Jayesh Harakhji Patel, Rajkot V. Asstt. Commr. of Income Tax, Cen. Cir.1, Rajkot

ITSSA 145/RJT/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3324 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-07-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 07-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 132; 153A; 250; 251; 139(1); 246A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT Before: Shri Waseem Ahmed, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Shri Jay esh Harak hji Patel, Janta Society, Sanala Road, Morbi-3 63641 PAN: AC NPP 7783L (Appellant) Vs The ACIT, Central Circle-1, Rajkot (Resp ondent) Asses see by : Shri Sa mir Bhuptani, A.R. Revenue by : Shri Aarsi Pra sad, CIT-D. R. Date of hearing : 04-07 -2022 Date of pronouncement : 03-08 -2022 आदेश/ORDER PER BENCH:- These five appeals have been filed by the assessee against the orders of Ld. CIT(A)-11 for assessment years 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 Ahmedabad dated 29-09-2017, in Appeal Nos. CIT(A)- 11/041R/CC.1/Rjt/2015-16, CIT(A)-11/042R/CC.1/Rjt/2015-16, CIT(A)- 11/043R/CC.1/Rjt/2015-16, CIT(A)-11/044R/CC.1/Rjt/2015-16 & CIT(A)- IT(SS)A Nos. 143, 144, 145, 146 &147/Rjt/2017 Assessment Year 2008-09 to 2012-13 I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 2 11/045R/CC.1/Rjt/2015-16, in proceedings under section 153A r.w.s. 144 of the Income Tax Act, 1961; in short “the Act”. 2. The assessee has raised the following grounds of appeals:- IT(SS)A 143/Rjt/2017 A.Y. 2008-09 “CIT(A) erred in law as well as on facts in – 1. Dismissing the appeal ex-parte, particularly when notices of hearing were not served on the appellant. 2. Dismissing the appeal in utter casual manner, even without typing all grounds of appeal in the order. 3. Dismissing the appeal without passing any comment on merit stated in the statement of facts and gourds of appeal. 4. Dismissing the appeal without adjudicating any grounds of appeal on merit. 5. Confirming the arbitrary addition of Rs. 2,51,000/- on account of gross deposits in bank account, by ignoring the nature of business, return of income and corresponding withdrawal and thereby not restricting the addition of income element embedded in the deposits. 6. Not restricting addition upto peak investment only. 7. Not giving deduction/ credit of intangible addition made in year under consideration as well as in earlier year.” IT(SS)A 144/Rjt/2017 A.Y. 2009-10 “Ld. CIT(A) erred in law as well as on facts in – I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 3 1. Dismissing the appeal ex-parte, particularly when notices of hearing were not served on the appellant. 2. Dismissing the appeal in utter casual manner, even without typing all grounds of appeal in the order. 3. Dismissing the appeal without passing any comment on merit stated in the statement of facts and gourds of appeal. 4. Dismissing the appeal without adjudicating any grounds of appeal on merit. 5. Confirming the arbitrary addition of Rs.1,00,000/- on account of gross deposits in bank account, by ignoring the nature of business, return of income and corresponding withdrawal and thereby not restricting the addition of income element embedded in the deposits. 6. Not restricting addition upto peak investment only. 7. Not giving deduction/ credit of intangible addition made in year under consideration as well as in earlier year.” IT(SS)A 145/Rjt/2017 A.Y. 2010-11 “Ld. C1T(A) erred in law as well as on facts in – 1. Dismissing the appeal ex-parte, particularly when notices of hearing were not served on the appellant. 2. Dismissing the appeal in utter casual manner, even without typing all grounds of appeal in the order. 3. Dismissing the appeal without passing any comment on merit stated in the statement of facts and gourds of appeal. 4. Dismissing the appeal without adjudicating any grounds of appeal on merit. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 4 5. Confirming the arbitrary addition of Rs. 4,05,000/- on account of gross deposits in bank account, by ignoring the nature of business, return of income and corresponding withdrawal and thereby not restricting the addition of income element embedded in the deposits. 6. Not restricting addition upto peak investment only. 7. Not giving deduction/ credit of intangible addition made in year under consideration as well as in earlier year.” IT(SS)A 146/Rjt/2017 A.Y. 2011-12 “Ld. CIT(A) erred in law as well as on facts in - 1. Dismissing the appeal ex-parte, particularly when notices of hearing were not served on the appellant. 2. Dismissing the appeal in utter casual manner, even without typing all grounds of appeal in the order. 3. Dismissing the appeal without passing any comment on merit stated in the statement of facts and gourds of appeal. 4. Dismissing the appeal without adjudicating any grounds of appeal on merit. 5. Confirming the arbitrary addition of Rs. 3,50,000/- on account of gross deposits in bank account, by ignoring the nature of business, return of income and corresponding withdrawal and thereby not restricting the addition of income element embedded in the deposits. 6. Not restricting addition upto peak investment only. 7. Not giving deduction/ credit of intangible addition made in year under consideration as well as in earlier year.” IT(SS)A 147/Rjt/2017 A.Y. 2012-13 I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 5 “Ld. CIT(A) erred in law as well as on facts in - 1. Dismissing the appeal ex-parte, particularly when notices of hearing were not served on the appellant. 2. Dismissing the appeal in utter casual manner, even without typing all grounds of appeal in the order. 3. Dismissing the appeal without passing any comment on merit stated in the statement of facts and gourds of appeal. 4. Dismissing the appeal without adjudicating any grounds of appeal on merit. 5. Confirming the arbitrary addition of Rs. 1,00,000/- on account of gross deposits in bank account, by ignoring the nature of business, return of income and corresponding withdrawal and thereby not restricting the addition of income element embedded hi the deposits. 6. Not restricting addition upto peak investment only. 7. Not giving deduction/ credit of intangible addition made in year under consideration as well as in earlier year.” 3. Since, common issues are involved in all the appeals, the same are being disposed of by a common order. We shall first deal with assessment year 2008-09. The brief facts of the case are that the search action under section 132 of the Act was carried out in the premises of the assessee on 17- 01-2013. Consequent to search under section 132 of the Act, proceedings under section 153A of the Act were initiated asking the assessee to file return of income. The assessee filed letter dated 21-11-2014 along which the assessee filed copies of regular returns and requested the AO to treat the same as returns filed in response to the notice issued under section 153A of the Act. The return filed under section 139(1) of the Act was for 90,020/ -. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 6 During the course of assessment, none appeared on behalf of the assessee and the assessment order was passed ex parte. The AO noticed that there is cash deposit of 2,01,000/- in the assessee’s Bank of Baroda account and cash deposit of 50,000/- in assessee’s HDFC account. The AO held that since no sources of deposits are available on record and also no explanation is forthcoming from the assessee, the cash deposits are treated as unexplained and added to the assessee’s total income. Similarly for assessment year 2009-10, AO passed ex parte assessment order adding a sum of 1 lakh deposited in assessee’s HDFC bank account treating the same as unexplained income of the assessee, on the ground that no sources are available on record and also no explanation is forthcoming from the assessee. For assessment year 2010-11,AO passed ex parte assessment order adding a sum of 4.05 lakhs deposited in assessee’s HDFC bank account treating the same as unexplained income of the assessee, on the ground that no sources are available on record and also no explanation is forthcoming from the assessee. For assessment year 2011-12, AO passed ex parte assessment order adding a sum of 3.50 lakhs deposited in assessee’s HDFC bank account treating the same as unexplained income of the assessee, on the ground that no sources are available on record and also no explanation is forthcoming from the assessee. For assessment year 2012-13, AO passed ex parte assessment order adding a sum of 1 lakh deposited in assessee’s HDFC bank account treating the same as unexplained income of the assessee, on the ground that no sources are available record and also no explanation is forthcoming from the assessee. All the orders of the various assessment years were passed by the Ld. Assessing Officer on the same date i.e. 12-03-2015. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 7 4. The assessee filed appeal against the orders passed by the Ld. Assessing Officer for various assessment years mentioned above. The Ld. CIT(A) dismissed the assessee’s appeal for various assessment years (notably orders for all the assessment years were passed on 29-09-2017), ex parte, confirming the order of the Ld. Assessing Officer by stating that the assessee was not interested in pursuing his case in appeal proceedings and accordingly the appeal of the assessee was dismissed. Order passed by Ld. CIT(A) for assessment year 2008-09 is reproduced below for reference (we note that orders for assessment were passed on similar lines): “In this case, notices for conducting hearings of appeal were issued from time to time. The particulars of these notices are as under:- Sl. No. notice issued on Date of hearing remarks 1 10-08-2017 21-08-2017 no compliance 2 19-9-2017 28-9-2077 no compliance The above state of affairs established that the appellant was not interested in pursuing this case in the appeal proceedings. In view of above facts and circumstances of the case, the appeal is dismissed.” 5. The assessee is in appeal before us against the aforesaid orders passed by the Ld. CIT(A). Before us the counsel for the assessee submitted that all five appeals were dismissed by the Ld. CIT(A) on the same date viz. 29-09- 2017. The common and uniform contention of the Ld. CIT(A) while dismissing the appeal of the assessee has been discussed above. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 8 6. Thus, all the pleas of the assessee were dismissed for want of prosecution and while dismissing the appeals, Ld. CIT(A) did not pass any comment/observation on the merits of the case and did not discuss grounds of appeal of the assessee while passing order under section 250 of the Act. In fact, a perusal of the order shows that the Ld. CIT(A) did not even reproduce the grounds of appeal of the assessee in appeal order and also did not consider the statement of facts. In the appeal memo, the assessee had raised as many as 6 grounds of appeal, whereas the order of the Ld. CIT(A) only reproduced of 1 ground of appeal and the order was passed without adjudicating on the single ground of appeal so reproduced in the order and the appeal was dismissed summarily for want of prosecution, without touching upon the merits of the case. The Ld. CIT(A) while passing the order did not conduct any enquiry either by himself or through the AO to understand the facts of the case and passed the order on merits. The counsel for the assessee cited cases before us to the effect that Ld. CIT(A) cannot summarily dismiss the assessee’s appeal under section 250 of the Act and should pass a speaking order after discussing the merits of the case. Regarding non-compliance of the notices of hearing issued by Ld. CIT(A) , the counsel for the assessee submitted that the assessee did not receive any notice of hearing and hence was not aware of fixing of hearing this case. The assessee is very much interested in pursuing the appeal on merits and the observation/presumption of Ld. CIT(A) that the assessee is not interested pursuing the appeal is incorrect. In response, DR relied upon the observations of the Ld. CIT(A) in the appeal orders. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 9 7. We have heard the rival contentions and perused the material on record. We note that Ld. CIT(A) passed ex parte appellate orders for all the respective assessment years on the same date (29-09-2017), dismissing the assessee’s appeal for want of prosecution and without going either into the merits of the case or discussing the various grounds of appeal filed by the assessee in his orders. We also note that only two notices of hearing were issued to the assessee, after which appeals for all the five assessment years in question, were dismissed on the same date, summarily without discussing the individual grounds of appeal raised by the assessee/ on merits and all orders were passed without making any further enquiry with the observation/remark that the assessee is not interested pursuing the appeal. At this stage, we would like to reproduce the section 250(4) and 250(6) of the Act: "(4) The Commissioner (Appeals) may, before disposing of any appeal, make such further inquiry as he thinks fit, or may direct the assessing officer to make further inquiry and report the result of the same to the Commissioner (Appeals)." "(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state points for determination the decision thereon and the reason for the decision. " 8. A perusal of the language of the above provisions shows that it is incumbent on the Ld. CIT(A) to make necessary enquiry either himself or through AO before passing the order. Further, Ld. CIT(A) is obliged to decide each of the points arising out of the appeal i.e. grounds on merits have to be discussed even in an ex parte order. In view of section 250(4) and I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 10 250(6) of the Act, Ld. CIT(A) has no power to dismiss an appeal on account of non-prosecution, without discussing the merits of the case. In the case of CIT v. PremkumarArjunda (2107) 297 CTR 614 (Bombay), the Bombay High Court made the following observations: 8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 11 passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) is co-terminus with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non- prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act. 9. Again in the case of Pawan Kumar Singhal v. ACIT [2019] 108 taxmann.com 548 (Delhi - Trib.), the Delhi ITAT held that Commissioner (Appeals) cannot dismiss assessee's appeal in limine for non-prosecution without deciding same on merits through an order in writing, stating points of determination in appeal, decision thereon and reason for decision. In the case of Ms. Swati Pawa v. DCIT [2019] 103 taxmann.com 300 (Delhi - Trib.), the Delhi ITAT held that in terms of section 250, Commissioner (Appeals) is not empowered to dismiss appeal for non-prosecution and is obliged to dispose of appeal on merits by passing a speaking order. In the case of HV Metal ARC (P.) Ltd. v. ACIT [2018] 100 taxmann.com 4 (Delhi - Trib.), the Delhi ITAT held that where Commissioner (Appeals) I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 12 dismissed assessee's appeal on ground that assessee did not wish to pursue appeal, since revenue failed to bring any evidence to prove actual service of notice of hearing on assessee, requirements of procedure as mentioned in section 250(1) and (2) could not be said to have been fulfilled and, thus, impugned order was to be set aside. In the case of Shri NisarhusenAmdali Lakhani (ITA 532/Ahd/2018), ITAT Ahmedabad observed as under: “We straightway refer to Section 250(6) of the Act which enjoins that the CIT(A) shall state the points for determination before it and the decision shall be rendered on such points along with reasons for the decision. Thus, it is incumbent upon the CIT(A) to deal with the grounds on merits even in ex pane order. In view of Section 250(6) of the Act, the CIT(A) has no power to dismiss an appeal on account of non-prosecution. This view is also taken by the Hon'ble Bombay High Court in case of CIT vs. Premkumar Arjundas Luthra HUF (2017) 297 CTR 614 (Bom.). A bare glace of the order of the CIT(A) shows that CIT(A) has not addressed itself on the various points placed for its determination at all and dismissed the appeal of assessee for default in nonappearance. Needless to say, the CIT(A) plays role of both adjudicating authority as well as appellate authority. Thus, the CIT(A) could not have shunned the appeal for non-compliance without addressing the issue on merits. 7. In the totality of the circumstances, we consider it just and expedient to restore the matter back to the CIT(A) in the larger interest of justice with a view to enable the assessee to avail proper opportunity for disposal of appeal by the CIT(A) on various points. Needless to say, the assessee shall extend full cooperation to the CIT(A) without any demur, failing which, the CIT(A) shall at liberty to conclude the appellate proceedings in accordance with law. Hence, the order of the CIT(A) appealed against, is set aside and all the issues raised in the impugned appeal are restored back to the file of the CIT(A) for fresh adjudication in accordance with law after giving reasonable opportunity of hearing to the assessee. I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 13 8. In the result, appeal of the assessee is allowed for statistical purposes.” 10. In view of the above facts and legal ratio laid by the Hon'ble Mumbai High Court and various Tribunals, we are of the considered view that the orders passed by Ld. CIT(A) is in contravention of provisions of section 250(6) of the Act. We are of the considered view that the Ld. CIT(A) has erred in facts and in law in summarily dismissing the assessee’s appeals for all five assessment years, by passing a non-speaking order on the same day for all assessment years, without mentioning the various grounds of appeal raised by the assessee in his appellate order and without discussing the merits of the case. Therefore, in the interests of justice, we are setting aside the case to the file of Ld. CIT(A) for fresh adjudication on merits of the case for all the assessment years, after giving due opportunity of hearing to the assessee to present his case on merits. 11. In the result, all the five appeals of the assessee are upheld for statistical purposes. Order pronounced in the open court on 03-08-2022 Sd/- Sd/- (WASEEM AHMED) (SIDHHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 03/08/2022 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- I.T(SS)A Nos. 143, 144, 145, 146 & 147/Rjt/2017 A.Y. 2008-09 to 2012-13 Page No Shri Jayesh Harakhji Patel vs. ACIT 14 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order, Assistant Registrar, Income Tax Appellate Tribunal, Rajkot