Mr. Meda Raja Kishor Raghuramy Reddy, Gokak V. The Assistant Commissioner of Income Tax, Circle - 2(1), Belagavi

ITA 127/PAN/2022

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8470 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Next Hearing Date: 04-12-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 21-12-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S SHIVSHANKAR
• Assessee Lawyers: SENDING NOTICE THROUGH MAIL OR REGISTERED POST
• Keywords: Unexplained investment; Additional evidence; Set aside
• Section: 131; 68; 69; 144; 234B; 133(6); 250; 246A; 44AB

Judgement Text

।आयकर अपीलीय अिधकरण Ɋायपीठ पणजी, पणजीमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL, PANAJI BENCH : :PANAJI [VIRTUAL HEARING AT PUNE] BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.127/PAN/2022 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 Mr.Meda Raja Kishor Raghuramy Reddy, 173/B-6, Vidyanagar, Gokak – 591307. PAN: AGKPR2696F V s The Assistant Commissioner of Income Tax, Circle-2(1), Belagavi. Appellant/ Assessee Respondent/ Revenue Assessee by Smt.Pratibha R – AR Revenue by Shri P S Shivshankar – CIT-DR Date of hearing 13/02/2024 Date of pronouncement 28/02/2024 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the assessee against the order of ld.Commissioner of Income Tax(Appeals), Hubbali under section 250 of the Income Tax Act, 1961 dated 12.03.2019 emanating from order under section 144 of the Income Tax Act, 1961 dated 25.11.2016. The assessee has raised the following grounds of appeal : ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 2 “1. On the facts and in the circumstances of the case, the ex- parte order passed by the learned Commissioner of Income- tax(Appeals) is opposed to law and against the principles of natural justice and accordingly the impugned appellate order is liable to be set aside. 2. The learned CIT(A) even while passing the order did not considered the facts of the case and grounds of appeal raised by the appellant. 3. The learned CIT(A) ought to have appreciated that the ex- parte order under sec 144 as passed by the assessing authority was unwarranted since the appellant had filed the return of income for the relevant year which was also duly supported by 44AB report furnished along with the return and all the material facts were available in the return and enclosed annexed thereto and in the circumstances the ex-parte order as made was opposed to law and accordingly the CIT(A) ought to have cancelled the order passed u/s.144 of the Act. 4. Without prejudice, even if the order has to be passed under sec 144 of the Act the assessing authority ought to have assessed the sundry creditors was brought to tax u/s 68 of the Act and cash deposits brought to tax u/s 69 of the Act as unexplained investment. The impugned addition as made to the income declared was opposed to law and thus liable to be deleted. 5. The learned CIT(A) erred in confirming the addition of Rs.5,07,087/- made by the AO without verifying that whether the AO has taken the figures correctly or not. The learned AO mentioned in the order at Para 14 there was only one addition of ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 3 Rs.40,063/- towards the interest on deposit. Thus, the impugned addition of Rs.5,07,087/- is baseless and has to be deleted. 6. The learned CIT(A) failed to appreciate that even in the ex- parte the merits of the case have to be considered on every ground raised by the appellant and dispose on merits and having failed do so, the appellate order is unsustainable and liable to be set aside. 7. The learned CIT(A) ought to have appreciated that the sundry creditors which are shown in the balance sheet are genuine transaction and out of this some are opening balances, if the Appellant would have got one more opportunity to explained the same. Thus, the addition made has to be deleted. 8. The Id. CIT(A) ought to have given one more opportunity to the Appellant by sending notice through mail or registered post since all the notices were issued by the CIT(A) was in the portal. Therefore, the Appellant unable to respond or made the submission before the CIT(A). Accordingly, impugned addition confirmed by the CIT(A) is bad in law. 9. The learned CIT(A) ought to have appreciated that the cash deposits were part of it withdrawals and part of his income which was already disclosed in the return, without giving the opportunity the addition cannot be made as unexplained investment u/s 69 of the Act. Thus, the addition as made by the assessing authority is unsustainable and the learned CIT(A) ought to have deleted the impugned addition. 10. The learned CIT(A) ought to have given fair opportunity to the appellant to submit the evidence and to furnish written ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 4 submission before the appellate order is made and having failed do so the impugned order is liable to be set aside. 11. On the facts the impugned estimate of addition as made by the assessing authority as sustained by the CIT(A) is excessive, arbitrary and unreasonable and liable to be deleted. 12. The learned CIT(A) erred in confirming the interest made under sec 234A, 234B of the Act 13. For these and such other grounds that may be urged at the time of hearing, the Appellant prays that the appeal may be allowed.” Brief facts of the case : 2. In this case assessee filed return of income electronically for A.Y.2014-15 on 29.11.2014 declaring total income of Rs.37,60,840/-. Assessee’s case was selected for scrutiny. The Assessing Officer(AO) issued various notices including show cause notice, however, assessee failed to comply. The AO added Rs.6,22,72,638/- under section 68 of the Act as unproved creditors. Thus, the AO added the entire amount of Sundry Creditors appearing in the Balance Sheet. Similarly, AO added Rs.37,23,200/- and Rs.2,39,272/- under section 69 of the Act. In addition to that AO made addition of Rs.5,47,150/- and Rs.31,700/- on account of difference in 26AS statement and ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 5 return of income. Aggrieved by the assessment order, assessee filed appeal before the ld.Commissioner of Income Tax(Appeals), Hubbali. The ld.CIT(A) dismissed the appeal of the assessee. 3. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal. 4. As per affidavit of the assessee, the appeal filed before the Tribunal is delayed by 1330 days which included the period of COVID Pandemic also. Assessee filed affidavit to explain the delay. Assessee claimed in the affidavit that the order of the ld.CIT(A) was uploaded on the Income Tax Portal but the Chartered Accountant and assessee was not aware of the ld.CIT(A)’s order which was on the Income Tax Portal. Assessee realized about the order of the ld.CIT(A) only when the assessee’s chartered accountant opened the Income Tax Portal on 04.11.2022 for filing return of income. The appellant submitted that immediately after that the assessee filed appeal before the Tribunal. ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 6 Submission of the Ld.Authorised Representative(ld.AR) for the assessee: 5. The Ld.AR submitted that there was a valid reason for the delay in filling the appeal. The Ld.AR readout the affidavit. Ld.AR requested for condonation of delay. The Ld.AR also submitted that the assessee had filed all necessary details including confirmations from the creditors before the Ld.CIT(A), however, the Ld.CIT(A) passed the order without considering the submission of the assessee. Ld.AR submitted that the Ld.CIT(A) has not discussed anything and merely confirmed the assessment order. Ld.AR invited our attention to the paper book which contained confirmation letters by the Creditors. Submission of the Ld.Departmental Representative(ld.DR): 6. Ld.DR for the Revenue vehemently submitted that there was no valid reason for the delay and hence delay shall not be condoned. Ld.DR supported the order of the AO and ld.CIT(A). Findings and Analysis : 7. We have heard both the parties and perused the records. ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 7 7.1 Before discussing the issue of Delay in filling appeal we will like to reproduce the relevant part of the cryptic order of the ld.CIT(A). “3. During appeal proceedings, the assessee was given opportunities of being heard on 14.08.2017, 13.09.2017, 11.02.2019 & finally on 11.03.2019. The assessee failed to appear on any of the opportunities afforded but filed a written submission Dt. 14.08.2017, containing photostat copy(s) of ledger extracts of various confirmation of accounts, copy(s) of some ledgers, cash book, bills, vouchers, challans, etc. The assessee was however, unable to produce any reason as to why the information and details called for by the AO during the course of assessment proceedings, was not submitted. The assessee was also unable to produce a person competent to explain the submissions and relevant entries in books of accounts. Thus, as the assessee was unable to make submissions in support of his claim that the AO was not justified in making the additions, I, have no reason to interfere with the order of the AO. 4. As a result, the appeal of the assessee is dismissed.” 7.2 Thus, admittedly the assessee had filed written submission dated 14/08/2017, containing, following documents :  Copy of Ledger extract of various confirmation of Accounts  Copy of Ledgers  Identity and Address proof of Creditors  Cash Books  Bills  Vouchers  Bank statement ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 8  Affidavits  Challans 7.3 On perusal of the Form 35 which is a form of Appeal for filling appeal before the Commissioner of Income Tax(Appeal), which is enclosed with the Appeal, it is observed that assessee had made an application for admission of Additional Evidence under rule 46A. 7.4 However, the Commissioner of Income Tax(Appeal) failed to follow the procedure laid down in Rule 46A. The ld.CIT(A) have discretion to admit the Additional evidence if there was sufficient cause for the assessee which prevented assessee from filling the documents during the assessment proceedings. The discretion has to be used in judicious manner and one must be able to reason out. In this case the CIT(A) has not passed a speaking order for rejecting the additional evidence. The substantial justice is important not the procedure. In this case the AO has added entire Sundry Creditors u/s 68 on the ground that assessee failed to file the details called for. However, it is observed that some of the Sundry Creditors were as under : Jaypee Cement Bangalore Rs.3,86,580/ JSW Cement Bellari Rs.39,95,346/- ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 9 7.5 These are renowned companies and it was possible for the Assessing Officer (AO) to collect the information directly from these companies u/s 133(6) or 131 of the Act. However, the AO has not taken any proactive steps to find the exact details. It is also observed that Assessee had filed copy of Audit report, balance sheet, Profit and Loss account. It is also observed that some of the Creditors also appeared as creditors in earlier years. We do not know whether the AO has initiated any action for earlier years. Be it as it may be, under section 68 the amount which was credited during the year only can be added. However, in this case there was carry forward from earlier years which has not been considered by the AO and ld.CIT(A). 7.4.1 In para 14 of the Assessment Order the AO has stated that as per 26AS statement assessee has received Interest on Fixed Deposit from Ratanakar Bank Ltd , which has not been shown in the Return of Income and accordingly added Rs.40,063/- as undisclosed Interest. However, we have already mentioned that assessee had filed copy of Profit and Loss Account before the AO, on perusal of the Profit and Loss Account for A.Y.2014-15, ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 10 it is observed that the Assessee had shown following Interest Income : Interest Income on Bank Deposits - 53302/- Interest on FD - 56855/- Int on IBS - 88330/- 7.4.2 Thus, the Assessee had shown Interest on FD. The AO has merely added Rs.40,063/-without discussing what was the Total Interest as per 26 AS statement. It is possible that the Interest amount shown by the assessee includes Rs.40,063/- . 7.4.3 The AO has also worked out corresponding FD in the Ratnakar Bank at Rs.507087/- without actually calling the details from the Ratnakar Bank. The AO made addition of Rs.507087 accordingly. However, in the Balance sheet for AY 2014-15 there is specific mention of Fixed Deposit in Ratnakar Bank Account Number 3158 in addition to Bank Deposits of Rs.38,32,006/-. The AO should have called for the details from Ratnakar bank about the Fixed Deposit account number 3158 before making the additions. 7.4.4 The AO has made an addition of Rs.31,700/- as receipt from Gammon India Ltd based on 26AS statement. However, on ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 11 perusal of the Balance Sheet of the Assessee it is observed that on Asset Side Rs.31,700/- appears against the name of Gammon India Ltd. Thus, exact amount and exact name appears in the Balance Sheet. If AO had any doubt the AO could have called for information u/s 133(6) of the Act from gammon India Ltd. 7.5 We have elaborately and specifically discussed all these points only to emphasis that we are of the opinion that admittedly the Assessee failed to comply notices issued by the Assessing Officer, but the Assessing Officer also failed to carry out necessary investigations and to understand the facts in totality. Assessing Officer always have access to the return of income of the assessee for earlier years. The AO has not bothered to study the details shown in the Balance sheets of earlier years. The aim of the Assessment Proceedings is to assessee the correct income of the Assessee. Also, the ld.CIT(A) has not adjudicated each and every ground raised by the Assessee on merits. The ld.CIT(A) also failed to consider the documents filed by the Assessee under Rule 46A. 7.6 In these facts and circumstances of the case, we are of the opinion that substantial justice is more important than the ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 12 technical delays. On identical facts in the case of Gupta Emerald Mines (P.) Ltd. Vs. Pr.CIT,[2023] 156 taxmann.com 198 (SC) [25-09-2023], the Hon’ble Supreme Court has condoned the delay of the assessee and set aside the order of the ITAT .In the case of Gupta Emerald Mines P Ltd the Appellant claimed that Appellant had not received the copy of the order of the CIT(A). The relevant portion of the Hon’ble Supreme Court’s order is reproduced as under : Quote, “ 4. We have noticed that the order of the Commissioner of Income-tax (Appeals) dated 21-2-2013 was communicated to the Appellant only on 18-12-2013. Thereafter, the Appellant immediately obtained a certified copy of the order passed by CIT(A) on 30-12-2013 and preferred an appeal on 6-1-2014. In the facts and circumstances of the case we deem it appropriate to condone the delay. Considering the amount involved in the appeals, we are also of the opinion that the appellant must have an opportunity of contesting the appeals before the Tribunal” Unquote. 7.7 The Hon’ble Bombay High Court has observed in the case of Hindalco Industries Ltd Vs. Pr.CIT, Writ Petition No.569 of 2023 that principle of advancing substantial justice is of prime importance, while considering the question of condonation. ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 13 7.8 Considering the principle of substantial justice, respectfully following the Hon’ble Supreme Court and Hon’ble Jurisdictional High Court, we condone the delay in filling the appeal. 7.9 We have already observed that the ld.CIT(A) failed to adjudicate the grounds of appeal raised by the assessee. Ld.CIT(A) has merely dismissed the appeal. 7.10 The Hon’ble Jurisdictional Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “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 Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 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. Section 251(1)(a) and (b) 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-section (2) of Section 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 ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 14 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 Section 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 with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer 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 Section 251(1)(a) and (b) and Explanation to Section 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.” Unquote. 7.10.1 Thus, Hon’ble Jurisdictional High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution. ITA No.127/PAN/2022 Mr. Meda Raja Kishor Raghuramy Reddy [A] 15 7.11 In these facts and circumstances of the case we set aside the order of the ld.CIT(A) to ld.CIT(A) for de-novo adjudication after giving opportunity to the assessee. 8. Since we have set aside the order of the ld.CIT(A) for de- novo adjudication, we do not intend to adjudicate the assessee’s grounds regarding additions on merits. 9. Accordingly the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 28 th February, 2024. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 28 th Feb, 2024/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध,आयकरअपीलीयअिधकरण,पणजीबᱶच, नागपुर/ DR, ITAT, Bench, Panaji. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT,Pune.