Ramchandra Yadav, Chandauli V. Income Tax Officer, Ward - 3(3), Varanasi

ITA 4/VNS/2020

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9202 (ITAT-VARANASI)
• Duration Of Justice: 2 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-10-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 09-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 69; 44AD; 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, VARANASI CIRCUIT BENCH, ALLAHABAD (THROUGH VIRTUAL COURT) BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 04/VNS/2020 Assessment Year: 2015-16 Mr. Ramachandra Yadav Village Dahiya Post Ramnagar (Basant Nagar) Chandauli-232101, U.P. v. Income Tax Officer Ward 3(3), Chandauli U.P. PAN: AEJPY7931H (Appellant) (Respondent) Appellant by: Shri Ashish Bansal, Advocate Respondent by: Shri A. K. Singh,Sr. DR Date of hearing: 31.10. 2022 Date of pronouncement: 31.10. 2022 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal, filed by assessee, being ITA No. 4/VNS/2020, is directed against an appellate order dated 14.11.2019 in Appeal No. 10202/CIT(A)/VNS/2017-18/348 passed by learned Commissioner of Income Tax (Appeals), Varanasi(hereinafter called "the CIT(A)"),for assessment year(ay):2015-16, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 27.12.2017 passed by learned Assessing Officer (hereinafter called "the AO") u/s. 143(3) of the Income-tax Act, 1961 (hereinafter called "the Act") for ay: 2015-16.We have heard both the parties through video conferencing mode through virtual court. 2. The brief facts of the case are that the assessee has claimed itself to be engaged in the business of Sarees. The assessee filed its return of income on ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 2 31.03.2017, declaring income of Rs. 7,07,320/- . The case of the assessee was selected by Revenue for framing LIMITED SCRUTINY through CASS , and reason for selection of the case under scrutiny was ‘Whether the cash deposit has been made from disclosed sources’. The assessee has shown in his return of income filed with Revenue, income from the business of trading of Sarees and has filed return of income u/s 44AD of the 1961 Act. The AO observed that the assessee has maintained bank account with Union Bank of India , Jeevanthpur , Ramnagar (A/C No. 442902010003760) , in which cash of Rs. 22,50,000/- and cheques of Rs. 50,81,000/- , were deposited by assessee during the year under consideration. The details of such cheque deposited are reproduced by AO in page 3-4 of its assessment order. The assessee was called upon by the AO to substantiate said deposits and produce the identity of the persons from whom said amounts were received as well bills, the assessee submitted that the said amounts were sale receipts, but as per AO the assessee failed to produce their identity as well bills. The AO in the meantime deputed Income Tax Inspector to conduct enquires, and it transpired in enquiry that the assessee is not engaged in the business of Sarees but is engaged in the business of Real Estate , by way of sale and purchase of plots. The ITI also submitted in its report that the assessee and one Mr. Nand Lal are jointly engaged in the aforesaid business of Real Estate. The ITI submitted its report to AO on 22.12.2017 which is reproduced by AO in its assessment order , at page 4-5. The AO also observed that even in bank account opening form of HDFC Bank Limited, the assessee has declared its business as that of ‘Real Estate’ . As is emerging from assessment order, the AO issued notice u/s 142(1) of the 1961 Act dated 12.12.2017 to assessee for compliance on 26.12.2017, which as per AO was duly served on assessee through speed post as well on the assessee’s AR personally on 22.12.2017. The assessee did not comply with the details called for by the AO , which led AO to make additions to the income of the assessee to the tune of Rs. 63,31,000/- by invoking provisions of Section 69 of the 1961 Act, vide assessment order dated 27.12.2017 passed by AO ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 3 u/s 143(3) of the 1961 Act. The AO while making above additions to the tune of Rs. 63,31,000/- added the entire cash deposit in the aforesaid bank account with UBI to the tune of Rs. 22,50,000/- as well added the cheque deposits to the tune of Rs. 40,81,000/- in UBI, after giving credit for two cheques of Rs. 7,50,000/- (cheque number 21029517 on 28.04.2014 ) and Rs. 2,50,000/- ( cheque number 21042174 dated 12.02.2015) which were issued to Mr. Nand Lal, and which were deposited in Mr. Nand Lal’s Bank Account. While assessing aforesaid income, the AO observed that the assessee has during demonetization period , deposited cash of Rs. 15,05,000/- in old notes in its HDFC Bank account with Ram Nagar, Panchwati Road, Varanasi, and this entire exercise for showing such income during impugned assessment year was done by the assessee to explain source of cash deposits made by the assessee during demonetization period, as the assessee has claimed while giving explanations during assessment proceedings for ay:2017-18 to be out of past savings. The AO observed that the assessee has failed to substantiate its claim of income, during the year under consideration. The AO added the income of Rs. 63,31,000/- while framing the assessment for impugned assessment year by invoking provision of Section 69 and the applicable tax rates as prescribed u/s 115BBE of the 1961 Act were applied by the AO, vide assessment order dated 27.12.2017 passed by AO u/s 143(3) of the 1961 Act. 3. The assessee being aggrieved by aforesaid assessment order passed by AO, filed first appeal with ld. CIT(A) raising as many as eight grounds of appeal. The ld. CIT(A) issued to assessee several notices , but the assessee did not furnish any reply on merits during appellate proceedings before ld. CIT(A). The ld. CIT(A) issued notice dated 14.08.2018 fixing date of hearing for 23.08.2018 . The assessee filed adjournment application on 23.08.2018 . The ld. CIT(A) issued fresh notice dated 27.08.2018 fixing date of hearing on 11.09.2018. The assessee filed adjournment application on 11.09.2018. The ld. CIT(A) adjourned the case to 15.10.2018. The ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 4 assessee filed adjournment application on 15.10.2018, the case was fixed by ld. CIT(A) for hearing on 30.11.2018 . Again on 30.11.2018 , the assessee filed adjournment application, the case was again adjourned by ld. CIT(A) to 31.12.2018. On the date of hearing fixed by ld. CIT(A) on 31.12.2018, the assessee did not appear before ld. CIT(A) nor any adjournment application was filed on behalf of the assessee. Thereafter, the ld. CIT(A) issued fresh notices dated 06.02.2019, 11.07.20189 and 25.10.2019 fixing date of hearing for 19.02.2019 , 26.07.2019 and 11.11.2019, but the assessee did not appear before ld. CIT(A) nor any adjournment application was filed on behalf of the assessee on the aforesaid dates fixed for hearing . The ld. CIT(A) dismissed the appeal filed by the assessee , vide appellate order dated 14.11.2019 , ex-parte in limine without discussing the issues on merit, by holding as under: “ 5. During the appellate proceedings, no arguments have been presented by the appellant despite notices issued. Therefore, so far as the appeal under consideration is concerned, since , the Grounds of Appeal are not explained/substantiated even after repeated opportunities, the appeal of the appellant is hereby dismissed and all the Grounds of Appeal are decided against the appellant and the order of the A.O. is upheld. 6. In the result, the appeal is dismissed.” 4. The assessee being aggrieved by the aforesaid appellate order passed by learned CIT(A) has filed second appeal with Income-Tax Appellate Tribunal, Varanasi Circuit Bench, Varanasi ( hereinafter called “ the tribunal”) and as many as eight grounds of appeal are raised by assessee in memo of appeal filed with the tribunal, challenging the appellate order passed by ld. CIT(A). This appeal was heard by Division Bench of the tribunal through video conferencing mode through Virtual Court. The ld. Counsel for the assessee opened arguments before the Bench and at the outset submitted that it is an ex-parte appellate order passed by learned CIT(A) where in appeal of the assessee was dismissed by ld CIT(A) ex-parte in the absence of assessee in limine without discussing the issues on merits. Prayers were made by ld. ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 5 Counsel for the assessee for setting aside the appellate order passed by learned CIT(A) and restoring the issues to the file of learned CIT(A) for fresh adjudication of the appeal of the asssessee by learned CIT(A). The learned counsel for the assessee stated that the assessee will duly co-operate with learned CIT(A) when the appeal will come up for hearing before learned CIT(A) in second round of litigation . The ld. Sr. DR fairly submitted that Revenue has no objection if the matter is restored to the file of learned CIT(A) for fresh adjudication on merits in accordance with law. 6. We have heard rival parties and perused the material on record. The brief facts of the case are enumerated in para’s 2 and 3 above in this order and are not repeated again. We have observed that the learned CIT(A) gave several opportunities of hearing to the assessee as are stated/extracted in the page 1 and 2 of the appellate order passed by learned CIT(A) and which are also enumerated by us in this order, but the assessee did not appear before learned CIT(A) nor adjournment application were filed by the assessee during proceedings conducted by ld. CIT(A) as detailed above in this order , although initially the assessee was participating in the proceedings before ld. CIT(A) wherein adjournments were sought by the assessee, but in any case the assessee did not gave any reply before ld. CIT(A) on merits of the issue. The ld. CIT(A) dismissed the appeal of the assessee ex-parte in the absence of the assessee , in limine without discussing the issues on merits which were raised by assessee in grounds of appeal in the memo of appeal filed with ld. CIT(A) or in statement of facts filed by assessee before ld. CIT(A), and the assessment order passed by the AO was upheld by learned CIT(A) without discussing issues on merits and without giving his independent reasoning by way of speaking order . Reference is made to provisions of Section 250(6) of the 1961 Act, wherein learned CIT(A) is obligated to state points for determination in appeal before him, the decision thereon and the reasons for determination. On the part of the assessee, there was failure to appear before the learned CIT(A) when the appeal was called for hearing ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 6 before learned CIT(A) specially at the later part of proceedings , which led learned CIT(A) to pass an ex-parte appellate order. Thus, assessee is equally to be blamed for its woes. Now, before us, both the parties have submitted that the appellate order passed by learned CIT(A) be set aside and matter be remanded back to the file of learned CIT(A) for fresh adjudication of the appeal filed by assessee with learned CIT(A). After considering the entire material on record, we are of the considered view that the interest of justice will be served if the appellate order dated 14.11.2019 passed by ld. CIT(A) be set aside and the matter is set aside/restored back to the file of learned CIT(A) for fresh adjudication denovo. The assessee did not co-operated with learned CIT(A) in the first round of litigation and if in the set aside remand proceedings , if the assessee again did not co-operate , the learned CIT(A) shall be free to decide all the issues raised by assessee , on merits in accordance with law. Needless to say that powers of ld. CIT(A) are co-terminus with powers of the AO. Needless to say that the learned CIT(A) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in the set aside remand proceedings.We clarify that we have not commented on the merits of the issues . We order accordingly. 7. In the result, the appeal filed by the assessee with tribunal in ITA No. 04/VNS/2020 for ay: 2015-16 is allowed for statistical purposes, as indicated above. Order pronounced in the open court on 31/10/2022 through Virtual Mode on the conclusion of hearing in the presence of both the parties , and reduced to writing and signed at Allahabad , U.P. on the date stated below . Sd/- Sd/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 01/11/2022 Copy forwarded to: ITA No.4/VNS/2020 Assessment Year: 2015-16 Ramchandra Yadav 7 1. Appellant –Sri Ramchandra Yadav, Village Dahiya, Post Ramnagar(Basant Nagar), Chandauli, U.P. 2. Respondent –ITO, Ward 3(3), Chandauli, U.P. 3. The CIT(A) , Varanasi, U.P. 4. The CIT, Chandauli, U.P. 5. Sr.DR –ITAT, Varanasi Circuit Bench, Varanasi, U.P. 6. The Guard File. By order Assistant Registrar