Shaukatali Tajumal Husain, Surat V. ITO, Ward-3(2)(5), Surat

ITA 242/SRT/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1690 (ITAT-SURAT)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-09-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 15-12-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained cash credit; Additional evidence; Reason to believe; Set aside
• Section: 147; 148; 271(1)(c); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 242 & 215/Srt/2021 (Assessment Year: 2009-10) (Physical hearing) Shaukatali Tajumal Husain, House No. 547, Ground Floor, Fulwadi, Zupadpatti, Bharimata Road, Surat-395004. PAN No. ABPPH 1011 C Vs. I.T.O. Ward-3(2)(5), Room No. 608, 6 th Floor, Aayakar Bhavan, Opp. New Civil Hospital, Majuragate, Surat-395001. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Hiren Vepari, CA Department represented by Shri Vinod Kumar, Sr.DR Date of hearing 09/09/2022 Date of pronouncement 12/09/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by the assessee are directed against the separate orders of the learned Commissioner of Income Tax (Appeals)-3, Surat (in short, the ld. CIT(A)/ National Faceless Appeal Centre (NFAC) dated 13/07/2018 and 28/09/2021 for the Assessment year (AY) 2009-10. 2. In ITA No. 242/Srt/2021, the assessee has challenged the addition in quantum assessment, however, in ITA No. 215/Srt/2021, the assessee has challenged the validity of penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 (in short, the Act). ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 2 3. Perusal of record shows that impugned order was passed by ld. CIT(A) on 13/07/2018, however, this appeal was filed by assessee on 16/12/2021, thus, there is considerable delay in filing appeal. In column 3C of Form 36, the assessee has mentioned the date of service of order as 17/11/2021. On confronting such fact, the ld. AR of the assessee submits that though, there is no delay in filing present appeal as the impugned order was received by assessee only on 17/11/2021 and the appeal was filed well within time on 16/12/2021, from the communication/receipt of impugned order, yet the assessee has filed his affidavit for condoning the delay in filing appeal for technical reasons/abandon caution. The ld. AR submits that in the affidavit, the assessee has specifically deposed that appeal in quantum assessment was filed on 12/01/2017. No notice of hearing of appeal was received from the office of ld. CIT(A). The assessee came to know about the dismissal of appeal only when he has received the dismissal order of penalty appeal. The assessee immediately made login on the portal of department and came to know that appeal of assessee has already been dismissed. The ld. AR for the assessee submits that in the affidavit, the assessee clearly made statement on oath that no notice of hearing of appeal was received by him. His statement is duly corroborated by the contents of order of ld. CIT(A). The assessee immediately obtained copy of impugned order by filing application dated ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 3 01/11/2021 for certified copy before the ld. CIT(A)-3, Surat, which was provided to the assessee on 17/11/2021 and filed present appeal before this Tribunal. The ld. AR further submits that the assessee has good case on merit and is liable to succeed if he is given opportunity of hearing on merit as similar addition was made in subsequent assessment year and on further appeal before the ld. CIT(A), the assessee was allowed relief. 4. The ld. AR further submits that he has already filed an application for admission of additional evidence in support of his claim that assessee used his bank account for transmitting the amount of his friends and known person to Bihar or Eastern Uttar Pradesh. 5. On the other hand, the ld. Sr.Dr for the revenue submits that Bench may take decision in accordance with law on the condonation of delay. 6. We have considered the submissions of both the parties. The ld. AR for the assessee vehemently submitted before us that copy of impugned order dated 13/07/2018 was not received by the assessee and that the said order was obtained by assessee by applying certified copy vide application dated 01/11/2021. The assessee has filed his affidavit and the copy of application filed before the ld. CIT(A)-3, Surat for seeking certified copy. On considering the submission of ld. AR of the assessee, we find merit in his submission that impugned order may not have received to the assessee as all the notices sent by ld. CIT(A) were returned back ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 4 unserved. Therefore, keeping in view the fact that when technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice must prevail. We further find that the assessee will not get any benefit in filing appeal belatedly, rather there is chance that the cause of delay explained may not be accepted by appellate authority. Therefore, considering the totality of facts and circumstances of case, the delay in filing appeal in ITA No. 242/Srt/2021 is condoned. 7. In ITA No. 242/Srt/2021, the assessee has raised following grounds of appeal: “(I) Ex-parte order: (1) With the appellant not receiving any of the notices for hearing of appeal, the appeal may kindly be restored back to the CIT(A), NFAC for adequate opportunity. (2) On the facts and circumstances of the case and as per law, the CIT(A), NFAC was not justified in dismissing the appeal. (II) Reopening of assessment: (1) The ld. CIT(A) was not justified in confirming the reopening particularly when the reasons for reopening were not communicated to the appellant. (2) With the reopening thus bad in law, the learned CIT(A) ought to have called for the records and struck down the reopening. (III) Merits: (1) On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming the addition of Rs. 37,00,286 in respect of cash deposited in the bank. (2) The learned CIT(A) ought to have appreciated that the appellant being a small time operator of STD/PCO and hailing from Bihar was ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 5 only rendering services only to large number of people from Bihar who have settle in Surat to send remittances to their relatives in Bihar on paltry commission. (3) Without prejudice to the above, bank account not being books of accounts, deposits therein would not attract provisions of section 68.” 8. Brief facts of the case are that the case of the assessee was reopened under Section 147 of the Act on the basis of AIR information. Notice under Section 148 dated 29/03/2016 was served upon the assessee. The case of assessee was reopened on the basis of information that the assessee had deposited a cash of Rs. 38,15,500/- in his bank account maintained with Axis bank. On the basis of such information, the Assessing Officer have reason to believe that the income of the assessee to the extent of cash deposit in his bank account has escaped assessment. The Assessing officer noted that despite service of notice under Section 148, the assessee failed to file return of income. The assessee was served various show cause notices. The Assessing Officer levied penalty under Section 271(1)(b) on 10/10/2016. The Assessing officer recorded that no compliance was made by assessee. During the assessment, the Assessing officer issued notice to the banker of assessee under Section 133(6) of the Act. In response to such notice, the banker informed that there are total cash credit of Rs. 38,49,326/- in the bank account of assessee. On the basis of information gathered from the banker of assessee and the AIR information available ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 6 with the Assessing officer, he issued show cause notice as to why the total credit of Rs. 38,49,316/- should not be treated as unexplained and undisclosed income. The contents of show cause notice is scanned by the Assessing Officer in para 4 of assessment order. The Assessing Officer recorded that in response to said show cause notice, the assessee filed reply on 11/11/2016 and filed copy of return of income filed on 10/11/2016. The assessee also filed reply vide reply dated 11/11/2016. The contents of reply are scanned in para 5 of assessment order. In the reply, the assessee submitted that he is an uneducated person and working as an assistant in tailoring firm. On the cash deposit, the assessee submitted that he is from Bihar and large number of persons from his area is settled in Surat. The assessee assisted by collecting money from then and sending to Bihar to their respective family. The assessee further submitted that all the letters/notices issued to him was handed over by him to a tax consultant Mr. Zakirbhai who informed him that he is contesting all the notices on his behalf. On receipt of last notice, he contracted Shri N.I. Shukla, tax consultant to take care of his case. The assessee contended that he has no other source of income except earning from STD-PCO booth. The assessee also relied on certain case laws in his reply. The reply of assessee was not accepted by the Assessing officer. The Assessing officer noted that in the reply, the assessee stated that he is ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 7 an uneducated person and working as an Assistant in tailoring firm which is a very vague reason as the assessee has communicated with the department in english language. On the contention that the assessee was assisting a large number of persons from his native place by collecting their money and sending it to their relatives in Bihar was not accepted by taking a view that payment deposited by ash and withdrawal through ATM. The ATM card can only be used by the account holder, how the person in Bihar was withdrawing through ATM, there is no facility in banking system to issue multiple number of ATM cards of a single account holder. On the decision relied upon by the assesse in case of Om Prakash Sharma in ITA No. 2256/Del/2009 and the Bhaichand H Gandhi, Bombay High Court 141 ITR 67 (Bom), the Assessing Officer held that the facts of the said cases have no relevancy with the facts of the present case. The income of assessee as declared in return of income of Rs. 1,49,040/- was reduced from cash credit and thereby addition of Rs. 37,00,286/- was made. 9. On appeal before the ld. CIT(A), the addition was upheld in an ex parte proceeding. The ld. CIT(A) while dismissing the appeal of assessee held that the notice through speed post was sent on four occasions, however, the postal authorities reported a remark “left” and all notices were returned back unserved. The ld. CIT(A) held that in absence of supporting ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 8 details or evidence, the ld. CIT(A) has no reason to deviate from the conclusion drawn by the Assessing officer. 10. Further aggrieved, the assessee has filed appeal before the Tribunal. 11. We have heard the submissions of the ld. Authorised Representative ld. AR) of the assessee and the ld. Senior Departmental Representative (Sr. DR) for the revenue. The ld. AR of the assessee by referring the contents of para 3 of impugned order submits that the ld. CIT(A) in his observation clearly held that “all the notices are returned unserved”. Once the ld. CIT(A) has recorded the finding that notice through registered post was not served, he should have adopted or would have exercised his power to serve the assessee by alternative mode as prescribed in Section 282 of the Act. The ld. CIT(A) dismissed the appeal of assessee without discussing the merit of the case. The order of ld. CIT(A) is not as per the mandate of Section 250(6) of the Act. The ld. AR for the assessee submits that the assessee has good case on merit and is liable to succeed if fair and reasonable opportunity of hearing is given to the assessee. The assessee has not received a reasonable and sufficient opportunity at the time of assessment or at the time of first appellate authority. The ld. AR submits that he undertakes on behalf of assesse that the assessee would be vigilant in future and will not make default in attending the hearing before the lower authorities. The ld. AR submits that one more ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 9 opportunity may be given to the assessee to explain the case before the ld. CIT(A). 12. On the other hand, the ld. Sr.DR for the revenue supported the order of ld. CIT(A). The ld. Sr.DR submits that the assessee was given ample opportunity to represent his case by issuing notice at the given address. The assessee has not even appeared before Assessing Officer. The Assessing Officer levied penalty under Section 271(1)(b) for non- compliance. The ld. Sr.DR submits that the assessee deserve no leniency. 13. We have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. We find that the Assessing officer made addition on account of unexplained cash credit in the bank account of assessee by taking a view that despite giving opportunity, the assessee has not offered any explanation about the nature and source. No documentary evidence was furnished by assessee. The ld. CIT(A) confirmed the action of Assessing Officer in ex parte proceedings. We find that ld. CIT(A) despite recording clear finding that all the notices were returned unserved has not taken any step to serve the assessee by way of alternative modes as prescribed under Section 282 of the Act. We further find that the ld. CIT(A) has not adjudicated the grounds of appeal raised by assessee as per mandate of Section 250(6) of the Act. Section 250(6) mandates that order of ld. CIT(A) must ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 10 contain facts of the case, points of determination and decision thereon and reasons of such decision. Considering the fact that ld. CIT(A) passed the ex parte order, in our view, the assessee was not offered sufficient and reasonable opportunity of hearing, therefore, the order of ld. CIT(A) is set aside and all the grounds of appeal raised by the assessee are restored back to the file of ld. CIT(A) to decide all the grounds of appeal afresh and in accordance with law. Needless to direct that before passing the order, the ld. CIT(A) shall grant reasonable opportunity of hearing to the assessee. The assessee is also directed to be vigilant and not to cause further detail and seek adjournment without any valid reason. The assessee is further directed to file all the relevant evidence in his power and possession, if so desired without any further delay, before the ld. CIT(A). In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes. 14. In the result, appeal of assessee is allowed for statistical purposes. ITA No. 215/Srt/2021 15. In this appeal, the assessee has challenged the order of ld. CIT(A) in confirming the order of penalty dated 28/03/2019. The Assessing officer while passing the penalty order noted that the appeal of assessee was dismissed by ld. CIT(A) and the Assessing Officer levied penalty @ 100% of tax sought to be evaded. On perusal of order of ld. CIT(A) dated ITA No.242 & 215/Srt/2021 Shaukatali Tajumal Husain Vs ITO 11 28/09/2021, we find that the ld. CIT(A) confirmed the order of penalty in ex parte order. Though, ld. CIT(A) had discussed merit of the case. Considering the fact that we have set aside the order of ld. CIT(A) in quantum assessment, therefore, this appeal is also restored back to the file of ld. CIT(A) to decide the penalty appeal after decision in quantum assessment. In the result, the grounds of appeal raised by assessee allowed for statistical purposes. 16. Finally, in the result, both the appeals of assessee are allowed for statistical purposes. Order pronounced in the open court on 12 th September, 2022 in open court and result was placed on the notice board. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 12/09/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat