JARINA BEGUM, KOTA V. ITO WARD -1(4), KOTA, KOTA

ITA 675/JPR/2023

• Counselvise Citation: [2024] 130 COUNSELVISE.COM (IT) 2195 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-02-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 08-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONISHA CHOUDHARY
• Assessee Lawyers: MAHENDRA GARGIEYA; DEVANG GARGIEYA; GIVING FOLLOWING
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 147; 144; 142(1); 68; 274

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBkSM+ deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 675/JPR/2023 fu/kZkj.k o"kZ@Assessment Years : 2017-18 Jarina Begum H. No. 62, Sector-7 Park Ke Pas, Keshavpura, Kota-324005. cuke Vs. Income Tax Officer Ward-1(4), Kota. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: BTPPB 8832 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Mahendra Gargieya (Adv.) & Shri Devang Gargieya (Adv.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl.CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 21/02/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 04/03/2024 vkns'k@ ORDER PER: DR. S. SEETHALAKSHMI, J.M. This appeal is filed by the assessee aggrieved from the order of the CIT(A), National Faceless Appeal Centre, Delhi dated 22.09.2023 [Here in after referred as “CIT(A)/NFAC”] for the assessment year 2017-18, which in turn arise from the order dated 28.06.2019 passed under section 148/144 of the Income Tax Act, [Here in after referred as “Act” ] by the AO. ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 2 2. The assessee has marched this appeal on the following grounds:- “1. The impugned order u/s 148/144 dated 28.06.2019 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed. 2. The ld. CIT(A) erred in law as well as on the facts of the case in passing the impugned order ex-parte, in a haste without affording adequate and reasonable opportunity of being heard. The impugned order having been framed in gross breach of natural justice, kindly be quashed or alternatively be restored to the file of the Id. CIT(A). 3.1 The Id. CIT(A) erred in law as well as on the facts of the case in not admitting the appeal by invoking the provisions of S.249(4)(b) of the Act on the allegations that appellant did not make payment of an amount equal to amount of advance tax which was payable by him on or before filing of the appeal. The impugned order, holding the appeal filed, as not admissible, is completely contrary to the provisions of law and facts on record and hence, the Id. CIT(A) be directed to admit the appeal and decide the same on merits. 3.2 The Id. CIT(A) has seriously erred in law as well as facts of the case in holding that the appeal was not admissible unless the appellant paid the amount equal to advance tax payable by him by completely ignoring that there was no advance tax at all payable in as much as no return of income was filed admitting any tax liability or in other words no advance tax was at all payable by the appellant or alternatively even if held payable, was completely in dispute and therefore, provisions of S.249(4)(b) were not at all applicable in this case. The order of Id. CIT(A) therefore deserves to be reversed and he may be directed to decide the appeal on merits. 4. The Id. AO erred in law as well as on the facts of the case in framing the asst. u/s 147/144 without affording adequate and reasonable opportunity and even without complying with the mandatory statutory requirement of law. The impugned order having been framed in gross breach of natural justice, kindly be quashed. 5. Rs.11,63,000/-: The Id. AO has erred in law as well as in facts in making the additions of Rs.11,63,000/- on account of cash deposited in ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 3 the bank account as undisclosed income u/s 68 of the Act. The addition so made being contrary to the provisions of law and facts of the case, the same kindly be allowed in full. 6. The Id. AO erred in law as well as in facts of the case in charging the levy of interest u/s 234A, 234B, 234C. The levy interest being charged, is contrary to the provisions of law and facts, kindly be deleted in full. 7. The appellant prays your honor indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.” 3. The fact as culled out from the record is that as per the information available the ld. AO the assessee has deposited a cash of Rs. 11,63,000/- in her bank account during the demonetization period. Notice us 142(1) of the IT Act was issued to the assessee on 09.03.2018 and requested to furnish return of income on or before 31.03.2018. The assessee did not comply, the notice us 142(1) of the IT Act. The case was transferred from ITO Ward 1(2), Kota to ITO, Ward 1(4), Kota vide order u/s 120 of the IT Act of the Addl. CIT. Range-1, Kota, dated 31.05.2018. 3.1 The assessee did not comply the notice u/s 142(1) and not submitted the ITR for A.Y. 2017-18, therefore, based on the reasons recorded u/s 147 of the IT Act and approval u/s 151(2) of the I.T. Act was obtained from the Jt. CIT, Range-1, Kota. Notice u/s 148 of the IT Act was issued on 28.03.2019, which was sent by registered post and e-mail. Further, Notice u/s 142(1) of the I.T. ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 4 Act, along with annexure, was issued on 16.04.2019 in which assessee was requested to furnish a brief note on the sources of income and sources of cash deposited for an amount of Rs. 11,63,000/-, with documentary evidence viz photocopies of bank accounts for the last three years, to prove the genuineness of source of earning of money and reflecting the transactions. The assessee did not respond to Notice u/s 148 of the IT Act and Notice u/s 142(1) of the IT Act. None appeared. 3.2 As there was non compliance to earlier notices, a show cause Notice u/s 274 r.w.s. 271(1)(b) of the IT Act was issued on 16.05.2019 and asked the asssessee “that you have not complied to the notices issued to you, please show cause why a penalty u/s 271(1)(b) for failure to furnish return, comply notices and concealment of income may not be imposed. You are once again requested to comply the notices and furnish the source of cash deposits with documentary proof by 31.05.2019 at 03:30 PM. This may be treated as final opportunity. Any non-compliance in this regard will be viewed that assessee has nothing to say in this regard, as sufficient opportunity has already been provided by issuing notice u/s 142(1) dated 16.04.2019 and the provisions of Section 144 of the I.T. Act will be invoked and assessment ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 5 proceedings would be finalized on the merits". The assessee did not furnish reply of show cause notice. Therefore, ld. AO based on the information hold that cash of Rs. 11,63,000/- deposited by the assessee in his bank account, is being treated as undisclosed income u/s 68 of the IT. Act 1961, of the assessee for the assessment year 2017-18, sources of which could not be verified due to absence of the information. 4. Being aggrieved, from the said order of assessment the assessee has filed an appeal before the ld. CIT(A). The ld. CIT(A) after hearing the contention of the assessee dismissed the appeal of the assessee by giving following findings on the issue:- “2.1. During the appellate proceedings, it is found that there is a deficiency in the appeal filed in Form No.35 and thereafter deficiency letter was issued on 12.02.2021and 15.09.2023 on the following grounds: "Tax on returned income not paid/particulars of payment not mentioned". 2.2. The appellant has replied to the earlier deficiency letter dated 12.02.2021 on 18.02.2021 and in response to second deficiency letter the appellant replied on 21.09.2023 which is considered. 2.3. In this regard, provisions of Section 249(4) of the Act, is reproduced here under. “[(4) No appeal under this chapter shall be admitted unless at the time of filing of the appeal,- ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 6 1. Where a return has been filed by the on the income returned by him; or assessee, the assessee has paid the tax due on the income returned by him; or 2. Where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him: Provided that, in a case falling under clause (b) and) on an application made by the appellant in this behalf, the (Joint Commissioner (Appeals) or the [Commissioner (Appeals), may for any good and sufficient reason to be recorded in clause)" writing, exempt him from the operation of the provisions of [that clause].” 2.4. As per the assessment order under section 144 of the Act, it is stated that the appellant has not filed the return of income and the AO has computed the total income at Rs.11,63,000/- and computed the tax payable at Rs. 6,97,800/- which includes the advance tax payable by the appellant as well as the interest on account of delayed payment of advance tax. 2.5. As per the deficiency letter, the details of deficiency is "Tax on returned income not paid/particulars of payment not mentioned, which includes two parts, one part is tax on returned income not paid and secondly particulars of payment not mentioned.”, which includes two parts, one part is tax on returned income not paid and secondly particulars of payment not mentioned. 2.6. In response to the deficiency notices, the appellant stated that as the income of the appellant is below the taxable limit return of income was not filed. The appellant further requested that the appeal may be admitted as addition has been made due to wrong reporting of cash deposits by the bank. After considering the reply of the appellant, it is stated that the case under consideration is not a fit case for granting of exemption from the operation of the provisions of section 249(4)(b) as per the proviso. 2.7. The second part of the provision in applicable to the case of the appellant. Particulars of payment not mentioned pertains to Section 249(4)(b) of the Act, which is particulars of payment of advance tax as per the said provision. It is seen that, the appellant has not paid an amount equal to the amount of advance tax which was payable, on or before filing the appeal. ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 7 2.8 In this regard, the column no. 8 & 9 of Form No. 35 is reproduced here under:- 8 Where a return has been filed by the appellant for the assessment year in connection with which the appeal is filed, whether tax due on income returned has been paid in full. No 8.1. If reply to 8 is yes, then enter details of return and taxes paid A Acknowledgement number b Date of filing c Total tax paid 9 Where no return has been filed by the appellant for the assessment year, whether an amount equal to the amount of advance tax as per section 249(4)(b) of the Income Tax Act, 1961 has been paid No As can be seen from the above, the appellant has stated "NO" in the above columns. This further establishes that, the appellant has not paid an amount equal to the amount of advance tax which was payable by him, on or before filing the appeal. 2.9. As per section 249(4)(b) of the Act, the appeal shall not be admitted, unless the appellant has paid an amount equal to the amount of advance tax which was payable. As the applicable advance tax has not been paid by the appellant before filing of the present appeal, the present appeal shall not be admitted. Therefore, the present appeal filed is not admitted as per the provisions of Section 249(4) of the Act. 3. In the result, the appeal is dismissed for statistical purposes.” 5. Aggrieved from the order of the ld. CIT (A) the assessee has preferred the present appeal before this tribunal on the grounds as reiterated in para 2 above. To support the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:- ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 8 “Brief Facts: The re-assessment proceedings against the assessee were initiated u/s 147 of the Income Tax Act, 1961 (referred to as "the Act") based on the information of deposit of cash of Rs.11,63,000/- in his bank account during the demonetization period. The case was transferred from ITO Ward 1(2) Kota to ITO, Ward 1(4) Kota vide order u/s 120 of the IT Act of the Addl. CIT. Range-1, Kota, dated 31.05.2018. The Id. AO finally passed the Assessment Order ex- parte dated 28.06.2019 after making an addition of Rs 11,63,000/- being undisclosed income u/s 68 of the Act and additional tax was imposed by applying u/s 115BBE of the Act. Upon filing Form 35, a deficiency notice was served to the appellant, pointing out the non-payment of tax on returned income and the absence of payment particulars. The appellant addressed the initial deficiency notice vide letter dated 19.02.2021 (PB 1-2) and subsequently responded to a second notice on 21.09.2023 (PB 3). The appellant argued that since the income being below the taxable threshold, no return of income was filed, and requested the appeal's acceptance, citing an erroneous bank report of the cash deposits as the basis for the addition. However, after evaluating the appellant's responses to the deficiency notices, the CIT(A) concluded that the case did not qualify for exemption from the conditions stipulated u/s 249(4) Proviso of the Act. The appeal was thus, dismissed in limini, as not maintainable without deciding any of the grounds taken before the Appellate Authority. Hence, this appeal. Submissions: 1.1 At the outset it is submitted that before invoking the provisions S. 249(4)(b) of the Act, the CIT (A) must have established that there was some tax liability duly admitted by the assesse, in case where return of income has been filed or in case, where no return of income has been filed, the amount of advance tax was legally payable. Thus, the jurisdictional facts that there is such income where tax liability is either duly admitted by the assessce as self- assessed tax or else by way of advance tax payable. However, in the peculiar facts available on record there was no tax liability at all in the hands of the appellant in as much as, the lady is not ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 9 a regular income tax assessee and does not have any regular source of income. During the relevant year, an amount of Rs.1,31,000/- was deposited in cash by the husband of the assessee, from his past saving, during demonetization period. Unfortunately, due to an inadvertent error by the bank personnel, this deposit was initially recorded as ₹10,31,000. The mistake that was immediately corrected, reverting to the accurate amount of ₹1,31,000, as substantiated by the bank statement and corroborated by the deposit slip. Not only this but the bank acknowledging this mistake wrote a letter dated 13.03.2020 to the Id. AO clarifying this very issues (PB 4-6). Reply to this effect was uploaded o ITD Portal twice on dated 30.05.2020 and 6.01.2021(PB 7- 9). 1.2 On the other hand, unfortunately the AO without making an enquiry from the bank and without looking into the facts, straightforwardly wrongly considered the amount of cash deposit of Rs.1.3 lakhs as of Rs.10.31 lakhs as the escaped income of the assesse. This oversight effectively nullified the basis for initiating proceedings u/s 147 of the Act, rendering the subsequent notice u/s 148 of the Act and the assessment order void ab initio. Given that the sum of ₹1,31,000 (in absence of any other income) falls below the taxable threshold of Rs. 2,50,000/-, it is clear that no tax liability arose, negating any possibility of advance tax liability. A response to the show-cause notice under Section 249(4)(b), submitted on 19.02.2021 reiterated the absence of any tax liability on the part of the assesse but was paid no attention. 2. While e filing the appeal, the column pertaining to tax liability this was correctly marked as 'Nil,' reflecting the correct factual position. However, the CIT(A) failed to consider these material facts, opted to dismiss the appeal on procedural grounds and shutting the doors of justice for the poor appellant lady. This decision is not only at odds with the legislative intent but also violates the principles of natural justice. In light of these facts, it is respectfully requested that the appeal be reinstated to the CIT(A) for a decision based on the merits of the case. In these admitted facts and circumstances, the appeal may kindly be restored to the Id. CIT (A)with a direction to decide on merits.” ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 10 6. The ld. AR of the assessee also filed a detailed paper book in support of the order of the ld. CIT(A) The index of the document submitted by the ld. AR of the assessee are as under:- S. No. Particulars Pg. No. 1. Copy of written submission to CIT(A) dated 19.02.2021 1-2 2. Copy of acknowledgement of submission dated 21.09.2023 3 3. Copy of letter by PNB Bank Manager to ITO Ward-1(2) dated 13.03.2020 4 4. Copy of Bank Statement & deposit slip 5-6 5. Copy of letter to AO uploaded on portal with relevant screenshots dated 30.05.2020 and 06.01.2021 7-9 7. During the course of hearing, the ld. AR for the assessee prayed that the Id. CIT(A) and the AO both have passed the order ex-parte order and the assessee was not provided adequate opportunity of being heard. As the ld. AO passed the order ex- parte without appreciation of the fact that the amount deposited is not Rs. 11,63,000 but it is Rs. 1,63,000/- only. This requires verification and even this cash which is allegedly to have been deposited by the assessee has been deposited in the joint account with her husband. If these aspect of the matter is considering the assessee has income which are below the maximum amount not chargeable to tax and therefore, looking, to this aspect of the ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 11 matter the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. AO on merits as the orders of the both the authority are ex-parte, and the assessee prayed to grant one chance provide the correct details in connection with the merits of her case. 8. Per contra, ld. DR objected to the prayer of the assessee and submitted that even the assessee did not represent case before the ld. AO and CIT(A) both stage and now there are praying for equity and justice. Therefore, in that case if the Bench feels the matter may be restored to the file of the Assessing Officer then with fine may be sent back. 9. We have heard both the parties and perused the materials available on record. The bench noted from the order of ld. CIT(A), the appeal of the assessee was dismissed on the reasons that the assessee has not paid advance tax and has not filed the return of income and therefore, his appeal was not admitted and was dismissed as such. The ld. AR of the assessee argued before us as the income of the assessee from all the sources are below maximum amount, not chargeable to tax, the assessee is not required to pay the advance tax. The ld. AR of the assessee ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 12 further submitted that the ld. CIT(A) has not decided the appeal of the assessee on merits and the order of the ld. Assessing Officer is also ex-parte. Being addition of Rs. 1,63,000/- in fact the assessee has deposited Rs. 1,63,000/- that too in a joint account with her husband. This fact has not been appreciated by the lower authorities and therefore, in the interest of equity and justice this fact needs to be verified by the ld. Assessing Officer. Therefore, considering the arguments advance before us, we are of the considered view that the matter is required to be remanded back to the file of the ld. Assessing Officer, who will examine the exact amount of cash deposit and decided the issue afresh after considering the submissions of the assessee. Thus, prayer of the assessee is considered and she is provided one more chance to represent the facts before the ld. AO. The object of the Bench is to provide justice. Considering the overall facts of the case and looking to the facts /grievance of the assessee as raised hereinabove, the Bench feels that one more chance should be given to the assessee to contest the case before the ld. AO and to submit the necessary information to resolve the issue raised in the appeal before us. Thus, the matter is restored to the file of the ld. AO for afresh adjudication of the case. ITA No. 675/JPR/2023 Jarina Begum. vs.ITO 13 10. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 04/03/2024. Sd/- Sd/- ¼jkBksM deys'k t;UrHkkbZ ½ ¼MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 04/03/2024 *Santosh vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Jarina Begum, Kota. 2. izR;FkhZ@ The Respondent- ITO, Ward-1(4), Kota. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA No. 675/JPR/2023} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar