SANJAY MEGHAJIBHAI SACHAPARA, SURAT V. INCOME TAX OFFICER, WARD-9(4), SURAT, AAYAKAR BHAVAN

ITA 161/SRT/2024

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6627 (ITAT-SURAT)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-05-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 13-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RASESH SHAH
• Keywords: Business income; Opportunity of being heard; Principle of natural justice; Reasonable cause; Set aside
• Section: 271(1)(c); 144; 143(3); 142(1); 143(2); 72

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आ.अ.सं./ITA Nos.161-162/SRT/2024 (AY 2008-09) (Hearing in physical court) Sanjay Meghajibhai Sachapara 5, Swaminarayan Div-3, Nr. Surat Diamond Girls High School, Surat- 395006 [PAN No: BDRPS 9197 M] Vs Income Tax Officer Ward-9(4)(2), Surat, Aayakar Bhawan, Majura Gate, Surat- 395001 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Rasesh Shah, CA राजˢ की ओर से /Revenue by Shri J.K.Chandnani, Sr-DR अपील पंजीकरण/Appeal instituted on 14.02.2024 सुनवाई की तारीख/Date of hearing 30.05.2024 उद्घोषणा की तारीख/Date of pronouncement 06.06.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by assessee are directed against separate order of National Faceless Appeal Centre, Delhi [for short to as “Ld. NFAC/Ld.CIT(A)”] dated 02.01.2024 and 29.12.2023 for same assessment year i.e., 2008-09, in ITA No.162/SRT/2024, the assessee has challenged the addition in the quantum assessment, wherein in ITA No.161/SRT/2024, the assessee has challenged the validity of penalty levying under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 23.06.2011. As certain facts in both appeals are common, thus, both the appeals were clubbed and heard together. Appeal in quantum assessment in ITA No.162/SRT/2024 is treated as “lead” case and are ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 2 decided by common order. The assessee has raised the following ground of appeal:- “1. The Ld.CIT(A) has erred in not admitting the appeal of assessee by considering that the assessment order was delivered on 27.12.2010 although the receipt doesn’t bear the name and signature of assessee but someone else. According to the assessee, the assessment order was received on 03.10.2017 and hence there is no delaying filing of appeal. 2.Without prejudice to the above, the Ld. CIT(a) ought to have condoned the delay in the interest of natural justice. 3. On the facts and circumstances of the case as well as the law on subject, the Ld. Assessing Office has erred in conducting assessment proceedings u/s 143(3) of the I.T. Act, 1961 as the assessee has not received a proper notice u/s 143(2) of the Act and hence the proceedings are liable to be quashed. 5.On the facts and circumstances of the case as well as law on the subject, the Ld. CIT(A) has erred in confirming the action of Assessing Office by making an addition of Rs. 38,900/- on account of agriculture income treated as business income of the assessee. 6. It is therefore prayed that the above addition / disallowance may please be deleted. 7. Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.” 2. Rival submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Sr. Departmental Representative (Ld. Sr-DR) for the Revenue have been heard and record perused. The Ld. AR for the assessee submits that Assessing Officer passed the assessment order under section 144 of the Act on 16.12.2010 was not served upon the assessee, in fact, no notice of ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 3 assessment proceedings was ever served upon the assessee. The assessment was completed under section 144 of the Act. The Assessing Officer (AO) while passing assessment order made addition on account of credit entries in the bank account by treating as unexplained income. The Assessing Officer made addition of Rs.36,18,899/- on account of unexplained income. The Assessing Officer also made addition by making disallowance of agricultural income of Rs. 38,900/- for want of details. The Ld. AR of the assessee reiterated that such assessment order was not served upon the assessee. The assessee came to know about the order only when recovery proceedings were initiated by Department. The assessee immediately approached before AO through his Authorized Representative for obtaining the copy of assessment order and various other notices. The AO provided copy of assessment order only on 03.10.2017, such date is mentioned on the demand notice as well as the assessment order. The assessee immediately filed appeal before Ld.CIT(A) on 01.11.2017. The appeal was filed with in time from date of communication of the assessment order. All such facts were pleaded / mentioned in the statement of fact filed along with Form-35, while filing appeal before Ld. CIT(A). The Ld. CIT(A) dismissed the appeal in limine by not condoning delay in filing appeal by holding that on verification of fact, from the jurisdiction of Assessing Officer about assessment proceedings, the Assessing Officer served notice u/s 143(2) dated 28.08.2009 and notice under section 142(1) dated 07.04.2010 by way of Speed Post. Further, the ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 4 Ld.CIT(A) extracted the copy of Acknowledgement Due (in short, ‘AD’) card about delivery of assessment order and penalty proceedings by way of Speed Post. The Ld. AR of the assessee while referring the copy of A/D of Speed Post as extracted on page-6 of the impugned order submits that he fairly accept that the Mobile telephone number mentioned on such copy of A/D card is of assessee, however, it does not bear the signature of assessee. The Ld. AR of the assessee submits that there was no delay in filing appeal before Ld.CIT(A) and from the date of communication of order. The assessee has good case and is likely succeeds if one more opportunity to give to contest the case on merit. The Ld. AR of the assessee submits that no fair and proper opportunity was given to assessee either at the stage of assessment proceedings or at the First Appellate Authority, though assessment was completed under section 144 as well as appeal of assessee was dismissed unadmitted. The Ld. AR of the assessee further submits that period of delay is not irrelevant rather the reasons disclosed for explaining the delay is more important. The assessee has, in fact, not received any notice as the assessee was available on the address mentioned in the A/D card. The Ld.CIT(A) in para-6.3 of his order accepted that notice under section 143(2) was served by affixing which clearly indicates that assessee was not available on the given address. The Ld. AR further submits that AO levied penalty of Rs. 40,000/- under section 271(1)(b) on 23.06.2011, against which assessee filed appeal before Ld.CIT(A), in 1 st November 2017. The ld CIT(A) admitted appeal by on ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 5 similar set of fact, though the said appeal was dismissed on merit. Copy of order of ld CIT(A) in penalty under section 271(1)(b) is filed on record. To support his submission, Ld. AR of the assessee relied upon following decisions:  Venkat Naicken Trust vs. ITO [1999] 107 Taxman 391 (Mad)/[2000] 242 ITR 141 ((Mad)/[2001] 166 CTR 461 (Mad)[15-07-1998]  Dina Nath vs. CIT [1994] 72 Taxman 174 (Jammu & Kashmir)/[1993] 204 ITR 667 (J&K)[08.04.1993]  CIT vs. Rajesh Kumar Sharma [2007] 165 Taxman 488 (Del)/[2009] 311 ITR 235 (Del)[13-08-2007]  CIT vs. Dr.Ajay Prakash [2014] 42 taxmann.com 387 (All)[2014] 226 Taxman 71 (All (Mag.) [12.09.2013]  ACIT vs. Prem Kumar Rastogi [1980] 124ITR 381 (All) [05.02.1980] 3. The Ld.AR of the assessee finally prayed that delay in filing appeal before Ld.CIT(A) which was sufficiently explained may be condoned and matter may be restored back either to file of Ld.CIT(A) or to Assessing Officer to pass de novo assessment order in accordance with law. The Ld. AR for the assessee undertakes that assessee will be more vigilant in future and will make compliance of all the notices as and when called for by Assessing Officer. 4. Against the grounds of appeal, in ITA No.161/SRT/2024, the Ld. AR of the assessee submits that grounds of appeal in case the appeal in quantum assessment is restored back to the file of lower authorities, by condoning the delay in filing appeal before CIT(A), the penalty under section 27(1)(c) will not survive. 5. On the other hand, Ld. Sr-DR for the Revenue supported the order of lower authorities. Ld. Sr-DR for the Revenue submits that A/D card of service of ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 6 assessment order, clearly bears the signature of respondent and telephone No. is mentioned as of assessee. The Ld. Sr-DR for the Revenue submits that delay in filing appeal before Ld.CI(t(A) was inordinate delay which was not condoned and assessee failed to show any reasonable cause in filing appeal belatedly. The Ld. Sr-DR for the Revenue submits that delay in filing before Ld.CIT(A) may not be condoned, however, in alternative and without prejudice submits, in case Bench is of the view that assessee deserves any leniency of delay in filing appeal before Ld. CIT(A) deserved to be condoned, the matter may be restored back to the file of Ld.CIT(A) for adjudication on grounds of appeal and on merit with the direction to assessee to make timely compliance and not to take deliberate delay of non-service of notice issued by authorities below. 6. We have considered the submission of both the parties and perused the order of lower authorities carefully. We have also deliberated on various case laws relied by the assessee. Before the facts brought before us, it is a fact that notice under section 143(2) was not served in ordinary manner, rather it was served by affixation. This fact is endorsed by ld CIT(A) in his order. The direction of affixation of notice is generally made when, either the person is not available at the given address or avoiding the service of notice. There is no fact on record to suggest that the assessee was avoiding the service of notice. Before us, the ld AR for the assessee vehemently argues that the assessee came to know about the order only when recovery proceedings were initiated by department and he ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 7 immediately approached AO through his Authorized Representative for obtaining the copy of assessment order and various other notices. The AO provided copy of assessment order only on 03.10.2017, such date is mentioned on the demand notice as well as the assessment order. It is the case of assessee that the assessee immediately filed appeal before Ld.CIT(A) on 01.11.2017. The appeal was filed with in time from date of communication of the assessment order. All such facts were pleaded / mentioned in the statement of fact filed along with Form-35, while filing appeal before Ld. CIT(A). On appreciation of the submissions of ld AR for the assessee, we find convincing force that the assessee not only filed appeal in quantum assessment order, but also filed appeal against the penalty levied under section 271(1)(b). On perusal of order of ld CIT(A) dated 01.03.2019, against the penalty under section 271(1)(b), copy of which is filed on record, we find that said appeal of the assessee though filed on similar set of fact, was adjudicated on merit. Though there is no express order on condoning the delay, yet it can easily be inferred that the similar facts mentioned while filing appeal against penalty under section 271(1)(b), the appeal was treated in time. However, in appeal against the quantum assessment was treated as filed belatedly. Thus, keeping in view all the facts and circumstances of the present case, when the assessee right from the beginning is pleading that assessment order was not served rather it was received on approaching the AO, we find that the assessee filed appeal well in time from the date of receipt of assessment order on ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 8 17.10.1019. Hence, the delay if any in filing appeal before CIT(A) is condoned. 7. We find Before us, the Ld. AR for the assessee undertakes that assessee will be more vigilant in future and will make compliance of all the notices as and when called for by Assessing Officer. Thus, considering overall facts and circumstances and ground of appeal raised by assessee, we set aside the impugned ex parte order, passed by ld CIT(A) and restore the matter back to the file of assessing officer with the liberty to assessee to furnish complete details about the source of investment or other evidence, if any. We direct the Assessing Officer to consider all such evidence and documents pass assessment order afresh in accordance with law. Needless to direct that before passing the order afresh, the Assessing Officer shall grant reasonable opportunity of being heard to the assessee. The assessee is also given liberty to furnish complete details and to raise all factual issues. The assessee is also further directed to be more vigilant and to make compliance in time as and when called for by Assessing Officer. In the result, the grounds of appeal raised by the assessee in quantum assessment is allowed for statistical purpose. 8. In the result, the appeal of the assessee is allowed for statistical purpose. 9. Considering the facts that we have restored the grounds of appeal in quantum assessment to the file of AO, the penalty under section 271(1)(c) will not survive. However, the AO is given liberty to initiate fresh penalty in ITA No.161-162/SRT/2023 (A.Y 08-09) Sanjay M Sachapara 9 accordance with law. In the result, the grounds of appeal in ITA No. 161/SRT/2024 is also allowed for statistical purpose. 10. In the result, both the appeals of the assessee are treated allowed for statistical purposes. Order pronounced in open court on 06/06/2024 Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] सूरत /Surat, Dated: 06/06/2024 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT By order 5. DR 6. Guard File Senior Private Secretary/ Assistant Registrar, ITAT, Surat copy/ // True Copy //