Shri Jignesh Kanubhai Patel, Ahmedabad V. The ACIT, Circle-6(1), Ahmedabad

ITA 1181/AHD/2019

AI Insights

This case involves an appeal by Shri Jignesh Kanubhai Patel against the order of the Commissioner of Income Tax (Appeals)-6, Ahmedabad, which upheld the additions made by the Assistant Commissioner of Income Tax under section 143(3) of the Income Tax Act. The additions included undisclosed cash and unaccounted sales of gold and silver. The primary contention was the jurisdiction of the assessing officer and the validity of the additions made. The ITAT found that the matter regarding the reconciliation of excess cash was not adequately addressed by the lower authorities and thus restored it for further examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125689 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 16-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 14-07-2019
• Other Referred Cases: State of West Bengal v. Administrator, Howrah Municipality, Sterlite Industries (India) Ltd. v. Addl. CIT/Jt. CIT, Senior Bhosale Estate (HUF) v. ACIT, Smt. Samanthapudi Lavanya v. ACIT, Bhupindra Food & Malt Industries, Hindustan Transport Co., Punjab Urban Development Authority, Mohali, All India Children Care & Educational Development Society, CWT v. Ravi Malhotra, Abhishek Jain, Elite Pharmaceuticals, Bal Chand Jain & Sons
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Condonation of delay; Set aside
• Section: 148; 132; 143(3); 153A; 143(2); 73; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I. T .A . N o .1 18 1 / Ah d/2 0 1 9 ( A s se ss m e nt Y e a r : 20 15- 16 ) Sh r i J i gn e s h K a nu b ha i P a t el , P/ 9 Pa v a n pu tr a A p a rt m en ts , N r . Sh r e e na ga r So c ie t y, B h a ir av na t h, Ma n i na g ar , A h m e d ab a d- 3 8 00 0 8 V s. A s s is ta n t C o mm i ss i on e r of I nc o m e Ta x, C ir cl e - 6( 1) , A h m e da ba d [ P AN N o. A M I P P0 2 39 J ] (Appellant) .. (Respondent) Appellant by : Shri Hem Chhajed, A.R. Respondent by: Shri Ashok Kumar Suthar, Sr. D.R. D a t e of H ea r i ng 17.07.2023 D a t e of P r o no u n ce me nt 04.08.2023 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals)-6, (in short “Ld. CIT(A)”), Ahmedabad in Appeal No. CIT(A)-6/296/16-17 vide order dated 16.08.2018 passed for Assessment Year 2015-16. 2. The assessee has taken the following grounds of appeal:- “1. The order passed by the Ld. CIT(A) is against law, equity & justice. 2. The Ld. CIT(A) has erred in law and/or facts in upholding order of Ld. A.O. passed u/s 143(3) of the Act though year under reference falls in block of search period and assessment order is passed without approval u/s 153D of the Act. ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 2 – 3. The Ld.CIT(A) has erred in law and/or facts in upholding the addition of undisclosed cash of Rs.82,27,488/- made by the Ld. A.O. 4. The Ld. CIT(A) has erred in law and/or facts in upholding addition made by the Ld. A.O. for Gross profit of Rs.56,990/- being on unaccounted sale of gold. 5. The Ld. CIT(A) has erred in law and/or facts in upholding the addition made by the Ld. A.O. for Gross profit of Rs.32,142/- on unaccounted sale of silver. 6. The appellant Craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.” 3. Further, the assessee has also taken the following additional ground of appeal before us: “1. The assessment order passed Ld AO is without jurisdiction and in contravention to the instruction No. 08 dated 14-08-2002 of CBDT.” Application for condonation of delay 4. At the outset, we observe that the appeal is time-barred by 246 days. The assessee has filed application for condonation of delay along with affidavit, in which the assessee submitted that the Counsel who represented the case of the assessee before Ld. CIT(Appeals) advised the assessee not to file further appeal before ITAT. However, the assessee approach in another counsel, who advised assessee to file appeal before the Tribunal. Accordingly, since the assessee is not conversant with ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 3 – Income Tax Laws, he relied on the advice of the earlier counsel and did not file appeal before the Tribunal. Accordingly, the delay in filing of the present appeal is on account of incorrect advice of the earlier counsel appointed by the assessee, and therefore the same was on account of bona fide reasons. Accordingly, it was requested that the delay may kindly be condoned looking into the facts of the instant case. 5. It is a settled principle of law that the Tribunal, u/s 253 of the Act, may admit an appeal, or cross-objection, after the expiry of prescribed period, if it is satisfied that there was sufficient cause for not presenting it within that period. The Supreme Court in the case of State of West Bengal v. Administrator, Howrah Municipality AIR 1972 SC 749 (SC) held that the expression "sufficient cause" for condonation of delay in section 5 of Limitation Act should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party. The Mumbai ITAT in the case of Sterlite Industries (India) Ltd. v. Addl. CIT/Jt. CIT [2006] 6 SOT 497 (Mum.)]laid down the following proposition on power of ITAT to condone delay: “The expression ‘sufficient cause or reason’ as provided in sub-section (5) of section 253 of the Act is used in identical position in the Limitation Act, 1963 and the CPC. Such expression has also been used in other sections of the Income-tax Act such as sections 274, 273, etc. Keeping in mind the authoritative pronouncement of the Supreme Court, it is an admitted position that the words ‘sufficient cause’ ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 4 – appearing in sub-section (5) of section 253 of the Act should receive a liberal construction so as to advance substantial justice. It must be remembered that in every case of delay, there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If explanation does not smack of mala fide or does not put forth a dilatory strategy, the Court must show utmost consideration to such litigant. Further, the length of delay is immaterial, it is the acceptability of the explanation and that is the only criteria for condoning the delay.” 5.1 The Supreme Court in the case of Senior Bhosale Estate (HUF) v. ACIT [2019] 112 taxmann.com 134 (SC) held that where revenue did not expressly refute stand taken by assessee that they had no knowledge about passing of order of Tribunal, dated 29-12-2003, until June, 2008, assessee's delay of 1754 days in filing appeal before Bombay High Court against Tribunal order was to be condoned. The brief facts of the case were that assessee sought condonation of delay of 1754 days in filing appeals against order, dated 29-12-2003, passed by Tribunal. The assessee pleaded that it had no knowledge about passing of Tribunal's order, until it was confronted with auction notices in June, 2008, issued by competent authority, immediately upon which, assessee filed appeal with High Court. The High Court dismissed assessee’s appeals holding that these were not fit cases in which inordinate delay of 1754 days in filing appeals deserved to be condoned. However, it was found that respondent revenue did not expressly refute stand taken by assessee that they had no knowledge about passing of ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 5 – order, dated 29-12-2003, until June, 2008.The Supreme Court held that unless that fact was to be refuted by the Revenue, question of disbelieving stand taken by assessee on affidavit, could not arise and for which reason, High Court should have shown sympathy to assessee by condoning delay in filing concerned appeal(s). 5.2 The Vishakhapatnam ITAT in the case of Smt. Samanthapudi Lavanya v. ACIT [2021] 127 taxmann.com 188 (Visakhapatnam - Trib.) held that where assessee was under bona fide impression that its appeal had been filed by accountant, but came to know fact of not having filed appeal when there was pressure from department for payment of demand, delay of 492 days in filing appeal was to be condoned, in the interests of justice. 5.3 In view of the facts placed on record by the assessee and light of the judicial precedents referred to above, in the interest of justice, the delay in filing of the present appeal is being condoned. Additional ground of appeal 6. Before us, the counsel for the assessee has taken an addition ground which is to the effect that assessment order was passed by ACIT, Circle 6(1) Ahmedabad u/s 153A of the Act. However, according to CBDT Instruction Number 8 dated 14-08-2002, it is mandatory that search cases shall be centralised in central charges. However, despite this, the Ld. Assessing Officer passed assessment order, who is not in ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 6 – charge of Central Range in violation of aforesaid Instruction of CBDT. The assessee filed RTI application on 24-01-2022 to provide copy of order, if any passed by concerned authority for not assigning the case to Central Charges, however, the aforesaid information was not available on record. Accordingly, it was submitted that the aforesaid assessment order was passed without requisite jurisdiction, and hence the same is void ab initio and hence liable to be set aside. 7. It is a well settled law that no person can call in question the jurisdiction of the assessing officer after the expiry of time limit laid down in subsection (3) of section 124 of the Act which ensures that the objection is raised before the assessment is completed. In the case of Bhupindra Food & Malt Industries [1997] 95 Taxman 203 (HP), the High Court held that assessee not having raised objection regarding jurisdiction within a period of 30 days from receipt of notice under section 147(a), assessment related to assessment year 1964-65, ITO Simla was held to be having proper jurisdiction in the instant case. In the case of Hindustan Transport Co. 63 Taxman 246 (Allahabad), the High Court held that in view of section 124(5)(a), no objection to jurisdiction can be raised after assessment has been completed. Further, the High Court held that allocation of functions to various authorities or officers is one of procedures and any defect arising from allocation of functions is a mere irregularity which does not affect resultant action. In the case of Punjab Urban Development Authority, Mohali 42 taxmann.com 160 (Chandigarh - Trib.), the ITAT held that once a ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 7 – notice under section 143(2) is issued by a particular officer and if assessee wishes to object to such jurisdiction then objection has to be raised in terms of section 124(3)(a) within 30 days of issue of such notice and, in absence of such objection, assessee cannot challenge jurisdiction later on. In the case of All India Children Care & Educational Development Society 41 taxmann.com 20 (Allahabad), the High Court held that Tribunal is not a competent authority to adjudicate upon jurisdiction of Assessing Officer when it is not raised before Assessing Authority. In the case of CWT v. Ravi Malhotra 166 Taxman 253 (Allahabad), the High Court held that where up till stage of assessment no objection whatsoever was taken by assessee relating to jurisdiction of Wealth-tax Officer concerned, it would be presumed that assessee had acquiesced in jurisdiction of that Wealth-tax Officer and, therefore, he could not be permitted to raise such objection subsequently. In the case of Abhishek Jain 94 taxmann.com 355 (Delhi), the Delhi High Court held that in terms of section 124(3)(b) jurisdiction of an Assessing Officer cannot be called in question by an assessee after expiry of one month from date on which he was served with a notice for reopening assessment under section issued notice u/s 148 of the Act. In the case of Elite Pharmaceuticals 73 taxmann.com 69 (Calcutta), the High Court held that where Assessing Officer conducted survey upon assessee and thereafter issued on it a notice under section 148 dated 27-3-2015 and assessee by letter dated 29-4-2015 raised objection to territorial jurisdiction of Assessing Officer, since objection was not raised within 30 days even from date of issuance of notice under section 148, assessee ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 8 – had lost right to raise objection by efflux of time. In the case of Bal Chand Jain & Sons 41 taxmann.com 524 (Allahabad), the High Court held that provisions of sub-section (3) of section 124 bar an assessee from raising question of jurisdiction before first appellate authority or Tribunal if such an objection has not been raised before assessing authority at very first stage. 8. The brief facts of the instant case are that the assessment was completed 31-12-2016 u/s 153A of the Act and the appeal was disposed of by Ld. CIT(Appeals) vide order dated 16-08-2018. However, the assessee now before us vide application dated 17-01-2022 is seeking to challenge the jurisdiction of the assessing officer on the ground that in view of the CBDT Instruction, the concerned officer did not have requisite authority to pass the assessment order. However, the assessee did not object to the jurisdiction of the assessing officer during the course of assessment proceedings and nor any challenge was posed before Ld. CIT(Appeals) during the course of appellate proceedings. Therefore, now, after a period of substantial lapse of time of almost 6 years from completion of assessment, the appeal of jurisdiction cannot be raised at appellate stage before us. Accordingly, the additional ground raised by the assessee is dismissed. 9. In the result, the additional ground raised by the assessee is dismissed. ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 9 – On merits 10. At the outset, the counsel for the assessee submitted that he shall not be pressing for ground numbers 4 and 5 of the assessee’s appeal. Accordingly, grounds 4 and 5 of the assessee’s appeal are dismissed as not pressed. 11. Before us, no arguments were made by the counsel for the assessee with respect to ground number 2. Accordingly, ground number 2 of the assessee’s appeal is dismissed as not pressed. 12. With respect to ground number 3 of the assessee’s appeal, the brief facts of the case are that during the year under consideration, survey was conducted at the premises of the assessee on 19-02-2015. During the survey, cash of ₹ 1,11, 55,000/- was found. The survey was converted into search under section 132 of the Act. The assessee was asked to reconcile the cash found during the course of survey. After considering the statement of the assessee, the assessing officer concluded that the assessee has not explained the excess cash found of ₹ 82,27,488/-. Accordingly, the AO made addition of the aforesaid amount in the hands of the assessee. 