R VIT & CO, MUMBAI V. ITO 23(3)(5), MUMBAI

ITA 696/MUM/2023

AI Insights

The case involves R VIR & Co., a partnership firm, which appealed against the order of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2015-16. The primary contention was the addition of Rs. 4,19,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961, and the initiation of penalty proceedings under section 271(1)(c) along with interest under section 234. The assessee argued that the CIT(A) passed the order ex parte without proper consideration of their adjournment request and without a fair opportunity to present their case. The Tribunal found that the CIT(A) had not adequately served notices or provided a fair hearing, leading to the decision to set aside the CIT(A)'s order and remand the case for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302268 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-05-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 08-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 68; 6; 15; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘ SMC‘ BENCH MUMBAI BEFORE: SHRI KULDIP SINGH, JUDICIAL MEMBER IT A N o . 696 / Mu m/ 20 23 ( A sse s s me n t Y e ar s :2 0 15 -1 6 ) R VIR & Co. JW4010, Bharat Diamond Bourse, Bandra Kulra Complex, Bandra (E), Mumbai- 400051. Vs. ITO-23(3)(5) Kautilya Bhavan, Mumbai. P A N / GIR N o. AAHFV 9019 M (Appellant) .. (Respondent) Assessee represented by Shri Bhupendra Shah Revenue represented by Shri Jogendra Singh, Sr. AR Date of Hearing 10/05/2023 Date of Pronouncement 10/05/2023 O R D E R PER KULDIP SINGH (J.M): The Appellant, R VIR & CO. (hereinafter referred to as the ‘assessee’) by filing the present appeal, sought to set aside the impugned order dated 16.02.2023 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the ‘CIT(A)’] qua the assessment order for Assessment year 2015-16 on the grounds inter-alia that:- “1) In the facts and circumstances of the case and in law the learned Assessing Officer erred in adding Rs4,19,000/- u/s 68 as unexplained cash credit by way of undisclosed income in the hand of the Appellant: ITA No. 696/Mum/2023 2 a) Without appreciating the fact that the Appellant is not required to explain source of source of income as was held in various judgments of multiple courts. b) Without issuing show cause notice before making addition. 2) In the facts and circumstances of the case and in law the learned Assessing Officer erred in initiating penalty proceedings u/s 271(1)(c) and also levying interest on the same u/s 234. 3) In the facts and circumstances of the case and in law the learned cit[A] erred passing order ex parte a) Without deciding matter on merits b) Without considering adjournment request uploaded online on 13.02.2023 c) By granting time of less than 7 days vide notice dated 10.02.2023for making submission for which adjournment application was ignored d) Notices dated 09.02.2021, 24.06.2021 could not be attended due to Covid19 period. Relief Prayed: The appellant therefore prays Your Honour, 1) To quash the order passed without issuing show cause notice. 2) To delete the addition of Rs4,19,000/- u/s 68 as unexplained cash credit. 3) To delete the interest u/s 234 and penalty u's 271(1)(e). 4) To quash the Appellate order passed exparte which is against the scheme od faceless appeal General:- . The appellant reserves rights to add alter or delete any portion of this appeal before its conclusion. . This appeal is filed in time and may please be allowed in full. A Detailed paper book along with case laws will be submitted at the time of hearing.” 2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are : The assessee company being a partnership firm filed its return of income declaring total income of Rs.13,31,210/, which was subjected to scrutiny. The AO noticed that during the year under ITA No. 696/Mum/2023 3 consideration, the assessee has availed of loan to the tune of Rs. 1,30,61,349/- from 3 parties. On failure of the assessee to explain the source of deposits in the bank accounts concerned, treated the same as undisclosed income under section 68 of the Income Tax Act, 1961 (in short, “the Act”) and thereby framed assessment under section 143 of the Act. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the disallowance by dismissing the appeal filed by the assessee. Feeling aggrieved with the impugned order passed by the Ld. CIT(A), assessee has come up before the Tribunal by way of filing the present appeal. 4. I have heard the Ld. Authorised representative of the parties to the appeal, perused the order passed Ld. Lower Revenue Authorities and material available on record in the light of the case law applicable. 5. At the very outset, it is brought to the notice of the Bench by the Ld. AR for the assessee that impugned order is passed by Ld. CIT(A) at back of the assessee without providing opportunity of being heard and without deciding the case on merits, which fact is not controverted by the ld. DR for the Revenue. 6. On perusal of the impugned order passed by Ld. CIT(A) particularly para-4 shows that ld. CIT(A) stated to have given 3 notices to the assessee but failed to record if such notices were ever served upon the assessee. ITA No. 696/Mum/2023 4 Rather the ld. CIT(A) has proceeded to dispose of the appeal ex-parte due to non-prosecution without deciding the merits. 7. In view of what has been discussed above. I am of the considered view that adequate opportunity of being heard has not been given to the assessee by the ld. CIT(A). To advance the cause of justice and to stop the multiplicity of the providing adequate opportunity of being heard is required to be given to the assessee, hence the impugned order passed by the ld. CIT(A) is set aside to be diceded afresh after providing opportunity of being heard to the assessee by the ld. CIT(A). 8. Resultantly, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 10/05/2023. Sd/- (KULDIP SINGH) JUDICIAL MEMBER Mumbai; Dated 10/05/2023 Santosh, Sr. PS Copy of the Order forwarded to : BY ORDER, (Sr. Private Secretary / Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy// ITA No. 696/Mum/2023 5 Date Initial 1. Draft dictated on 09/05/2022 Sr.PS 2. Draft placed before author 10/05/2023 Sr.PS 3. Draft proposed & placed before the second member 10/05/2023 JM/AM 4. Draft discussed/approved by Second Member. JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. File sent to the Bench Clerk Sr.PS 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed Yes