JAGJIT SINGH ,PATIALA V. .INCOME TAX OFFICER, WARD-2, PATIALA , PATIALA

ITA 105/CHANDI/2024

AI Insights

This case involves a second appeal by the assessee, Jagjit Singh, against the order of the CIT(A) which upheld the assessment made by the Income Tax Officer under sections 147 and 144 of the Income Tax Act, 1961. The assessment was based on an unexplained investment of Rs. 53,00,000 in purchasing land, for which the assessee failed to provide satisfactory evidence of the source of funds despite multiple notices. The CIT(A) dismissed the appeal primarily due to a delay in filing, which the assessee attributed to his mother's illness and subsequent death. The Tribunal found that the CIT(A) should have addressed the issue of delay at the outset and then considered the merits of the case, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107729 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: TEJMOHAN SINGH
• Keywords: Condonation of delay; Set aside; Additional evidence; Invalid notice; Unexplained investment; Principle of natural justice; Reason to believe
• Section: 147; 148; 144; 142(1); 250; 246A

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी िवŢम िसंह यादव, लेखा सद˟ एवं ŵी परेश म. जोशी, Ɋाियक सद˟ BEFORE: SHRI. VIKRAM SINGH YADAV, AM & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 105/Chd/2024 िनधाŊरण वषŊ / Assessment Year : 2011-12 Jagjit Singh, C/o Tejmohan Singh, Advocate # 527, Sector 10D, Chandigarh बनाम The ITO Ward-2, Patiala Punjab ˕ायी लेखा सं./PAN NO: FOGPS3507P अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Tejmohan Singh, Advocate राजˢ की ओर से/ Revenue by : Shri Vivek Vardhan, JCIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 16/10/2024 उदघोषणा की तारीख/Date of Pronouncement : 18/12/2024 आदेश/Order PER PARESH M. JOSHI, J.M. : This is an second appeal filed by the assessee under section 253 of the Income Tax Act, 1961 (hereinafter referred to as Act) before this Tribunal. The assessee is aggrieved by the order bearing No. ITBA/NFAC/S/250/2023- 24/1058720011(1) dt. 13/12/2023 of the Ld. CIT(A) passed under section 250 of the Act which is hereinafter referred to as the “impugned order”. The relevant assessment year is 2011-12 and the corresponding previous year period is from 01/04/2010 to 31/03/2011. 2. Factual Matrix 2.1 That the Department of Income Tax had information that the assessee has made financial transactions of Rs. 53,00,000/- during the F.Y. 2010-11 relevant to the A.Y. 2011-12 but had not filed his return of income for A.Y 2011-12 2 consequently proceedings under section 147 of the Act were intiated against the assessee as source of the investment remained unexplained. 2.2 A notice under section 148 of the Act dt. 29/03/2018 was issued with the prior approval of the appropriate authority. 2.3 That the notice was served on the assessee through speed post as well as through email and the notice server. 2.4 That subsequently notices under section 142(1) of the Act and other letters / notice(s) were sent as per chronological events as below: Nature of notice/letter Date or notice Date of hearing Remarks \"Notice u/s 142(1) 02 05.2018 I I 05.20 18 Served but uncomplied with Penalty notice u/s 271(1)(b) 17.05.2018 25 05.2018 -do- Opportunity letter 04 06.2018 11 06.2018 -do- Show cause to penalty u/s 27l(1)(b) 22 06 2018 28 06.2018 -do- Notice u/s 142(1) 19.07.2018 26.07.2018 -do- Notice u/s 142(1) 06.08.2018 13.08.2018 -do- Notice u/s 142(1) 06.09.2018 12.09.2018 -do- Show cause notice 19.09.2018 27.09.2018 -do- Opportunity letter 22 10.2018 26.10.2018 -do- ! 2.5 That the perusal of the above cited table, it is clear that all notices/letters remained un-complied with as neither anybody attended nor any application for adjournment was filed. Sufficient opportunities were given for the production of relevant documents which were never ever produced before the undersigned during the entire assessment proceedings despite the fact that number of opportunities have been given to the assessee in the interest of natural justice. The onus was on the assessee to explain the nature and source of 3 investment made of Rs.53,00,000/- in purchasing the land at Village Panjeta, Tehsil & District Patiala on 28.04.2010. 2.6 That from the facts adduced above, it is evident that despite issue of repeated notices, the assesse has failed to comply with these notices and even the return of income, for the A.Y. 2011-12, in response to notice u/s 148 of the IT Act, 1961, has not been received. In fact, there is ample authority for the proposition that where the assessee fails to prove satisfactorily the source and nature of certain investment during the accounting year, the revenue is entitled to draw the inference that the investment made is of an assessable nature. The assessee has failed to bring on record any evidence to establish that the investment made is out of genuine sources. Therefore, the source of investment made remained unexplained. Therefore, in the given circumstances, the undersigned has left with no alternate but to complete the assessment within the meanings of Section 144 of the I.T Act, 1961, to the best of judgment, on the basis of facts, available on record. 2.7 That During the year under consideration, as per facts on record, the assessee has made investment of Rs.53,00,000/- in purchasing the land at Village Panjeta Tehsil & District Patiala on 28.04.2010. Accordingly, the assessee was requested to provide the source of this investment with documentary evidence. In response, the assessee could not produce any cogent documentary evidence to substantiate. He has also not filed any reply/information in response to show cause notice dated 19.09.2019 requiring for addition of Rs.53,00,000/- on 4 account of unexplained investment and taxed accordingly. However, to be fair and reasonable, the undersigned has not considered the whole of the investment made amounting to Rs.53,00,000/- as unexplained. I have perused the assessee's bank account statement with Punjab & Sind Bank, Gurbax Colony, Patiala and have noticed a DD of Rs.15,10,870 on 27.04.2010 which appears to be relied upon being related to the said transaction dated 28.04.2010. However, the assessee has not filed any information and also none appeared on behalf of the assessee. No written submissions and corroborative documentary evidence has been filed to justify the investment made. Further, the assessee has not filed return of income for the financial year 2010-11 relevant to Asstt.Year 2011-12. Hence, I have no other option but to make the assessment at Rs.37,80,130/- (53,00,000 - 15,19,870) on account of unexplained investment and brought to tax. 2.8 Accordingly with the above observation Income Tax Officer, Ward-2, Patiala assessed the income of the assessee at Rs. 37,80,130/- vide assessment order dt. 30/10/2018 which was passed under section 147/144 of the Act. 3. That the assessee being aggrieved by the aforesaid assessment order dt. 30/10/2018 prefers first appeal before Ld. CIT(A)in terms of section 246A of the Act and by the impugned order Ld. CIT(A) has rejected the appeal of the assesse consequently the impugned assessment order of Ld. AO dated 30/10/2018 stands sustained. 5 4. The assessee being aggrieved by the aforesaid impugned order prefers second appeal before this Tribunal and has raised following grounds of appeal in Form 36 before us : 1. That the Ld. Commissioner of Income Tax (Appeals) lias erred in law in dismissing the appeal only on the ground that the appellant has failed to provide any sufficient cause for the delay in filing of appeal by 125 days and that also without issuance of any show cause notice to explain the delay which is arbitrary and unjustified. 2. That the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that while filing the appeal in Form Number 35, it was specifically mentioned that the widowed mother of the assessee was suffering from chronic renal failure who ultimately expired on 04.04.2019 and a prayer was also made by filing a separate application for condonation of delay alongwith additional evidence which has not been considered and as such the order passed arbitrary and unjustified. 3. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in not deciding the appeal on the legal issues and merits leading to upholding of the addition of Rs.37,80,130/- which is arbitrary and unjustified. 4. That the Ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the initiation of proceedings under section 147 of the Act and framing the assessment under section 147 r.w.s 144 read with Sectionl44B of the Act without satisfying the statutory pre- conditions required for initiation of proceedings and completion of assessment and as such, the same are without jurisdiction and hence deserve to be quashed as such. 5. That the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the assessment framed by the Assessing Officer in as much as there has been no reason to believe that there was an escapement of income in as much as the reasons recorded are based only on borrowed information, incorrect facts and conjectures as such the order passed is illegal, arbitrary and unjustified. 6. That initiation of proceedings was mechanical and without any application of mind much less independent application of mind, therefore the notice issued u/s 148 of (he Act was an invalid notice and assumption u/s 147 of the Act was without jurisdiction. 7. That in absence of any valid approval obtained mechanically under section 151 of the Act, initiation of proceedings u/s 147 of the Act and assessment framed u/s 147/144B of the Act are invalid and deserve to be quashed as such, 6 8. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in in upholding of the addition of Rs.37,80,130/-for alleged unexplained investment which is arbitrary and unjustified. 9. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 10. That the order of Ld. Commissioner of Income Tax (Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable. 5. Record of Hearing 5.1 The hearing before this Tribunal took place on 16/10/2024 when the Ld. AR for and on behalf of the assessee was heard in support of his contentions. We also heard Ld. DR for and on behalf of the Revenue. The Ld. AR chronological took us through the facts of the case and Ld. DR supported the orders of both the lower authorities i.e Ld. AO and Ld. CIT(A). Equal opportunity was afforded to both the parties and that they were treated equally. In brief and in sum and substance the Ld. AR contended that the impugned order is in violation of the principles of natural justice and consequently bad in law and illegal. It ought to be set aside as even delay in filing 1st appeal is not condoned. The Ld. DR in final analysis has left it to this Tribunal to take final call according to law in such manner that justice is done to both parties in equitable manner. 6. Observations Findings & Conclusions 6.1 We now have to decide legality, validity and the proprietary of the impugned order basis premises laid down by us as aforesaid. 6.2 We are of the considered view that delay of 125 days in preferring the first appeal ought to have been decided by the Ld. CIT(A) at the outset and threshold as limitation issue goes to the root of the matter. Whether the appeal is 7 maintainable and is filed within the prescribed time limit must be decided at the outset and not at the fag end of the impugned order as has happened in the instant case. Even if Ld. CIT(A) is of the considered view that delay in preferring first appeal is not required to be condoned then also such decision should be taken at the outset and not after dealing with grounds taken up in Form No. 35 i.e; Form of appeal to CIT(A) as per Rule 45. Unfortunately the Ld. CIT(A) has dealt with preliminary ground at fag end of the impugned order and has infact not condoned the delay. In such circumstances we are not inclined to consider reasons sustaining the order of Ld. AO which order is under section 147/144 of the Act. We are constrained to observe that Ld. AO was left with no other alternative but to pass the order in terms of section 144 which exercise of power in our considered view is correct and appropriate. However ends of justice require that the Ld. CIT(A) to consider first the condonation of delay application and then to decide merits of the case after the assessee has submitted all necessary and required material in support of his case. 6.3 In the result we set aside the impugned order and remand the case back to the file of Ld. CIT(A) who should afford sufficient opportunity to assessee to place all the papers and document in support of his case and thereafter should pass a reasoned and speaking order on merits of the case. Be it noted all papers and documents be first be considered as per law and rule applicable in this regard. However before this exercise and other exercise on merit is done by Ld. CIT(A) he should consider condonation of delay application on merits and thereafter proceed to pass order on merits on denovo basis. 8 7. Order 7.1 In result with above observation we set aside the impugned order and remand the case back to the file of CIT(A) on denovo basis. 7.2 Appeal allowed for statistical purposes. Order pronounced in the open Court on 18/12/2024 Sd/- Sd/- िवŢम िसंह यादव परेश म. जोशी ( VIKRAM SINGH YADAV) (PARESH M. JOSHI) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ / JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "