MANGESH KUMAR MAHAR, RAIPUR,RAIPUR V. INCOME TAX OFFICER WARD- 1(2), RAIPUR, RAIPUR

ITA 402/RPR/2024

AI Insights

The case involves Mangesh Kumar Mahar, the appellant, who contested the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, which confirmed an addition of Rs.35,37,909 to his income for the assessment year 2018-19. This addition was initially made by the Assessing Officer under Sections 147 and 144B of the Income-tax Act, 1961, treating the amount as business income. The appellant argued that the order was unjustified and violated principles of natural justice, as it was passed ex-parte without a reasonable opportunity to be heard. The Tribunal found that the CIT(Appeals) erred in dismissing the appeal for non-prosecution without considering the merits of the case, leading to the decision to set aside the CIT(Appeals)'s order and remand the case for a fresh decision on merits.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469760 (ITAT-RAIPUR)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Next Hearing Date: 28-10-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 02-09-2024
• Other Referred Cases: National Thermal Power Company Ltd. Ltd. Vs. CIT, CIT Vs. Premkumar Arjundas Luthra (HUF)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: NIKHILESH BEGANI
• Keywords: Set aside; Business income; Opportunity of being heard; Question of law; Principle of natural justice
• Section: 147; 250; 251; 44AD; 28; 246A

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी रवीश सूद, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER आयकर अपील सं. / ITA No. 402/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2018-19 Mangesh Kumar Mahar Tulsi Nagar, Near Durga Mandir, Gudhiyari, Raipur (C.G.)-492 001 PAN : CLOPM0063Q .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer Ward-1(2), Raipur (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Nikhilesh Begani, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 28.10.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 21.11.2024 2 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 02.07.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.144B of the Income-tax Act, 1961 (in short ‘the Act’) dated 21.03.2023 for the assessment year 2018-19. The assessee has assailed the impugned order on the following grounds of appeal: “GROUND NO.I 1. That the ex-parte Appellate Order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, New Delhi (\"the Ld.CIT(A)') under section 250 of the Income Tax Act, 1961 (\"the Act') is highly unjustified, bad in law, without providing reasonable opportunity of being heard, against the principles of natural justice and not in accordance with the provisions of law. It is prayed that the Appellate Order passed under section 250 of the Act may please be cancelled/set-aside on this ground alone. GROUND NO. II 2. On the facts and in the circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in confirming an addition of Rs.35,37,909/- made by the Ld.AO invoking the provisions of section 28 of the Act treating the same as business income which is highly unjustified, unwarranted, unsustainable, not proper on facts, ignoring the submissions of the appellant thereby based on presumptions & surmises and not in accordance with the provisions of law. Further, the Ld.CIT(A) has failed to appreciate that the Ld. AO was purportedly influenced by the observations in the revision order, 3 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 hence, it is earnestly prayed that the unjustified addition of Rs.35,37,909/- may kindly be deleted. GROUND NO.III 3. That the Appellant craves leave to add, amend, alter or delete all or any of the grounds of Appeal at the time of hearing of the appeal.” Also, the assessee has raised the following additional grounds of appeal: “(I) That the Assessment Order passed u/s.147 r.w.s. 144B of the Act on 27/03/2023 and the consequential addition made therein by the Ld.AO is highly illegal, bad in law, void ab initio, unsustainable, nullity & non est in the eyes of law since, the addition made in the assessment order is different, alien & extraneous to the reasons recorded/issues identified in the Order passed u/s.148A(d) by the Ld. Income Tax Officer, Ward-1(2), Raipur (being the Jurisdictional Assessing Officer) (\"the Ld.JAO') and the corresponding re-opening notice issued u/s.148 on 30th March, 2022 hence, it is earnestly requested that the assessment order passed u/s.147 r.w.s. 144B may please be quashed and cancelled in limine. (II) That the Order passed u/s.148A(d) and the corresponding reopening notice issued u/s.148 on 30th March, 2022 has been issued by the Ld.JAO and not by the Faceless Assessing Officer (\"the Ld.FAO') thereby violating the mandatory provisions enshrined u/s.151A of the Act r. w. the Notification/Scheme issued by the Hon'ble CBDT w.e.f 29/03/2022 hence, the Order passed u/s.148A(d), reopening notice u/s.148 and consequential re-assessment proceedings is highly illegal, bad in law, void ab initio, without jurisdiction and unsustainable hence, it is earnestly requested that the assessment order passed u/s.147 r.w.s. 144B may please be quashed and cancelled in limine. (III) That the Order passed u/s.148A(d) and the corresponding reopening notice issued u/s.148 on 30th March, 2022 are highly illegal, bad in law, void ab initio and unsustainable for the reason that the same defies the time line prescribed under the provisions of section 148A(b) of the Act hence, it is earnestly requested that the assessment order passed u/s. 147 r.w.s. 144B may please be quashed and cancelled in limine.” 4 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 As the assessee based on the additional grounds of appeal has assailed the validity of the jurisdiction that was assumed by the A.O for framing the impugned assessment, adjudication of which would not require looking any further beyond the facts available on record, therefore, I have no hesitation in admitting the same. My aforesaid view that where an assessee, had raised, though for the first time, an additional ground of appeal before the Tribunal which involves purely a question of law and requires no further verification of facts, then, the same merits admission finds support from the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Company Ltd. Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 2. Succinctly stated, the A.O based on information, viz. (i) that the assessee had made substantial amount of cash withdrawals of Rs.1,72,90,000/- from his current account No.201000353161 maintained with Indusind Bank Ltd.; and (ii) that the assessee had received an amount of Rs.4,42,862/- from Shri Ganesh Prasad Khetan as contract receipts (PAN : AEYPK1535L), but had not filed his return of income for the year under consideration, initiated proceedings u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 30.03.2022 was issued by the A.O. 3. The assessee in compliance to the notice issued u/s. 148 of the Act filed his return of income declaring an income of Rs.2,38,990/-, which 5 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 included viz. (i) 8% of the contract receipts of Rs.4,42,862/- : Rs. 35,429/-; (ii) commission income from the bank transactions @ 0.3 to 0.4% of Rs.4,65,77,734/-: Rs.1,88,310/-; and (iii) miscellaneous interest and other receipts: Rs.15,250/-. The A.O directed the assessee to submit the reconciliation of his income with the total credits in his bank account maintained with Indusind bank a/w. details of nature and source of income. The A.O observed that apart from the gross receipts of Rs.4,65,77,734/- in the assessee’s current account No. 201000353161 maintained with Indusind Bank Ltd., there were contract receipts of Rs.4,42,862/- from Shri Ganesh Prasad Khetan (PAN : AEYPK1535L), on which, the latter had deducted tax at source. It was further observed by him that the assessee had declared income on the aforesaid amount of contract receipts of Rs.4,42,862/- u/s. 44AD of the Act. Apropos the gross receipt of Rs.4,65,77,734/- (supra), the A.O observed that the assessee had declared his income at Rs.1,88,310/- only which was less than 1% of the total credits. Considering the aforesaid facts, the A.O called upon the assessee to put forth an explanation as to why the entire amount of receipts i.e. Rs.4,66,20,596/- [Rs.4,65,77,734/- (+) Rs.42,862/-] may not be treated as his receipts from business activities. As the assessee had failed to come forth with any explanation, therefore, the A.O worked out his income @8% of the aforesaid gross receipts and computed the same at Rs.37,61,648/-. As the assessee had already disclosed an income of 6 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 Rs.2,23,739/-, therefore, the A.O restricted the addition to the extent of Rs.35,37,909/-. Accordingly, the A.O vide his order passed u/s. 147 r.w.s. 144B of the Act, dated 21.03.203, after making the aforesaid addition determined the income of the assessee at Rs.37,76,900/-. 4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. As the assessee despite having been afforded sufficient opportunity had failed to participate in the proceedings before the CIT(Appeals), therefore, the latter was constrained to dismiss the appeal vide an ex-parte order. 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the tribunal. 6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 7. As observed by me hereinabove, the CIT(Appeals) had disposed off the appeal for non-prosecution and had failed to apply his mind to the issue which did arise from the impugned order and was assailed by the assessee before him. I am unable to persuade myself to accept the manner in which the appeal of the assessee has been disposed off by the 7 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 CIT(Appeals). In my considered view, once an appeal is preferred before the CIT(Appeals), it becomes obligatory on his part to dispose off the same on merit and it is not open for him to summarily dismiss the appeal on account of non-prosecution of the same by the assessee. In fact, a perusal of Sec.251(1)(a) and (b), as well as the “Explanation” to Sec.251(2) of the Act reveals that the CIT(Appeals) remains under a statutory obligation to apply his mind to all the issues which arises from the impugned order before him. As per the mandate of law the CIT(Appeals) is not vested with any power to summarily dismiss the appeal for non-prosecution. The aforesaid view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bom). In the aforementioned case the Hon’ble High Court had observed as under: \"8. From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the AO to make further inquiry and report the result of the same to him as found in Sec. 250 of the Act. Further, Sec. 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Sec. 251(1)(a) and (h) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-s. (2) of s. 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under s. 246A of the Act, it is not open to him as of right to withdraw or not press the appeal. In fact the CIT(A) is obliged to 8 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 dispose of the appeal on merits. In fact w.e.f. 1st June, 2001 the power of the CIT(A) to set aside the order of the AO and restore it to the AO for passing a fresh order stands withdrawn. Therefore, it would be noticed that the powers of the CIT(A) are co-terminus with that of the AO i.e. he can do all that A.O could do. Therefore, just as it is not open to the AO to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the s. 251(1)(a) and (b) and Explanation to Sec. 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non-prosecution as is evident from the provisions of the Act.” 8. I, thus, not being able to persuade myself to subscribe to the dismissal of the appeal by the CIT(Appeals) for non-prosecution, therefore, set-aside his order with a direction to dispose off the same on merits. Needless to say, the CIT(Appeals) shall afford a reasonable opportunity of being heard to the assessee in the course of the de-novo appellate proceedings. Thus, the grounds of appeal a/w. additional grounds of appeal raised by the assessee are allowed for statistical purposes in terms of the aforesaid observations. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 21st day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER 9 Mangesh Kumar Mahar Vs. ITO, Ward-1(2), Raipur ITA No.402/RPR/2024 रायपुर/ RAIPUR ; Ǒदनांक / Dated : 21st November, 2024. **SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण,रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 6. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "