SHADAB ALI, Lucknow V. Income Tax Officer Range 2(3), Lucknow, Lucknow

ITA 172/LKW/2022

AI Insights

The case involves Shadab Ali, the appellant, who contested the order of the National Faceless Appeal Centre (NFAC), which had dismissed his appeal due to non-compliance. The original assessment by the Income Tax Officer (ITO) included significant additions to the assessee's income, citing unaccounted cash deposits during the demonetization period and unaccounted sales. The Tribunal noted a communication gap between the assessee and his counsel, leading to the non-receipt of necessary compliance dates and the impugned order. Consequently, the Tribunal decided to remand the case back to the ITO for a fresh assessment, emphasizing the need for a fair opportunity for the assessee to present his case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123004 (ITAT-LUCKNOW)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 29-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Non compliance
• Section: 144; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘A’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No.172/Lkw/2022 Assessment Year: 2017-18 Shadab Ali, 120/94, Beldari Lane, Lalbagh, Lucknow. PAN: BEAPA9667Q Vs. Income Tax Officer, Range 2(3), Lucknow (Appellant) (Respondent) O R D E R PER SUDHANSHU SRIVASTAVA, J.M.: This appeal has been preferred by the assessee against the order dated 26.07.2022 passed by the National Faceless Appeal Centre, (NFAC), Delhi for Assessment Year 2017-18. 2. The brief facts of the case are that the assessee had filed his return of income for the captioned assessment year showing taxable income from business at Rs.10,15,550/-. The case was selected for limited scrutiny under CASS guidelines to examine the issue of cash deposited during the year. The assessment was completed u/s. 144 of the Income Tax Act, 1961 (hereinafter called ‘the Act’) at income of Rs.63,75,382/-. After making an addition of Rs.13,19,500/- u/s.69A of the Act on account of cash deposited during the demonetization period. Another addition of Appellant by Ms. Gurmeet Kaur, Advocate Respondent by Shri S.H. Usmani, CIT (DR) Date of hearing 22/05/2023 Date of pronouncement 25/05/2023 I.T.A. No.172/Lkw/2022 2 Rs.40,40,332/- was made by applying the gross profit rate of 8% on alleged unaccounted sales. 3. Aggrieved, the assessee approached the NFAC. However, the NFAC dismissed the assessee’s appeal because of non compliance on the part of the assessee. 4. Now, the assessee has approached this Tribunal (ITAT), challenging the order of the NFAC by raising the following grounds of appeal: “1. Because on the facts and in the circumstances of the case the order of Assessment is bad in law and deserves to be quashed being illegal. 2. Because on the facts and in the circumstances of the case the order of the Assessment is bad in law and being passed by the Ld. AO without assuming proper jurisdiction. 3. Because on the facts and in the circumstances of the case the order of the Assessment no due and proper opportunity of hearing was afforded before the passing of the impugned order. 4. Because without considering the facts and in the circumstances of the case the Ld. CIT has added an amount of Rs. 40,40,332/-as deemed profit of the assessee @ 8 percent when the total income of the assessee was much below the total taxable income. 5. Because without considering the facts and circumstances of the case, the Ld. CIT has erred in law and in facts in adding an amount of Rs. 13,19,500/- under section 69A of the Income Tax Act, 1961 being cash deposited during the demonetization period without considering the fact that such cash deposits were out of sales and receipts from debtors were duly incorporated in the audited books of account of the assessee. 6. That in any case and in any view of the matter, impugned addition/allowance assessment order are bad in law, illegal, unjustified, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed. I.T.A. No.172/Lkw/2022 3 7. The humble assessee, craves for leave to add/amend any other ground with the prior permission of the Hon'ble Tribunal.” 5. At the outset, the ld. Authorized Representative submitted that the captioned appeal before this Tribunal had been filed belatedly and that there was a delay of two days. She pointed out at the delay condonation application filed in this regard and also its supporting affidavit. It was submitted that the assessee had not received any intimations regarding the dates of compliance before the NFAC because the then counsel of the assessee had provided his e-mail-id in Form 35 and later on that counsel did not pass on the necessary information regarding the date of hearing/compliance. It was also submitted that the assessee had not received the impugned order and had come to know of the same having been passed only on receiving an SMS regarding the same. It was submitted that, therefore, the delay had occurred only because of some communication gap between the assessee and his counsel, which was entirely beyond the control of the assessee. It was prayed that the delay be condoned and the appeal be admitted for the purpose of regular hearing. 6. The ld. Sr. DR had no objection to the delay being condoned. 7. The ld. AR submitted that the assessee could not file the required documents and evidences before the NFAC on account of assessee not being aware of the proceeding before the NFAC due to the communication gap between the assessee and the assessee’s counsel. She prayed that the assessee deserves another opportunity to present his case. It was also submitted that even the order of assessment had been passed u/s. 144 of the Act and the required documents could not be filed I.T.A. No.172/Lkw/2022 4 even before the Assessing Officer and, therefore, another opportunity may kindly be provided to the assessee. 8. Per contra, the ld. Sr. DR opposed the assessee’s prayer for being provided with another opportunity and submitted that since the assessee had not appeared either before the Assessing Officer nor had filed the required documents before the NFAC, it was evident that the assessee was a chronic defaulter and, therefore, no further opportunity should be afforded to the assessee. 9. We have heard the rival submissions and have also perused the material placed on record. The fact remains that the assessee could not explain his position before the NFAC for want of communication. Further, even the assessment has been completed u/s.144 of the Act. From the records, it is seen that final opportunity had been provided to the assessee by the AO vide notice dated 20.12.2019 fixing the date of compliance as on or before 19.12.2019 which has an underlying improbability of compliance. In such a situation on the facts of the case, we consider it appropriate to restore the file to the office of the Assessing Officer with the direction to adjudicate the issues afresh after giving proper opportunity to the assessee and, thereafter, decide the issues on merits, in accordance with law. We also caution the assessee that the assessee should avail this opportunity before the Assessing Officer, which is being provided by us, and fully cooperate during the assessment proceedings, failing which, the Assessing Officer shall be at complete liberty to decide the issues on merits, in accordance with law, even ex- parte qua the assessee. I.T.A. No.172/Lkw/2022 5 10. In the final result, the appeal of the assessee stands allowed for statistical purposes. (Order pronounced in the open court on 25/05/2023) Sd/- Sd/- ( ANADEE NATH MISSHRA ) (SUDHANSHU SRIVASTAVA) Accountant Member Judicial Member Dated: 25/05/2023 Aks Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar