Sanjay Kesarwani, Prayagraj V. ITO, Ward- 1 (5), Allahabad

ITA 81/ALLD/2023

AI Insights

The case involves multiple appeals by the assessee, Sanjay Kesharwani, against the orders of the CIT(A) and the NFAC concerning the assessment years 2008-09 and 2009-10. The primary contention was the ex-parte nature of the CIT(A)'s orders and the best judgment assessment made under sections 144 and 147 of the Income Tax Act, 1961 by the AO, which the assessee argued was done without proper opportunity to present his case. The Tribunal noted the lack of proper hearing and the hurried nature of the assessments, leading to the decision to remand the case back to the AO for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114372 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-09-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2023
• Other Referred Cases: Tin Box Company Vs. CIT (249 ITR 216) (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMLENDU NATH MISHRA
• Assessee Lawyers: MAYANK ARORA
• Keywords: Opportunity of being heard; Bonafide belief; Set aside
• Section: 131; 271(1)(c); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD “SMC” BENCH, ALLAHABAD BEFORE SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.78/Alld/2023 (निर्धारण वर्ा / Assessment Year: 2009-10) & आयकर अपील सं/ I.T.A. No.79/Alld/2023 (निर्धारण वर्ा / Assessment Year: 2009-10) & आयकर अपील सं/ I.T.A. No.81/Alld/2023 (निर्धारण वर्ा / Assessment Year: 2008-09) Sanjay Kesharwani 48/23-G/4, Nyay Marg, Nevada, Civil Lines, Prayagraj-211001. बिधम/ Vs. ITO, Ward-1(5) Income Tax Office, 38 M. G. Marg, Allahabad- 211001. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AJUPK2396Q (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 13/09/2023 घोषणा की तारीख /Date of Pronouncement: 22/09/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: Appeals captioned as ITA No.81/Alld/2023 & ITA. No.78/Alld/2023 are filed by assessee against the quantum appellate orders of the Ld. CIT(A), Allahabad, dated 23.10.2019 (AY. 2008-09) and Ld. NFAC order dated 01.12.2022 for AY. 2009-10 respectively; and ITA. No. 79/Alld/2023 is an appeal against the Ld. NFAC order dated 01.12.202 for AY. 2009-10 confirming the penalty levied u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter “the Act”)]. 2. At the outset, both the parties agree that the issue in quantum appeals captioned as ITA. No. 81/Alld/2023 and ITA. No.78/Alld/2023 are similar/identical and therefore, the decision in Assessee by: Shri Mayank Arora Revenue by: Shri Amlendu Nath Mishra (Sr. DR) ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 2 ITA. No.81/Alld/2023 for AY. 2008-09 will decide the fate of the appeal for AY. 2009-10 (ITA. No.78/Alld/2023). 3. The Ld. AR assailing the impugned action of the First Appellate Authority pointed out that the Ld. CIT(A) has passed an ex-parte order qua assessee, and also brought to my notice that AO has framed the assessment order u/s 144/147 of the Act [for AY. 2008-09] and submitted that even though AO had time until 31.03.2016, he hurriedly passed the best judgment assessment u/s 144 of the Act on 18.01.2016 without giving proper opportunity to the assessee. In the light of the aforesaid facts i.e. ex-parte order of Ld. CIT(A) and order u/s 144 of the Act by AO, he prays that the assessment be restored to the file of AO for de-novo assessment; and for such a preposition cited the decision of the Hon’ble Supreme Court in the case of Tin Box Company Vs. CIT (249 ITR 216) (SC). 4. Per contra, the Ld. DR submitted that despite several opportunities given assessee, he did not respond; and the assessee ought to have participated in the proceedings before the AO and ultimately AO had recorded assess’s statement u/s 131(1) of the Act and thereafter, had passed the order u/s 144 of the Act since the assessee did not produce relevant documents. Therefore, he does not want this Tribunal to give him second innings before both authorities. 5. In his rejoinder, the Ld. AR Shri Mayank Arora pleading for an opportunity before AO, submits that provided an opportunity is given, he would diligently participate in the assessment proceedings and present the relevant documents and the he undertakes to do so. According to the Ld. AR, the assessee is an individual trader who was assessed by the AO by making an addition of Rs. 10,40,950/- and ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 3 thereby imposed tax for Rs.5,87,063/-. According to him, the AO/Ld. CIT(A) erred in determining income as 8% of the total deposit of bank accounts; and in that process ignored the elementary fact that all credit entries in the bank cannot be characterized as income [which is taxable] and due to the impugned action of AO, assessee had to suffer double taxation on the same income which has already been shown in the suo-motto turn-over by assessee. In the light of aforesaid facts and circumstances, according to Ld AR, since assessee did not get proper opportunity to place the correct facts before the AO [about the character and nature of credit entries] and since the impugned appellate order is an ex-parte order, he pleads that assessment be restored before AO, so that assessee will get an opportunity to explain the character/nature of the credit entries. Therefore, he pleads that one more opportunity be given to the assessee. 6. I have heard both the parties and perused the records. It is noted that the impugned order of the Ld. CIT(A) is an ex-parte order since the assessee failed to respond to the notices issued by him thrice i.e. on 19.07.2019, 13.09.2019 and 12.10.2019. According to the Ld. CIT(A) since the assessee has not responded to the aforesaid notices, he was pleased to pass an ex-parte order without assigning any reason on the grounds raised by assessee. Further, it is noted that assessment order has been passed u/s 144 of the Act (best judgment assessment). And the AO has alleged that assessee did not participate in the proceedings and only appeared before him for recording statement u/s 131 of the Act. Be that as it may, it has been pointed out that the addition has been made by AO since assesse failed to explain the credit entries in ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 4 the bank account; and the assessee has pleaded that he appeared to notices served upon him. According to assessee, whenever he received notices, he appeared before AO, and answered to the queries. However, after he appeared and his statement was recorded, he was of the bonafide belief that AO was satisfied with his explanation and after that since he was not served with any notice, he didn’t appear again before AO. However, to his astonishment, when he received the assessment order, he was surprised to note that AO has passed an order u/s 144 of the Act and alleged non-participation from his side and made addition on ad-hoc basis treating the credit entries in bank account as trading receipts. Thus assessee pleads that he didn’t get proper-opportunity before AO to explain the nature and character of each credit entry in the bank account. Taking in to consideration the overall facts and circumstances, and also considering the fact that the impugned order of the Ld. CIT(A) is an ex-parte order and assessee did not get proper opportunity before the AO during assessment proceedings by relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company (supra) wherein similar situation their Lordship has held as under: - “ It is unnecessary to go into great detail in these matters for there is a statement in the order of the Tribunal, the fact-finding authority, that reads thus : "We will straightway agree with the assessee's submission that the ITO had not given to the assessee proper opportunity of being heard." That the assessee could have placed evidence before the first appellate authority or before the Tribunal is really of no consequence for it is the assessment order that counts. That order ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 5 must be made after the assessee has been given a reasonable opportunity of setting out his case. We, therefore, do not agree with the Tribunal and the High Court that it was not necessary to set aside the order of assessment and remand the matter to the assessing authority for fresh assessment after giving to the assessee a proper opportunity of being heard. 2. Two questions were placed before the High Court, of which the second question is not pressed. The first question reads thus: "1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in not setting aside the assessment order in spite of a finding arrived at by it that the Income-tax Officer had not given a proper opportunity of hearing to the assessee ?" In our opinion, there can only be one answer to this question which is inherent in the question itself: in the negative and in favour of the assessee. 3. The appeals are allowed. The order under challenge is set aside. The assessment orders, that of the Commissioner (Appeals) and of the Tribunal are also set aside. The matter shall now be remanded to the assessing authority for fresh consideration, as aforestated. No order as to costs.” 7. As noted (supra), the assessee during assessment proceedings did not get proper opportunity before the AO, so, by relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company (supra), I am inclined to set aside the impugned order of the Ld. CIT(A) and restore the matter back to the file of the AO with a direction to frame de-novo assessment in accordance to law after hearing the assesee. And before me, the Ld. AR of the assessee Shri ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 6 Mayank Arora has undertaken to file the relevant documents/written submission and in case assessee desires hearing before AO, it may be allowed as per Rules; and the AO to pass the assessment order afresh after considering the material on record/written submission in accordance to law. ITA. NO. 78/Alld/2023 for AY. 2009-10 Since the impugned order of First Appellate Authority is an ex- parte order and AO has passed order u/s 144 of the Act, and since AO has made similar addition as that for AY 2008-09, for the same reason given supra for deciding appeal for AY 2008-09 will apply mutatis- mutandis to the appeal for AY. 2009-10, and therefore, the impugned order of Ld. CIT(A) is set aside back to AO for fresh assessment as directed for appeal of AY. 2008-09. ITA. No.79/Alld/2023 for AY. 2009-10 This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC confirming the penalty levied u/s 271(1)(c) of the Act. Since the quantum assessment for AY. 2009-10 has been set aside back to the file of the AO, therefore, the penalty appeal becomes infructuous and therefore, AO needs to initiate the same if found warranted after quantum assessment is decided in accordance to law. 8. In the result, the appeals of the assessee are allowed for statistical purposes. Order pronounced in the open court on this 22/09/2023. Sd/- (ABY T. VARKEY) JUDICIAL MEMBER Allahabad दिनांक Dated : 22/09/2023. Vijay Pal Singh, (Sr. PS) ITA Nos.78, 79 and 81/Alld/2023 A.Y. 2009-10 & AY 2008-09 Sanjay Kesarwani 7 Copy forwarded to: 1. Appellant – 2. Respondent – 3. CIT(A) , Allahabad 4. CIT 5. DR - By order Assistant Registrar