MIHIR RAJESHKUMAR DHAMECHA,AHMEDABAD V. ACIT, INTERNATIONAL TAXATION, RAJKOT, RAJKOT

ITSSA 7/RJT/2024

AI Insights

The case involves Mihir Rajeshkumar Dhamecha, an NRI, who faced scrutiny from the Income Tax Department following his arrival in India with gold coins and subsequent cash deposits in his bank account. The Assistant Commissioner of Income Tax (International Taxation), Rajkot, initiated proceedings under sections 153A and 69A of the Income Tax Act, alleging unexplained sources of income. The CIT(A) dismissed the appeal ex-parte, leading to an appeal before the ITAT. The ITAT found procedural lapses in the handling of the case, particularly the failure to adequately notify the appellant, and thus remitted the case back to the CIT(A) for a thorough re-examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472617 (ITAT-RAJKOT)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-09-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 08-05-2024
• Other Referred Cases: CIT vs. B. N. Bhattarcharjee and Another, Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAMDEEP SINHA
• Assessee Lawyers: MEHUL RANPURA
• Keywords: Set aside; Opportunity of being heard; Validity of assessment
• Section: 143(3); 132; 153A; 69A; 20

Judgement Text

" आयकर अपीलȣय अͬधकरण,राजकोट Ûयायपीठ, राजकोट। IN THE INCOMETAXAPPELLATE TRIBUNAL, RAJKOT BENCH: RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER And SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकर अपील सं./IT(SS)A No. 07/RJT/2024 (Ǔनधा[रण वष[/Assessment Year: (2018-19) Mihir Rajeshkumar Dhamecha, A-3, Anmol Flats, Nr. Commerce Six Roads, Navrangpura, Ahmedabad Vs. Assistant Commissioner of Income Tax, International Taxation, Rajkot èथायी लेखा सं./जीआइआरसं./PAN/GIR No.: BKNPD4427Q (अपीलाथȸ/Appellant) (Ĥ×यथȸ/Respondent) Ǔनधा[ǐरती कȧ ओर से/Appellant by : Shri Mehul Ranpura, A.R. राजèव कȧ ओर से/Respondent by : Shri Shramdeep Sinha, Sr. D.R. सुनवाई कȧ तारȣख/ Date of Hearing : 03/09/2024 घोषणा कȧ तारȣख/Date of Pronouncement : 15/10/2024 आदेश / O R D E R PER SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of Learned Commissioner of Income Tax (Appeals), Ahmedabad-13 [in short, “the Ld. CIT(A)”], order dated 03.05.2024 for assessment year 2018-19. 2. The assessee has raised the following grounds of appeal:- “1. The grounds of appeal mentioned hereunder are without prejudice to one another. 2. The ld. Commissioner of Income-tax (Appeals)-13, Ahmedabad [CIT(A)] erred on facts as also in law in dismissing the appeal ex-parte without allowing adequate opportunity of being heard. 3. The ld. CIT(A) erred on facts as also in law in dismissing ground of appeal related validity of assessment proceeding initiated u/s.153A of the Act, in absence of there being incriminating material found from the appellant. The order passed making addition without there being any incriminating materials may kindly be quashed. Page | 2 IT(SS)A No. 7/RJT/2024 A Y:2018-19 4. The ld. CIT(A)erred on facts as also in law in confirming addition of Rs.14,20,000/- made by AO u/s.69A r.w.s. 115BBE of the Act on the alleged ground that the appellant failed to explain source of cash of Rs.14,20,000/-deposited in the bank account no.655301075141 held with ICICI Bank Ltd alongwith supporting evidence. The addition made and confirmed is bad in law as also on facts therefore the same may kindly be deleted. 5. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of appeal.” 3. The brief facts of the case are that the appellant an individual and non-resident of India, is assessed to tax by the Deputy Commissioner of Income-tax, International Taxation, Rajkot (hereinafter referred to as the \"AO\") His income in India were below maximum amount chargeable to tax and therefore not liable to file any return of income as such and hence not filed The appellant had flown from Dubai to Mumbai on 11 01 2019 and from Mumbai, he had taken connecting flight of Air India for travel to Jamnagar to reach his native place at Rajkot While flying from Mumbai to Jamnagar, the appellant had carried 51 pieces 20 of Gold Coins weighing 1001 660 grams in his hand baggage as personal belonging along with purchase invoices / bills of such Gold During the security check at Mumbai Airport before boarding to flight, the appellant had declared the valuables kept in his hand luggage to the deputed officer of CISF and they had, after verifying bills / invoices produced, allowed the appellant to board the flight. On arrival at Jamnagar Airport, the appellant was intercepted by the officers of Income-tax Department, who had initiated enquiry against the appellant by issuing summon u/s 131(1A) of the Act dated 11 01 2019 During the enquiry, the Ld Assistant Director of Income-tax (Investigation), Jamnagar had started recording the statement of the appellant u/s 131(1A) of the Act During the statement recording, the appellant spontaneously clarified that he is coming from Mumbai and brought 49 pieces of gold coins weighing 20 Grams each and 2 pieces of Page | 3 IT(SS)A No. 7/RJT/2024 A Y:2018-19 gold coins weighing 10 Grams each as his personal belonging On further inquiry regarding source of said gold, the appellant produced the relevant purchase bills, job-work bills and payment made for such purchases through RTGS and account payee cheques Therefore, source of gold coins found from the possession of the appellant was satisfactorily explained by the appellant. However Ld ADIT initiated search action u/s 132 of the Act on 12 01 2019 at 6:30 PM and gold coins weighing 1001 660 Grams valued at Rs 33,11,488/ was seized vide Annexure S of the Panchnama dated 12 01 2019 The AO initiated search assessment proceeding by issuing notice u/s 153A of the Act dated 27 02 2020 In response to said notice, the appellant filed return of income declaring income of Rs 2,25.100/- on 18 05 2020. During the assessment year under consideration, the appellant deposited cash of Rs 14,20,000/- in