Alkaben Ketulkumar Patel, Ahmedabad V. The DCIT, Circle-3(2), Ahmedabad

ITA 287/AHD/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1310 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 30-06-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 15-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside
• Section: 131; 68; 143(3); 142(1); 133(6); 143(1); 143(2)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Ramit Kochar, Accountant Member Alkaben Ketulkumar Patel, 37, Prerana Park Society, Opp. Krishna Bunglows, Jashodanagar, Ahmedabad-382440, Gujarat PAN: BIQPP8521A (Appellant) v. The DCIT, Circle-3(2), Ahmedabad (Respondent) Assessee by: Shri Parimalsinh B. Parmar, A.R. Revenue by: Smt. Trupti Patel, Sr. D.R. Date of hearing : 01-07-2024 Date of pronouncement : 01-07-2024 आदेश/ORDER This appeal in ITA No. 287/Ahd/2024 for assessment year 2017-18 has been filed by the assessee with Income Tax Appellate Tribunal, Ahmedabad Bench, Ahmedabad which has arisen from the appellate order dated 12 th October, 2023 vide ITA No. 287/Ahd/2024 Assessment Year 2017-18 I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 2 DIN & Order No. ITBA/NFAC/S/250/2023-24/1057026413(1) passed by ld. CIT(A)/NFAC, Delhi , which in turn has arisen from the assessment order dated 25-12-2019 passed by ld. Assessing Officer u/s. 143(3) (DIN and Order No. ITBA/AST/ S/143(3)/2019-20/1023085094(1)) 2. The Grounds of appeal raised by the assessee in memo of appeal filed with ITAT, Ahmedabad Bench, Ahmedabad, reads as under:- “The following grounds are without prejudice to each other. In view of the facts and circumstances of the case - 1. The Learned CIT(A) erred in law and on facts in confirming addition of Rs. 10,00,000/- made by the learned DCIT as unexplained cash credit in the hands of the assessee as per section 68. The Addition confirmed by the learned CIT(A) deserves to be deleted. The same be deleted now. 2. The Learned CIT(A) has erred in not properly appreciating the facts, various submissions, explanations and information submitted by the appellant during the assessment proceedings which ought to have been considered in proper perspective before passing the impugned order. 3. The ex Parte order passed by the Learned CIT (A) is invalid and bad in law as the appellant could not make submissions due to reasons beyond her control. It be so held now. 4. The appellant craves leave to add, amend, alter, delete, change or modify any or all grounds of appeal before or at the time of the hearing.” 4.The brief facts of the case are that the assessee filed return of income for the assessment year 2017-18 on 01-11-2017 , declaring total income of Rs. 21,18,016/-. The return of income was processed by Revenue u/s. 143(1) , at the I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 3 returned income. The case of the assessee was selected by Revenue for framing scrutiny assessment under CASS. Statutory notices were issued by the AO u/s 143(2) and 142(1) to the assessee , and in response thereto, the assessee furnished written submissions and requisites details from time to time. The assessee is running a petrol pump. It was observed by the Assessing Officer that there is a credit entry of Rs. 10,00,000/- by way of addition to the capital account during the year under consideration , for which sources of addition to the capital account with other details were called for by the Assessing Officer from the assessee. The assessee had explained that she had withdrawn cash in the preceding year which has been introduced during the year under consideration. The Assessing Officer doubted the genuineness of the said credit as the Assessing Officer observed that the cash was withdrawn from the last day of the month in definite pattern of withdrawal. The assessee submitted that the assessee has withdrawn cash of Rs. 2.5 lakhs each on 31 st December, 2015, 31 st January, 2016 and 29 th February, 2016 and 31 st March, 2016 respectively aggregating to Rs. Ten lakhs to meet expenses in connection with her brother in law marriage. Her brother in law (divorcee) engagement was fixed with NRI girl named Shreni G Patel residing at Boston, U.S.A. , and marriage was to happen in May , 2016 , but due to some personal reason their engagement was broken and marriage I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 4 got cancelled and the assessee has deposited back all the cash withdrawn into the bank account. Thus, the assessee claimed that she has deposited the cash during the year which was withdrawn in the immediately preceding assessment year. So, the assessee submitted that the said deposits in bank account cannot be treated as income of the assessee u/s. 68. The Assessing Officer rejected the contentions of the assessee by holding that there is a definite pattern in the withdrawal from the bank which assessee could not explain. The assessee has not furnished any reason for withdrawing the amount of Rs. 2.5 lakhs at the end of each month in financial year 2015-16 , If the same was required for marriage of brother in law to be held in May, 2016. The Assessing Officer had also doubted that not even penny was spent out of the entire cash withdrawn. Thus, the assessee having failed to explain the nature and source of deposits of Rs. 10,00,000/- in the books in cash with corroborated evidences, the same was treated by the AO as unexplained cash credit in the hands of the assessee as per Section 68 of the 1961 Act read with Section 115BBE and added to the income of the assessee. 5.Aggrieved, the assessee filed first appeal with ld. CIT(A), who issued notice of hearings dated 13 th January, 2021,10 th August, 2023, 23 rd August, 2023 and 29 th September, 2023 which were claimed by the CIT(A) to have delivered to the I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 5 assessee. The assessee did not file any submissions before the ld. CIT(A) except filing adjournment application in response to the notice dated 13 th January, 2021. Since no submissions/ evidences/documents were filed by the assessee, the ld. CIT(A) dismissed the appeal of the assessee and the assessment order passed by the Assessing Officer was upheld. The ld. CIT(A) has observed that the assesse has failed to explain the nature and source of credit of Rs. 10,00,000/- in the books in cash with corroborated evidence as was held by Assessing Officer, and the order of the assessment passed by the AO was upheld by ld. CIT(A). 6.Aggrieved , the assessee has filed second appeal with Tribunal. At the outset, it is observed that this appeal is filed belatedly by 67 days with the Tribunal, beyond the time stipulated u/s 253(3). The assessee has filed an application for condonation of delay in which it has been explained that the assessee’s business and operations are dependent upon his Manager, Shri Kaushalbhai Patel. It is stated that the brother in law of Shri Kaushalbhai Patel namely Shri Krunal Rajendrabhai Patel expired in January, 2024 after long illness. It is further stated that wife of Shri Kaushalbhai Patel namely Smt. Susmitaben Kaushalbhai Patel got heart problem after hearing the news of death of her brother, and she was hospitalized and kept in ICU. Due to aforesaid reason, Shri I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 6 Kaushalbhai Patel failed to communicate to the Authorized Representative who is looking after the matter regarding the filing of appeal and, hence the appeal could not be filed in time and there was delay of 67 days in filing the appeal beyond the time stipulated u/s 253(3). The prayers are made to condone the delay in filing this appeal belatedly beyond the time provided u/s 253(3) of the 1961 Act. The ld. Departmental Representative did not raise serious objection and left the matter to the discretion of the Bench. After hearing both the parties and considering the materials on record, I am of the considered view that this delay in filing appeal by assessee with ITAT belatedly by 67 days beyond the time prescribed u/s. 253(3) of the Act need to be condoned as the assessee has shown sufficient and reasonable cause in filing this appeal belatedly with ITAT. Further, I do not find any malafide on the part of the assessee in filing this appeal belatedly as the assessee is not likely to gain by filing this appeal belatedly by 67 days beyond the time prescribed u/s 253(3). In my considered view, the assessee has shown sufficient and reasonable cause and hence I condone the delay. When technicalities are pitted against the substantial justice, the Courts will lean towards advancement of substantial justice rather than technicalities. Under the facts and circumstances, I do not find any malafide on the part of the assessee and in the interest of justice, I condone the delay. Reference is drawn I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 7 to the decision of Hon’ble Supreme Court in the case of Collector of Land Acquisition, Anantnag v. Mst. Katiji (1987 AIR 1353(SC)). 6.2On merit, the ld. counsel for the assessee submitted that the CIT(A) has dismissed the appeal of the assessee for non- prosecution by simply upholding the order of the Assessing Officer. It is submitted that ld. CIT(A) has not decided the issues on merit and rather dismissed the appeal ex-parte in- limine without deciding the issues on merit as is required u/s. 250(6). The ld. counsel for the assessee submitted that the matter can be set aside and restored to the file of ld. CIT(A) for fresh adjudication. The ld. Departmental Representative relied upon orders of the authorities below , but fairly submitted that the matter can go back to the file of ld. CIT(A) for fresh adjudication. 7.I have heard both the parties and considered the material on record. I have observed that the ld. CIT(A) dismissed the appeal of the assessee ex-parte in-limine without deciding the issues on merit in accordance with law and order passed by the CIT(A) is not in consonance with the provisions of section 250(6). As per provisions of section 250(6), ld. CIT(A) has to state point for determination, his decision and reasoning thereof. The CIT(A) in the instant case, has simply upheld the I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 8 order of the Assessing Officer. It is true that ld. CIT(A) issued notice of hearing but the whole proceedings effectively were concluded by CIT(A) during the period of two months beginning from the issue of notice on 10 th August, 2023 which culminated into an ex-parte order dated 12 th October, 2023 i.e within short period of two months, if we exclude the first notice dated 13.01.2021 which was during Covid-19 period, and also that the assessee sought adjournment against notice of hearing dated 13.01.2021 which was granted by ld. CIT(A). Thus, in my considered view , effective opportunity of hearing was not provided by ld. CIT(A) to the assessee. It is also observed that assessee has raised grounds of appeal before Tribunal that the ld. CIT(A) has erred in not properly appreciating the facts, comments, submissions/explanation and information submitted by the assessee during the assessment proceedings.The assessee has also raised ground of appeal that the assessee could not make submission to CIT(A) beyond her control. I have observed that the assessee has stated before the Assessing Officer as well as in the statement of facts that the said cash was withdrawn from her bank account in the immediately preceding year from 31 st December, 2015 onwards until 31.03.2016, which was deposited back into bank during the impugned assessment year. The assessee has explained that she withdrew cash from the bank in the immediately preceding financial year to meet I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 9 expenses of marriage of her brother in law which was slated to happen in May,2016, which ultimately got cancelled. The CIT(A) ought to have make independent inquiries and verifications of the claim of the assessee before dismissing the appeal of the assessee. The CIT(A) did not adjudicate this issue as well other issues arising in the appeal on merits, and simply dismissed the appeal of the assessee by upholding the addition made by the Assessing Officer. The power of ld. CIT(A) are co-terminus with the power of Assessing Officer which even includes power of enhancement(Section 251(1)(a)). The ld. CIT(A) is required to adjudicate the issues on merit in accordance with law , as is provided u/s. 250(6). The ld. CIT(A) has to state point for determination, his reasons for decision and the decision thereof as provided u/s 250(6). The CIT(A) has power to make such inquiries as he thinks fit and may also direct AO to make such enquiries and report to ld CIT(A), as is provided u/s 250(4), and to adjudicate issues arising in the appeal before him on merits in accordance with law. The CIT(A) could have issued summons u/s. 131 to the assessee or could have called for information from third parties u/s. 133(6) , in case there is non-compliance on the part of the assessee. The ld. CIT(A) ought to have called for assessment record. There are other powers vested with ld. CIT(A) as is provided under the 1961 Act. The ld. CIT(A) has not rebutted the claim of the assessee, but dismissed the I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 10 appeal of the assessee on ground of non filing of documents/details etc. by the assessee. The ld. CIT(A) is required and obligated to pass order in compliance with the provisions of section 250(6), as ld CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issue are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not appear before ld. CIT(A) or did not comply with the notices in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 11 passed without reasoning on the issues on merits . There is not even mention of the service of the notice by ld. CIT(A) to the assessee. In the present case, it is observed that ld. CIT(A) has dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal before him on merits, and hence the appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld , and that the assessee has not submitted details/documents is not sufficient . The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO. The ld. CIT(A) could have made enquiries himself or have caused enquiries to be made by the AO and submit remand report to him to enable ld. CIT(A) to adjudicate the appeal(Section 250(4)). There are other vast powers vested under the 1961 Act with ld. CIT(A). It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties. The ld. CIT(A) shall pass the I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 12 order in compliance with the provision of section 250(6) of the Act on merit in accordance with law, in set aside proceedings , after giving opportunity to both the parties in compliance with principles of natural justice. The assessee on his part is also directed to comply with the direction/notices of CIT(A) , and in case of failure of the assessee, the ld. CIT(A) shall be free to pass such order as deemed fit ex-parte in accordance with law on merits and after complying with the provisions of section 250(6) of the Act. Thus, the appeal of the assessee is allowed for statistical purposes and the matter is restored back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law. I clarify that I have not commented on the merits of the issues in the appeal. Thus, the appeal of the assessee is allowed for statistical purposes. I order accordingly. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 01-07-2024 at the Conclusion of the hearing and reduced to writing and signed on 03 rd July, 2024 Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Ahmedabad : Dated 03/07/2024 I.T.A No. 287/Ahd/2024 A.Y. 2017-18 Page No. Alkaben Ketulkumar Patel v. DCIT 13 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद