HITESHKUMAR ISHWARBHAI PATEL,VADODARA V. THE ITO, WARD-3(1)(2), VADODARA

ITA 986/AHD/2024

AI Insights

The case involves Hiteshkumar Ishwarbhai Patel, the appellant, who contested the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, which confirmed the additions made by the Assessing Officer under various sections of the Income Tax Act, 1961. The additions were primarily based on the assessee's unexplained sources of funds for purchasing immovable property and other transactions. The Tribunal found that the principles of natural justice were not followed, as the assessee was not given a reasonable opportunity to be heard due to the health issues of his Chartered Accountant, leading to an ex-parte order by the CIT(A).

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 29667 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-10-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 10-05-2024
• Other Referred Cases: GKN Drive Shaft's case (2002) 125 Taxman 963 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATEEK SHARMA
• Assessee Lawyers: MEHUL THAKKAR
• Keywords: Opportunity of being heard; Reassessment proceedings; Sale consideration of property below Jantri Value; Capital Gains; Principle of natural justice; Source of fund
• Section: 147; 148; 143(3); 69A; 50C

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ D ” BENCH, AHMEDABAD सु\u0017ी सुिच\u0019ा का\u001aले, \u0011ाियक सद\u001c एवं \u0017ी मकरंद वसंत महादेवकर, लेखा सद\u001c क े सम\"। ] ] BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER आयकर अपील सं /ITA No.986/Ahd/2024 िनधा \u000fरण वष\u000f /Assessment Year : 2014-15 Hiteshkumar Ishwarbhai Patel C-70, Shripad Nagar Society VIP Road Karelibaug Vadodara – 390 022 (Gujarat) बनाम/ v/s. The Income Tax Officer Ward-3(1)(2) Ahmedabad \u0013थायी लेखा सं./PAN: AEKPP 5163 R अपीलाथ%/ (Appellant) &' यथ%/ (Respondent) Assessee by : Shri Mehul Thakkar, AR Revenue by : Shri Prateek Sharma, Sr.DR सुनवाई की तारीख/Date of Hearing : 08/10/2024 घोषणा की तारीख /Date of Pronouncement: 15/10/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, AM: This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (NFAC) [hereinafter referred to as “CIT(A)”], dated 15.03.2024, for the Assessment Year (A.Y.) 2014-15 arising out of order of the Assessing Officer [hereinafter referred to as “AO”] passed under Section 143(3) r.w.s.147 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]. ITA No.986/Ahd/2024 Hiteshkumar Ishwarbhai Patel vs. ITO Asst. Year : 2014-15 2 Facts of the Case: 2. The assessee filed his return of income for the Assessment Year (A.Y.) 2014-15 on 27.04.2019, declaring a total income of Rs.5,53,370/-. The Assessing Officer (AO) initiated reassessment proceedings under Section 147 of the Act, 1961, by issuing a notice under Section 148 of the Act on 27.03.2019. The reasons for reopening the assessment were based on information that the assessee had purchased immovable property worth Rs.1,99,73,500/-, and the source of funds for the purchase was unexplained. After reopening the assessment, the AO completed the assessment proceedings on 24.12.2019, assessing the income at Rs.2,52,49,184/-. The AO made various additions to the assessee’s income under Sections 69A, 269SS, and 50C of the Act. 3. Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). During the appellate proceedings, several notices were issued to the assessee by the CIT(A) to furnish submissions and relevant documents. The assessee, however, failed to provide submissions within the given time. The first notice dated 26.12.2020 was responded to with a request for an adjournment by the assessee, as he required more time to compile the necessary details. Subsequent notices issued on 05.04.2021 and 26.07.2021 were missed by the assessee due to personal reasons, including the disruption caused by the COVID-19 pandemic. A notice issued on 09.09.2022 was again responded to with an adjournment request. Final notices were issued by the CIT(A) on 19.02.2024 and 27.02.2024, fixing the hearing dates on 22.02.2024 and 06.03.2024 respectively. On 15.03.2024, the CIT(A) passed an ex-parte order, dismissing the appeal due to the assessee’s continuous non- compliance and failure to furnish submissions or attend hearings. The CIT(A) ITA No.986/Ahd/2024 Hiteshkumar Ishwarbhai Patel vs. ITO Asst. Year : 2014-15 3 upheld the AO’s additions and confirmed the assessment of Rs.2,52,49,184/-. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us with following grounds of appeal: 1. The Ld. CIT(A) has erred in law and in facts in confirming the jurisdiction of assessing officer under section 147 of the Act. 2. The Ld. CIT(A) has also erred in law and in facts in confirming the jurisdiction of assessing officer under section 147 of the Act despite the fact that Ld. A.O. failed to pass a disposal order against the objections raised by the appellant and which is a pre-condition as enumerated by the Hon'ble Supreme Court in case of GKN Drive Shaft's case (2002) 125 Taxman 963 (SC). 3. The Ld. CIT(A) has erred in law and in facts in confirming the action of assessing officer even though the assessment order was passed without giving a reasonable opportunity of being heard and more particularly before the show cause notice being served upon the appellant. 4. The Ld. CIT(A) has erred in law and in facts in confirming the addition of an amount of Rs.22,00,000/-u/s 69A being the payment done by appellant for purchase of immovable property. The addition of Rs.22,00,000/- being bad in law and in facts is prayed to be deleted. 5. The Ld. CIT(A) has erred in law and in facts in confirming the addition of an amount of Rs.50,00,000/-being an amount received by the appellant from Shri Harjitsingh without affording proper opportunity to the appellant and that too under section 269SS of the Income Tax Act. The addition of Rs.50,00,000/-being bad in law and in facts is prayed to be deleted. 6. The Ld. CIT(A) has erred in law and in facts in confirming the addition to the tune of Rs.1,73,85,814 as capital gains as discussed in para 8 to 10 of the A.O's order. 7. Appellant craves liberty to add, alter, amend substitute or withdraw any of the grounds) of appeal hereinabove contained. 5. During the course of hearing before us, the Authorised Representative (AR) of the assessee contended that the non-compliance during the appellate ITA No.986/Ahd/2024 Hiteshkumar Ishwarbhai Patel vs. ITO Asst. Year : 2014-15 4 proceedings before the CIT(A) was due to genuine reasons, including the health condition of his Chartered Accountant. The AR stated that the assessee did not attend these hearings due to difficulties in contacting his Chartered Accountant, Shri Mukund Bakshi, who had been handling his tax matters. The assessee, in his affidavit, explained that his Chartered Accountant, Shri Mukund Bakshi, had suffered a brain stroke in January 2023 and was incapacitated, unable to handle any tax matters. This unforeseen situation prevented the assessee from filing submissions or attending the appellate hearings, leading to the ex-parte order passed by the CIT(A). 5.1. The AR further pointed out that the AO issued a show-cause notice on 23.12.2019, fixing the hearing for 24.12.2019, and passed the assessment order on the same day, thereby violating the principles of natural justice by not allowing the assessee a reasonable opportunity to be heard. 5.2. In response, the learned Departmental Representative (DR) stated that the matter may be remanded back to the AO, instead of CIT(A), for a fresh adjudication in the interest of justice. 6. After hearing both parties and perusing the materials on record, we are of the considered opinion that the principles of natural justice have not been duly followed in this case. The short notice period between the issuance of the show-cause notice and the passing of the assessment order deprived the assessee of a reasonable opportunity to defend his case. Moreover, the non- compliance during the appellate proceedings before the CIT(A) was attributable to the health condition of the CA, which was beyond the control of the assessee. ITA No.986/Ahd/2024 Hiteshkumar Ishwarbhai Patel vs. ITO Asst. Year : 2014-15 5 6.1. Therefore, in the interest of justice and fairness, we deem it appropriate to restore the matter to the file of the AO. The AO is directed to provide the assessee a reasonable opportunity to be heard and dispose of the objections raised by the assessee in accordance with law, after considering all relevant facts and evidence. The assessee is also directed to co-operate with the AO in the fresh proceedings and furnish all necessary details to enable a proper adjudication of the matter. 6.2. In view of the above, the impugned order passed by the CIT(A) is set aside, and the matter is restored to the AO for fresh adjudication. 7. In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the Open Court on 15th October, 2024 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER अहमदाबाद/Ahmedabad, िदनांक/Dated 15/10/2024 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS ITA No.986/Ahd/2024 Hiteshkumar Ishwarbhai Patel vs. ITO Asst. Year : 2014-15 6 आदेश की \"ितिलिप अ#ेिषत/Copy of the Order forwarded to : 1. अपीलाथ$ / The Appellant 2. \"%थ$ / The Respondent. 3. संबंिधत आयकर आयु& / Concerned CIT 4. आयकर आयु& ) अपील ( / The CIT(A)-(NFAC), Delhi 5. िवभागीय \"ितिनिध , अिधकरण अपीलीय आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड\u000f फाईल / Guard file. आदेशानुसार/ BY ORDER, स%ािपत \"ित //True Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 10.10.2024 2. Date on which the typed draft is placed before the Dictating Member. : 10.10.2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 15.10.24 7. Date on which the file goes to the Bench Clerk. : 15.10.24 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 Despatch of the Order : "