MUKHTAR AHMED SUJAN KHAN, MUMBAI V. ITO-31(2)(3), MUMBAI

ITA 461/MUM/2023

AI Insights

The case involves Mukhtar Ahmed Sujan Khan, the appellant, who appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi/CIT(A), which sustained the additions made by the Assessing Officer (AO) under Section 68 of the Income Tax Act, alleging unexplained cash deposits. The AO had initially reopened the assessment under Section 147, believing income had escaped assessment, based on AIR information of substantial cash deposits in the appellant's bank accounts. The CIT(A) upheld the AO's decision, leading to the appellant's appeal to the Tribunal. The Tribunal found that the CIT(A) had dismissed the appeal ex-parte without adequate consideration of the merits, as the appellant had not been given a fair opportunity to present his case.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 125814 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 19-04-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 15-02-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LAVANY PURIHI
• Keywords: Reason to believe
• Section: 147; 68; 148; 144; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI BR BASKARAN, ACCOUNTANT MEMBER & SHIR PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 461/Mum/2023 (A.Y: 2011-12) MukhtarAhmedSujanKhan C-110, Golden Soil, Near Raj Nagar, SV Road, Jogeshwari (W), Mumbai-400102 Vs. ITO 31(2)(3), PratyakshkarBhavan, C-13, BKC, Bandra (E), Mumbai-400051. PAN/GIR No. : AAEPK3432G Appellant .. Respondent Appellant by : Shri Lavany Purihi.AR Respondent by : Smt. Mahita Nair, Sr.DR Date of Hearing 20.04.2023 Date of Pronouncement 21.04.2023 आदेश / O R D E R PER PAVAN KUMAR GADALE JM: The assessee has filed the appeal against the order of National Faceless Appeal Centre (NFAC), Delhi/ CIT(A) passed u/s 250 of the Act. The assessee has raised the following grounds of appeal: 1. On the facts and in circumstances of the case and in law, the Ld. CIT(A)-NFAC has erred in sustaining the addition made by the AO, without appreciating that the ldAO has erred in invoking provisions of Sec 147 on wrong premise that the appellant has not filed return of income. Hence, the reopening of the case is based on a ITA No. 461/Mum/2023 Mukhtar Ahmed Sujan Khan, Mumbai. - 2 - premise contrary to the facts and hence, it is illegal and void on this score alone. 2) On the facts and in circumstances of the case and in law, the CIT(A) has erred in confirming the act of the AO passing the impugned assessment order without proper verification of facts and application of mind. The impugned assessment order cannot be sustained. Kindly quash it. 3) On the facts and in circumstances of the case and in law, the CIT(A) has erred in confirming the addition of Rs. 22949846 u/s 68 of the Act alleging unexplained cash deposits in the bank accounts of the appellant, without appreciating that bank statements are not books of accounts of the appellant and therefore provisions of Sec 68 are not applicable to bank statements. 4) On the facts and in circumstances of the case and in law, the CIT(A) has erred in confirming the treatment of cash deposits of Rs. 22949846 as unexplained cash credit u/s 68 whereas the said deposits are fully recorded in the books of accounts of the appellant which are duly audited u/s 44AB. The said addition therefore. cannot be sustained. Kindly delete it. 5) On the facts and in circumstances of the case and in law, the CIT(A) has erred in confirming the act of the AO of taking figure of contract receipt of the appellant at Rs. 111538128, claiming it to be as per AIR whereas as per Form 26AS the turnover is only of Rs. 55751494 and as ITA No. 461/Mum/2023 Mukhtar Ahmed Sujan Khan, Mumbai. - 3 - per audited books of accounts it is Rs. 65109898. The AO is therefore not justified in taking the figure of turnover at Rs. 111538128 claiming it to be as per AIR and assessing estimated income at Rs. 8923050 therefrom that too without ever giving any notice of his such intention and without affording opportunity of being heard to the appellant. 6) Your appellant craves leave to add to, amend, alter, modify and/or delete any of the above grounds or to add any new grounds thereto.. 2. The brief facts of the case that the assessee is engaged in the business of civil contract works and filed the return of income for the A.Y 2011-12 on 26.09.2011. The Assessing Officer (AO) as per the AIR information found that the assessee has made cash deposits of Rs. 34,75,000/- in the saving bank account and Rs.1,94,74,846/- was deposited in other bank account. The AO has reason to believe that the income has escaped assessment and notice u/s 148 of the Act was issued. Since there was also no compliance to the notice u/sec142(1) of the Act and no details were filed by the assessee. The AO based on the information available has made addition u/s 68 of the Act of Rs. 34,75,000/-and Rs.1,94,74,846/-, bank interest of Rs.23,221/- and interest on income tax refund of Rs.5,580/-and assessed the total income ITA No. 461/Mum/2023 Mukhtar Ahmed Sujan Khan, Mumbai. - 4 - of Rs.3,19,01,697/- and passed the order u/s 144 r.w.s 147 of the Act dated 17.12.2018. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A),whereas the CIT(A) has considered the grounds of appeal, statement of facts and findings of the AO and has issued notices of hearing and since there was no compliance by the assessee to notices. Therefore the CIT(A) considering the information on record has confirmed the action of the A.O and dismissed the appeal. Aggrieved by the order of the CIT(A), the assessee has filed an appeal before the Hon’ble Tribunal. 4. At the time of hearing, the Ld. AR submitted that the CIT(A) has erred in confirming the action of the Assessing officer. Further the assessee has a good case on merits and shall substantiate with the material evidences and prayed for an opportunity to explain before the lower authorities. Contra, the Ld. DR supported the order of the CIT(A). 5. We heard the rival submissions and perused the material on record. Prima-facie the CIT(A) has passed the order considering the fact that there is no appearance in spite of providing adequate opportunity ITA No. 461/Mum/2023 Mukhtar Ahmed Sujan Khan, Mumbai. - 5 - of hearing and the notices were issued. Therefore, the CIT(A) was of the opinion that the assessee is not interested in prosecuting the appeal and dismissed the appeal ex-parte confirming the action of the assessing officer. The Ld.CIT(A) has issued the notices of hearing referred at Para 4 of the order, but there was no response and thus the Ld.CIT(A) came to a conclusion that the assessee is not interested and decided the appeal based on the information available on record. Whereas the assessee has raised grounds of appeal challenging the additions of the A.O and there could be various reasons for non appearance which cannot be overruled. Therefore, considering the principles of natural justice shall provide one more opportunity of hearing to the assessee to substantiate the case with evidences and information subject to the payment of cost of Rs.2000/- to the Income Tax Department within 30 days from date of receipt of order and produce the proof of payment. Accordingly, we set aside the order of the CIT(A) and remit the entire disputed issues to the file of the CIT(A) to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in ITA No. 461/Mum/2023 Mukhtar Ahmed Sujan Khan, Mumbai. - 6 - submitting the information for early disposal of the appeal and we allow the grounds of appeal of the assessee for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 21.04.2023. Sd/- Sd/- (BR BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 21.04.2023 KRK, PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT (Judicial) 4. The PCIT 5. DR, ITAT, Mumbai 6. Guard File आदेशान ु सार/ BY ORDER, //True Copy//() 1. ( Asst. Registrar) ITAT, Mumbai