ILIYAS,KHARGONE V. INCOME TAX OFFICER, DELHI

ITA 445/IND/2024

AI Insights

The case involves an appeal by the assessee, Iliyas, against the order of the CIT(A) which upheld the addition of INR 33,29,641 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The assessee had initially not filed a return of income for the assessment year 2013-14 despite having significant bank deposits. Upon receiving a notice under section 148, the assessee filed a return declaring a lower income than assessed. The Assessing Officer (AO) treated the bank deposits as unexplained cash credits due to insufficient evidence of business activities. The CIT(A) dismissed the appeal for non-prosecution as the assessee failed to respond to multiple notices. The Tribunal, however, found that the CIT(A) had not adhered to the principles of natural justice by not allowing the assessee a fair opportunity to present his case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 303010 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Other Referred Cases: CIT Vs Multiplan India Ltd., Estate of Late Tukoji Rao Holker Vs. CWT
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHPORWAL
• Assessee Lawyers: SHRIS.N. AGRAWAL
• Keywords: Condonation of delay; Set aside; Business income; Opportunity of being heard; Reassessment proceedings; Unexplained cash credit; Principle of natural justice; Non compliance
• Section: 147; 148; 144; 142(1); 143(2); 250; 143(1); 271(1)(c); 68; 44AB; 246A; 271B

Judgement Text

"Page 1 of 12 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI PARESH M JOSHI, JUDICIAL MEMBER ITA No.445/Ind/2024 (AY: 2013-14) Iliyas, 56, Khargone Road Bedia, Khargone (PAN: ACFPI8543M) बनाम/ Vs. NFAC, Delhi (Appellant) (Revenue) Assessee by Shri S.N. Agrawal, AR Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 15.04.2025 Date of Pronouncement 22.04.2025 आदेश/ O R D E R Per Paresh M Joshi, J.M.: This is an appeal filed by the assessee Under Section 253 of the Income Tax Act (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal as and by way of Second appeal under the Act. The assessee is aggrieved by the order bearing Number ITBA/NFAC/S/250/2023-24/1060261066(1) dated 30.01.2024 passed by Ld. CIT(A) passed u/s 250 of the Act which is hereinafter referred to as the “Impugned order”. The relevant Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 2 of 12 Assessment Year is 2013-14 and the corresponding previous year period is from 01.04.2012 to 31.03.2013. Delay At the outset registry has pointed out delay of 45 days in filing the appeal. The Ld. AR for and on behalf of the assessee has taken us through condonation of delay application. Per contra Ld. DR has not opposed condonation of delay. We have perused the condonation application in which assessee has shown reasonable and sufficient cause along with an affidavit in support and we are satisfied with same and condone the delay of 45 days in filing the appeal. Matter admitted and taken up for hearing. 2. FACTUAL MATRIX 2.1 That as and by way of Assessment Order bearing Number :- ITBA/AST/S/147/2023-24/1053047716(1) dated 22.05.2023 the assessee’s total income was determined/computed at Rs.33,29,641/- in terms of Section 147 r.w.s. 144B of the Act. The aforesaid assessment order of Ld. A.O is hereinafter referred to as the “Impugned Assessment Order”. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 3 of 12 2.2 That the department of Income Tax had a credible information from insight portal and so also an investigation report of Dy. Director, Investigation of the Income Tax department that the assessee had made a transaction of Rs.4,16,20,519/- during the financial year 2012-13 relevant to Assessment Year 2013-14 in Bank account No: 0528102000002448 held with IDBI Bank, Sanawad and Account No: 9936210110000147 held with Bank of India, Bedia. 2.3 That in spite of having aforesaid income in his above two bank accounts (supra) the assessee had not filed his original return of income for the year under consideration. 2.4 That since the assessee had not filed any return of income for the year under consideration the case of the assessee was selected for assessment/reassessment proceedings for Assessment Year 2013-14 u/s 147/148 of the Act. 2.5 Accordingly a notice u/s 148 of the Act dated 26.07.2022 was duly served upon the assessee. In response thereto to the notice u/s 148, the assessee filed a return of income on 26.08.2022 declaring a total income of Rs.3,44,280/-. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 4 of 12 2.6 That a statutory notice u/s 143(2) of the Act dated 07.05.2023 was duly issued to the assessee. 2.7 That before computing the income of the assessee the Ld. A.O gave following opportunities to the assessee with a view to determine and compute the income of the assessee exigible to tax according to law:- Type of notice/ communica- tion Date of notice/com- munication Date of compliance given Response of the assessee received/ not received Date of response received Respons e type (Full/ Part/ adjourn ment Remar ks if any Notice u/s 148 of the IT Act 27.07.02022 30 days from service of this notice. Filed return of income - NA ROI filed Notice u/s 142(1) of the Act 05.04.2023 10.04.2023 Not received NA NA No reply AU-1 letter for non compliance 18.04.2023 05 days from service of letter Not received NA NA No reply Notice u/s 142(1) of the Act 24.04.2023 29.04.2023 Not received NA NA No reply Non response letter issued by NFAC 28.04.2023 Immediatel y after receipt of the letter Not received NA NA Show cause notice u/s 144 of the Act 02.05.2023 04.05.2023 Yes 04.05.2023 & 18.05.2023 Part - Notice u/s 143(2) of the Act 07.05.2023 09.05.2023 Yes 08.05.2023 NA - Show cause notice 09.05.2023 13.05.2023 Yes 15.05.2023 Full - 2.8 That this Tribunal observes that a show cause notice u/s 144 dated 02.05.2023 was complied partly and that yet another show cause notice dated 09.05.2023 was complied fully. The reminder notice(s) particularly u/s 142(1) were not Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 5 of 12 complied with (supra). ROI was filed in response to notice u/s 148 dated 27.07.2022 i.e. within 30 days from service of notice (refer para 2.8 supra). 2.9 The Ld. A.O in the “impugned assessment order” while adjudging and adjudicating the case observed that the assessee despite notice(s) (supra) has not been able to establish the core business activity with cogent evidences such as ledger confirmation of buying and selling parties, bills and vouchers for purchase as well as sale transactions. The books of account have not been audited by him despite huge turnover u/s 44AB of the Act. Since these details were not put forth by the assessee despite notice(s) (supra) the Ld. A.O prima facie formed an opinion at that stage of the proceedings that for deposit to the extent of Rs.4,16,20,519/- the assessee has failed to give relevant documents in support thereof and therefore such an amount of Rs.4,16,20,519/- comes within the mischief of the words “Unexplained cash Credit” u/s 68 of the Act and therefore the same is liable to be added to the total income of the assessee. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 6 of 12 2.10 That basis part reply and full reply of the assessee (supra table para 2.7) it is recorded by the Ld. A.O in the “impugned assessment order” that in support of his claim the assessee has furnished; “1. ITR & Computation, 2. Mandi License, 3. Commercial tax department registration, 4. P&I BS, 5. Bank Book, 6. Bank Statement(IDBI & BOI), 7. Cash Book, 8. Sales & Purchase register, 9. Sales ledger of highest receipt parties, 10. Mandi department purchase acknowledgment. However, the details submitted by the assessee does not prove that actual business activity has been carried out. The assessee was not able to establish the business activity with cogent evidences, such as ledger confirmation of buying and selling parties, bills and vouchers for purchase/sale transaction. Further the assessee has also not filed original return of income and has filed return of income only after receipt of notice u/s 148. The assessee has also not got his books audited despite having turnover of more than the limit prescribed u/s 44AB. Therefore the assessee was asked to substantiate the above points with documentary evidences. However, the assessee has failed to submit any documentary evidences hence the cash deposit to the tune of Rs.4,16,20,519/- is treated as unexplained cash credit and is proposed to be added to the total income of the assessee u/s 68 of the IT Act.” 2.11 That the core finding in the “Impugned Assessment Order” of Ld. A.O are as under which is reproduced below as under (Basis assessee response dated 15.05.2023): “However, the assessee has not submitted copies of ledger confirmation from the parties. In response to the show cause notice dated 09.05.2023 the assessee has submitted its reply in which the assessee has expressed inability to submit the ledger confirmations of individual parties. Further, in its submissions the assessee has asserted that the deposits/credits in Bank accounts are business receipts and also submitted Bank book, Cash Book and sale purchase register to support its claim. The assessee has also stated that being first year of business the assessee has neither got his accounts audited nor filed return of Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 7 of 12 income, but has filed return of income on receipt of notice u/s 148 and has also stated that the assessee has been filing return of income from the succeeding year onwards. The reason/justification for not filing return of income by the assessee is not acceptable as it is not a valid justification. Further the ITR details of the assessee was verified on the system and it was found that the assessee has been continuously filing return of income alongwith Audit report in succeeding years. The turnover of the assessee has also grown over a period of time and the income thereon has been offered for tax. Further, on observation of Bank account statement of the assessee for the year under consideration it has been observed that most of the transactions are through banking channels i.e. RTGS/NEFT etc. and the entries in assessee's account are reflecting in the Cash Book, Bank book and Sale and Purchase register submitted the assessee alongwith names of the parties. Hence the contention of the assessee that the deposit/credit in Bank account are on account of business receipts is accepted. However, since the assessee was liable to file return of income for the year under consideration and the assessee has not filed original return of income despite having income more than the minimum income chargeable to tax, the computation of income and Profit & Loss of the assessee is not accepted. 4.3 Conclusion drawn:- On the basis of above discussion and submission of the assessee it is concluded that the credits in the bank account of the assessee to the tune of Rs.4,16,20,519/- is the business receipts of the assessee. However, the assessee has not filed original return of income and has filed return of income only on receipt of notice u/s 148 of the Act. Therefore the computation of income and Profit & Loss account submitted by the assessee is rejected and the total credits in the Bank account of the assessee to the tune of Rs.4,16,20,519/- is treated as turnover of the assessee for the year under consideration and income of the assessee is calculated @ 8%. Therefore the amount of Rs.33,29,641/- (8% of Rs.4,16,20,519/-) is added to the total income of the assessee as business income. Penalty proceedings u/s 271(1)(c) of the IT Act is initiated separately for concealment of income and Penalty proceedings u/s 271(1)(b) of the IT Act is initiated separately for non compliance of notice u/s 142(1) of the Act. Penalty proceedings u/s 271F of the Act is initiated separately. Penalty proceeding u/s 271B of the Act is initiated separately. 5. Final computation of taxable income: Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 8 of 12 Sl.No. Description Amount (In Rs.) 1 Total income as per return of income (not filed original return of income) Nil 2 Total Income as per 143(1) of the Act. - 3 Addition undisclosed business income (As discussed above) Rs.33,29,641/- 4 Total income determined Rs.33,29,641/- 2.12 That the assessee being aggrieved by the aforesaid “Impugned Assessment order” prefers first appeal before Ld. CIT(A) u/s 246A of the Act who by impugned order has held as under:- “FINDING 5. In Ground no. 1 to 5 appellant has challenged the addition amounting to Rs. 33,29,641/- on account of unexplained cash credit u/s 68 of the IT Act, 1961. Other grounds of appeal are general in nature. Several opportunities have been allowed to the appellant in terms of the notices fixed for hearing of the appeal under section 250 of the Act issued to the appellant. No compliance has been made by the appellant till date. The details of the opportunities allowed to the appellant to represent in this case are tabulated as under:- DIN No. Date of Notice Date of hearing fixed Remarks 1058389840 01.12.2023 18.12.2023 No reply 1058882828 19.12.2023 03.01.2024 No reply 1059648083 12.01.2024 29.01.2024 No reply 6. The aforesaid non compliances reveals beyond doubt that the appellant has nothing to say in the matter of present appeal. Thus, it appears that the assessee is not interested in prosecution of the present appeal and the same is liable to be dismissed on this ground itself. The Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 9 of 12 law assists those who are vigilant and not those who sleep over their rights. This principle is embodied in the well known dictum \"VIGILATIBUS, NON DORMENTIBUS, JURA SUBVENIUNT\". Considering the facts and relying on the decision of the Hon'ble, ITAT, Delhi Bench, in the case of CIT Vs Multiplan India Ltd. reported in 38-ITD-320 and the judgement of the Hon'ble Madhya Pradesh High Court in the case of Estate of Late Tukoji Rao Holker Vs. CWT (1997) reported in 223-ITR- 480 the present appeal is liable to be dismissed. 7. The appellant has raised grounds of appeal No. 1 to 5 which mainly challenged the addition of amount of Rs. 33,29,641/- on account of unexplained cash credit u/s 68 of the IT Act, 1961. However no written submissions were filed in respect of Grounds of Appeal. It is noted that the appeal of the appellant has been dismissed by me for non prosecution in para 6. In view thereof the various grounds raised in appeal have become academic in nature. Grounds of Appeal No. 1 to 5 are hereby dismissed. 8. As a result, the appeal is dismissed.” 2.13 That the assessee being aggrieved by the “Impugned Order” has preferred this instant second appeal under the Act and has raised following grounds of appeal against the impugned order in Form No.36 which is a form of appeal to this Tribunal. “1. That the learned CIT(A) erred in law and facts of the case and passed an order on ex parte basis without giving the assessee the opportunity of being heard. 2. That the Ld. Assessing Officer erred in law and the facts of the case and assessed the total income at INR 33,29,641/- under section 147 r.w.s. 144B of the Income Tax Act, 1961 as against the Returned Income of 3,44,280/- 3. That the Ld. Assessing Officer erred in law and fact of the case and failed to consider the new provisions of 148A w.e.f. 01/04/2021 and issued the notice u/s 148 which is time barred by limitation for issuance of 148 done on 26/07/2022. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 10 of 12 4. That the Ld. Assessing Officer erred in law and fact of the case and made an addition of INR 33,29,641/- by taking net profit @ 8% of the bank account credits on an estimation basis. 5. That the Ld. Assessing Officer erred in law and fact of the case and initiated a penalty u/s 271B, 271F, 271(1)(b) and 271(1)(c). 6. That the appellant craves to leave, add, alter or amend any of the ground at or before hearing.” 3. Recording of Hearing 3.1 The hearing in the matter took place before this Tribunal on 15.04.2025 when Ld. AR for and on behalf of the assessee interalia contended that the “impugned order” is bad in law, illegal and not proper. It is also in violation of the principles of natural justice therefore Null and Void. The Impugned order should be set aside by this Tribunal in exercise of its appellate power which is conferred upon it under the Act. In so far as merit of the case is concerned the Ld. DR has stated that impugned order is exparte and not on merits. 4. Observations,findings & conclusions. 4.1 We now have to examine the legality, validity and the proprietary of the “Impugned Order” basis records of the case. 4.2 We have carefully perused the records of the case and have examined the rival contentions canvassed before us. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 11 of 12 4.3 We are of the considered view that in the impugned order the relevant extracts of which we have narrated hereinabove (supra) there is no doubt that the same is in the violation of the principle of natural justice as no opportunity of hearing was afforded to the assessee. 4.4 We notice that in Form 35 which is form of appeal to first appellate authority an e-mail address which is “[e-mail]” where on the notice(s) dated 01.12.2023, 19.12.2023 and 12.01.2024 issued by office of Ld. CIT(A) were never received. In record of proceedings before us it is shown to have gone at e-mail id “Sandeepreena1010 @gmail.com.” Further tax portal is not seen by him on day to day basis. No hard copy of notice(s) ever came to assessee by speed post of registered post. Further on merits the appeal is not “disposed off” by Ld. CIT(A) in meritorious way as is mandated by law u/s 250(6) of the Act. Further Ld. AR has made a grievance of an exparte nature of impugned order too with regard to opportunity of hearing with which conquer as Ld. DR too has not effectively rebutted this contention of Ld. AR. Iliyas ITA No. 445/Ind/2024 - A.Y.2013-14 Page 12 of 12 4.5 In the premises set out herein above we set aside the impugned order as it does not perse meets requirement of principal of natural justice and so also there is no effective disposal of the first appeal on meritorious grounds as contemplated by Section 250(6) of the Act. 5. Order 5.1 In result Impugned order is set aside as and by way of remand on denovo basis back to the file of CIT(A). The assessee is at liberty to raise such legal and other contentions which arises out of “impugned assessment order” before Ld. CIT(A) who shall examine the same on merits. 5.2 Appeal of the assessee is allowed for statistical purpose. Order pronounced in open court on 22.04.2025. Sd/- Sd/- (SMT. ANNAPURNA GUPTA) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक/ Dated : 22/04/2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "