KRISHNAN GOMATHI, KRISHNAGIRI V. INCOMETAX OFFICER, WARD-1, Krishnagiri

ITA 647/CHNY/2023

AI Insights

The case involves Mrs. Krishnan Gomathi, who is engaged in the wholesale distribution of pharmaceutical medicines and drugs under the name M/s.Narein Agency. For the assessment year 2017-18, she filed her return admitting a total income of Rs.4,42,810. However, during scrutiny, it was noticed that she had made substantial cash deposits in Specified Bank Notes amounting to Rs.43,36,120. The Assessing Officer (AO) questioned the source of these deposits, leading to an addition of Rs.17,92,750 under section 69 read with section 115BBE of the Income Tax Act, 1961. The assessee's appeal to the CIT(A) was dismissed ex parte for non-prosecution as she failed to appear or provide necessary details despite multiple notices. Aggrieved by this, she appealed to the Income Tax Appellate Tribunal, which found that the CIT(A) had disposed of the appeal on technical grounds without discussing the merits, thus violating the principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127941 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-06-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 21-05-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Set aside

Judgement Text

आयकर अपील सं./ITA No.647/Chny/2023 िनधा रण वष /Assessment Year: 2017-18 Mrs.Krishnan Gomathi, 6, Narein Agencies, T.B.Link Road Balaji Nagar, 1 Cross, Krishnagiri. v. The Income Tax Officer, Ward-1, Krishnagiri. [PAN: ASXPG 8732 E] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.T.S.Lakshmi- Venkataraman, FCA यथ क ओर से /Respondent by : Mr. AR.V.Sreenivasan, Addl.CIT सुनवाई क तारीख/Date of Hearing : 26.06.2023 घोषणा क तारीख /Date of Pronouncement : 26.06.2023 आदेश / O R D E R PER MANJUNATHA.G, AM: 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 15.05.2023, and pertains to assessment year 2017-18. 2. The brief facts of the case are that the assessee is an individual and engaged in the business of wholesale distribution of pharmaceutical medicines and drugs under the name and style of M/s.Narein Agency. The आयकर अपीलीय अिधकरण, ‘ए’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं ी मंजूनाथा .जी, माननीय लेखा सद के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA. G, HON’BLE ACCOUNTANT MEMBER ITA No.647/Chny/2023 :: 2 :: assessee filed her return of income for AY 2017-18 on 22.03.2018 admitting total income of Rs.4,42,810/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has made cash deposits in Specified Bank Notes (in short “SBNs") to City Union Bank, amounting to Rs.43,36,120/-. The AO called upon the assessee to explain source for cash deposits. In response, the assessee submitted that source for cash deposits is out of sale proceeds of pharmaceuticals products and realization from debtors. The AO after considering relevant submissions of the assessee, made addition of Rs.17,92,750/- u/s.69 r.w.s.115BBE of the Income Tax Act, 1961 (in short “the Act"). The assessee carried the matter in appeal before the First Appellate Authority, but neither appeared nor filed any details which is evident from Para 3.1 of the order of the Ld.CIT(A), where the Ld.CIT(A) has given three notices on different dates, but the assessee did not appear for hearing. Therefore, the Ld.CIT(A) disposed off appeal filed by the assessee ex parte for non-prosecution, and sustained the additions made by the AO towards cash deposits u/s.69 of the Act. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before us. 3. The Ld.AR for the assessee submits that the Ld.CIT(A) erred in disposing off appeal filed by the assessee on technical grounds without discussing the issue in violation of principles of natural justice. Therefore, he submits that one more opportunity of hearing may be given to the assessee to go back to the Ld.CIT(A) and file necessary details. ITA No.647/Chny/2023 :: 3 :: 4. The Ld.DR, on the other hand, fairly agreed that the matter may be set aside to the file of the Ld.CIT(A) to give one more opportunity to the assessee. 5. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. We find that the Ld.CIT(A) disposed off appeal filed by the assessee ex parte for non- prosecution which is evident from Para No.3.1 of the order of the Ld.CIT(A), where the Ld.CIT(A) has given three notices on different dates, but the assessee neither appeared nor filed any details. However, such appeal has been disposed off on technical grounds without discussing the issues on merits. It is a well settled principle of law by the decision of various courts and Tribunal that when the assessee is not seriously prosecuting their appeal, then, the appellate authorities are left with no option but to dispose off appeal on the basis of materials on record, but such appeal should be disposed off on merits. In the present case, although, the Ld.CIT(A) disposed off appeal filed by the assessee, but such appeal has been disposed off on technical ground without discussing the issues on merits. Therefore, we are of the considered view that the appeal needs to go back to the file of the Ld.CIT(A) to give reasonable opportunity of hearing to the assessee, and thus, we set aside the order of the Ld.CIT(A), and restore the issue back to the file of the Ld.CIT(A), and direct the Ld.CIT(A) to reconsider the issue after providing reasonable opportunity of hearing to ITA No.647/Chny/2023 :: 4 :: the assessee. Needless to say, the assessee shall appear before the Ld.CIT(A), and file necessary details without seeking any adjournment. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 26 th day of June, 2023, in Chennai. Sd/- ( वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 26 th June, 2023. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 3. आयकर आयु"/CIT 5. गाड फाईल/GF 2. यथ /Respondent 4. िवभागीय ितिनिध/DR