DHARMIN RAGHUBHAI PATEL (INDIVIDUAL),VAPI V. ITO, WARD 1, VAPI, VAPI

ITA 171/SRT/2024

AI Insights

The case involves Dharmin Raghubhai Patel, the appellant, who contested the additions made to his income by the Income Tax Officer (ITO) under sections 69A and 143(3) r.w.s. 147 of the Income-tax Act, 1961, for the assessment year 2010-11. The additions were based on unexplained cash deposits and receipts totaling Rs. 20,82,500. The appellant's initial appeal was dismissed by the CIT(A) due to non-compliance with notices. The Tribunal noted the absence of adequate representation and the principles of natural justice, leading to the decision to set aside the CIT(A)'s order and remand the case for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26751 (ITAT-SURAT)
• Duration Of Justice: 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-11-2024
• Assessment Year: 2010-2011
• Appeal Filed On: 16-02-2024
• Other Referred Cases: Estate of Late Tukojirao Holkar vs. CIT, New Diwan Oil Mills vs. CIT, CIT vs. B. Bhattacharee & Anothers
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVISH BHATT
• Assessee Lawyers: PARIN SHAH
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit; Peak credit; Principle of natural justice; Competent authority; Initiation of penalty proceedings
• Section: 143(3); 250; 271(1)(c); 69A

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.171/SRT/2024 Assessment Year: (2010-11) (Hybrid Hearing) Dharmin Raghubhai Patel (Individual), 326, Patel Street, Salvav, Vapi, Valsad - 396191 Vs. The ITO, Ward – 1, Vapi èथायीलेखासं./जीआइआरसं./PAN/GIR No: ACCPP2642R (Appellant) (Respondent) Appellant by Shri Parin Shah, CA Respondent by Shri Ravish Bhatt, Sr. DR Date of Hearing 12/11/2024 Date of Pronouncement 22/11/2024 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 10.08.2023 by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2010-11. 2. The grounds of appeal raised by the assessee are as under: “1. The order passed by AO and confirmed by NFAC is bad in law and required to be quashed. 2. Ld. NFAC erred in law and on facts in not passing order as per section 250(6) of the Act. 3. Ld. NFAC erred in law and on facts in making addition u/s 69A of the Act of Rs.19,92,500/-. 4. Ld. NFAC ought to have considered fact that assessee is in business of trading in aqua guard and RO plant and correctly offered income u/s 44AF of the Act. 2 ITA No.171/SRT/2024/AY.2010-11 Dharmin Raghubhai Patel 5. Without prejudice to above and in alternative, NFAC ought to have considered peak balance of cash deposited in bank account. 6. Ld. NFAC erred in confirming addition of Rs.90,000/- as unexplained credit ignoring that same has been offered in return of income from explained sources. 7. Initiation of penalty proceedings u/s 271(1)(c) is unjustified. 8. Charging of Interest u/s 234A, 234B, 234C are unjustified.” 3. The appeal filed by the assessee is barred by limitation by 130 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal before the Tribunal. In the affidavit, the assessee stated that his Income-tax matters are being looked after by Shri Manoj T. Shah, CA. He had appeared from time to time and had filed submissions. Later, his case was referred to Shri Parin Shah by his earlier consultant. The application had been filed under Vivad se Vishwas Scheme for settlement of Income-tax demands. However, due to paucity of required funds, the requisite payment could not be made by him. The assessee could not avail the benefit of Vivad se Vishwas Scheme and the appeal for AY.2010-11 was not withdrawn by his consultant. The assessee did not receive any communication from the Department. He received CIT(A) order dated on 13.08.2023. Thereafter, he came to know that his earlier consultant had a brain stroke on 10.08.2023 after primary treatment and MRI at Haria Hospital, Vapi and expired on 07.09.2023. The assessee submitted that Shri Manoj T. Shah had referred the appellate order to Shri Parin Shah for preparation and filing appeal before ITAT. Due to his frequent visit to Ahmedabad for medical checkup and his CT 3 ITA No.171/SRT/2024/AY.2010-11 Dharmin Raghubhai Patel Angiography of head & neck, entire procedure of providing needful feedback to Shri Parin Shah, CA had been delayed and appeal was filed on 16.02.2024 and therefore there is delay by 130 days in filing the appeal. 4. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee has failed to explain sufficient cause for the delay; hence, delay should not be condoned. 5. We have heard both the parties on this preliminary issue and note that because of the expiry of the then tax consultant, who has not informed the assessee, the delay of 130 days has occurred in filing appeal before this Tribunal. We note that assessee was not negligent but due to absence of legal advice of original tax consultant, the delay has occurred in filing the present appeal. As the tax consultant of the assessee expired during the appellate proceedings, there was no one to assist the assessee with respect to the procedure and formalities of filing appeal before the Tribunal. Assessee’s case was referred to the present counsel Shri Parin Shah, who advised to the assessee to file appeal before ITAT. Hence, the reasons given in the affidavit for condonation of delay are prima facie reasonable and the same would constitute sufficient cause for the delay in filing this appeal. We, therefore, condone the delay and admit the appeal for hearing. 6. Brief facts of the case are that the assessment has been reopened u/s 147 of the Act with prior approval of competent authority. Various notices u/s 142(1) of the Act and show cause notice were issued and duly served on the assessee. The assessee did not file any reply or written submissions. As per 4 ITA No.171/SRT/2024/AY.2010-11 Dharmin Raghubhai Patel CIB/AIR information, the assessee had deposited aggregate cash of Rs.19,92,500/- in his savings bank account maintained with ICICI Bank and the other receipts of Rs.90,000/- from various parties. The Assessing Officer (in short, ‘AO’) requested assessee to show cause as to why aggregate cash of Rs.19,92,500/- deposited in ICICI Bank account and other receipts of Rs.90,000/- should not be treated as unexplained and added to the total income of the assessee. In absence of any reply and compliance from assessee, the AO completed the assessment proceedings u/s 143(3) r.w.s. 147 of the Act on 05.12.2017, determining the total income at Rs.24,64,853/- by making addition of Rs.20,82,500/-. 7. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) issued 4 notices of hearing; but the assessee did not comply with the notices. The CIT(A) observed that the appellant could not submit any explanations and details against the addition of Rs.20,82,500/- on account of unexplained deposits and receipts. The CIT(A) relied on the various decisions of Hon’ble High Courts in case of Estate of Late Tukojirao Holkar vs. CIT, 223 ITR 480 (MP), New Diwan Oil Mills vs. CIT, 296 ITR 495 (P & H). The CIT(A) also relied on the decisions of Hon’ble Supreme Court in case of CIT vs. B. Bhattacharee & Anothers, 118 ITR 461 (SC) and held that the appeal does not mean mere filing of appeal but effectively pursuing the same. The CIT(A) observed that the addition was based on facts and without sales, bills/vouchers, cash book etc., appeal cannot be decided on merit. Accordingly, the CIT(A) dismissed the appeal. 5 ITA No.171/SRT/2024/AY.2010-11 Dharmin Raghubhai Patel 8. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Learned Authorized Representative (Ld. AR) of the assessee submitted that only 2 effective notices were issued to assessee. He contended that assessee could not represent his case before CIT(A) due to circumstances beyond control. and the order being an ex parte, stood vitiated on account of violation of principles of natural justice. Adequate opportunity of hearing was not given to the assessee, therefore, Ld. AR contended that one more opportunity should be given to the assessee to plead his case before the AO. 9. On the other hand, Learned Senior Departmental Representative (Ld. Sr. DR) for the Revenue submitted that assessee was negligent during the appellate proceedings; hence, appeal of the assessee should be dismissed. 10. We have heard both the parties and perused the materials available on record. It is an undisputed fact that the assessee did not respond to the notices issued to him by the CIT(A). Therefore, the CIT(A) has discussed the order of the AO and dismissed the appeal of assessee. The Ld. AR requested for one more opportunity in the interest of justice and fair play. We find that assessee could not plead his case properly before the CIT(A). We are of the view that one more opportunity should be given to the assessee to plead his case before the AO. It is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving deeper into the merits of the case, in the interest of justice, we set aside the order of CIT(A) and restore the matter back to the file of AO for de novo adjudication and to pass a speaking order after 6 ITA No.171/SRT/2024/AY.2010-11 Dharmin Raghubhai Patel affording sufficient opportunity of being heard to the assessee. The assessee is also directed to furnish explanation and submit the relevant details and documents before the AO without taking adjournment without valid reasons. For statistical purposes, the appeal of the assessee is treated as allowed. 11. In the result, the appeal of the assessee allowed for statistical purposes. Order is pronounced in the open court on 22/11/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 22/11/2024 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 "