LALITBHAI HINDUJI LOHAR,SURAT V. INCOME TAX OFFICER, WARD-2(3)(5), SURAT

ITA 792/SRT/2024

AI Insights

The case involves Lalitbhai Hinduji Lohar, the appellant, who contested the additions made to his income by the Income Tax Officer (ITO) under section 68 of the Income-tax Act, 1961, for unexplained cash credits totaling Rs. 17,68,300. The additions were confirmed by the CIT(A), leading to an appeal before the Tribunal. The Tribunal found that the CIT(A) had not provided sufficient opportunities for the appellant to be heard, thus violating the principles of natural justice. Consequently, the Tribunal set aside the CIT(A)'s order and remitted the case for a fresh decision, imposing a cost of Rs. 15,000 on the appellant to be paid to the Gujarat High Court Legal Aid Authority.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473068 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: NILISHA SHAH
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Unexplained cash credit; Principle of natural justice
• Section: 250; 68; 2

Judgement Text

" THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.792/SRT/2024 Assessment Year: (2017-18) (Physical Hearing) Lalitbhai Hinduji Lohar, 11, Ground Floor, Udhna Bus Depo, Udhna, Surat - 394210 Vs. The ITO, Ward – 2(3)(5), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AGOPL1900G (Appellant) (Respondent) Appellant by Ms. Nilisha Shah, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 10/12/2024 Date of Pronouncement 26/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 27.05.2024 by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2017-18. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(A) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making the addition of Rs. 17,68,300/- on account of unexplained credit u/s. 68 of the Act being cash deposited in bank accounts. 3. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the income u/s 115BBE @ 2 ITA No.792/SRT/2024/AY.2017-18 Lalitbhai Handuji Lohar 77.25 percent by applying the duly substituted S.115BBE retrospectively instead of taxing it at 35.54 percent as per the old provision of S.115BBE. 4. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in taxing the addition by taking the rate @ 77.25 percent by attracting S. 115BBE instead of normal tax rate. The addition if any that maybe confirmed should be taxed as business income, 5. It is therefore prayed that the addition made by the assessing officer and confirmed by Ld. CIT(A) may please be deleted and/or taxed at normal rate. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. Brief facts of the case are that the assessee filed his return of income on 02.10.2017, declaring total income of Rs.3,08,460/-. The case was selected for scrutiny. Various notices issued to the assessee and served upon him. During the demonetization period, the assessee deposited cash of Rs.3,20,000/- in IndusInd Bank, Rs.7,37,000/- in Axis Bank, Rs.28,000/- in State Bank of Mysore, which amounting to total of Rs.10,85,000/-. The Assessing Office (in short, ‘AO’) asked assessee to explain the source of cash deposited in his bank account. The assessee submitted cash book and ledger account which revealed that assessee received cash loans in the range of Rs.19,000/- to Rs.19,900/- from thirty persons totalling to Rs.17,68,300/-. In response to the show-cause notice, the assessee had furnished copy of VAT return, copy of tax audit report and copy of bank account statement. However, no details or explanation about the cash loan taken from about 30 persons have been furnished by assessee. The assessee failed to produce any details to establish the genuineness of the transaction in spite of giving various opportunities. The onus is cast upon the assesse to establish genuineness of transactions made 3 ITA No.792/SRT/2024/AY.2017-18 Lalitbhai Handuji Lohar by him. Therefore, the AO made the addition of Rs.17,68,300/- as unexplained cash credit u/s 68 of the Act and it was taxed u/s 115BBE of the Act. The AO assessed the income of Rs.20,76,760/- as against the returned income of Rs.3,08,460/-. 4. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) issued notice u/s 250 of the Act on 21.01.2021, 10.11.2023 and 14.05.2024 for fixing the date of hearing on 05.02.2021, 20.11.2023 and 21.05.2024 respectively. During the appellate proceedings, the assessee was non-compliant. The CIT(A) observed that the appeal deserves to be dismissed on this ground alone, but he still decided the issue on merits. The CIT(A) found that the appellant has not submitted complete details before the AO though sufficient time was provided. The appellant has submitted that cash balance in his cash book was incorrect, but assessee was not given sufficient time to file revised cash book. Thus, CIT(A) noticed that the appellant had deviated from the initial claim made before AO as claimed to be the source of impugned cash deposits. The appellant had claimed shortage of time to file the revised cash book / actual cash book before AO, but surprisingly had not relied upon any documentary evidence in the relevant Col. 11 and not requested for filing any additional evidence under Rule 46A in the relevant Col. 12 of Form 35. The CIT(A) further observed that the appellant is the owner of such amount and further failed to discharge his onus to explain the nature and source of impugned deposits in his bank account. Since the appellant had not furnished 4 ITA No.792/SRT/2024/AY.2017-18 Lalitbhai Handuji Lohar any documents / explanation to substantiate his claim, the addition made by AO under provisions of section 68 of the Act for making addition was confirmed and the CIT(A) dismissed the appeal of assessee. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) submitted that notices of hearing were not received by appellant. The ld. AR submitted that the CIT(A) passed the order u/s 250 of the Act on 27.05.2023 without hearing the assessee. The ld. AR contended that assessee could not represent his case before CIT(A) due to circumstances beyond his control and the order being an ex parte, stood vitiated on account of violation of principles of natural justice. Therefore, ld. AR contended that one more opportunity should be given to the assessee to plead his case before the CIT(A). 6. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of lower authorities. He submitted that the adequate opportunities were given to the assessee during the appellate proceedings. The assessee has been negligent and non-cooperative due to which the addition confirmed by CIT(A). 7. We have heard both the parties and perused the materials available on record. The ld. AR submitted that CIT(A) has passed order without giving reasonable and sufficient opportunities of being heard to assessee. AO made the addition u/s 68 of the Act because assessee did not file details and explanation. The ld. AR submitted that notices issued by CIT(A) were not 5 ITA No.792/SRT/2024/AY.2017-18 Lalitbhai Handuji Lohar received by assessee, which resulted in the non-compliance before CIT(A). She request to allow one more opportunity to plead the case of assessee on merits. Considering all these facts, though the assessee was negligent before the lower authorities, we are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would be met in case the CIT(A) re-adjudicates the entire issue afresh subject to payment of cost of Rs.15,000/- (Rupees fifteen thousand only) by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(A) and remit the matter back to the file of CIT(A) with a direction to pass de novo appellate order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(A) by not seeking adjournment without valid reasons. With these directions, the grounds of appeal raised by the assessee are allowed for statistical purposes. 8. In the result, appeal of assessee is allowed for statistical purposes. Order is pronounced in the open court on 26/12/2024. Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 26/12/2024 SAMANTA 6 ITA No.792/SRT/2024/AY.2017-18 Lalitbhai Handuji Lohar Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat "