DILIP KUMAR SAH, BHILAI,DURG V. INCOME TAX OFFICER, WARD-1(3), BHILAI, DURG

ITA 397/RPR/2024

AI Insights

The case involves Dilip Kumar Sah, who appealed against the order of the Commissioner of Income-Tax (Appeals), which was based on a revised assessment order by the Assessing Officer (AO) under sections 143(3) r.w.s. 263 r.w.s. 144B of the Income-tax Act, 1961. The primary contention was the addition of Rs.23,51,529 as business income, which the assessee argued was unjustified and based on presumptions. The CIT(Appeals) had dismissed the appeal ex-parte due to non-prosecution by the assessee, leading to the current appeal before the Tribunal. The Tribunal found that the CIT(Appeals) had not adequately addressed the specific issues raised by the assessee and emphasized the need for a speaking order addressing each point of contention.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 35780 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 01-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 27-08-2024
• Other Referred Cases: CIT Vs. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Keywords: Set aside; Business income; Opportunity of being heard; Principle of natural justice; Assessment record; Revision of order
• Section: 143(3); 250; 44AD; 28; 246A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 397/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Dilip Kumar Sah Near V.N Public School, Supela Bhilai S.O Durg (C.G.)-490023 PAN : CYUPS4603M .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer, Ward-1(3), Bhilai (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : None Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 01.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 08.10.2024 2 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 27.06.2024, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s. 263 r.w.s. 144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 16.03.2023 for the assessment year 2017-18. The assessee has assailed the impugned order on the following grounds of appeal: “GROUND NO. I 1. That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi (\"the Ld.CIT(A)n) under section 250 of the Income Tax Act, 1961 (\"the Act') is highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law. It is prayed that the Appellate Order passed under section 250 of the Act may please be cancelled/set-aside on this ground alone. GROUND NO. II 2. On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in confirming an addition of Rs.23,51,529/- made by the Ld.AO invoking the provisions of section 28 of the Act treating the same as business income which is highly unjustified, unwarranted, unsustainable, not proper on facts, ignoring the submissions of the appellant thereby based on presumptions & surmises and not in accordance with the provisions of law. Further, the Ld.CIT(A) has failed to appreciate that the Ld. AO was purportedly influenced by the observations in the revision order, hence, it is earnestly prayed that the unjustified addition of Rs.23,51,529/- may kindly be deleted. GROUND NO. III 3 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 3. That the Appellant craves leave to add, amend, alter or delete all or any of the grounds of Appeal at the time of hearing of the appeal.” 2. Succinctly stated, the assessee had filed his return of income for A.Y. 2017-18, declaring an income of Rs.3,04,240. The original assessment was framed by the AO vide his order passed u/s 143(3) of the Act, dated 21.11.2019, wherein his income was assessed at Rs.5,17,730/-. 3. The Principal Commissioner of Income Tax (for short, “Pr.CIT”) after culmination of the assessment proceedings called for the assessment record. The Pr.CIT observed that the assessee during the subject year had made cash deposits of Rs. 8.22 lacs in “Specified Bank Notes” (SBNs) during the demonetization period in his two bank accounts, viz. current accounts with SBI and ICICI bank. The Pr.CIT further observed that the assessee during the course of the assessment proceedings had disclosed “additional commission receipts” of Rs.26,50,935/- on which he had offered income @ 8.05% i.e Rs.2,13,490/-. Accordingly, the Pr.CIT observed that the AO after making the aforesaid addition of Rs.2,13,490/- (supra) had vide his order u/s 143(3) of the Act, dated 21.11.2019 assessed the income of the assessee at Rs.5,17,730/-. 4. The Pr.CIT on a perusal of the record observed that there were total receipts of Rs.3,15,67,776/- in the bank accounts of the assessee during the year under consideration, as under: 4 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 “Total receipts from sale of goods: Rs.2,16,33,201/- Commission on sale of goods : Rs.26,50,935/- Sales u/s 44AD : Rs. 38,04,690/- Interbank transfer : Rs.34,78,950/-” The Pr.CIT further observed that though the assessee in his return of income had disclosed the income/profit of Rs. 4,13,584/- on sales of Rs. 38,04,690/- (supra) @ 10.87%, but had not offered any income on sale of goods of Rs. 2,16,33,201/- (supra). The Pr.CIT holding a firm conviction that the assessee ought to have offered income/profit on the aforesaid sale receipts of Rs.2,16,33,201/- (supra), thus, worked out the resultant business income at Rs. 23,15,529/- (10.87% of Rs. 2,16,33,201/-). Accordingly, the Pr.CIT was of the view that the failure on the part of the AO to assess the business income of Rs. 23,15,529/- (supra) while framing the assessment vide his order u/s 143(3) of the Act, dated 21.11.2019, had rendered his order as erroneous in so far it was prejudicial to the interest of the revenue u/s 263 of the Act. The Pr.CIT based on his aforesaid observations set aside the assessment order with a direction to the AO to pass a fresh assessment order after affording a reasonable opportunity of being heard to the assessee. 4. Thereafter, the AO vide his order u/s 143(3) r.w.s. 263 r.w.s. 144B of the Act, dated 16.03.2023 while giving effect to the order passed by the 5 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 Pr.CIT u/s 263 of the Act, dated 08.03.2023 made an addition of Rs.23,51,529/-(supra) and determined the income of the assessee at Rs.28,69,259/-. 5. Aggrieved, the assessee assailed the order passed by the AO u/s 143(3) r.w.s. 144B of the Act, dated 16.03.2023 before the CIT(A) but without success. As the assessee despite having been afforded sufficient opportunity had failed to participate in the proceedings before the CIT(Appeals), therefore, the latter was constrained to dismiss the appeal vide an ex-parte order. 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 7. As the assessee appellant has failed to put up an appearance, therefore, I am constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities. 8. As observed by me hereinabove, the CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issues which did arise from the impugned order and were specifically assailed by the assessee before him. Ostensibly, the assessee appellant had, inter alia, vide his “Ground of appeal No.1” raised before the CIT(appeals), assailed the 6 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 assessment order on the ground that the same was passed by the A.O overlooking the replies which were filed with him in the course of the assessment proceedings. Although, there is no denying the fact that the assessee had not participated in the proceedings before the CIT(Appeals), but I am of a firm conviction that the latter irrespective of the non- participation by the assessee appellant should have called for the assessment record, and only after consulting the same dealt with and disposed off the aforesaid grievance of the assessee based on a speaking order. I am unable to persuade myself to accept the manner in which the appeal of the assessee has been summarily disposed off by the CIT(Appeals). In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same after addressing the issues based on which the assessment order was assailed before him, and it is not open for him to summarily dismiss the appeal on the basis of his general observations regarding the non-prosecution of the matter by the assessee appellant before him. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act, reveals that the CIT(A) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar 7 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"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 AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 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. Sec. 251(1)(a) and (h) 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-s. (2) of s. 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 s. 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 w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO 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 s. 251(1)(a) and (b) and Explanation to Sec. 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.” 9. I, thus, not being able to persuade myself to subscribe to the summary dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same after addressing 8 Dilip Kumar Sah Vs. ITO, Ward-1(3), Bhilai ITA No. 397/RPR/2024 the specific issues on which the impugned assessment order had been assailed before him. Needless to say, the CIT(Appeals), in all fairness, shall in the course of the set-aside proceedings afford a reasonable opportunity of being heard to the assessee. The grounds of appeal raised by the assessee are disposed off in terms of the aforesaid observations. 10. In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 08th day of October, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 08th October, 2024 ***#SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "