Shri Rajiv Kailashbhai Chhabra, Surat V. Income Tax Officer, Ward 1(3)(4), Surat

ITA 318/SRT/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 7488 (ITAT-SURAT)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 07-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Rule of consistency; Reasonable cause; Corroborative evidences; Condonation of delay; TDS; Set aside
• Section: 147; 69; 148; 271(1)(c); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA Nos. 316, 317, 318, 319 & 320/Srt/2023 (Assessment Years: 2011-12, 2012-13 and 2017-18) (Physical hearing) Rajiv Kailashbhai Chhabra,, 8/7, 1 st Floor, Khatodara Industrial Society, Behind Sub-Jail, Khatodara, Surat-395002. PAN No. AAOPC 8556 B Vs. I.T.O., Ward 1(3)(4), Surat. Appellant/ Assessee Respondent/ Revenue Assessee represented by Shri Sapnesh Sheth, C.A. Department represented by Shri Ritesh Mishra, CIT-DR Date of hearing 30/04/2024 Date of pronouncement 30/04/2024 Order under Section 254(1) of Income Tax Act PER: BENCH: 1. This group of five appeals by the assessee(s) are directed against the separate orders of the National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals) [in short, the ld. CIT(A)] all dated 21/03/2023, for the Assessment Year (AY) 2011-12, 2012-13 and 2017-18 respectively. In all these appeals, certain facts are almost common, therefore, with the consent of parties, all the appeals were clubbed, heard together and are decided by common order to avoid the conflicting decision. ITA No. 316 & 318/Srt/2023 are arising out of quantum assessment for the A.Y. 2011-12 and 2012-13. ITA No. 317 & 319/Srt/2023 are arising out of penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 (in short, the Act) for the A.Y. 2011-12 and 2012-13 respectively. ITA No. 320/Srt/2023 relates to quantum ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 2 assessment for A.Y. 2017-18. For deciding all these appeals, we take ITA No. 316/Srt/2023 for the A.Y. 2011-12 as a lead case. In this appeal, following grounds of appeal have been raised by the assessee. “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A), N|FAC has erred in confirming the action of assessing officer of reopening assessment by issuing notice u/s 148 of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in passing ex- parte order u/s 144 of the I.T. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in passing the order without providing reasonable opportunity of hearing to assessee. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in making addition of Rs. 8,85,39,212/- u/s 69 of the IT Act. 5. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals), NFAC has erred in confirming the action of assessing officer in making addition of Rs. 11,24,399/- as undisclosed income under the IT Act. 6. It is therefore prayed that above addition made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted. 7. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of appeal.” 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that appeal of the assessee was dismissed by the ld. CIT(A) in limine by not condoning the delay in filing appeal. Though, the ld. CIT(A) adjudicated the issue on merit, yet the addition in the assessment order was upheld in a cryptic manner without discussing the merits of the case. The ld. AR of the assessee submits that even the assessment order was passed under Section 144 of the Act. Thus, ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 3 no fair and proper opportunity was given to the assessee either during the assessment or at the time of first appeal. 3. The ld. AR of the assessee submits that in fact no notice during the assessment was served upon the assessee as the address of assessee was changed. Thus, in absence of proper notice, no compliance was made. The Assessing Officer made huge addition on account of credit in the bank account of assessee. Entire credit in the bank account can never be an income of assessee. The ld. AR of the assessee submits that during the assessment for A.Y. 2017-18, the assessee was served with the demand notice for A.Y. 2011-12 and 2012-13. On service of such demand, the assessee requested/ approached the Assessing Officer for supply of copy of assessment orders for both the years, vide his application dated 16/01/2020. Copies of assessment orders was supplied to the assessee by the Assessing Officer vide his letter dated 14/02/2020. Copy of application dated 16/01/2020 and copy of letter of Assessing Officer dated 14/02/2020 is filed on record at page No. 9 and 10 of paper book. On receipt of assessment order for A.Y. 2011-12 and 2012-13, the assessee immediately within 30 days, filed appeal before the ld. CIT(A) on 14/03/2020. The assessee while filing appeal in Form 35, explained the reasons for delay in filing appeal. The ld. AR of the assessee invited our attention on column 15 of Form 35 wherein the assessee has contended that the assessee came to know about the assessment order when recovery notice was issued by Assessing Officer. The assessee categorically contended in the statement of fact that the assessment order passed on 06/11/2018 was served (supplied) to the assessee only on 18/12/2020. The ld. AR of the assessee by referring the aforesaid ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 4 contention as recorded in column 15 of Form 35 would submit that the ld. CIT(A) has not appreciated the fact in a proper manner. There was reasonable and sufficient cause for condonation of delay. Though, there was no delay in filing such appeal from the date of communication of assessment order. The ld. AR of the assessee submits that the superior courts in various decisions have held that the condonation of delay is a matter of discretion of the Court and such discretion can be exercised judiciously if the delay is within certain limit. The length of delay is no matter, acceptability of the explanation is the only criteria. Even the delay of very long length can be condoned if the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion. The ld. AR of the assessee further submits that it is also held by the various courts that primary function of the court is to adjudicate the dispute between the parties and to advance substantial justice. The time limit for approaching the court in different situations in not because on the expiry of such time a bad cause would transform into a good cause. Rule of limitations are not meant to destroy the right of parties in case the delay is not condoned, it would amount for closing a right of party. There is no presumption in law that delay in approaching the court is always a deliberate. The ld. AR of the assessee submits that the superior court has also held that when technical considerations are kept against the cause of substantial justice, the cause of substantial justice may be preferred. To support the various contentions, the ld. AR of the assessee relied upon the following case laws:  N. Balakrishnan Vs. M. Krishnamurthy AIR 1998 Supreme Court 3222. ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 5  Shakuntala Devi Jain Vs Kuntal Kumari and Ors AIR 1969 SC 575.  Vasantbhai Soni Vs State of Gujarat (M.A. No. 8967 of 2016),  Ultrasound Education & Research Foundation Vs DCIT, CPC, Lucknow ITA 134 & 135/Lkw/2021. 4. On merit, the ld. AR of the assesse submits that it is settled position under Income tax that only real income may be brought to tax and not total transaction or not the entire credit or deposits in the bank. The assessee was engaged in the business of commission agent of textile and in cheque discounting and there is very low margin in such business transactions. To support such contention, the ld. AR of the assessee relied on the following decisions:  Brij Bhushan Lal Parduman Kumar Vs CIT 115 ITR 524 (SC)(1978)  CIT-VII Vs Pradeep Shatilal Patel 42 taxmann.com 2 (Gujarat)(2014) 5. The ld. AR of the assessee further submits that the Assessing Officer as well as the ld. CIT(A) passed the order in absence of compliance or evidence by assessee, thus, the matter may be restored back to the file of Assessing Officer with the liberty to the assessee to furnish detailed submission along with corroborative evidence to substantiate the cash deposit and other credits in the bank accounts. The ld. AR of the assessee submits that he has good case on merit and is likely to succeed if the delay is condoned and his case is considered on merit. 6. The ld. AR of the assessee further submits that that in ITA No. 317 and 319/Srt/2023, the assessee challenged validity of penalty levied under Section 271(1)(c) of the Act. In case, the grounds of appeal in quantum appeal is ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 6 restored back to the file of Assessing Officer, the penalty levied on addition made in ex parte proceedings would not survive. 7. On the other hand, the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue supported the orders of lower authorities. The ld. CIT-DR for the revenue submits that the appeal was filed before the ld. CIT(A) after 15 months of passing the assessment order. The ld. CIT(A) passed a reasoned order in not condoning the delay. On merit of the case, the ld. CIT-DR for the revenue submits that both the authorities below passed order on the basis of material available on record, the tax authorities have no option except to pass best judgment assessment, when the assessee has not made compliance to the notices. The ld CIT-DR for the revenue prayed for dismissal of all the appeals. 8. We have considered the submissions of both the parties and have gone through the orders of the lower authorities carefully. We have also deliberated on the various documentary evidences as well as case laws relied upon by the ld. AR of the assessee. We find that the case of assessee was reopened on the basis of information that the assessee has made cash deposit of Rs. 2.02 crores in savings bank account and received commission and brokerage income of Rs. 11,24,399/-. The Assessing Officer recorded that various notices were issued to the assessee but no response was made by the assessee. The Assessing Officer noted that in absence of explanation, the cash deposit remained unexplained which leads to conclusion of escapement of income. The Assessing Officer after recording reasons, reopened the case under Section 147 of the Act. Notice under Section 148 of the Act was issued to assessee on 28/03/2018. ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 7 The Assessing Officer recorded that despite issuing several show cause notice as recorded on page No. 2 of assessment order, no response was made by assessee. The Assessing Officer obtained information from IndusInd bank wherein the assessee was maintaining two bank accounts, as recorded in para 3 of assessment order. The bankers of assessee informed that there was a total credit of Rs. 8.85 crores which includes cash deposit of Rs. 7.83 crores. As the assessee has not made any compliance, the Assessing Officer in absence of compliance, made addition of Rs. 8.85 crores as unexplained investment under Section 69 of the Act and addition of Rs. 11,24,399/- on account of commission and brokerage receipt in the assessment order dated 06/11/2018 passed under Section 144 r.w.s. 147 of the Act. The Assessing Officer also initiated penalty under Section 271(1)(c) of the Act. 9. We find that the assessee filed appeal before the ld. CIT(A) on 14/03/2020. In the column No. 15 of Form-35, the assessee explained that assessment order was not served on the assessee and the assessee came to know about passing of assessment order when notice for recovery of demand was served by the Assessing Officer. The assessee also stated that copy of assessment order was supplied to the assessee only on 18/02/2020. The assessee pleaded that not filing appeal within stipulated time was beyond their control and have no intention to file appeal belatedly. The assessee requested for condoning the delay. We find that the ld. CIT(A) in para 6.1 of his order, has recorded such fact. We further find that the appeal of assessee was dismissed in limine by taking view that the assessee failed to make out a case of condonation of delay in filing appeal. It was also held that the conduct of assessee can be understood ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 8 by the fact that he has not filed return of income and not made any compliance during the assessment. 10. We further find that on merit as well, the assessee filed his submission as recorded in para 5 of order of ld. CIT(A) wherein the assessee has contended that he is earning commission from textile trading on which TDS was made. The assessee was also engaged in cheque discounting. The assessee received a very low percentage of income. We find that the ld. CIT(A) confirmed the addition that the assessee has not filed return of income, the assessee failed to prove the source of cash deposit. We find that from the evidence placed on record that the assessee has received copy of assessment order for A.Y. 2011- 12 and 2012-13 only through letter of Assessing Officer dated 14/02/2020. We find that there is no dispute of date of filing appeal before the ld. CIT(A) on 14/03/2020. We further find that no contrary fact was brought on record by Assessing Officer or by the ld. CIT(A) that the assessee was served assessment order before supplying of copy of assessment order prior to 14/02/2020. We find that the stand of assessee throughout the proceeding is that no notice either during the assessment is served nor the assessment order came to the notice of assessee. Thus, in our considered view, the appeal was filed within 30 days from the receipt/communication of assessment order. Yet we find that as the assessee has shown sufficient and reasonable cause for condoning the delay by explaining all the facts while filing of appeal, thus the delay if any before ld CIT(A) deserve to be condoned. Thus, keeping in view the principle that there is no presumption under law that delay in filing appeal was intentional or deliberate, moreover the assessee is not going to be benefited ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 9 by filing appeal belatedly. Considering the decisions of various courts relied by the ld. AR of the assessee, the delay in filing appeal before the ld. CIT(A) is condoned and the order of ld. CIT(A) in dismissing the appeal in limine on the issue of limitation is set aside. 11. Considering the fact that the ld. CIT(A) has discussed the merit of the case, therefore, we deem it appropriate to examine the validity of order of ld. CIT(A) on merit. We find that the ld. CIT(A) while upholding the addition made by Assessing Officer held that the assesse failed to prove the source of cash deposit and that the case laws relied by assessee does not support the grounds of appeal. We are in agreement with the contention of ld AR for the assessee that the entire credit entry or cash credit can never be the income of account holder. When the assessee is engaged in business or profession, only a reasonable or real profit can be taxed and not the entire transaction. Considering the fact that the assessment was completed under Section 144 of the Act and the addition was confirmed by the ld. CIT(A) for want of sufficient evidence, therefore, we deem it appropriate that the assessee deserve one more opportunity to explain the nature and source of credit in his bank account, therefore, the grounds of appeal raised by assessee is restored back to the file of Assessing Officer to reconsider the matter and pass order afresh in accordance with law. Needless to direct that Assessing Officer shall grant reasonable and fair opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in future and not to cause further delay and to furnish all the details and evidences to substantiate cash and credit in his ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 10 bank accounts. In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes. 12. In the result, the appeal of the assessee for AY 2011-12 is allowed for statistical purpose. ITA No. 318/Srt/2023 for A.Y. 2012-13. 13. We find that the facts for A.Y. 2012-13 are almost similar except various figures of addition on account of unexplained investment and undisclosed income. The ld. CIT(A) passed similar order in not condoning the delay as well as in upholding the addition on merit. Considering the fact that on similar grounds of appeal, the appeal for A.Y. 2011-12 is restored back to the file of Assessing Officer, therefore, following the principle of consistency, the appeal for A.Y. 2012-13 is also restored back to the file of Assessing Officer with similar direction. In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes. ITA No. 317 & 319/Srt/2023 for A.Y. 2011-12 and 2012-13 (penalty under section 271(1)(c). 14. Considering the fact that the addition in the quantum assessment in AY 2011- 12 & 2012-13 has been restored back to the file of Assessing Officer to pass order afresh, therefore, penalty levied by the Assessing Officer for both the years would not survive. However, the Assessing Officer will be at liberty to initiate penalty under Section 271(1)(c) of the Act as per law. 15. In the result, Grounds of appeal raised in ITA No. 317 & 319/Srt/2023 for the A.Y. 2011-12 and 2012-13 are allowed. ITA No. 320/Srt/2023 for A.Y. 2017-18. ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 11 16. The ld. AR of the assessee submits that facts for this assessment year is at little variance. There was a delay of 30 days in filing appeal before the ld. CIT(A). The assessment order was passed by the Assessing Officer on 11/11/2019. The assessee filed appeal before the ld. CIT(A) on 11/01/2020. Though, during assessment the assessee filed certain details yet, the Assessing Officer while passing assessment order mentioned Section 144 of the Act on the assessment order. The ld CIT(A) while passing impugned order held that there was a delay of 60 days in filing appeal before him and dismissed the appeal in limine. The ld. AR of the assessee submits that the appeal was dismissed on wrong presumption of fact. The assessee in column 15 of Form- 35 has explained the reason for delay that physical copy of assessment order was not received as the father of assessee was sick and hospitalised. The assessee was unable to check his e-mail, as service of orders of tax authorities was introduced in 2019. The ld. AR of the assessee further submits that the delay was neither intentional nor deliberate. Otherwise the delay was very minor. To support his contention, the ld. AR of the assessee relied upon all other submissions and the decisions on which he relied in appeal for A.Y. 2011- 12. 17. On merit of the case, the ld. AR of the assessee submits that the Assessing Officer as well as the ld. CIT(A) has added entire cash credit and other credit in his bank accounts, which can never be income of assessee. The ld. AR of the assessee submits that since high-pitched assessment is made against the assessee for want of proper compliance, thus appeal may also be restored to the file of Assessing Officer to pass assessment order de novo with the liberty ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 12 to assessee to file submission and the supporting evidence to substantiate the cash credit and other credit in his bank account. 18. On the other hand, the ld. CIT-DR for the revenue supported the orders of lower authorities on the issue of limitation as well as on merit. 19. We have considered the submissions of both the parties. We find that the assessment was completed on 11/11/2019. The assessee filed appeal before the ld. CIT(A) on 10/11/2021. Thus, the appeal was filed within 60 days from passing of the order. Though, the assessee was required to file appeal within 30 days, thus, there was a delay of 30 days only. We find that in the statement of fact before the ld. CIT(A), the assessee has taken a categorical stand that physical copy of assessment order was not received and he could not check his mails on his e-mail address, as his father was hospitalised and on receipt of assessment order, the assessee filed appeal within 30 days. Considering the fact that there was delay of only 30 days in filing appeal and the assessee has explained the delay in filing appeal which was primarily due to the fact that physical copy was not received by the assessee, therefore, we find a reasonable cause for condoning the delay. Thus, the order of ld. CIT(A) on the issue of delay is set aside. On considering the merit of the case, we find that the lower authorities have made addition of entire cash credit and other credits in the bank account which can never be considered as income of assessee. Further, considering the fact that the appeal for A.Y. 2011-12 and 2012-13 have already been restored back to the file of Assessing Officer, therefore, this appeal is also restored back to the file of Assessing Officer with similar direction. In the result, ITA No. 316 to 320/Srt/2023 Rajiv Kailashbhai Chhabra Vs ITO 13 the grounds of appeal raised by the assessee are allowed for statistical purposes. 20. In the result, this appeal for AY 2017-18 is allowed for statistical purpose. 21. In the result, ITA No. 316, 318 and 320/Srt/2023 for A.Y. 2011-12, 2012-13 and 2017-18 are allowed for statistical purposes only and the appeal being ITA No. 317 & 319/Srt/2023 for A.Y. 2011-12 and 2012-13 are allowed. Order announced in open court on 30 th April, 2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 30/04/2024 *Ranjan Copy to: 1. Assessee 2. Revenue 3. CIT 4. DR By order 5. Guard File Sr. Private Secretary, ITAT, Surat