13. In appeal before Ld. CIT(Appeals), the assessee submitted that during the course of survey, the assessee had submitted in his statement that that the books of accounts were completed only upto 13-02-2015 and that accounting entries in the books of accounts for the last 4 days were pending to be completed. The assessee submitted that he had requested ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 10 – the search party to allow him to do the needful, but the search party did not allow the same and proceeded to calculate the amount of cash, purchases and sales etc. The assessee submitted that he had to reconcile the cash of ₹ 82, 27,488/- and duly matched the cash physically found by the search party and balance as per the books of accounts after the search. The assessee submitted before Ld. CIT(A) that there is neither any evidence nor any documentary proof or any adverse observation either by the search party or by the assessing officer against him, which proves that there is an undisclosed cash of ₹ 82,27,488/ -. However, Ld. CIT(Appeals) dismissed the appeal of the assessee with the following observations: “After considering all facts and circumstances of the case, I am not inclined to agree with the contention of the appellant. It is seen that admittedly cash of Rs. 1,11,55,000/- was found during the survey action under 131(A) of the Act which was converted into search action u/s 132 of the Act. It is seen that the AO has mentioned that the appellant was asked to reconcile the cash found of Rs. 82,27,488/-. However, the appellant could not reconcile the cash found. It is seen that the AO has made detailed discussion on this issue in the Assessment order. However, as against this the appellant filed very brief and general submissions without any corroborative evidences in support of his submissions. The appellant merely submitted that he was not allowed to complete the books of account but has not given any further evidence. In view of above discussion, I hold that the AO was justified in making ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 11 – addition of Rs. 82,27,488/-. Accordingly, addition of Rs. 82,27,488/- is upheld. This ground of appeal is rejected.” 14. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(Appeals). Before us, the counsel for the assessee submitted that at the time of search, the books were not updated. However, during the course of assessment proceedings, the assessee had submitted a reconciliation of cash and stock from 13-02-2015 till date of search. The counsel for the assessee submitted that the assessing officer rejected the explanation with regards to cash merely for the reason that purchases and sales were not incorporated in the books of accounts. Further, it was submitted by the counsel for the assessee that Ld. CIT(Appeals) has also erred in facts and in law in not appreciating the evidence placed on record and not appreciating that the assessee had given complete reconciliation and evidentiary proof with respect to the excess cash deposited. However, Ld. CIT(Appeals) summarily dismissed the appeal of the assessee without examining the facts placed on record before him. 15. We have heard the rival contentions and perused the material on record. In our considered view, on going to the facts placed on record and the arguments put forth by the counsel for the assessee, we are agreeable with the arguments put forward by the counsel for the assessee that the Department has not analysed/appreciated the evidence placed on record with respect to the reconciliation of the excess cash. We observe that Ld. CIT(Appeals) has summarily dismissed the appeal of the assessee with ITA No. 1181/Ahd/2019 Shri Jignesh Kanubhai Patel vs. ACIT Asst.Year –2015-16 - 12 – the general observation that the assessee could not reconcile the cash found, without pointing out any specific defects in the reconciliation sought to be placed on record by the assessee. Accordingly, in the interest of justice, the matter is being restored to the file of Ld. CIT(Appeals) for giving an opportunity to the assessee to present his case on merits and to provide complete reconciliation of the excess cash found at its premises, along with supporting evidences. 16. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 04/08/2023 Sd/- Sd/- (WASEEM AHMED) (SIDDHARTHA NAUTIYAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 04/08/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 31.07.2023 (Dictated in his Dragon Software) 2. Date on which the typed draft is placed before the Dictating Member 31.07.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 01.08.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .08.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 04.08.2023 7. Date on which the file goes to the Bench Clerk 04.08.2023 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..........................................