KANHAIYA POWER PVT. LTD.,KOLKATA V. .ITO, WARD-4(4), KOLKATA

ITA 876/KOL/2024

AI Insights

Kanhaiya Power Pvt. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the addition of Rs. 22,00,000 as unexplained cash credit under section 68 of the Income Tax Act, 1961. The addition was based on cash deposits during the demonetization period, which the Assessing Officer (AO) deemed unexplained. The CIT(A) dismissed the appeal ex-parte due to non-compliance, as the assessee's representative failed to attend the hearings. The ITAT, considering the circumstances and the affidavit submitted for condonation of delay, set aside the CIT(A)'s order and restored the case for a fresh decision, emphasizing the need for a fair hearing and proper compliance in future proceedings.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36257 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Other Referred Cases: CIT vs. Durga Prasad More, Sumati Dayal vs. CIT, A. Govinda Rajulu Mudaliar vs. CIT, CIT vs. T.S. Kishan & Co. Ltd., CIT vs. P. Mohanakala, ITO vs. Mont Blanc Properties and Industries (P.) Ltd., CIT vs. N.R. Portfolio (P.) Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Unexplained cash credit; Bonafide belief
• Section: 147; 148; 143(3); 142(1); 68

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'एसएमसी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SONJOY SARMA, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Vs. ITO, Ward-4(4), Kolkata (Appellant) (Respondent) PAN: AAECS2118J Appearances: Assessee represented by : Siddharth Agrawal, Adv. Department represented by : Susanta Saha, Sr. DR. Date of concluding the hearing : September 26th, 2024 Date of pronouncing the order : December 20th, 2024 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: The present appeal filed by the assessee pertaining to the AY 2017-18 is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (in short, the 'Act') dated 08.11.2023 arising out of the assessment order framed u/s 147/143(3) of the Act dated 16.12.2019. 1.1. The Registry has informed that the appeal filed by the assessee is time barred by 106 days. An application along with an affidavit seeking Page | 2 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 2 of 7 condonation of delay has been filed by the assessee for condoning the delay stating as follows: Application for condonation of delay in filing appeal before the Tribunal: “a) That Sri Subh Karan Soni, FCA of 36, Strand Road, 3rd Floor, Room No. 11, Kolkata-700001, was engaged to look after the assessee’s appeal matter. b) That the assessee remained under bona fide belief that proper compliances were done by him before the ld. CIT(A) since all the notices of hearing were issued to his email id [e-mail] c) That later on or around 15th April, 2024 when the assessee enquired about the status of the appeal, thereupon it transpired that the said order was already passed on 08.11.2023. Sri Subh Karan Soni, FCA further clarified that the hearing notices and the Ld. CIT(A)’s order inadvertently missed his attention. d) That no hearing notices nor the order passed by the Ld. CIT(A) were ever received by the assessee physically. e) That on or around 17th April, 2024, the assessee contacted Advocate Sri Siddharth Agarwal for filing an appeal before the Hon’ble Tribunal. f) That then appeal was prepared and finally deposited in the office of the ITAT on 22.04.2024 with a delay of 107 days. g) Thus, there is a reasonable cause for not filing appeal within time and it is humbly prayed that the delay of around 107 days may please be condoned and the case of your petitioner be heard on merit.” 1.2 The assessee has also filed an Affidavit for condonation of delay in filing appeal before the Tribunal, which is as under: “I, Dipak Kumar Sawaria, son of Late Shankar Lal Sanwaria aged, about 59 years, by religion Hindu, residing at 78 Hazra Road, Kolkata 700029 do hereby solemnly affirm and state as follows- 1. That I am one of the directors of M/s Kanhaiya Power Pvt. Ltd. and, as such, I am competent to swear this affidavit on behalf of the said company. 2. That an appeal was filed on 14.01.2020 before the Ld. CIT(A), NFAC against the assessment order u/s,147 rws 143(3) dated 16.12.2019 for AY: 2017-18. 3. That the said appeal was dismissed by the Ld. CIT(A) by passing an ex- parte order dated 08.11.2023 due to non-compliance. 4. That Sri Subh Karan Soni, FCA of 36, Strand Road, 3rd Floor, Room No. 11, Kolkata- 700001, was engaged to look after our appeal matter. Page | 3 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 3 of 7 5. That we remained under the bonafide belief that proper compliances were done by him before the Ld. CIT(A) since all the notices of hearing were issued to his email id - [e-mail] 6. That later on or around 15th April, 2024 when I enquired about the status of the appeal thereupon it transpired that the said order had already been passed on 08.11.2023. Sri Subh Karan Soni, FCA further clarified that the hearing notices and the Ld. CIT(A)’s order inadvertently missed his attention. 7. That no hearing notices nor the order passed by the Ld. CIT(A) were ever received by us physically. 8. That then on or around 17th April 2024, I contacted Sri Siddharth Agarwal, Advocate for filing appeal before the Hon’ble Tribunal. 9. That then appeal was accordingly prepared and finally deposited in the office of the Hon’ble Tribunal on 22.04.2024 with a delay of 107 days. 10. That I give an undertaking that proper compliance shall be made in case the abovementioned case is restored back to the lower authorities by the Hon’ble Tribunal. 11. That the facts stated in para 1 to 9 are true to the best of my knowledge and belief and paragraph 10 is an undertaking given by me.” 1.3. Considering the condonation application as well as the affidavit and the reasons stated therein, we are satisfied that the assessee had reasonable and sufficient cause and was prevented from filing the instant appeal within statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication on merits. 2. The assessee is in appeal before this Tribunal raising the following grounds of appeal: “1. For that on the facts and in the circumstances of the case, Ld. CIT(A) was not justified in passing an ex-parte order. 2. For that the Ld. CIT(A) ought to have quashed the order passed u/s 147/143(3) dated 16.12.2019 holding that the proceeding u/s 147 is not valid in the eyes of law. 3. For that on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified in confirming the addition made by the AO to the tune of Rs.22,00,000/-on account of cash deposits during the demonetization period, by wrongly treating the same as unexplained cash credit u/s 68 of the Act. 4. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.” Page | 4 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 4 of 7 2.1. The brief facts of the case of the assessee are that the Assessing Officer (hereinafter referred to as ld. 'AO') had information that the assessee company had deposited a sum of Rs. 22,00,000/- in the bank account of Axis Bank, Bank More, Dhanbad, Jharkhand during the demonetization period from 09.11.2016 to 30.12.2016. He recorded the reasons to believe that the income had escaped assessment and issued notice u/s 148 of the Act. Several notices u/s 142(1) of the Act were also issued subsequently and finally a show cause notice was issued requiring the assessee to explain why the cash of Rs. 22,00,000/- deposited in the bank account during the demonetization period should not be added to the income of the assessee. The Ld. AO considered the submission of the assessee that the cash deposits were out of cash withdrawn during the period from 24.06.2016 to 19.09.2016 but since the assessee could not establish the purpose of keeping the cash of Rs. 23,00,000/- in hand before the demonetization period and the reply was not acceptable to the Ld. AO in this regard, the Ld. AO after relying upon the decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More (1971) 82 ITR 540, Sumati Dayal vs. CIT (1995) 214 ITR 801, A. Govinda Rajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC) and the order of the Hon'ble High Court of Delhi in the case of CIT vs. T.S. Kishan & Co. Ltd. [ITA No. 1270/2011] added a sum of Rs. 23,00,000/- u/s 68 of the Act to the income of the assessee. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, after going through the statement of facts, the assessment order and non-receipt of the submission in response to the notices issued during the course of appeal proceeding and after considering the following ratios laid down by the Hon'ble Courts, confirmed the addition and dismissed the appeal: Page | 5 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 5 of 7 a) CIT v. Durga Prasad More [1971] 82 ITR 540 (SC). b) Sumati Dayal v. CIT [1995] 80 Taxman 89(SC). c) CIT v. P. Mohanakala [2007] 161 Taxman 169/291 ITR 278 (SC). d) ITO v. Mont Blanc Properties and Industries (P.) Ltd., ITA No. 614/Bom/87 dated 20-4-1994. e) CIT v. N.R. Portfolio (P.) Ltd. [2013] 29 taxmann.com 29 (Delhi) which was approved by the Hon’ble Supreme Court as reported in (2019) 15 SCC 529. 2.2. It was submitted by the ld. AR before us that the order of the Ld. CIT(A) is ex-parte and the appeal was dismissed as proper representation could not be made before the Ld. CIT(A). It was also submitted that the assessee had withdrawn cash of Rs. 8,00,000/- on 24.06.2016 which along with other withdrawals was deposited in the bank account. 2.3. The assessee has also relied upon the decision of SMC Bench of the ITAT, Delhi in ITA No. 1939/Del/2016 for A.Y. 2008-09 for the relief claimed while the Ld. DR argued that the order of the Ld. CIT(A) and requested that the order of the Ld. CIT(A) may be confirmed. 3. We have considered the submissions made in the affidavit filed for condonation of delay where the assessee has undertaken that proper compliance shall be made in case the appeal is restored back to the lower authorities by the Tribunal as the e-mail received from the Ld. CIT(A) were received by Sri Subh Karan Soni, FCA and the assessee was under the bona fide belief that proper compliance would be done by him and when the assessee enquired about the status of the appeal, it was informed that the order had already been passed. Since proper compliance was not made on account of lapses on the part of the Page | 6 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 6 of 7 Counsel of the assessee and the assessee contends that in case the matter is sent back to the lower authorities, proper compliance would be made, it is deemed proper in the interest of justice that the order of the Ld. CIT(A) is set aside and matter is restored back to the file of Ld. CIT(A) to be decided de novo. It is assured that the assessee shall make proper compliance if the case is restored to the lower authorities. Accordingly, we deem it proper in the interest of justice and fair play that the order of the Ld. CIT(A) is set aside and another opportunity is provided to the assessee to furnish all necessary evidences before the Ld. CIT(A). The Ld. CIT(A) shall provide an opportunity of being heard to the Ld. AO in accordance with Rule 46A of the Income Tax Rules, 1962. All the contentions raised before us shall be raised before the Ld. CIT(A) who will decide the same in accordance with law. The assessee shall not seek any unnecessary adjournment and shall make compliance. 4. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 20th December, 2024. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 20.12.2024 Bidhan (P.S.) Page | 7 I.T.A. No.: 876/KOL/2024 Assessment Year: 2017-18 Kanhaiya Power Pvt. Ltd. Page 7 of 7 Copy of the order forwarded to: 1. Kanhaiya Power Pvt. Ltd., C/o Subash Agrawal & Associates, Advocates, Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata, West Bengal, 700069. 2. ITO, Ward-4(4), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "