DARSHANBHAI ARVINDBHAI DESAI,NAVSARI V. INCOME TAX OFFICER , WARD 2, NAVSARI

ITA 690/SRT/2024

AI Insights

The case involves Darshanbhai Arvindbhai Desai, the appellant, who appealed against the order of the CIT(A) confirming the additions made by the AO under sections 69A and 143(3) r.w.s. 147 of the Income-tax Act, 1961, for the assessment year 2014-15. The AO had reopened the case and made additions to the assessee's income based on unexplained cash deposits and investments, which the CIT(A) upheld. The Tribunal found that while the assessee had been non-cooperative, the principles of natural justice necessitated another opportunity for the assessee to present his case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26783 (ITAT-SURAT)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 29-10-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 20-06-2024
• Other Referred Cases: K. Chinnathamban, 162 Taxman 459 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: RASESH SHAH
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 147; 148; 143(3); 142(1); 250; 271(1)(c); 69A; 139

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.690/SRT/2024 Assessment Year: (2014-15) (Physical Hearing) Darshanbhai Arvindbhai Desai, 104, Sanjay Farm, Khergam Chikhli Road, Chikhli, Navsari - 396521 Vs. The ITO, Ward – 2, Navsari èथायीलेखासं./जीआइआरसं./PAN/GIR No: AHSPD4515A (Appellant) (Respondent) Appellant by Shri Rasesh Shah, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 29/10/2024 Date of Pronouncement 11/11/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 22.04.2024 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2014-15. 2. The grounds of appeal raised by the assessee are as under: “1. On the fact and in circumstances of the case as well as law on the subject, the learned CIT (A) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in reopening the case of the assessee u/s. 147 of the Act by issuing notice u/s. 148 of the Act without passing speaking order. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making 2 ITA No.690/SRT/2024/AY.2014-15 Darshanbhai Arvindbhai Desai the addition of Rs.1,05,26,346/- u/s. 69A of the I.T. Act on account of alleged unexplained money being cash deposits and other credits made in bank account without passing speaking order. 4. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making the addition of Rs.30,16,314/- u/s.69/69A on account of alleged unexplained investment without passing speaking order. 5. It is therefore prayed that the matter may please be set aside to the file of CIT(A) for fresh adjudication or the assessment framed u/s. 143(3) r.w.s. 147 of the I.T. Act may please be quashed and/or above additions made by the assessing officer and confirmed by the CIT(A) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.” 3. Brief facts of the case are that the assessee had not filed his original return of income for AY.2014-15. As per ITS data, the assessee deposited substantial amount of cash in his savings bank account. The Assessing Officer (in short, ‘AO’) issued a letter on 01.03.2019 to verify the cash deposited in the bank account. The assessee did not submit any reply. Thereafter, the case of the assessee was reopened u/s 147 of the Act by obtaining prior approval of the Jt. CIT, Navsari. Subsequently, notice u/s 148 of the Act was issued to the assessee on 29.03.2019. However, no return was filed in response to notice u/s 148 of the Act. Various notices u/s 148, 142(1) and 129 were issued to the assessee, but the assessee had not complied with any of the notices. In response to show cause notice issued subsequently, assessee had filed some details, which were inadequate and not complete. The AO observed that assessee has not submitted the required details as per notice u/s 142(1) and the show cause notice issued subsequently. He further observed that the assessee even failed to file his ITR for AY.2014-15 u/s 148 of the Act. During the year, the assessee had claimed to 3 ITA No.690/SRT/2024/AY.2014-15 Darshanbhai Arvindbhai Desai have earned income from agricultural activities. However, the assessee had not filed his ITR for AY.2014-15 u/s 139 of the Act. The reply of the assessee that he is an agriculturist and had earned more than Rs.100 lakhs as agricultural income, was not accepted by the AO and the rebuttal has been given by AO at para 6 (page 8) o the assessment order. After analysing the information gathered u/s 133(6) of the Act from IDBI Bank Ltd., Navsari, AO found that there was cash deposit of Rs.83,67,000/- and credit entries of Rs.21,59,346/-, totalling to Rs.1,05,26,346/- during the year under consideration. He found that assessee had not maintained any books of account. The AO has discussed provisions of section 69A of the Act and relying on the decision of Hon’ble Supreme Court in case of K. Chinnathamban, 162 Taxman 459 (SC), he observed that the onus was on assessee to prove the source of deposit, which he failed to discharge. Therefore, he added Rs.1,05,26,346/- u/s 69A of the Act. The AO also found that assessee had purchased an Audi Q 3 Car for Rs.30,16,314/-. The assessee did not explain the source of investment. Therefore, the same was also added to the total income. Thus, the total income was determined at Rs.1,35,42,660/-. The AO also initiated penalty u/s 271(1)(c) of the Act. 4. Aggrieved by the order of AO, the assessee filed this appeal before CIT(A). The CIT(A) issued five notices fixing the hearing on 19.01.2021, 24.01.2022, 04.11.2022, 20.12.2023 and 22.04.2022. The assessee requested for adjournment only on the hearing fixed on 20.12.2023. He has not filed any reply in response to the other notices, therefore, the CIT(A) has decided the appeal on the basis of the materials available on record including the assessment order. He 4 ITA No.690/SRT/2024/AY.2014-15 Darshanbhai Arvindbhai Desai has specifically reproduced the rebuttal of the AO in respect of claim of agricultural income. At para 3.5 of the appellate order, the CIT(A) stated that the appellant has not produced any material to controvert the finding of AO during the appellate proceedings. He further observed that appellant was not interested in prosecuting his appeal, therefore, he dismissed the appeal. 5. Aggrieved by the order of Ld. CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted that the appellant was not given adequate opportunity of hearing by the lower authorities. He submitted that the AO has passed an order u/s 143(3) after issuing show cause notice to pass order u/s 144. However, considering the reply submitted on 23.12.2019 and 27.12.2019 of the assessee, the AO passed the order u/s 143(3) r.w.s. 147 of the Act. He further submitted that the CIT(A) has issued the last notice on 15.04.2024 and fixed the hearing on 22.04.2024. However, he has passed the order u/s 250 of the Act on 22.04.2024 itself, which shows that the order was passed without hearing the assessee in violation of the principles of natural justice. 6. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) of the Revenue supported the order of lower authorities. He submitted that the AO has given six notices and show cause notice which is clear from the table at 3.2 of the assessment order which have not been properly replied to. Similarly, the CIT(A) also issued five notices which remained unanswered. Hence, the assessee has been negligent and non-cooperative due to which the addition made by the AO was rightly confirmed by CIT(A). 5 ITA No.690/SRT/2024/AY.2014-15 Darshanbhai Arvindbhai Desai 7. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee has been totally non- cooperative to the statutory notices and the show cause notice issued to him by the AO and the CIT(A). It is further seen that assessee had not filed his original return of income of AY.2014-15, though there were cash deposit and credit entries to the extent of Rs.1,05,26,346/- in his bank account with IDBI Ltd., Navsari. The assessee has also purchased an Audit Q 3 Car for Rs.30,16,314/- during the year under consideration. He had also not filed the return in response to notice u/s 148 of the Act. As stated by the AO, before issue of notice u/s 148 of the Act, a letter was issued to the assessee on 01.03.2019 which was also not replied to. We also find that the CIT(A) has also issued five notices as per the table in para 3 of the appellate order. It is true that the date of hearing in respect of the last notice was on 22.04.2024 and on the same day the order u/s 250 of the Act was passed. Therefore, the CIT(A) has passed the order without waiting for the reply on the date hearing on 22.04.2024. Be that as it may, the Ld. AR has also not filed any evidence to show that the assessee had in fact filed reply on 22.04.2024. Considering all these facts, we are of the view that though the assessee was negligent and non-cooperative before the lower authorities, the CIT(A) should have waited for the reply of the assessee till 22.04.2024. The Ld. AR requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. Considering the peculiar facts of the case, we are of the view that the principles of natural justice would call for giving another opportunity of hearing to the 6 ITA No.690/SRT/2024/AY.2014-15 Darshanbhai Arvindbhai Desai assessee. Accordingly, we hold that the interests of justice would be met in case the AO re-examines the entire issue afresh subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the Gujarat High Court Legal Aid Authority within two weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass de novo assessment order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the AO by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order is pronounced in the open court on 11/11/2024 Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 11/11/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "