CHIRAG PATEL,VADODARA, GUJARAT V. INCOME TAX OFFICER (ITO),WARD -3(1)(1), VADODARA, GUJARAT

ITA 1846/AHD/2024

AI Insights

Chirag Patel appealed against the order of the Commissioner of Income Tax (Appeals) which had confirmed the addition of \\u20b912,07,183 to his income for the assessment year 2012-13. The addition was based on cash deposits of \\u20b912 lakhs in a savings bank account, which the assessee claimed was operated by an agent. The Tribunal dismissed the appeal due to the assessee's non-compliance and failure to provide a valid reason for the delay in filing the appeal. The Tribunal referenced several judicial precedents to support its decision, emphasizing the importance of compliance and the right of the Tribunal to dismiss cases for non-prosecution.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25819 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. B. N. Bhattacharjee, Sunderlal Mannalal Vs. Nandramdas Dwarkadas, Dr. P. Nalla Thampy Thera Vs. B.L. Shankar, New India Assurance Co. Ltd. vs. R. Srinivasan, Commissioner of Income-tax vs. Gold Leaf Capital Corporation Ltd., Adim Jati Seva Sahkari Samiti Maryadit v. ITO, Chiranji Lal Bairwa v. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V K MANGLA
• Keywords: Set aside; Capital asset; Sale consideration of property below Jantri Value; Principle of natural justice
• Section: 147; 148; 144; 142(1); 250; 205; 69A; 50C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1846/Ahd/2024 (Assessment Year: 2012-13) Chirag Patel, B-26, Chandan Park, Nr. Saivihar Society, Somatalav, Gujarat-390025 Vs. Income Tax Officer, Ward-3(1)(1), Vadodara [PAN No.AVGPP6413P] (Appellant) .. (Respondent) Appellant by : None Respondent by: Shri V K Mangla, Sr. DR Date of Hearing 16.12.2024 Date of Pronouncement 08.01.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-4, Mumbai vide order dated 04.01.2024 passed for A.Y. 2012-13. 2. The assessee has taken the following grounds of appeal:- “1. Condonation of Delay: The appellant submits that the delay in filing the appeal before the Commissioner of Income Tax (Appeals) was unintentional and caused by genuine hardships. The appellant, being unaware of the technicalities and requirements under tax law, relied on an agent to manage financial and tax-related matters, including the disputed bank account. Due to misleading guidance and lack of awareness, the appellant could not comply with the timelines for filing the appeal. It is respectfully submitted that the delay should be condoned in the interest of justice, as the appellant was not willfully negligent but genuinely lacked knowledge of procedural requirements. ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 2– 2. Unjustified Ex Partee Assessment under Section 144: The assessment under Section 144 was conducted without considering the genuine circumstances surrounding the appellant's financial status. The appellant was unemployed during the relevant financial year (2011-12) and had no independent source of income. The bank account in question was operated by an agent named Minesh Patel for the purpose of arranging the appellant's overseas travel. The appellant had executed a power of attorney authorizing the agent to manage the bank account and was unaware of the nature and extent of the transactions carried out. The addition made in the assessment order based on this account is therefore unjustified, as the transactions do not represent the appellant's income. 3. Non-Prosecution Dismissal by C1T(A): The Commissioner of Income Tax (Appeals) dismissed the appeal for non-prosecution without considering the merits of the case. Multiple notices under Section 250 were issued to the appellant, but due to the appellant's limited understanding of tax procedures and lack of proper legal assistance, there was a failure to respond. The appellant submits that the non-compliance was not deliberate but arose from circumstances beyond his control. The appellant requests that the matter be heard on merits to avoid a miscarriage of justice. 4. Violation of Principles of Natural Justice: The appellant submits that the dismissal of the appeal by CIT(A) without examining the merits constitutes a violation of the principles of natural justice. The appellant was not provided a fair opportunity to present the evidence and explain his case, particularly the role of the agent in operating the bank account. In judicial and quasi- judicial proceedings, a fair opportunity of hearing must be granted before any adverse decision is taken. The appellant requests that the Hon'ble ITAT provide an opportunity to present all relevant documents and evidence, including the power of attorney, bank statements, and any correspondence with the agent to substantiate his claims. 5. No Intention to Evade Tax: The appellant maintains that there was no intent to conceal income or evade taxes. The disputed transactions were carried out by an agent, and the appellant had not direct involvement in the financial activities. The appellant had acted in good faith, assuming that the agent would handle all related matters, including tax compliance. The appellant is willing to cooperate fully with the authorities to resolve the matter and requests that a fair evaluation of the facts be conducted.” 3. The brief facts of the case are that as per information available with the assessing officer, it was observed that during the year under consideration, the assessee had made cash deposits of ₹12 lakhs in his ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 3– savings bank account held with Union Bank of India. The assessing officer observed that the assessee had not filed return of income for the impugned assessment year. The case of the assessee was reopened under section 147 of the Act. Thereafter, various notices of hearing were issued to the assessee, but the assessee did not comply with the same. Accordingly, in view of the deliberate non-compliance by the assessee, the assessing officer, after recording the statement received from the Union Bank in response to notice issued under section 133 (6) of the Act, added a sum of ₹12,07,183/-being the credits appearing in the bank account of the assessee, as income of the assessee under section 69A of the Act. 4. In appeal, Ld. CIT(Appeals) issued as many as seven notices of hearing, the details of which are tabulated below, but the assessee again remained non-compliant. The tabular chart of notices issued by Ld. CIT(Appeals) is reproduced below for ready reference: Sr. No. Date of Issue Notice Compliance date Status Remarks 1. 19.07.2022 03.08.2022 Served No Reply 2. 11.10.2022 18.10.2022 Served No Reply 3. 29.11.2022 14.12.2022 Served No Reply 4. 25.01.2023 09.02.2023 Served No Reply 5. 01.03.2023 16.03.2023 Served No Reply 6. 01.09.2023 08.09.2023 Served No Reply 7. 29.11.2023 (Show Cause) 05.12.2023 Served No Reply 5. Accordingly, Ld. CIT(Appeals) dismissed the appeal of the assessee on account of non-appearance by the assessee. 6. Before us, none appeared on behalf of the assessee to represent the case and nor was any adjournment sought by the assessee. We observe that ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 4– the assessee has all throughout remained non-compliant at all stages of proceedings. 7. We observe that even before us, there is a delay of 232 days in filing of the present appeal. The assessee has given no cogent reason for this delay in filing of appeal before us and has simply stated that the delay was due to misleading guidance and lack of awareness, which caused the present delay in filing of appeal. Even when the matter was called out for hearing neither any application for adjournment was filed and none appeared on behalf of the assessee. Accordingly, we observe that even before us the assessee had continued to remain non-compliant and evasive. We are therefore, not inclined to condone the delay in filing of the present appeal, since the assessee has given a vague reasoning for the instant delay of 232 days in fling of the present appeal and has continued to remain non- cooperative even before us. 8. In the case of CIT vs. B. N. Bhattacharjee 118 ITR 461 (Supreme Court), Hon'ble Supreme Court observed as under: “Purposefully interpreted, preferring an appeal means more than formally filing it but effectively pursuing it” 9. In Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260, High Court observed as under: ''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 ...\" ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 5– 10. This statement of law was approved by the Supreme Court in Dr. P. Nalla Thampy Thera Vs. B.L. Shankar 1984 (Supp.) SCC 631. 11. In New India Assurance Co. Ltd. vs. R. Srinivasan (2000) 3 SCC 242, the Hon'ble Supreme Court observed at paragraph no. 18: \"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 who had instituted the proceedings. That is not the function of the court or, for that matter of a judicial or quasi-judicial body. In the absence of the complainant, therefore, the court will be will within its jurisdiction to dismiss the complaint for non-prosecution…'' 12. In the case of Commissioner of Income-tax vs. Gold Leaf Capital Corporation Ltd. [2012] 18 taxmann.com 166 (Delhi)/[2012] 205 Taxman 16 (Delhi) (Mag.)/[2013] 353 ITR 163 (Delhi)[02-09-2011]. Hon'ble High Court made the following important observations on the subject: “The perusal of the impugned order would show that after discussing the law on the subject, the Tribunal pointed out that the burden lay on the assessee to prove identity of the investors, genuineness of capital/share application money and the capacity of the investors to pay. The Tribunal also recorded that such a burden was not discharged by the assessee in spite of the fact that two innings were given to assessee and in both the innings, number of opportunities were given. [Para 10] When such conduct of the assessee was noted by the Tribunal itself, there was no occasion to give another opportunity to the assessee. Interestingly, the Tribunal was conscious of this fact, which is clear from the reading of the impugned order. The Tribunal noticed that there were two courses open to it. First course was to draw an adverse inference against the assessee and second course was to restore the matter back to the Assessing Officer. It chose second course only on the ground that the quantum of amount involved was high, that is hardly a ground or justification for restoring and giving premium to the assessee for its negligence. In fact, it is a clear case where adverse inference should have been drawn. When the Tribunal itself concluded that the assessee was non-cooperative, it can naturally be safely concluded that the assessee did not want to produce evidence as it would have ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 6– exposed that the transactions in question were not genuine and fraudulent. Therefore, there is a legal error committed by the Tribunal, as in a case like this, only one course of action is presumed, viz., to draw adverse inference.” 13. In the case of Adim Jati Seva Sahkari Samiti Maryadit v. ITO 159 taxmann.com 8 (Raipur - Trib.), the ITAT made the following observations: “19. Apropos, the claim of the Ld. A.R. that the matter in all fairness be restored to the file of the A.O. for fresh adjudication, the same does not favor us. As observed by us herein above, the grounds based on which the order of the CIT (Appeals) has been assailed before us are devoid and bereft of any merit; therefore, the appeal is liable to be dismissed on the said count itself. Apart from that, we are of a firm conviction that the right vested with an appellant to approach the tribunal by preferring an appeal before it is for a limited purpose, i.e. a grievance that the assessment framed by the AO, or for that matter, order of the CIT(Appeal) were not according to law. In no case can the Tribunal be taken as a forum for an appellant who, as per his volition, had either adopted an evasive or lackadaisical approach before the lower authorities and not participated in the assessment or appellate proceedings to come up with its case for the first time before the Tribunal and, as a matter of right seek restoring of the impugned order to the file of the lower authorities for fresh adjudication. 20. Considering the facts mentioned above, finding no infirmity in the view taken by the lower authorities who had rightly made/sustained the addition of 2,47,65,369/-, we uphold the same. 21. In the result, the assessee's appeal is dismissed in terms of our observations above.” 14. Again, in the case of Chiranji Lal Bairwa v. ITO in ITA No.404/JP/2023, the ITAT made the following observations, while dealing with a similar issue “5. Succinctly, the fact as culled out from the records is that notice u/s 148 was issued on 30.03.2017 after obtaining prior approval of Pr.CIT-3, Jaipur since there was an information with the Department that assessee had sold land vide Khasra No. 1091/954 during FY 2009-10 for Rs.5,00,000/- within the municipal limits of Jaipur city. The value of this land under section 50C of the IT Act, 1961 is Rs.8,36,375/-. Notice u/s 142(1) was issued on 11.08.2017 and served for compliance on 24.08.2017. There was no compliance by assessee to this notice u/s 142(1) and subsequent notices u/s 142(1) and final opportunity/show cause notice u/s 142(1) dated 11.09.2017 for compliance on 25.09.2017. Assessment u/s 147/144 was completed ex-parte on ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 7– 21.12.2017 at total income of Rs.8,31,375/-. Against this order, appeal was filed before Ld. CIT(Appeals)-3, Jaipur on 27.01.2018 who decided the appeal ex-parte on 19.12.2018 due to total non-compliance by assessee. Against this order assessee moved ITAT, Jaipur Bench, wherein the bench vide order in ITA No.206/JP/2019 dated 06.03.2020 set aside the issue to the file of ld. CIT(Appeals) for fresh adjudication. 6. Thus, the bench noted that the assessee was given the chance to represent the case before ld. CIT(A) and even though there were three notices given after set aside of the proceedings by the Bench to the assessee. Three instances of the notices are given in span of 10 months and the assessee did file any submission in support of the grounds raised in the appeal before the ld. CIT(A). Therefore, the ld. CIT(A) has passed a detailed order, mentioning the details of 3 notices issued to the assessee as reproduced here in below : …… Therefore, in support of the fact that the assessee remained noncompliant in the earlier round of litigation. One more chance was given by the Bench vide order dated 06.03.2020 on which the assessee in support of given three occasions did not appear and file the requisite submission before ld. CIT(A). Therefore, it appears that the assessee is not interested in pursuing his case on merits. Before us also while filing the appeal, the assessee did not file any document in support of the claim that why the addition of Rs. 8,31,375/- is not sustainable and it is sale of property and is capital assets and receipt thereof is not chargeable to tax in full. Based on these observations, the appeal of the assessee stands dismissed. In the result, the appeal of the assessee is dismissed.” 15. Accordingly, in view of the above judicial precedents and the fact that the assessee has all throughout remained evasive and non-compliant, we are of the considered view that Ld. CIT(Appeals) has correctly upheld the order of the Assessing Officer. Accordingly, we find no infirmity in the order of Ld. CIT(Appeals) so as to call for interference. 16. In the result, the appeal of the assessee is dismissed. This Order is pronounced in the Open Court on 08/01/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 08/01/2025 TANMAY, Sr. PS TRUE COPY ITA No. 1846/Ahd/2024 Chirag Patel vs. ITO Asst.Year –2012-13 - 8– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 06.01.2025 (Dictated over dragon software) 2. Date on which the typed draft is placed before the Dictating Member 06.01.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 06.01.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 08.01.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 08.01.2025 7. Date on which the file goes to the Bench Clerk 08.01.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "