GUNASEKARAN SANGEETHA, SALEM CEHNNAI V. ITO CIRCLE 1(1) SALEM, SALEM

ITA 454/CHNY/2023

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The case involves Ms. Gunasekaran Sangeetha, the proprietor of Shree Sai Traders, who appealed against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, which had dismissed her appeal ex-parte. The original dispute arose from the Assessing Officer's addition of Rs. 1.80 Crores as unexplained money due to cash deposits during the demonetization period, which were considered unexplained under Section 69A of the Income Tax Act. The Tribunal noted that the CIT(A) had dismissed the appeal without considering the merits, solely on the grounds of non-representation by the assessee, which was attributed to the disruptions caused by the COVID-19 pandemic.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127924 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 20-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 09-04-2023
• Other Referred Cases: Calcutta High Court
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence
• Section: 69A

Judgement Text

आयकर अपील सं./ITA No.454/Chny/2023 िनधा रण वष /Assessment Year: 2017-18 Ms.Gunasekaran Sangeetha, No.504, Prop. Shree Sai Traders, Trichy Main Road, Dadagapatty, Salem-636 006. v. The Income Tax Officer, Circle-1(1), Salem. [PAN: AXFPS 1462 G] (अपीलाथ /Appellant) ( थ /Respondent) अपीलाथ की ओर से/ Appellant by : Mr.N.Arjun Raj, CA थ की ओर से /Respondent by : Mr.P.Sajit Kumar, JCIT सुनवाई की तारीख/Date of Hearing : 21.06.2023 घोषणा की तारीख /Date of Pronouncement : 23.06.2023 आदेश / O R D E R PER ARUN KHODPIA, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi, dated 14.02.2023, and pertains to assessment year 2017-18. 2. The assessee has raised the following grounds of appeal: 1. The order of the NFAC, Delhi dated 14.02.2023 vide DIN & Order No. ITBA/NFAC/S/250/2022-23/1049723850(l) for the above mentioned Assessment Year is contrary to law, fact and in circumstances of the case. आयकर अपीलीय अिधकरण, ’सी’ !ायपीठ, चे$ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI ी वी. दुगा राव, ाियक सद , एवं *ी अ ण खोडिपया, लेखा सद+ के सम BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER ITA No.454/Chny/2023 :: 2 :: 2. The NFAC erred in dismissing the appeal ex-parte and ought to have appreciated that any order passed in gross violation of principles of natural justice should be reckoned as nullity in law. 3. The NFAC failed to appreciate that the provisions of Section 250(6) of the Act was not followed in passing the impugned order and hence ought to have appreciated that ex-parte order under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The NFAC failed to appreciate that having not dealt with the issues on merits, the impugned order passed by them should be considered as nonestin law and ought to have appreciated that the cryptic order passed by them would defy the principles laid down by the Calcutta High Court recently by explaining the process of adjudication, thereby vitiating the ex-parte appellate order under consideration. 5. The NFAC failed to appreciate that non consideration of issues on merits was bad in law and ought to have appreciated that the addition made in the assessment order by making additions of cash deposits as unexplained money in terms of Section 69A of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 6. The NFAC failed to appreciate that having noticed / taken on record the explanation for the source for the cash deposits, treating such sum as unexplained money within the scope of Section 69A r.w.s 115BBE of the Act was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. 7. The NFAC, Delhi failed to appreciate that process / procedure made available for conducting faceless appeal was not followed and ought to have appreciated that the non- adherence to procedure for conducting faceless appeal regime would vitiate the impugned order on various facets. 8. The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are that the assessee is an individual filed her return of income electronically for AY 2017-18 on 31.10.2017, offering a total income of Rs.40,50,100/-. The return of the assessee was processed u/s.143(1) of the Income Tax Act, 1961 (in short “the Act"). Subsequently, the case was selected under CASS for scrutiny. During the process of scrutiny assessment, certain information was called for from the assessee and in response, the assessee has submitted the details through e- proceedings on 27.11.2019 & 28.11.2019 respectively. Subsequently, after examination of the details furnished by the assessee on 20.12.2019, the assessee was show caused by Ld. AO and the assessee has furnished required explanations along with factual details in response to the said ITA No.454/Chny/2023 :: 3 :: show cause. Ld.AO has considered response of the assessee, and after carefully examining the reply submitted by the assessee, has made certain observations. Consequently, an addition on account of unexplained money of Rs.1.80 Crs. was made with regard to cash deposits during the demonetization period by the assessee. 4. Dissatisfied with the order of the AO, the assessee filed an appeal before the First Appellate Authority i.e. CIT (Appeals), NFAC, Delhi. The Ld.CIT(A) had dismissed the appeal of the assessee on account of non- prosecution. 5. Now, the assessee has filed the present appeal before us to challenge the order of the Ld.CIT(A), NFAC, Delhi, which was an ex parte order. At the outset, ld. AR of the assessee has submitted that since the assessee was unable to submit required details before the Ld.CIT(A), NFAC, because, notices were issued to the assessee during the period between 2020-2022, during which, the business of the assessee was not functioning efficiently due to Covid-19 pandemic, especially in view of complete lockdown. The assessee is a wholesale trader as well as retail trader and the cash deposits during the period of demonetization is erroneously considered as unexplained money in terms of provisions of Sec.69A of the Act. Before ld.AO, the assessee has filed five replies in the assessment proceedings explaining the nature of business and source for cash deposits, but ld. AO has not appreciated the facts of the case correctly. Also First Appellate Authority has issued a non-speaking order on ex parte basis without ITA No.454/Chny/2023 :: 4 :: adjudication of findings on merits. It was the prayer of ld.AR that since, certain evidences are to be submitted to prove that the cash deposits were on account of regular sale of the assessee, if an opportunity is being granted, the same can be produced before the ld.AO for verification/examination and to decide the issue after appreciation of the facts in correct perspective. It is, therefore, submitted that the matter may be remitted back to the file of the AO for re-adjudication. 6. Contrary to the submission of the AO, ld. DR has strongly opposed the contention of the ld.AR., Ld.DR has submitted that reasonable opportunities were granted to the assessee for representing its case before the Ld.CIT(A). Therefore, no further opportunity shall be granted to the assessee and the order of the Ld.CIT(A) confirming the addition made by the ld.AO, needs to be upheld. 7. We have heard rival contentions and perused the order of the authorities below and materials available on record. Admittedly, the order of the Ld.CIT(A), NFAC, Delhi, dated 14.02.2023 was an ex parte order, concluded without deciding the issue on merits, but only on account of no representation by the assessee. Ld.AR of the assessee has also sought for some time before us to furnish further additional details/ evidence in support of the contention of the assessee. In such circumstances, in the interest of natural justice, since, the assessee has requested for time for admission of certain additional evidences which will definitely need to be examined and verify by the Revenue authorities to attain a just and proper ITA No.454/Chny/2023 :: 5 :: inference on the issue. We find it appropriate to remit the issue back to the file of the ld.AO to adjudicate the issue afresh in light of available evidences. Needless to mention that reasonable opportunity of being heard and liberty to produce all the relevant information/evidence in support of the contention raised by the assessee, shall be granted. Consequently, without going into the merits of the grounds raised by the assessee, we are setting aside the matter for fresh adjudication by the ld. AO. 8. In the result, present appeal, filed by the assessee is partly allowed for statistical purposes, in terms of our observations herein above. Order pronounced on the 23 rd day of June, 2023, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) ाियक सद /JUDICIAL MEMBER Sd/- (अ ण खोडिपया) (ARUN KHODPIA) लेखा सद+/ACCOUNTANT MEMBER चे$ई/Chennai, िदनांक/Dated: 23 rd June, 2023. TLN आदेश की ितिलिप अ,ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु-/CIT 2. थ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु- (अपील)/CIT(A) 6. गाड फाईल/GF