fact which may be helpful in furthering the cause of the appellant, but could not find any. The A.O. had made the addition specifically because the appellant failed to give any satisfactory explanation regarding the source of cash deposit, despite being provided with reasonable opportunity. Even during the present appellate proceedings, the appellant failed to give any submission/evidence whatsoever and chose to remain non-compliant. The facts stated in the grounds of appeal are very cryptic, vague and general in nature and do not come to rescue of appellant. The appellant in the Grounds of Appeal claimed that there has been I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 5 of 9 a recycle of cash deposits in bank accounts, but failed to provide any evidence in this regard. The appellant has not provided even a primary and basic evidence about her running any kind of business. Thus, the appellant has not discharged the primary onus of explaining his case. The appellant has not produced any material to controvert the finding of A.O. on merits. Further, from the above conduct of the appellant, it is clear that the appellant is not interested in pursuing his appeal. In the event, I have no reason to interfere with the findings of the AO. In view of these facts, I am of the opinion that no interference is called for in the AO’s assessment order and therefore, the grounds of appeal are dismissed.” 4. We have heard rival contentions and the record and the submissions made were examined. We find that the ld. CIT(A) has passed an ex-parte order. He has not disposed of the appeal on merits. Such dismissal for non-prosecution is not permissible in law. 5. We also note that while the Ld. CIT(A) has discussed non- compliance on the part of the assessee as the notices sent by e-mail were not complied with but has not decided the appeals on merits. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.” 5.1. In this respect, we note that Section 250(6) casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and a decision as well as the reason for arriving at such decision. In the present case before us, though the assessee had made no compliance to the three notices issued before the Ld. CIT(A) but the Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. Although in the appeal before us, the assessee has raised 7 grounds of appeal, however, some of them are mere statement of facts. Before the Ld. AO, the assessee contended that the I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 6 of 9 cash deposits were made out of the business receipts and were received from parties being Arena Food & Agro, Kisan Agro Enterprises and Ashok Kumar for A.Y. 2013-14, however, the same was added by the Ld. AO as no compliance was made by these parties to the notices issued under section 133(6) of the Act. Even the ground relating to the deductions claimed under Chapter VI-A was not adjudicated upon by the Ld. CIT(A). We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. The relevant extract from the order is as under: “6. … The first respondent is the appellate authority. Needless to state that the Appellate Authority is also a fact finding authority and therefore, he has to consider the order of assessment on the grounds raised in the appeal and thereafter, pass a speaking order on merits and in accordance with law by giving his own reasons and findings as to whether the order of assessment can be sustained or not. In other words, the order passed by the Appellate Authority should explicitly exhibit his application of mind to the facts and circumstances and the objections raised in the grounds of appeal, also by expressing his reasons and findings in support of his conclusion. 7. In this case, the Appellate Authority, after extracting the order of the Assessing Officer in full, has not given any other reason or finding to dismiss the appeal except by stating that he is of the considered view that the Assessing Officer's order is a self speaking order and does not call for any interference. In my considered view, such single line finding of the Appellate Authority, cannot be sustained as a proper exercise of the Appellate Authority, while disposing the appeal. Therefore, it is apparent that the order impugned in this writ petition is an outcome of total non-application of mind. Consequently, the impugned order cannot be sustained. It is further contended that before passing the order, the petitioner was not heard.” 5.2. It has also been held in the case of Commissioner of Income-tax (Central) Nagpur v. Premkumar Arjundas Luthra (HUF) [2016] 69 I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 7 of 9 taxmann.com 407 (Bombay) that the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act. The relevant extract is as under: “7. An appeal is filed with the CIT(A) from appealable orders listed in Section 246A of the Act. We find that the procedure in appeal before the CIT(A) and the powers of the CIT(A) are governed by Sections 250 and 251 of the Act respectively. The relevant provisions for consideration are as under:— 'Procedure in appeal 250 (1) . . . . . . . . . . . . . (2) . . . . . . . . . . . . . . . . . (3) . . . . . . . . . . . . . . . . . . (4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). (5) . . . . . . . . . . . . . . . . . . (6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision. (6A) . . . . . . . . . . . . . . . . . . (7) . . . . . . . . . . . . . . . . . . Powers of the Commissioner (Appeals) \"Section 251(1) In disposing of an appeal, the Commissioner (Appeals) shall have the following powers — (a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment. (aa) . . . . . . . . . . . . . . . . . . (b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty.\" (c) . . . . . . . . . . . . . . . . . . I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 8 of 9 (2) The Commissioner (Appeals) shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction. Explanation. - In disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.' 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 Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 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. Section 251(1)(a) and (b) 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-section (2) of Section 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 Section 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 with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer 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 Section 251(1)(a) and (b) and Explanation to Section 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.” 6. The Ld. AR requested that in the interest of justice, the matter may be set aside to the Ld. CIT(A). The Ld. DR did not oppose this request. Accordingly, considering the principles of natural justice which I.T.A. No.338/PAT/2023, AY: 2013-14 Archana. Page 9 of 9 require that the appellant should be heard, we deem it appropriate in the interest of justice and fair play to set-aside the order of the Ld. CIT(A) and remit the matter back to him for disposal of the appeal afresh on the grounds taken by the assessee on merits, after hearing the assessee and thereafter by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission and furnish evidence he wants to submit in support of the grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in her appeal are allowed for statistical purposes. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 7th January, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 07.01.2025 Bidhan (P.S.) Copy of the order forwarded to: 1. Archana, Near Old Arvind Mahila College, Akhtiyarpur House, Kadamkuan, Patna, Bihar, 800003. 2. ITO, Ward-4(1), Patna. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Patna Bench, Patna. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "