M.V. Sathyanarayana, V. ITO,

ITA 1683/BANG/2013

• Counselvise Citation: 168321114 RSA 2013
• Duration Of Justice: 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 04-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO. 1683 /BANG/201 3 (ASSESSMENT YEAR : 200 9 - 10 ) SHRI M.V. SATYANARAYANA, NO.333, TALAKAVERI LAYOUT, AMRUTHHALLI, BYATARAYANAPURA, BANGALORE - 560 092 PAN AEZPS 8698H VS. INCOME TAX OFFICER, WARD 6(4), BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI G.N. BHAT, C.A. RESPONDENT BY : SHRI P. DHIVAHAR, JCIT (D.R) DATE OF H EARING : 8.10.20 1 4 . DATE OF P RONOUNCEMENT : 24.10 . 201 4 . O R D E R PER SHRI JASON P. BOAZ, A.M. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, BANGALORE DT.30.09.2013 FOR ASSESSMENT YEAR 2009 - 10. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER : - 2.1 THE ASSESSEE, AN INDIVIDUAL WHOSE INCOME IS OUT OF SALARY AND COMMISSION, FILED HIS RETURN OF INC OME FOR ASSESSMENT YEAR 2009 - 10 ON 24.4.2009 DECLARING INCOME OF RS.4,63,670. THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSING OFFICER SUBSEQUENTLY COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ' THE ACT'). BY ORDER DT.30.12.2011 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.37,97,770 AS AGAINST THE RETURNED INCOME OF RS.4,63,370. THIS WAS DUE TO THE ASSESSING OFFICER TREATING CASH, AMOUNTING TO RS.33,34,100 , DEPOSITED IN THE ASSESSEE'S BANK ACCOUNTS IN THE PERIOD UNDER CONSIDERATION AS UNEXPLAINED. 2 ITA NO. 1683/ BANG/ 20 1 4 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 DT.30.12.2011, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) II, BANGALORE. THE LEARNED CIT (APPEALS) DISMISSED THE ASSESSEE'S APPEAL VIDE ORDER DT.30.9.2013. 3. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) II, BANGALORE FOR ASSESSMENT YEAR 2009 - 10 DT.30.9.2013 AND IS BEFORE THIS TRIBUNAL RAISING THE FOLLOWING GROUNDS IN HIS APPEAL : - 1. THE ORDER OF THE LEARNED CIT (APPEALS) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN NOT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. 3. THE LEARNED CIT (APPEALS) ERRED IN PASSING THE APPELLATE ORDER THOUG H AN ADJOURNMENT WAS GRANTED AS PER THE EVIDENCE AVAILABLE WITH THE APPELLANT. 4. THE APPELLANT ENTERTAINED A BELIEF THAT THE MATTER WILL BE HEARD ONCE AGAIN AND ON THE APPOINTED DATE, HE COULD GIVE EXPLANATION. UNFORTUNATELY, THE APPELLATE ORDER HAS BEEN PASSED MUCH BEFORE THE DATE FIXED FOR HEARING. 5. THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION MADE IN THE ORDER OF ASSESSMENT TO THE EXTENT OF RS.33,34,100. 6. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE APP ELLANT DID NOT HAVE ADEQUATE OPPORTUNITY TO EXPLAIN THE SOURCE BEFORE THE ASSESSING OFFICER ALSO. 7. THE LEARNED CIT (APPEALS) SHOULD HAVE APPRECIATED THE CIRCUMSTANCES UNDER WHICH THE CASH CAME TO BE DEPOSITED INTO THE BANK ACCOUNT. 8. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THERE WAS COMMUNICATION GAP BETWEEN THE APPELLANT AND THE AUTHORIZED REPRESENTATIVE NOT ONLY AT THE STAGE OF ASSESSMENT, BUT ALSO IN THE APPELLATE STAGE, WHICH PREVENTED THE APPELLANT TO ADDUCE MATERIAL EVIDEN CE IN SUPPORT OF HIS CASE. 9. THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THE PLEA THAT IN CASE THE ADDITION HAS TO BE UPHELD, IT CANNOT BE ANYTHING MORE THAN THE PEAK CASH CREDIT TAKING INTO ACCOUNT THE CASH WITHDRAWALS IN THE VERY BANK ACCOUN TS WHERE THE CASH WAS FOUND TO HAVE BEEN DEPOSITED. 10. THE LEARNED CIT (APPEALS) ERRED IN NOT FOLLOWING THE RATIO OF THE DECISIONS QUOTED BEFORE HER FOR ADJUDICATION OF THE APPEAL. 11. THE LEARNED CIT (APPEALS) ERRED IN SUMMARILY BRUSHING ASIDE TH E CASE LAWS RELIED UPON WITHOUT DISCUSSING THE APPLICABILITY AND THE RATIO OF THOSE JUDGEMENTS. 12. THE LEARNED CIT (APPEALS) SHOULD HAVE APPRECIATED THAT THE APPELLANT HAD ADEQUATE EXPLANATION FOR THE SOURCE FOR DEPOSIT OF CASH INTO HIS BANK ACCOUNT. THE AMOUNT REPRESENTED THE MONEY CONTRIBUTED BY THE MEMBERS OF HIS FAMILY FOR CONSTRUCTION OF HIS FATHER S BUILDING AND THE APPELLANT S BANK ACCOUNT WAS ONLY A CONDUIT FOR THOSE TRANSACTIONS . THE APPELLANT WAS IGNORANT AND INNOCENT. AS NOTED BY THE CIT (APPEALS), HE DID NOT HAVE ANY SOURCE OF INCOME (OTHER THAN WHAT IS DECLARED) FROM WHICH HE COULD GENERATE CASH AND DEPOSIT IN THE BANK ACCOUNT. 3 ITA NO. 1683/ BANG/ 20 1 4 13. THE LEARNED CIT (APPEALS) OUGHT NOT TO HAVE OBSERVED IN THE APPELLATE ORDER IN HARSH WORDS LIKE THE AP PELLANT S TEMERITY IN TRYING TO JUSTIFY A WRONG DOING HAS TO BE TREATED WITH CONTEMPT AND DISDAIN AND THE APPELLANT PRAYS FOR ITS EXPUNCTION. 14. FOR THESE AND SUCH OTHER REASONS THAT MAY BE PUT FORTH AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT T HE ORDER OF THE CIT (APPEALS) BE SET ASIDE AND THE ADDITION MADE IN THE ORDER OF ASSESSMENT BE COMPLETELY DELETED. 15. WITHOUT PREJUDICE AND IN THE ALTERNATIVE, IT IS PRAYED THAT LEARNED ASSESSING OFFICER BE DIRECTED TO EXAMINE THE DETAILS AVAILABLE WI TH THE APPELLANT AND DELETE THE ADDITION WRONGLY MADE IN THE ORDER OF ASSESSMENT. 4.1.1 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE WAS HEARD IN SUPPORT OF THE GROUNDS OF APPEAL RAISED. HIS ARGUMENTS WERE PRIMARILY IN RESPECT OF THE TECHN ICAL ISSUES LIKE LACK OF ADEQUATE OPPORTUNITY BEING AFFORDED TO HIM BY THE LEARNED CIT (APPEALS) TO FURNISH DETAILS AND FAILURE ON THE PART OF LEARNED CIT (APPEALS) TO EXAMINE HIS CASE WITH REGARD TO THE AIR INFORMATION OF CASH DEPOSITS OF RS.33,34,100 IN HIS VARIOUS BANK ACCOUNTS IN THE RELEVANT PERIOD. IT WAS VEHEMENTLY ARGUED THAT THE ORDER OF THE LEARNED CIT (APPEALS) IS BAD IN LAW AND LIABLE TO BE QUASHED AND SET ASIDE AS THE IMPUGNED ORDER DT.30.9.2013 WAS PASSED IN SPITE OF THE ASSESSEE BEING GRANTE D ADJOURNMENT OF APPELLATE HEARING TO 24.10.2013 BY THE OFFICE OF THE LEARNED CIT (APPEALS). IN THIS REGARD THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE DREW OUR ATTENTION TO PAPER BOOK FILED BY THE ASSESSEE, WHEREIN AT PAGES D - 12 AND 13 IS A COP Y OF LETTER DT.1.10.2013 ADDRESSED BY THE ASSESSEE TO THE LEARNED CIT (APPEALS) REQUESTING FOR ADJOURNMENT OF HEARING. THE LEARNED AUTHORISED REPRESENTATIVE BROUGHT TO OUR NOTICE THAT AT PAGES D - 13 , THE SEAL OF THE OFFICE OF THE CIT(APPEALS) II, BANGAL ORE IS AFFIXED DULY ACKNOWLEDGING THE RECEIPT OF THE LETTER, THE PRESENCE OF SRI SATYANARAYANA AND ADJOURNMENT OF THE APPELLATE HEARING TO 24.10.2013. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT THIS FACT ITSELF WOULD BE SUFFICIENT TO ESTABLISH THA T THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) IS BAD IN LAW AND IS LIABLE TO BE QUASHED FOR THE REASON THAT THE IMPUGNED ORDER COULD NOT HAVE BEEN PASSED ON 30.9.2013 WHEN THE APPELLATE PROCEEDINGS / HEARINGS WERE STILL ON GOING AND NOT COMPLETE; WITH THE NEXT DATE OF HEARING FIXED ON 24.10.2013. IN THIS REGARD THE LEARNED AUTHORISED REPRESENTATIVE HAS PUT FORWARD WRITTEN SUBMISSIONS ALSO. 4 ITA NO. 1683/ BANG/ 20 1 4 4.1.2 THE LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT APART FROM THE FACT THAT THE PASSING OF TH E IMPUGNED ORDER HAS RESULTED IN A GRAVE MISCARRIAGE OF NATURAL JUSTICE, THIS HAS ALSO BEEN FAILURE ON THE PART OF THE LEARNED CIT (APPEALS) TO BRING TO TAX THE CORRECT INCOME OF THE ASSESSEE BY NOT EXAMINING THE BASIC ISSUE IN QUESTION, I.E. THE SOURCE OF CASH DEPOSITS AMOUNTING TO RS.33,34,100 IN THE ASSESSEE'S BANK ACCOUNTS IN THE RELEVANT PERIOD. THE LEARNED AUTHORISED REPRESENTATIVE ALSO OBJECTED TO THE HARSH LANGUAGE USED BY THE LEARNED CIT (APPEALS) IN THE IMPUGNED ORDER, AND MO R E SPECIFICALLY TO THE APPELLANTS TEMERITY I N TRYING TO JUSTIFY A WRONG DOING HAS TO BE TREATED WITH DISDAIN . A T PARA 3.4 OF THE ORDER. 4.1.3 ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE, A PERUSAL OF THE NON - SPEAKING IMPUGNED ORDERS OF THE LEARNED CIT (APPEALS) AND THE ASSESSING OFFIC ER WOULD CLEARLY ESTABLISH THAT THE ASSESSEE'S CONTENTION THAT THE AUTHORITIES BELOW HAD NEITHER AFFORDED HIM ADEQUATE OPPORTUNITY OF BEING HEARD NOR HAD EXAMINED THE SOLE ISSUE BEFORE THEM I.E. THE AIR INFORMATION WITH RESPECT TO THE SOURCE OF THE CASH D EPOSITS AMOUNTING TO S.33,34,100 IN THE ASSESSEE'S BANK ACCOUNTS. THE LEARNED AUTHORI SED REPRESENTATIVE PRAYED THAT ON THESE TECHNICAL GROUNDS ALONE, THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) BE SET ASIDE FOR DE NOVO CONSIDERATION TO THE FILE OF THE ASSESSING OFFICER. 4.3 .1 WE HAVE HEARD BOTH THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE OF REVENUE AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD ON THE ISSUE OF THE INFIRMITIES IN IMPUG NED ORDER OF THE LEARNED CIT (APPEALS) AS CANVASSED BY THE ASSESSEE ABOVE. FROM THE DETAILS ON RECORD, IT IS SEEN THAT THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2009 - 10 WAS TAKEN UP FOR SCRUTINY FOR EXAMINATION, INTER ALIA, OF THE SOURCE OF CASH DEPOSITS O F RS.33,34,100 IN THE ASSESSEE'S BANK ACCOUNTS IN THE RELEVANT PERIOD AS PER AIR INFORMATION REC EIVED . FROM A PERUSAL OF THE BRIEF ORDER OF ASSESSMENT, IT APPEARS THAT THE SAME WAS BROUGHT TO TAX AS INCOME IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF FAILU RE ON HIS PAT TO FILE DETAILS OF THE SOURCE OF CASH DEPOSIT WITH EVIDENCES. THERE IS NOT A MENTION OF THIS ISSUE IN THE ORDER OF ASSESSMENT. 5 ITA NO. 1683/ BANG/ 20 1 4 4.3.2 FROM A PERUSAL OF THE OPERATIVE PART OF THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS), AT PARA 3.3 AND 3.4 OF THE ORDER, WE FIND THAT THE LEARNED CIT (APPEALS) HAS DISPOSED OFF THE APPEAL IN A SUMMARY MANNER. ADMITTEDLY, IN THE FEW HEARINGS CONDUCTED, THE LEARNED CIT (APPEALS) HAS DECIDED THE ISSUE IN QUESTION AGAINST THE ASSESSEE ON THE BASIS OF CAREFUL CONSIDERATION OF . THE SUBMISSIONS MADE ORALLY AT THE TIME OF APPEAL HEARING AND PERUSED THE ASSESSMENT RECORD. AS OBSERVED EARLIER, THE ASSESSMENT ORDER IS A BRIEF ONE AND CONTAINS NOT A WHISPER OF EXAMINATION OF THE SOURCE OF CASH DEPOSITS IN THE A SSESSEE'S BANK ACCOUNT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO FILE DETAILS CALLED FOR IN THIS REGARD. I T IS NOT CLEAR TO US AS TO WHAT MATERIAL THE LEARNED CIT (APPEALS) HAS CAREFULLY CONSIDERED FROM THE SAID ORDER OF ASSESSMENT OR THE ORAL SUBMISSIONS O F THE ASSESSEE. THE FINDING OF THE LEARNED CIT (APPEALS) IS ALSO INDICATIVE OF THE FACT THAT THE ASSESSEE HAD NOT YET FILED ANY DETAILS IN THE COUPLE OF HEARINGS , BEFORE THE LEARNED CIT (APPEALS) DISMISSED THE ASSESSEE'S APPEAL BY THE IMPUGNED ORDER DT.3 0.9.2013, WHICH WAS ACKNOWLEDGED TO HAVE BEEN SERVED ON THE ASSESSEE ON 7.10.2013. WE FAIL TO UNDERSTAND AS TO WHAT WAS THE HURRY ON THE PART OF THE LEARNED CIT (APPEALS) TO PASS THE IMPUGNED ORDER ON 30.9.2013, WHEN HER OFFICE ITSELF HAS ON 1.10.2013 ADJ OURNED THE APPELLATE HEARING IN THE ASSESSEE'S CASE TO 24.10.2013, OSTENSIBLY SINCE THE IMPUGNED ORDER WAS NOT PASSED TILL THEN. IN OUR UNDERSTANDING, THE FACTUAL POSITION THAT EMERGES IS THAT THE LEARNED CIT (APPEALS) HAS PASSED THE IMPUGNED ORDER DURING THE PENDENCY OF AND BEFORE THE COMPLETION OF APPEAL HEARINGS IN THE CASE ON HAND FOR ASSESSMENT YEAR 2009 - 10. THIS ACTION ON THE PART OF THE LEARNED CIT (APPEALS), IN OUR CONSIDERED VIEW, WHICH IS IRREGULAR TO SAY THE LEAST, HAS GROSSLY VIOLATED THE PRIN CIPLES OF NATURAL JUSTICE BY DENYING THE ASSESSEE THE OPPORTUNITY OF THE APPEAL HEARING FIXED BY HER OFFICE FOR 24.10.2013 AND FURTHER IS THE FAILURE TO ADDRESS, THE BASIC ISSUE OF THE BRINGING TO TAX IN THE ASSESSEE'S HANDS THE CORRECT INCOME ARISING ON E XAMINATION AND VERIFICATION OF THE CASH DEPOSITS OF RS.33,34,100 IN THE ASSESSEE'S BANK ACCOUNTS IN THE RELEVANT PERIOD. ALL THESE FACTS IN OUR VIEW WOULD CLEARLY RENDER THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) TO BE BAD IN LAW. 6 ITA NO. 1683/ BANG/ 20 1 4 4.3.2 WE, THE REFORE, IN THE INTEREST OF JUSTICE AND EQUITY SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) AND RESTORE THE MATTER TO THE FILE OF THE LEARNED CIT (APPEALS) FOR FRESH ADJUDICATION AFTER EXAMINATION AND VERIFICATION OF THE AIR INFORMATION ON THE ISSUE OF CASH DEPOSITS OF RS.33,34,100 IN THE ASSESSEE'S BANK ACCOUNTS IN THE RELEVANT PERIOD, ONLY AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS / SUBMISSIONS IN THIS REGARD. S INCE THIS ISSUE HAS NOT BEEN EXAMINED B Y THE ASSESSING OFFICER, THE SUBMISSIONS / DETAILS FILED BY THE ASSESSEE ARE TO BE FORWARDED TO THE ASSESSING OFFICER FOR HIS EXAMINATION, VERIFICATION AND REPORT THEREON. THE ASSESSEE'S SUBMISSIONS AND THE ASSESSING OFFICER S REPORT WILL BE DULY CONSIDER ED BY THE LEARNED CIT (APPEALS) BEFORE ADJUDICATING THIS ISSUE IN ACCORDANCE WITH LAW. IT IS ORDERED ACCORDINGLY. 5. IN VIEW OF OUR FINDING ABOVE, SETTING ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) FOR ASSESSMENT YEAR 2009 - 10 DT.30.9.2013, WE REFRAIN FROM COMMENTING OR ADJUDICATING ON THE MERITS OF THE ISSUE OF AIR INFORMATION REGARDING THE CASH DEPOSITS OF RS.33,34,100 IN THE ASSESSEE'S BANK ACCOUNT IN THE RELEVANT PERIOD. 6. IN THE RESULT, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2009 - 1 0 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER, 2 01 4 . SD/ - SD/ - ( N.V. VASUDEVAN ) ( JASON P BOAZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER *REDDY GP