JATIN NARESHBHAI PABARI,KEVDAVADI V. NFAC, DELHI

ITA 26/RJT/2024

AI Insights

The case involves two appeals filed by the assessee, Jatin Nareshbhai Pabari, against the orders of the National Faceless Appeal Centre (NFAC), Delhi, concerning the assessment year 2017-18. The appeals were initially dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)] due to being filed late, without condoning the delay. The assessee challenged the additions made by the AO regarding unexplained cash deposits and the penalties imposed under sections 69A and 271AAC of the Income Tax Act, 1961. The Tribunal found that the assessee was not aware of the proceedings due to communications being sent to a former consultant's email, and thus, the delays were not intentional. Consequently, the Tribunal decided to condone the delays and remit the cases back to the AO for a fresh examination on merits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 26371 (ITAT-RAJKOT)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 15-01-2024
• Other Referred Cases: Jatinbhai Vallabhbhai Hirabhai vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIMANYU SINGH YADAV
• Assessee Lawyers: SUMIT SHINGALA
• Keywords: Condonation of delay; Set aside; Reasonable cause; Unexplained cash credit; Reopening of assessment; Principle of natural justice; Reason to believe
• Section: 147; 148; 144; 250; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./ITA Nos. 26&27/RJT/2024 (Assessment Year: 2017-18) (Hybrid Hearing) Jatin Nareshbhai Pabari, Devi Bhuvan, 8/12 Kevdavdi, Opp. Dwarkadhis Apartment, Kevdavadi Main Road-360002 Vs. National Faceless Appeal Centre, Delhi Income Tax Officer, Ward-1(1)(1), Rajkot èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ASKPP1400B (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरतीकȧओरसे/Appellant by : Shri Sumit Shingala, AR राजèवकȧओरसे/Respondent by : Shri Abhimanyu Singh Yadav, Sr. DR सुनवाई कȧ तारȣख/ Date of Hearing : 09/09/2024 घोषणाकȧतारȣख/Date of Pronouncement : 15/10/2024 आदेश/ORDER PER DINESH MOHAN SINHA, JM: Captioned two appeals filed by the assessee, are directed against the order passed by National Faceless Appeal Centre (in short ‘NFAC’), Delhi, dated 06.12.2023, under section 250 of the Income Tax Act, 1961 (in short, ‘the Act’). 2. The Grounds of appeal raised by the assessee are as follows: ITA No. 26/Rjt/2024(A.Y. 2017-18):- “1. The grounds of appeal mentioned herein are without prejudice to one another. I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 2 2. The Ld. CIT(A) has erred in law as well as on facts without considering any grounds of appeal and passed order only on the basis that filing of appeal is late. The ld. CIT(A) has erred in law as well as on facts in not condoning the delay of filing of appeal. 3. On Facts and circumstances of the case Ld. CIT(A) ought to have admitted the appeal and adjudicate grounds of appeal. 4. The Ld. CIT(A) has erred in law as well as on facts of the case where the addition made by the assessing officer of Rs.30,47,526/- account of cash deposit was challenged as the same was duly reflected in books of accounts as income from undisputed sources. 5. It is therefore prayed that the order of the Ld. CIT(A) may kindly be cancelled and addition made by the A.O. may please be deleted. 6. Your honor’s appellate craves to leave, to add, to alter, to amend or withdrawal any or more grounds of appeal on or before the hearing of appeal.” ITA No. 27/Rjt/2024(A.Y. 2017-18):- “1. The grounds of appeal mentioned herein are without prejudice to one another. 2. The Ld. CIT(A) has erred in law as well as on facts without considering any grounds of appeal and passed order only on the basis that filing of appeal is late. The ld. CIT(A) has erred in law as well as on facts in not condoning the delay of filing of appeal. 3. On Facts and circumstances of the case Ld. CIT(A) ought to have admitted the appeal and adjudicate grounds of appeal. 4. The Ld. CIT(A) has erred in law as well as on facts of the case where the penalty of Rs. 2,35,421/- was made u/s 271AAC of the Act was challenged as the source of cash deposit on which penalty is levied was duly reflected in books of account of the assessee. 5. It is therefore prayed that the order of the Ld. CIT(A) may kindly be cancelled and addition made by the A.O. may please be deleted. 6. Your honor’s appellate craves to leave, to add, to alter, to amend or withdrawal any or more grounds of appeal on or before the hearing of appeal.” I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 3 3. Since the issue involved in both these appeals are delayed in filing appeal before Ld. CIT(A) for 377 and 561 days, therefore, the matter is being heard together and passed a consolidated order for the sake of brevity. 4. The brief facts of the case are that the assessee is an individual and filed his return of income on 09.10.2017, declaring his total income at Rs.4,59,590/-. As per information received in category of High-Risk Transaction CRIU/VRU on Insight Portal of the Department. The assessee made transactions to the tune of Rs. 30,55,498/- in his bank account. The AO had reason to believe that the income chargeable to tax, i.e. attributable to the unexplained credits of Rs.30,55,498/- in bank accounts, has escaped assessment within the meaning of Section 147 of the Act. A notice u/s. 148 of the Act was issued to the assessee on 31.03.2021 with the approval of the Joint Commissioner of Income-tax, who called for a return of income within 30 days from the date of service of the notice, but the assessee has filed his return on 08.03.2022, was not within the stipulated time. During the course of assessment proceeding, the assessee was asked to explain the sources of Rs.30,55,498/- in his bank account, but the assessee remain un-responded. The AO observed that assessee has deposited cash & credits in his bank account maintained with ICICI Bank & HDFC Bank Ltd., but the assessee had not explained the source of cash deposited in his bank account. Thus, the source of such deposits was unexplained u/s. 69A of the Act. Further, the AO observed that the assessee has failed to prove the source and nature of the cash deposited in the bank account, was treated as income taxable u/s. 69A of the Act and added to the total income of the assessee, was taxed @ I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 4 60% u/s. 115BBE of the Act. The AO also initiated a penalty proceeding u/s. 271AAC(1) of the Act. 5. Aggrieved by the order of AO, the assessee filed appeal before Ld. CIT(A). In both the appeals before Ld. CIT(A), the addition made by the AO was confirmed by the Ld. CIT(A). In the case of reopening of assessment u/s 147, the AO passed an ex parte order without considering the facts, which relates to make cash deposit of Rs.30,55,498/- during the demonetization period. The other appeal filed before Ld. CIT(A), the AO levied a penalty of Rs.2,35,421/- u/s 271AAC(1) of the Act, wherein the assessee has challenged the source of cash deposit on which penalty was levied was duly reflected in the books of accounts of the assessee. The Ld. CIT(A) relied upon the various case laws in both the appeals and observed that the legal proposition that the discretion to condone the delay has to be exercised judiciously based on the facts and circumstances of each case, the expression ‘sufficient cause’ cannot be liberally interpreted, if negligence, inaction or lack of bona fides is attributed to the party. Further, the Ld. CIT(A) found no other way except to treat both the appeals as invalid since the same are not filed within the stipulated time. Therefore, the Ld. CIT(A) dismissed both the appeals, filed belatedly, as the assessee failed to explain the ‘sufficient cause’ for delay in filing appeal during the appellate proceedings, hence, the delay in filing both the appeals of 377 and 561 days cannot be condoned. 6. Appeal filed by the assessee before Ld. CIT(A) is delayed by 377 & 561 days. The assessee submitted application for condonation of delay. The reasons for the delay of 377 days are as under: I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 5 “1) I the above name appellant is fully conversant of the facts deposed below, and therefore I am competent to make this affidavit. 2) Assessment Order is passed on 28/03/2022, whereas the First Appeal was filed on 09/11/2023. Thus, there has been delay of 561 days in preferring first appeal against the Assessment Order. Similarly, the Penalty Order got passed on 28/09/2022 whereas the first appeal against the Penalty Order is filed on 09/11/2023. Thus, there has been delay of 377 days. 3) In fact, I was never aware of any assessment proceedings initiated against me. All the notices and/or communications were served in the email ID of my previous consultant whose details are : NARESNBHAI JAYSUKHLAL PANDYA, OM CONSULTANCY, ADD-GOVIND BAUG VEG. MARKET, DAYANAND COMPLEX, FIRST FLOOR OFFICE NO: 4, RAJKOT. 4) Due to above, I was neither in receipt of any communication sent electronically, nor I received Assessment order or Penalty Order. When I received recovery notice for recovery of demand, I approach the jurisdiction A.O. and I came to know that my assessment order was passed u/s 144 of the Act 1961, and whereupon I realized that due to change of my consultant all the correspondence were received in his mail ID. 5) Upon being aware of the facts and circumstances, I filed First appeal with aforestated delay, with a prayer to condone the delay in the interest of justice. 6) Since as stated above there is a reasonable cause for delay in filing the appeal and accordingly I earnestly request your honors to kindly condone the delay and remit the matter back to the file of Ld. CIT(A) with direction to admit the appeal in the interest of natural justice & oblige. 7. The reasons of delay of 561 days in ITA No. 26/Rjt/2024 are as follows:- “1) I the above name appellant is fully conversant of the facts deposed below, and therefore I am competent to make this affidavit. 2) Assessment Order is passed on 28/03/2022, whereas the First Appeal was filed on 09/11/2023. Thus, there has been delay of 561 days in preferring first appeal against the Assessment Order. 3) In fact, I was never aware of any assessment proceedings initiated against me. All the notices and/or communications were served in the email ID of my I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 6 previous consultant whose details are NARESNBHAI JAYSUKHLAL PANDYA, OM CONSULTANCY, ADD-GOVIND BAUG VEG MARKET, DAYANAND COMPLEX, FIRST FLOOR OFFICE NO: 4, RAJKOT. 4) Due to above, I was neither in receipt of any communication sent electronically nor I received Assessment order. When I received recovery notice for recovery of demand, I approach the jurisdiction A.O. and I came to know that my assessment order was passed u/s 144 of the Act 1961, and whereupon I realized that due to change of my consultant all the correspondence were received in his mail ID. 5) Upon being aware of the facts and circumstances, I filed First appeal with aforestated delay, with a prayer to condone the delay in the interest of justice. 6) Since as stated above there is a reasonable cause for delay in filing the appeal and accordingly I earnestly request your honors to kindly condone the delay and remit the matter back to the file of Ld. CIT(A) with direction to admit the appeal in the interest of natural justice & oblige.” 8. In the above affidavits, it is seen that there is 377 and 561 days of delay in filing both the appeals respectively before the Ld. CIT(A), as the assessment order was passed on 28.09.2022 whereas the first appeal against the penalty order was filed on 09.11.2023. 9. The Ld. AR of the assessee submitted that assessee filed before Ld. CIT(A) who has not admitted both the appeals filed belatedly in 377 and 561 days respectively. The Ld. AR also submitted that the assessee was not aware of the notices available in his old consultant’s email address. The Ld. AR submitted that the appeals filed belatedly before Ld. CIT(A), was neither deliberate nor negligent. The Ld. AR of the assessee submitted that the assessee is to be more careful and vigilant during the appellant proceedings. To support of his claim, the Ld. AR of the assessee relied on the order of this Tribunal in case of Jatinbhai Vallabhbhai Hirabhai vs. ITO, in ITA No. 397/Rjt/2023, dated 18.07.2024. However, the Ld. Counsel for the assessee I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 7 submitted that the assessee has explained the ‘sufficient reason’ to condone the delay of 377 and 561 days, therefore, in the interests of justice, the delay may be condoned. 10. On the other hand, Ld. Sr. DR for the Revenue supported the order of lower authorities. The Ld. Sr. DR submitted that the assessee bears the burden of proving proper facts before advancing any argument of negligence. The Ld. Sr. DR also submits that the assessee can argue that the negligence of his tax consultant caused non-receipt of notices, was essential to prove to demonstrate the existence of consultant and without foundation of evidences, the claim of negligence remains unsubstantiated. The Ld. Sr. DR relied on the various decisions of Hon’ble Supreme Court in cases of CIT vs. Mohanakala (2007) (SC) and Sumati Dayal vs. CIT, (1995) (SC). The Ld. Sr. DR submitted that the assessee has not explained the ‘sufficient reason’ to condone the delay. During the appellate proceeding, the assessee was negligent, therefore, both the appeals of the assessee may be dismissed. 11. We have heard both the parties and perused the materials available on record. It is noted that the ld. CIT(A) has issued notices for hearing, but the assessee had no information about the notices. Beside this, the ld. CIT(A) passed an ex parte order without giving an opportunity. 11.1 The assessee submitted that the assessee was unaware about the proceedings which was initiated against him. The assessee did not receive any communication from the Department, as the notices of hearing or communication were served on previous address/e-mail id of his consultant. Thereafter, the assessee went to the consultant and filed appeal before the I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 8 first appellate authority. Due to the circumstances stated above, the delay has occurred 377 days in filing the appeal before Ld. CIT(A), resultantly, the Ld. CIT(A) dismissed the appeal of the assessee without condoning the delay. The assessment order passed on 28-03-2022. The penalty order passed on 28/09/2022. Hence, since the assessee came to know about the order passed by the ld. CIT(A), the assessee collected the order and because the AO order was dated 06-12-2023 made a delay of 561 and the penalty order dated 28/09/2022 made delay of 377 days. We note that the reason explained in the application for condonation of delay clearly states that delay in both the appeals were neither deliberate nor intentional, therefore, in the interest of justice, one more opportunity should be granted to the assessee to contest his before the AO. Since the Ld. CIT(A) has not condoned the delay in both the appeals, we are of the view that the assessee has explained the ‘sufficient cause’ to condone the delay, therefore, we condone the delay in filing both the appeals and admit the appeal for hearing on merit. Therefore, we set aside the order of the ld. CIT(A) and remit the matter back to file of AO for fresh adjudication on merits. We, further, direct to the assessee to submit relevant details and documents before AO as and when required by AO. Looking to the facts and circumstances of the present case, a cost of Rs.5,000/- (Rupees Five thousand only) is to be imposed upon the assessee for non-compliance/negligence on the part of the assessee and the same is to be deposited in the account of “Prime Minister Relief Fund”. Therefore, we deem it fit and proper to set aside the order of the Ld. CIT(A) and remit the matter back to the file of AO to adjudicate the issue afresh on merits. For statistical purposes, both the appeals of the assessee are treated as allowed. I.T.A No. 26-27/Rjt/2024/ A.Y. 2017-18 Jatin Nareshbhai Pabari 9 12. In the result, both the appeals of the assessee are treated to be allowed for statistical purposes. Order pronounced in the open court on 15/10/2024. Sd/- Sd/- (Dr. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot Dated: 15/10/2024 आदेश की Ůितिलिप अŤेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Rajkot 6. Guard file. By order/आदेश से, Assistant Registrar ITAT, Rajkot "