his bank account (NRO) held with ICICI Bank. Rajkot The AO required the appellant to explain source of such cash deposited. In reply, the appellant vide letter dated 21 05 2021 explained the source of cash deposited as under The Ld. AO was, however, in total disregards to the appellant's reply/submission and without making any independent inquiry alleged as under: (a) There are frequent cash debit and credit transactions in the bank account and cash was deposited in the bank account just before making payment through RTGS/Cheque for purchase of Gold Jewellery. (b)The assessee failed to establish with documentary evidence that same cash which was withdrawn from bank account earlier was deposited again in the bank account for making payment for acquisition of Gold Items. Page | 4 IT(SS)A No. 7/RJT/2024 A Y:2018-19 (c) The assessee is withdrawing cash from his bank account without utilizing the available cash on hand Pattern of cash deposit and withdrawal is against the nature and pattern of \"preponderance of probability\" (d) Contention of the assessee is not justifiable that cash which was withdrawn earlier has again deposited in the bank account. (e) The appellant failed to furnish any documentary evidences in support of his professional income and amount received towards the supply of electronic gadgets to friends/relatives Therefore contention of cash deposit out of professional income and cash received from relatives is not acceptable On the above background, the AO passed an assessment order u/s 143(3) rws 153A of the Act dated 02 09 2021 by assessing the total income of the appellant at Rs 16,45,000/- wherein he made addition of Rs 14,20,000/- u/s 69A rws 115BBE of the Act on the alleged ground that the appellant failed to explain source of cash deposited of Rs 14,20,000/- in the bank account no 655301075141 held with ICIC Bank Ltd alongwith supporting evidences. 3. Feeling aggrieved by the order of ld. AO dated 02-09-2021 filed appeal in the office of ld. CIT(A). That the ld. CIT(A) has issued six notices all remained uncomplied with. However, first notice dated 29-04- 2022, the assessee filed an adjournment application. The ld. CIT(A) has disposed of the appeal with under mentioned remark:- “7.4 In view of the above facts of the instant case, this appeal solely on this ground is liable to be dismissed in terms of the ratio of the judgments of the Hon'ble Apex Court in the case of CIT vs. B. N. Bhattarcharjee and Another (10 CTR 354) that an appeal Page | 5 IT(SS)A No. 7/RJT/2024 A Y:2018-19 means an effective appeal and that to \"prefer an appeal would mean effectively prosecuting an appeal. Purposefully and constructively interpreted preferring an appeal means more than formally filing it but effectively it and if a party retreats before the contest begins, it is as good as not having entered the fray. 7.5 Thus, considering the lackadaisical approach of the appellant it is clear that the appellant is not interested in pursuing the appeal filed by him. Therefore, in the absence of the proper written submission with documentary evidences thereof, the appeal filed by the appellant is rejected solely on this ground. It is trite that an appellant authority is essentially called upon to balance the two sides of an argument presented before him as held in Nirmal Singh and Others of the Hon'ble Punjab and Haryana High Court [Cr No.3791 of 2013 (O&M) dated 01.05.2014] The AO has passed assessment order giving detailed finding The appellant filed appeal against the impugned order and raised grounds of appeal However, mere rising of grounds of appeal is not sufficient to adjudicate the issues on merits Therefore, in the absence of any reasonable, cogent and valid evidences/arguments/contentions advanced by the appellant in the instant appeal to counter the AO's decision as contained in the Order passed u/s 153A rw.s 144C(3) of the Act dated 02 09 2021 I am unable to interfere with the action of the Assessing Officer Therefore, all the grounds raised by the appellant in the present appeal are dismissed.” 4. The assessee filed against the impugned order dated 30-05-2024 of ld. CIT(A) before the ITAT, Rajkot. The Ld. AR submitted that the assessee appellant could not comply to notice because he is an NRI and requested to set aside the order of ld. CIT(A) and prayed for one more opportunity to be given to him. On the contrary, the ld. DR has not objected to the prayer of the assessee since the matter was not adjudicated by the ld. CIT(A). The matter may kindly be sent back to the ld. CIT(A) for fresh adjudication on merit. 5. We have heard both the parties and perused all the relevant materials available on record. It is noted that since the notices have been issued through email but the assessee has not responded to notice. The ld. A.R. of the assessee submitted that the assessee is not residing here and is an NRI and it is further noted that the ld. CIT(A) has issued notices but the order of the ld. CIT(A) is silent on the service of notice upon the assessee. Besides this, the ld. CIT(A) has disposed of the appeal by passing an ex-parte order. Therefore, we are of the view that one more Page | 6 IT(SS)A No. 7/RJT/2024 A Y:2018-19 opportunity to be given to the assessee to present his case before the ld. CIT(A). Therefore, we set aside the order of ld. CIT(A) and remit the matter back to the file of CIT(A) for fresh adjudication after affording due opportunity of being heard to the assessee. We direct the assessee to submit relevant details/documents/evidences if any as and when required by the ld. CIT(A). 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order is pronounced on 15/10/2024 in the Open Court. Sd/- Sd/-S (DR. ARJUN LAL SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot TRUE COPY Ǒदनांक/ Date: 15/10/2024 Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6.Guard File. By Order, Assistant Registrar/Sr. PS/PS ITAT, Rajkot "