SATISH KUMAR, RAJOURI V. INCOME TAX OFFICER WARD-2(3), RAJOURI

ITA 186/ASR/2024

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 5606 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-08-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; TDS; Set aside
• Section: 271(1)(c); 144; 142(1); 234B; 133(6); 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. No. 186/Asr/2024 Assessment Year: 2012-13 Satish Kumar, Block No.02, Balshama, Tala Road, Sunderbani Rajouri 185154, J & K. [PAN: AYPPK 6703P] (Appellant) Vs. Income Tax Officer, Ward-2(3), Rajouri (Respondent) Appellant by Respondent by : : Sh. Munish Arora, ITP Sh. Arvind Bansal, Sr. D.R. Date of Hearing Date of Pronouncement : : 13.08.2024 19.08.2024 ORDER Per Dr. M. L. Meena, AM: The captioned appeal has been filed by the assessee against the order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 08.02.2024 in respect of Assessment Year: 2012-13 challenging therein the 2 ITA No. 186/Asr/2024 Satish Kumar v. ITO confirmation of addition on account of cash deposit in bank account being claimed for insurance purpose. 2. At the outset, the ld. counsel for the assessee stated that the appellant assessee is an insurance agent and during the assessment year under consideration, the clients of the appellant have deposited cash in its bank account for insurance purposes as at that time, there was no online procedure for getting insurance policy. The ld. AR contended that the ld. AO made addition of cash deposited in the appellant’s account as income u/s 69Awhich was unfair and illegal. The Ld. AR argued that during the FY 2011- 12, usually the cash was deposited by the Clients in appellants account for the purpose of insurance policy creation. Thereafter, the said cash deposits in the bank account were withdrawn from appellants account and redeposited it into the company’s account (PNB metlife) and the appellant assessee had received only salary on which TDS has been deducted by the company. Accordingly, he pleaded that salary income may be considered for tax purposes. The Ld. AR requested that this case may be set aside and restored back to the file of the AO to pass denovo order in the interest of natural justice. In support, he has filed a brief synopsis which reads as under: “This is an appeal preferred by the assessee against the order of the Learned CIT(A), National Faceless Appeal Centre, Delhi, wherein the worthy CIT(A) has 3 ITA No. 186/Asr/2024 Satish Kumar v. ITO confirmed the addition made by the Assessing Officer in limine without deciding the grounds of appeal raised before him and also he has not decided the case on merits even. It is relevant to point out that no notice of hearing was received by the assessee from CIT(A). As such, the assessee could not avail the opportunity of hearing. In this case, the assessment was completed on a total income of Rs.21,69,285/- against Nil returned income. It may be pointed out that in this case, the assessment year involved is 2012-13 and assessment was completed u/s 144/147 vide order dated 11/11/2019. From the assessment order it is clear that the assessment was completed in the name of the assessee at the following address: Shri Satish Kumar S/o Shri Om Parkash Block No.02, Balshama, Tala Road, Sunderbani, Rajouri - 185154 I would like to bring following facts into your knowledge in order to prove that the notice was not served on the assessee: (i) That I was earlier residing at Block No.02, Balshama, Tala Road, Sunderbani, Rajouri and I was working as Branch Manager of PNB Metlife Insurance Co. (ii) That later on in the year 2008,I shifted to Jammu and was residing independently in Jammu later on I shifted to my father-in-law at House No. 79, Raghunath Pura, Jammu. (iii) That I did not receive any notice from the department. As such I could not comply the notices issued by the department from time to time. (iv) That the department issued notice u/s 133(6) to Manager, J&K Bank, Jammu for statement relating to FY 2011-12 which is available on paper Book Page No. 10 to 18 and on Page No. 10, the address of the assessee is clear. Whereas the department was sending the notices to theassesseeon old address/wrong address. (v) That it is clearly proved that notice has not been sent u/s 142(1) to the assessee. 4 ITA No. 186/Asr/2024 Satish Kumar v. ITO (vi) That the department has not used the correct address which was given to them by the bank authorities. Refer Page 10 to 18 of Paper Book. The CIT(A) has not decided any issue in this appeal but the worthy CIT(A) in Para 5.2 of his order has reproduced the observation made in the assessment order. It is relevant to point out that no notice u/s 142(1) was served on the assessee. It appears that notice u/s 142(1) might have been served at some other place where the assessee was not residing on his old Address. So, the assessee did not receive any notice of hearing. Earlier, the assessee was residing at Block No.02, Balshama, Tala Road, Sunderbani, Rajouri and I was working as Branch Manager of PNB Metlife Insurance Co. at Rajouri. The assessee shifted to Jammu and left this village in the year 2008 and was residing independently and later on he shifted to in-laws house. It is further relevant to point out that even the E-Mail did not belong to him. In this connection, I am enclosing herewith the copy of bank statement of Jammu & Kashmir from 01/04/2011 onwards where from it is clear that the address of the assessee is Raghunath Pura, Jammu [Refer Page No.10 to 18 of the paper- book]. In this connection, I am also filing the affidavit which will speak for itself[ReferPage No.7 to 9 of the paper-book]. Thus, it is crystal clear that the assesseedidnot get any opportunity of being heard by the AO as well as by the CIT(A). The assessment order was passed u/s 144/147 dated 11/11/2019. Furthermore, even no notice of hearing was received from CIT(A). Thus, the assessee got no opportunity of being heard from the authorities below. As such, the order of the CIT(A) is bad in the eyes of law for the reasons explained hereinbelow: (i) That grounds of appeal which were raised by the appellant before the worthy CIT(A) are reproduced in Para 3 of the order of the CIT(A) which are again reproduced hereunder: “1. The Ld. AO has considered cash deposited in the account as income u/s 69A which was unfair and unreasonable. During the FY 2011-12, usually cash deposits by the Clients in my account for insurance purpose as at that time online procedure was not there for policy creation. And after collection of 2-3 days, total cash deposited withdraw from my account and re- deposited back into the company (PNB Metlife) account. Only salary received by me should be considered as my income on which TDS has been deducted by the company. 5 ITA No. 186/Asr/2024 Satish Kumar v. ITO 2. That I was not residing at that place where notice has been served since 2008 also no notice received on my mail, so assessment u/s 144 was unfair and unreasonable. 3. Interest u/s 234A and 234B may kindly be deleted. 4. Penalty u/s 271(1)(c) may kindly be deleted. ” The CIT(A) should have decided the grounds of appeal raised before him. The statement of facts filed by the appellant before the Ld. CIT(A) are also reproduced in Para 4 of the order of the CIT(A) which are also reproduced hereunder: “1. That the assessee was working with PNB Metlife since 2008 as Branch Manager, Sunderbani on salary basis (And area falls under Assessee was Rajouri, Nowshera, Poonch at that time). 2. That notice was issued u/s 142(1) on 25.03.2019 and subsequently on 24.09.2019 as per Assessment order which was not received by the assessee because assessee was not residing at that place since 2008 in reference to cash deposit amounting to Rs.21,69,285/-.” Thus, it is crystal clear that neither the CIT(A) has considered these grounds of appeal raised before him nor he has adjudicated these grounds of appeal. The Td. CIT(A) has not at all considered the grounds of appeal raised before him and he has not given any finding thereon. It may be further submitted that the Td. CIT(A) has also not decided the case on merits. Thus, the order of the CIT(A) is bad in the eyes of law and the same is liable to be cancelled. It is further relevant to point out that Ld. CIT(A) has cited 10 instances of fixing the case but in this connection we may very kindly point out that the Ld. CIT(A) has not been able to mention any date of service of notice. The CIT(A) has only mentioned the date of issuance of notice and date of hearing of the case. He has not been able to cite the date of service of notice on the assessee. It is further relevant to point out that service of notice before deciding the case ex- parte is necessary. In this connection, your kind attention is invited to the decision of P&H High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship, Ludhiana vs. CIT (Exemptions), Chandigarh in CWP No: 21028 of 2023 (O&M), date of order: 04/03/2024. This judgment was accepted by ITAT, Amritsar Bench in the case of Ankush Sharma s/o Sh. Dharam Chand, Raipur, Mahanpur, Kathua (J&K) vs. ITO, Ward-6, Kathua (J&K) in ITA No: 93/Asr/2024, 6 ITA No. 186/Asr/2024 Satish Kumar v. ITO order dated 30/04/2024 relating to AY 2017-18.[Refer Page No.19 to 26 of the paper-book] At this stage, we would like to reproduce section 250(4) and 250(6) as under: “(4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the Assessing Officer to make further inquiry and report the result of the same to the Commissioner (Appeals). ” “(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state points for determination the decision thereon and the reason for the decision.” It may be further submitted that this appeal has not been decided even on merits also as is the requirement of law u/s 250(4) and 250(6) as observed in the case of C1T vs. Prem kumarArjunda (2107) 297 CTR 614 (Bombay) (supra).[Refer Page No. 27 to 29 of the paper-book] It may be further pointed out that this case may be set aside and restored back to the file of the AO to pass denovo order in the interest of natural justice. This view finds support from the decision of Supreme Court of India in the case of Tin Box Co. vs. CIT reported in 249 ITR 216 in which their Lordships of Supreme Court of India observed as under: “Assessment — Opportunity of being heard — Setting aside of assessment - Assessment Order must be made after the assessee has been given reasonable opportunity of setting out his case — Same not done — Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts — Assessment order set aside and matter remanded to assessing authority for fresh consideration.” Furthermore, your kind attention is invited to the decision of ITAT, Amritsar Bench, Amritsar in the case of Sh. Manjit Singh vs. ITO in ITA No: 44/Asr/2022 dated 17/11/2022 and it was observed in Para 10 as under: [Refer Page No. 30 to 39 of the paper-book] “10. In view’ of the principles of natural justice and considering the factual matrix of the case, we are of the considered view, that the appellant assessee should get an opportunity to explain and substantiate the nature 7 ITA No. 186/Asr/2024 Satish Kumar v. ITO cash deposits in the alleged bank account with the support of material evidence relevant for the year under consideration. Accordingly, we consider it deem fit to restore back the matter back to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record before him during the appellate proceedings, and to be filed in fresh proceedings after granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh proceedings.” Both the above cited judgments were followed byITAT, Amritsar Bench, Amritsarin the case of Muzafar Ahmad Kawdari vs. ITO,Ward 3(2), Srinagar in ITA No:29/Asr/2023, order dated 12/05/2023. A copy of the judgment is enclosed herewith It may be further submitted that the same question cropped up before ITAT, Amritsar Bench, Amritsar in the case of Prabhat Enterprises vs. ITO in ITA No: 340 & 341/Asr/2023 order dated 28/05/2024 and the Learned Bench set aside the matter and restored back to the file of the AO with the remarks in Para 5 which is being reproduced hereunder: | Refer Page No.40 to 44 of the paper-book] Rerer Page 43 & 44 of the paper-bookl “5. Heard both the sides, perusalof material on record, impugnedorder, case law cited before us.We find that both the lowerauthorities have passed the order ex- parte qua the assessee without the proper service of notices. It is seen that the AO has issued notice u/s 142(1) for calling return of income on or before 13.03.2018 through email and duly delivered upon the assessee’s registered email address that remain un-rebutted. However, the Id. Counsel for the assessee contended that as per the clarification issued by CBDT vide Letter F. No. 225/363/2017-ITA.II, North Block, N. Delhi, dated 15 lh November, 2017. Clause (3) on handling of cases as per the Standard Operating Procedure (SOP) clause (5) states that notice u/s 142(1) shall be issued electronically as well as through postal. The evidence of service of notice as well as postal remarks (in case of return of notice) should be preserved carefully. Where notice could not be served either electronically or through postal authorities, then, personal service through departmental ITIs/Notice-servers should be made. The Id. AR further argued that there is a gross violation of principles of natural justice, as the AO and the Id. CIT(A) has decided the matter in violation of principles of natural justice. He accordingly, requested that the matter of disputed cash deposits in the Bank A/c may be restored back to the AO with the direction to pass a denovo assessment order after granting sufficient and adequate opportunity of being heard with proper services of notice. Accordingly, we consider it deem fit to 8 ITA No. 186/Asr/2024 Satish Kumar v. ITO remand back the matter to the file of Id. Assessing Officer to pass a denovo order after considering the material available on record and may be filed during the course of hearing. The AO is further directed to grant adequate opportunity of being heard in view of the principles of natural justice. The Hon’ble ITAT Amritsar Bench in the case of Sh. Manjit Singhv. ITO in ITA No:44/Asr/2022 in respect of AY 2017- 18 order dated 17.11.2022 has observed vide para 10 as under: “10. In view of the principles of natural Justice and considering the factual matrix of the case, we are of the considered view, that the appellant assessee should get an opportunity to explain and substantiate the nature cash deposits in the alleged bank account with the support of material evidence relevant for the year under consideration. Accordingly, we consider it deem fit to restore back the matter back to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record before him during the appellate proceedings, and to be filed in fresh proceedings after granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh proceedings.” Even otherwise, the CIT(A) in this case has miserably failed to decide the case even onmerits.Thus, viewed from all the angles, the order of the CIT(A) is bad inthe eyes of law and the same deserves to be cancelled.” 3. The Ld. DR on the other hand, supported the impugned order. However, he has no objection to the request of the assessee. 4. We have heard both sides, perused the material on record, impugned order and written submissions filed before us. Admittedly, the Ld. CIT(A) and the AO has passed the orders exparte qua the assessee without granting adequate opportunity of being heard and appreciating the merits of the case. The Ld. CIT(A) has observed that in view of the non-cooperation exhibited and keeping in view the fact that no reply has been filed by the assessee 9 ITA No. 186/Asr/2024 Satish Kumar v. ITO despite being afforded sufficient opportunities, the assessment was passed to the best of AO’s judgment in accordance with the provisions of section 144B of the Income tax Act, 1961 based on the information available on record. He further observed that there has been no response by the appellant and that the appellant has nothing to say or produce any documentary evidence in support of grounds raised to substantiate its claims and is not able to controvert the assessment order. However, the CIT(A) has not decided the issue on merits of the case and he has not discussed the factum of service of the notices issued by the AO and the CIT(A) to the appellant assessee. 5. The Ld. AR contended that no notice u/s 142(1) was served on the assessee as there was change of address and it appears that notice u/s 142(1) have been served at old place where the assessee was not residing and the assessee did not receive any notice of hearing. The AR contended that earlier, the assessee was residing at Block No.02, Balshama, Tala Road, Sunderbani, Rajouri and he has shifted to Jammu and left this village in the year 2008 and was residing independently and later on he shifted to in-laws house. It is further relevant to point out that even the E-Mail did not belong to him. In this connection, He has enclosed the copy of bank statement of Jammu & Kashmir from 01/04/2011 onwards where from it is clear that the 10 ITA No. 186/Asr/2024 Satish Kumar v. ITO address of the assessee is Raghunath Pura, Jammu [Refer Page No.10 to 18 of the paper-book]. In support, he has also filed an affidavit [ReferPageNo.7to 9 of the paper-book].Thus, it is clear that the assessee did not get proper opportunity of being heard either in the course of Assessment proceedings or appellate proceedings before the AO as well as by the CIT(A) respectively. 6. The Hon’ble Supreme Court of India in the case of Tin Box Company vs. CIT reported in 249 ITR 216 has observed as under: “Assessment - Opportunity of being heard - Setting aside of assessment - Assessment order must be made after the assessee has been given reasonable opportunity of setting out his case - Same not done - Fact that the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is assessment order that counts — Assessment order set aside and matter remanded to assessing authority for fresh consideration.” 7. On identical facts, the Coordinate ITAT Amritsar Bench in the case of Sh. Manjit Singhv. ITO in ITA No:44/Asr/2022 in respect of AY 2017-18 order dated 17.11.2022 has observed vide para 10 as under: “10. In view of the principles of natural Justice and considering the factual matrix of the case, we are of the considered view, that the appellant assessee should get an opportunity to explain and substantiate the nature cash deposits in the alleged bank account with the support of material evidence relevant for the year under consideration. Accordingly, we consider it deem fit to restore back the matter back to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record before him during the appellate proceedings, and to be filed in 11 ITA No. 186/Asr/2024 Satish Kumar v. ITO fresh proceedings after granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh proceedings.” 8. In the above view, we consider it deem fit to restore back the matter to the file of the Ld. AO to pass de novo assessment order after considering the written submission and evidence filed on record and may be filed before him during the fresh assessment proceedings. The AO shall grant sufficient opportunity of being heard to the assessee who undertakes to cooperate in the de novo assessment proceedings before the AO. 9. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 19.08.2024 Sd/- Sd/- (Udayan Dasgupta) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T. True Copy By Order