LAXMI PRASAD PATEL, RAIPUR,RAIPUR V. INCOME TAX OFFICER, WARD-1(2), RAIPUR, RAIPUR

ITA 490/RPR/2024

AI Insights

The case involves Laxmi Prasad Patel, the appellant, who contested the reassessment proceedings and subsequent additions made to his income by the Income Tax Officer, Ward-1(1), Raipur. The reassessment was based on unexplained cash credits amounting to Rs. 2,63,64,270, which were allegedly deposited in the appellant's bank account. The appellant argued that the reassessment and the subsequent appellate order were illegal and void ab initio due to non-compliance with specific notifications requiring real-time alerts for notices and orders. The Tribunal noted procedural lapses and the non-admission of the appeal on merits by the CIT(A) due to non-payment of advance tax, which the appellant contested was not applicable as his income was below the taxable limit.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106814 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: VEEKAAS S SHARMA
• Keywords: Condonation of delay; Set aside; Business income; Opportunity of being heard; Reassessment proceedings; Unexplained cash credit
• Section: 147; 148; 144; 142(1); 250; 68; 13; 73

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 490/RPR/2024 (िनधाŊरण वषŊ Assessment Year:2015-16) Laxmi Prasad Patel, 12/377, Computer Care, Bhudhapara, Raipur-492001, C.G. V s Income Tax Officer, Ward-1(1), Central Revenue Building, Civil Lines, Raipur -492001, C.G. PAN: AMHPP6890J (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri Veekaas S Sharma, CA राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 16.12.2024 घोषणा की तारीख/Date of Pronouncement : 24.12.2024 आदेश / O R D E R Per Arun Khodpia, AM: The aforesaid appeal of the assessee, directed against the order of Ld. Commissioner of Income Tax-(Appeals), NFAC, Delhi, [in short “Ld CIT(A)”], U/S 250 of the income tax Act, 1961 (in short “The Act”), dated 28.08.2024, which in turn arises from the order passed by Assessing Officer, NFAC, Delhi, u/s 147 r.w.s. 144 r.w.s. 144B dated 31.03.2022. 2. The grounds of appeal raised by the assessee reads as under: 2 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 1. On the facts and in the circumstances of the case, the reassessment proceedings are illegal, bad-in-law and void-ab-initio inasmuch as the said proceedings are in gross violation of Notification No. 62/2019 dated 12th Sept. 2019 wherein it was mentioned that communication of every notice or order has to be made by way of modes specified and followed by a \"real time alert\", however, in the present case no real time alert by way of SMS has ever sent to the assessee. It is prayed that the reassessment proceedings in violation of Notification 62/2019 may kindly be declared as void-ab-initio, bad-in-law and illegal and consequential enhancement of Rs. 2,63,64,270/- made to the total income may kindly be directed to be deleted. 2. On the facts and in the circumstances of the case, order passed by Learned CIT (Appeal) is illegal, bad-in-law and void-ab-initio inasmuch as the appellate proceedings are in gross violation of Notification No. 76/2020 dated 25th Sept. 2020 wherein it was mentioned that communication of every notice or order has to be made by way of modes specified and followed by a \"real time alert\", however, in the present case no real time alert by way of SMS has ever sent to the assessee. It is prayed that the order passed by Learned CIT (Appeal) in violation of Notification 76/2020 may kindly be declared as void-ab-initio, bad- in-law and illegal and consequential enhancement of Rs. 2,63,64,270/- made to the total income may kindly be directed to be deleted. 3. On the fact and in the circumstances of the case, the Learned CIT (Appeal), NFAC has erred in dismissing the appeal of the assessee in the light of provision of Section 249(4)(b) of the Income Tax Act 1961, disregarding the fact that the total income of the assessee in the year under consideration was not exceeding the maximum amount not chargeable to tax and therefore, there was no obligation on the assessee to pay any advance tax, more particularly, the Learned CIT (Appeal), NFAC did not consider the bonafide explanation of the assessee that there was no obligation to pay advance tax considering the total income declared by the assessee in the return of income filed for A. Y 2014-15 and A. Y 2016-17, thus, the summary dismissal of the appeal is absolutely arbitrary, irrational, unjustified and unsustainable. It is prayed that the order passed by the Learned CIT (Appeal) may kindly be set aside. 4. On the facts and in the circumstances of the case, the reassessment proceedings are illegal, bad-in-law and void-ab-initio on account of several reasons, the Learned CIT (Appeal) has erred in upholding the assessment and in conforming the addition when the proceedings itself are illegal and bad-in- law. It is prayed that the reassessment proceedings may kindly be declared as illegal, bad-in-law and void-ab-initio and consequential enhancement of Rs. 2,63,64,270/- made to the total income may kindly be directed to be deleted. 3 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 5. On the facts and in the circumstances of the case, the Learned A.O. had erred in making the addition of Rs. 2,63,64,270/- to the total income of the assessee by invoking Section 68 of the Income Tax Act, 1961 without recording satisfaction that the assessee has not maintained any books of accounts and sum of Rs.2,63,64,270/- is unexplained cash credit found therein inasmuch as the bank account statement does not constitute books of accounts, therefore, addition so made is absolutely illegal, irrational, unjustified and is liable to be deleted. 6. On the facts and in the circumstances of the case, the Learned AO has erred on facts and in law in making addition of Rs.2,63,64,270/- on account of cash deposited in Bank by invoking Section 68 of the Income Tax Act, 1961 and the Learned CIT (Appeals), National Faceless Appeal Centre, Delhi has erred in confirming the same inasmuch as the deposits were made from explainable sources, thus, the addition is contrary to facts, law and legislative intent, hence, it is prayed that the addition of Rs.2,63,64,270/- confirmed by the Learned CIT (Appeal) may kindly be deleted. 7. Without prejudice to the above, alternatively, on the facts and in the circumstances of the case, the Learned A.O. had erred on the facts and in law in making the addition of Rs. 2,63,64,270/- inaslnuch as, even assuming without admitting that the total cash deposit made by the assessee represents the business receipts of the assessee, then also it is only the profit element embedded in the total receipts that can be brought to tax, thus, the addition of entire cash deposit is irrational, unjustified and is liable to be deleted. 8. The Appellant craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of appeal. 3. At the outset, it is noticed that the appeal filed by the assessee, is barred by limitation with delay of 18 days. Before us, Ld. AR furnished an application seeking condonation of delay involved in filing of the appeal along with affidavit stating the reasons for delay. The main reason for delay as stated by the Ld. AR was the health issues of assessee’s father, who is of old age around 73 years, suffering from Spinal Cord Disorder, for which he requires frequent checkup and 4 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur continuous monitoring. It was the submission that the assessee has to look after his father for his treatment, therefore, he was in mental stress, therefore, the appeal could not be filed in time. It is further added that the email on which the communication are sent by the Ld. CIT(A) belongs to assessee’s counsel Shri Vivek Sharma, who had not communicated about notices and order issued by Ld. CIT(A) to the assessee, and therefore, the appeal could not be filed in time. 4. Per contra, Ld. Sr. DR objected representing the revenue have objected to the condonation for delayed filing of the appeal, but since the delay is not inordinate, therefore, have requested to decide the same in accordance with law. 5. We have considered the facts and circumstances, due to which the delay was occurred in filing of the present appeal, after considering the same, we find substance in the contention raised by the Ld. AR that there was no intentional failure on part of the assessee in filing of the appeal by a delay of 18 days, also since the delay is not exorbitant or for an inordinate period, therefore, considering the medical issues in family and non-cooperation by the counsel, we observed that the reasons explaining the delay are justifiable, therefore, we condone the same and direct the registry to fix the matter for regular hearing. 5 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 6. The brief facts of the case, culled out from the order of Ld. CIT(A), reads as under: In this case, the appellant had not filed return of income for A.Y. 2015-16. On verification of records, it was noticed that the appellant had deposited cash in Saving Bank Account of Rs. 2,63,64,270/-. The case was reopened u/s. 148 of the Act after recording reasons to believe that income had escaped assessment on account of non-disclosure of fully and truly to all material facts available on record. Notice u/s. 142(1) of the Act was issued. However, no compliance was made even after according several opportunities to the appellant. The A.O completed the assessment u/s. 147 rws 144 of the Act dated 31.03.2022 making addition of Rs. 2,63,64,270/- as unexplained cash credit u/s. 68 of the Act. Aggrieved appellant filed this appeal. 7. At the outset, Ld. AR, Shri Vikaas S Sharma, CA submitted that the appeal of the assessee before First Appellate Authority has been dismissed on account of assessee’s failure to comply with the terms and conditions prescribed under the provisions of section 249(4)(b) of the Act. While disposing of the appeal of the assessee, Ld. CIT(A) has observed has under: 5.3 The reply of the appellant has been perused and is not acceptable. As per the provisions of Section 249(4)(b), the appellant is required to pay the tax due on the income returned before the appeal can be admitted. On examination of the records and submissions made, it is observed that the appellant has failed to file the return of Income. The A.O. has also initiated penalty proceedings u/s. 271F of the Act for failure to furnish return of income. Appellant has failed to pay an amount equal to the amount of advance tax that was payable by him. The appellant has not furnished any substantial cause or valid reason for the non-compliance with the mandatory requirement under Section 249(4)(b). 6 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 5.4 In view of the aforementioned facts and provisions, and considering the mandatory nature of the requirement under Section 249(4)(b) of the Income Tax Act, 1961, the appeal filed by the appellant, is hereby dismissed as non-admissible. 8. It is submitted by the Ld. AR that during the appellate proceedings before First Appellate Authority, the assessee was confronted with the query that, appellant has not filed any return of income and has not paid any form of tax, so the assessee was asked to comment on the specific requirement of section 249(4)(b). In response, the counsel of the assessee had submitted a reply dated 14.08.2024, which is reproduced in the appellate order by the Ld. CIT(A), the same is culled out as under: 7 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 8 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 9. Ld. AR further submitted that, the assessee was not obliged to pay any advance tax for the reason that the income of the assessee was below the taxable limit during the relevant assessment year i.e., AY 2015-16. It is explained that the assessee had very low income during the last 10 years for which details along with reasons stating that the assessee was not required to pay advance tax for the AY 2015-16, are furnished before us in the form of an affidavit dated 13.12.2024, the same is extracted as under: 9 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 10 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 11 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 12 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 13 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 14 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 15 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 10. Based on aforesaid submissions, Ld. AR explained that the response before the Ld. CIT(A) was prepared by the counsel of the assessee, wherein the requisite details are not responded properly and the appeal of assessee before the First Appellate Authority has been held as non-admissible, triggering the provisions of section 249(4)(b). It was the submission that while filing of appeal memo in form no. 35, the assessee qua details of advance tax in column no. 9 had furnished “Not Applicable”, having conviction that there was no advance tax payable by the assessee. It was, therefore, the submission that since the case of the assessee is not being disposed of on merits on account of assessee’s failure to response in terms of provisions of section 249(b), although certain information in the form of assessee’s earlier returns and declaration in form 35 forms a basis to consider that the assessee does not fall in the category of taxpayers having obligation to pay Advance Tax. It is further mentioned that, the assessee should not be saddled the burden of taxes only for such an inadvertent mistake on his part. It was the prayer that under such circumstances in the interest of substantial justice, the matter may kindly be restore back to the file of Ld. CIT(A) so that assessee would be in position to comply with the provisions of section 249(4)(b) and to furnish / submit its contention / submissions and evidence in support of merits of the issue. 16 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur 11. Per contra, Ld. Sr. DR vehemently relied upon on the orders of revenue authorities. 12. We have considered the rival submissions, perused the material available on record and case laws relied upon by the assessee. In present appeal the main issue qua the addition of Rs. 2,63,64,270/- u/s 68 of the Act made by the Ld AO on account of cash deposits in the bank account of the assessee, under no response and explanation on the part of assessee made by the Ld AO, could not me decided on merits by the Ld CIT(A) for the reason that the assessee failed to submit any substantial cause or valid reason for the non- compliance with the mandatory requirement under section 249(4)(b). On perusal of the order of Ld CIT(A), we find that the query to comment regarding specific requirement u/s 249(4)(b) could not be properly construed by the assessee / assessee’s counsel, thus have responded with request to stay the disputed demand, referred to instruction no 96 dated 21.08.1969 by the CBDT to keep the collection of tax in abeyance till the pronouncement of appeal and Instruction no 1914 with several case laws. Assessee also enclosed tax returns for the preceding and succeeding AY’s from 2014-15 to 2024-25 with a request to grant immunity from paying of huge advance taxes, being a hard ship to the assessee looking to his income structure. The response of the assessee dated 14.080.2024 before the Ld CIT(A), was prepared by the counsel of the 17 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur assessee, as the assessee do not understand the tax law and its intricacies. The response of the assessee though was not appropriate to the query of Ld CIT(A) qua section 249(4)(b), but considering the overall facts and circumstances, that the assessee is a dealer engaged in the Sale and Distribution of mobile recharge coupon, sim cards, Photocopy Service, typing etc., which is not doubted by the revenue, also the returned income of the assessee for years, prior to and post the relevant assessment year are before the Ld CIT(A). 13. In backdrop of aforesaid facts and circumstances, though there is no infirmity in the order of Ld. CIT(A), dehors specific request of the assessee, substantiating the fact that the assessee was not incumbent upon, owing to the range of his income, not exceeding the limits for which the advance tax provisions would be applicable on him, however, certain facts like returns of the assessee for the AYs 2014-15 to 2024, support the claim that the assessee may not be liable to payment of advance tax, for the relevant AY. In view of such facts, which could not be brought to the attention of the Ld. CIT(A), for whatsoever reasons, but in the interest of justice, having justifiable substance in the submissions of the assessee, we find it appropriate to restore the issues, without deliberating upon the merits of the same, to the files of Ld. CIT(A), in order to afford an opportunity to the assessee to substantiate the admissibility 18 ITA No. 490/RPR/2024 Laxmi Prasad Patel vs ITO, Ward-1(2), Raipur of his appeal in terms of provisions of section 249(4)(b) and if he succeeds, in accordance with law, to adjudicate the appeal afresh on merits. 14. Needless to say, the assessee shall be provided with reasonable opportunity of being heard in the set aside appellate proceedings. 15. In result, the appeal of the assessee is partly allowed, in terms of our aforesaid observations. Order pronounced in the open court on 24/12/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 24/12/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Laxmi Prasad Patel 2. ŮȑथŎ / The Respondent- ITO, Ward-1(2), Raipur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // स×याͪपत ĤǓत True copy // "