RC RC ASSOCIATES, CHENNAI V. ACIT, NON-CORPORATE CIRCLE-3(1), CHENNAI

ITA 115/CHNY/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4550 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 20-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 68; 144; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण,‘बी’ यायपीठ,चे ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ीमहावीर सह, उपा य एवं ी मनोज कुमार अ वाल, लेखा सद"यके सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A No.:115/CHNY/2022 िनधा%रण वष%/ Assessment Year 2016 – 2017 M/s. RC RC Associates, New No.26, Old No.82, C.P Ramasamy Road, Alwarpet, Chennai – 600 018. PAN : AALFR 4951J Vs. The Assistant Commissioner of Income Tax, Non-Corporate Circle – 3(1), Nungambakkam High Road, Chennai – 600 034. (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओरसे/Appellant by : Mr. Shreyansh, Chartered Accountant यथ क ओरसे/Respondent by : Mr. Ravindra T. Mishra, JCIT सुनवाई क तारीख/Date of Hearing : 19.07.2022 घोषणा क तारीख/Date of Pronouncement : 22.07.2022 आदेश आदेशआदेश आदेश /O R D E R PER MAHAVIR SINGH, VP: This appeal by the Assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-4 in ITA No.145/18- 19/CIT(A)-4/A.Y.2016-17, dated 30.09.2019. The Assessment was framed by the Assistant Commissioner of Income Tax, Non- Corporate Circle – 3(1), Chennai for the Assessment Year 2016 – 2017 u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act”) vide order dated 24.12.2018. :: 2 :: I.T.A No.:115/CHNY/2022 2. At the outset, it is noticed that this appeal filed by the Assessee is barred by limitation by 869 days. The Assessee has filed a condonation application supported by an affidavit. In the affidavit, it was contended that the order of the CIT(A) dated 30.09.2019 was received by the Assessee on 05.10.2019. The appeal was to be filed before the Tribunal on or before 4 th December, 2019, however the appeal was filed only on 21 st February, 2022 thereby causing a delay of 869 days. 2.1 The learned Counsel for the Assessee took us through the affidavit and the petition for condonation of delay and stated that the Managing Partner of the firm was hospitalized as had undergone heart surgery and was under recuperation during the month of November and December 2019 and from 25.03.2020, complete lockdown was announced due to ‘Covid– 19’ pandemic spread in the country. He stated that practically the delay was from 4 th December, 2019 to 25 th March, 2020 and that was also due to the illness of the Managing Partner of the firm. Thereafter, as there was an outbreak of ‘Covid-19’ pandemic in the country during the period, the Hon’ble Bench took into cognizance the Order of the Hon’ble Supreme Court :: 3 :: I.T.A No.:115/CHNY/2022 the “Suo Moto WP 03/2020 dated 20.03.2020 while considering the condonation of delay. It is a fact that ‘Covid-19’ pandemic was prevalent, and in term of the directions issued by the Hon’ble Supreme Court in Miscellaneous Application No.21/2022 in Suo Motu Writ Petition No.3 of 2020. In view of the above reasons, we condone the delay of 869 days and admit the appeal for adjudication on merits. 3. The first issue raised by the Assessee in this appeal vide Ground No.1 [1.1 to 1.4] is as regards to the passing of the Assessment Order by the Assessing Officer u/s.144 of the Act without providing reasonable opportunity of being heard and also the order of the CIT(A) which is also an ex-parte order, except the written submissions of the Asssessee contest that the ex-parte was framed by the Assessing Officer u/s.144 of the Act. For this, the Assessee has raised the Grounds No.1 [1.1 to 1.4], as under: “Assessment completed under section 143(3) r.w.s.144 of the Act is bad in law. 1.1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not appreciating that the Assessment proceedings completed u/s.143(3) r.w.s.144 of the Act is erroneous, void and otherwise bad in law. :: 4 :: I.T.A No.:115/CHNY/2022 1.2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in disallowing INR 46,11,028/- as unexplained cash credit under section 68 of the Act, as disallowed by the learned Assessing Officer under section 143(3) r.w.s.144 of the Act. 1.3. On the facts and in the circumstances of the case and in law, the learned CIT(A) ought to have appreciated the facts that all the documents requested by the learned Assessing Officer were submitted on 24 th December, 2018 before the closure of the assessment proceedings. Hence, the assessment proceedings completed by the learned Assessing Officer under section 143(3) r.w.s.144 of the Act is erroneous, void and otherwise bad in law. 1.4. On the fact and in the circumstances of the case and in law, the learned CIT(A) erred in not considering and not adjudicating on the additional evidence placed on record before the learned CIT(A).” 4. The learned Counsel for the Assessee appearing before us, took us though the contest made by the Assessee before the Commissioner of Income Tax (Appeals) which is reproduced from paragraph No.5, as under: “Vehemently contesting the above action of the Assessing Officer, the Authorized Representative of the Appellant stated that... The Assessing Officer made addition without reviewing the details / response filed electronically with the :: 5 :: I.T.A No.:115/CHNY/2022 attachments and bank statements. The said addition is the closing cash balance of the firm as on 31.03.2016. The Assessee firm has earlier has submitted the cash book in detail with explanations during the investigation prior to the assessment. The Assessee could not submit the details at the time called for as the Managing Partner of the firm had a major heart surgery during that time and hence there was a delay which was duly communicated to the Assessing Officer which was not considered and opportunity for hearing before passing the order was not given. Hence, requested to remand the case back to the Assessing Officer for assessment as per the provisions of Rule 46A. Also, when the details were furnished in online the requirement of passing an order u/s.144 is not warranted. Pleading as above, the Authorized Representative prayed for quashing the order passed u/s.144 and deleted the addition made.” 4.1 The learned Counsel for the Assessee further stated that the CIT(A) has simply confirmed the addition by partly :: 6 :: I.T.A No.:115/CHNY/2022 assuming the probability of cash in hand without going through the cash book, which was never produced due to non-granting of a reasonable opportunity of being heard and allowed Rs.5,00,000/- as cash in hand. The relevant finding of the Commissioner of Income Tax (Appeals) reads as under: “The assessment was made under section 144 by adding the cash on hand of Rs.51,11,028/- which was considered huge. The return for the assessment year 2016-2017 wa filed only on 07.11.2017 after demonetization period. There is therefore every likelihood that the Appellant would have inflated the cash on hand to explain the deposits that have been made in the demonetization period. The cash on hand in the last year was only Rs.1,33,587/-. The Appellant had not explained the reasons for such high cash balance with any supporting documentary evidence. Cash book was also not produced. I therefore hold that the Assessing Officer was justified in doubting the huge cash on hand claimed by the Appellant. However, the Assessing Officer is not justified in treating the entire cash balance as inflated one. I would therefore allow the probable cash on hand the Appellant would have on the last day of the accounting year for the assessment year 2016 – 2017 which is estimated at Rs.5,00,000/-. I therefore sustain :: 7 :: I.T.A No.:115/CHNY/2022 the balance disallowance of Rs.46,11,028/- as not explained and dismiss the appeal.” 4.2 In view of the above, the learned Counsel for the Assessee only requested that he is ready to produce the relevant evidences and cash book in case an opportunity is being provided to him. 5. When these facts were confronted to the learned Senior Departmental Representative, he could not controvert on the above factual situation. However, he relied on the assessment order and the order of the CIT(A) and argued that sufficient opportunities were provided. 6. After hearing the rival contentions and going through the facts and circumstances of the case, we note that the assessment is also ex-parte and practically the appellate proceedings before the Commissioner of Income Tax (Appeals) is also ex-parte. Even the order of the Commissioner of Income Tax (Appeals) is a non-speaking order and on the probability of assumption, he had confirmed the cash in hand at Rs.46,11,028/-. We note that the authorities below, i.e., :: 8 :: I.T.A No.:115/CHNY/2022 neither the Assessing Officer nor the Commissioner of Income Tax (Appeals) have not decided the case properly. Hence, we set aside the order of the CIT(A) and that of the Assessing Officer and remand the matter back to the file of the Assessing Officer to decide the issue de novo afresh. 7. In the result, the appeal of the Assessee in I.T.A No.:115/CHNY/2022 is allowed for statistical purposes. Order pronounced in the court on 22 nd July, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अ वाल) (MANOJ KUMAR AGGARWAL) लेखा सद य/ACCOUNTANT MEMBER (महावीर िसंह ) (MAHAVIR SINGH) उपा य /VICE PRESIDENT चे ई/Chennai, दनांक/Dated, the 22 nd July, 2022 IA, Sr. PS आदेशकी ितिलिपअ ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु (अपील)/CIT(A) 4. आयकरआयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड"फाईल/GF