MODERN EDUCATION DEVELOPMENT SOCIETY, DHAMTARI,DHAMTARI V. INCOME TAX OFFICER, WARD- DHAMTARI, DHAMTARI

ITA 463/RPR/2024

AI Insights

The case involves the Modern Education Development Society appealing against the order of the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center, Delhi, which arose from an ex-parte assessment order under Sec. 144 of the Income-tax Act, 1961. The primary contention was regarding the additions made by the Assessing Officer (A.O) under sections 69A and 115BBE of the Act, related to unexplained cash deposits during the demonetization period and estimated business receipts. The CIT(Appeals) upheld the A.O's decision due to the society's non-compliance in providing necessary documents and participating in the proceedings. The Tribunal found that the society was not properly notified about the appeal hearing, leading to the decision to restore the matter to the CIT(Appeals) for a fair hearing.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469758 (ITAT-RAIPUR)
• Duration Of Justice: 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 22-10-2024
• Other Referred Cases: Vidhiyasekaran Pradeep Malliraj vs. ITO, Non Corporate Ward-1(6), Madurai, Raju Ravichandran, Namakkal Vs. ITO, W-2, Namakkal
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: VIMAL KUMAR AGRAWAL
• Keywords: Business income; Opportunity of being heard; Search and seizure
• Section: 144; 142(1); 69A; 10B

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. 463/RPR/2024 Ǔनधा[रण वष[ / Assessment Year : 2017-18 Modern Education Development Society C/o. Kaliram Chandrakar Public School, Near Atal Awas Kurud Dhamtari-493 663 (C.G.) PAN: AABAM0216E .......अपीलाथȸ / Appellant बनाम / V/s. The Income Tax Officer Ward-Dhamtari (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Vimal Kumar Agrawal, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 25.11.2024 घोषणा कȧ तारȣख / Date of Pronouncement : 28.11.2024 2 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee society is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 03.10.2024, which in turn arises from the order passed by the A.O under Sec. 144 of the Income-tax Act, 1961 (in short ‘the Act’) dated 26.11.2019 for the assessment year 2017-18. The assessee society has assailed the impugned order on the following grounds of appeal: “Gr.No.1: \"On the facts and circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.10,92,000 made by AO u/s69A on the count of cash deposits into bank during demonetization (i.e., 9-11-16 to 30-12-16) as it is made from school fees & transport fees receipts of the assessee-Trust running wholly for educational purposes only; it is made from cash balance available of Rs.21,52,224 as on 9-11-16 as per cash book of the assessee-Trust; addition is unjustified & is liable to be deleted.\" Gr.No.2: \"On the facts and circumstances of the case and in law, CIT(A) has erred in sustaining addition of Rs.8,84,970 i.e., 10% estimation of Rs.88,49,695 i.e., Rs.59,00,000 as cash deposits into bank (i.e., pre & post-demonetization) & Rs.29,49,695 as other receipts into bank, erroneously treating it as business receipts; total receipts into bank of Rs. 88,49,695 is from school fees & transport fees receipts of the assessee-Trust running wholly for educational purposes only; addition is unjustified & is liable to be deleted.\" Gr.No.3: 3 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 \"On the facts and circumstances of the case and in law, CIT(A) has erred in applying sec115BBE when it is cash deposits of Rs.10,92,000 during demonetization (i.e., 9-11-16 to 30-12-16) is made from school fees & transport fees receipts of the assessee-Trust running wholly for educational purposes only & it is made from cash balance available of Rs.21,52,224 as on 9- 11-16 as per cash book of the assessee-Trust; application of sec115BBE is unjustified & is liable to be deleted.\" Gr.No.4: \"The appellant craves leave, to add, urge, alter, modify or withdraw any grounds before or at the time of hearing.\" 2. Succinctly stated, the A.O based on the information received through ITBA AIMS module, observed that though the assessee society had during the demonetization period made cash deposits of Rs.10,92,000/- in Specified Bank Notes (SBNs) in his bank account No.15092011008870 with Oriental Bank of Commerce, but had not filed its return of income u/s.139 of the Act. The A.O issued notice(s) u/s.142(1) of the Act to the assessee society calling upon it to furnish its true and correct return of income. As the assessee society had failed to comply with the aforesaid notices, the A.O proceeded with and framed the assessment vide his order passed u/s. 144 of the Act, dated 26.11.2019 i.e. on an ex-parte basis. Accordingly, the A.O vide his order passed u/s.144 of the Act, dated 26.11.2019 determined the income of the assessee society at Rs.19,76,970/- after, inter alia, making the following two additions: 4 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 Sr. No. Particulars Amount 1. Addition u/s. 69A of the Act of cash deposits made in assessee’s bank account No. 15092011008870 with Oriental Bank of Commerce during the demonetization period in SBNS Rs.10,92,000/- 2. Addition (on estimated basis) @ 10% of the business receipt of the assessee society Rs.8,84,970/- 3. Aggrieved, the assessee society carried the matter in appeal before the CIT(Appeals) but without success. Ostensibly, as the assessee society despite having been afforded sufficient opportunity on three occasions, viz. on 04.11.2022 (enabling the assessee to respond w.r.t. grounds of appeal), 17.11.2023, 27.05.2024 and 29.07.2024 failed to participate in the proceedings before the first appellate authority, therefore, the latter was constrained to proceed with and dispose off the appeal vide an ex-parte order. The CIT(Appeals), after referring to the facts of the case approved the view taken by the A.O in absence any material having been placed before him pointing out any perversity in the view taken by the A.O, approved the same. For the sake of clarity, observations of the CIT(Appeals) are culled out as under: “4. Decision and observations: 4.1 I have perused the grounds of appeal, statement of facts and the facts appearing from the order u/s 144 of the Income Tax Act for the Asstt Year: 2017-18. The Appellant being aggrieved against the order u/s 144 of the Act, dated: 5 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 26.11.2019 has preferred this appeal. Ground no.3 is general in nature. Therefore no need for separate adjudication. Ground no.2 relates to the addition of Rs.10,92,000/- as unexplained money u/s 69A of the I.T.Act.1961. 4.2 Brief facts of the case are that the appellant had deposited cash of Rs.10,92,000/- in his account number 15092011008870 maintained with Oriental Bank of Commerce during the period of demonetization. The AO noted that despite the substantial cash deposits, the appellant did not file its Return of Income u/s 139(1), for the year under consideration. The appellant did not file Rol in response to the notices u/s 142(1) issued by the AO on numerous occasions nor submitted any documents/evidences to substantiate its claim. Consequently, the AO passed the assessment to the best of his judgement u/s 144 of the I.T. Act by an order dated: 26.11.2019 and added Rs.10,92,000/- to arrive at the total income of the appellant as unexplained money u/s 69A of the I.T.Act. 4.3 Ground no.2 pertains to the addition of Rs.8,84,970/- on estimate basis being the net profit @10 per cent of the gross receipts of Rs.88,49,695. On perusal of assessment order, it is seen that the appellant apart from the period demonetization had also deposited cash of Rs.59,00,000,41d had credit entries of Rs.29,49,695/- totaling to Rs.88,49,695/- in bank account bearing no.15092011008870 maintained with Oriental Bank Commerce. Subsequently, the appellant was asked to furnish the nature and source of cash and other deposits made in aforementioned account. Considering the reply filled the AO observed as under. \"the assessee has furnished the byelaws of the society, affiliation certificate of Kaliram Chandrakar Public School with CBSE and the copies of the fee receipt, however, the assessee has not furnished any supporting documents which could substantiate as to why the assessee has not filed the return of income for the assessment year under consideration. Also, the assessee has not furnished the copies of the books of accounts maintained during the financial year 2016-17 e.g. receipt payment account, income expenditure account, balance sheet, copy of form 10B etc. which is required to be maintained as per the provisions of the Act. Merely furnishing the byelaws of the society & copies of fee receipt could not establish the non-filing of ROI for the assessment year under consideration & the said income is exempted. Therefore, the total amount of Rs. 88,49,695/- as [per Table:3a & 3b] is treated as business receipts of the 6 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 assessee and profit @ 10% of the amount of Rs. 88,49,695/- i.e. Rs. 8,84,970/- is added to the total income of the assessee for the assessment year under consideration.\" Not being satisfied with the explanation of the appellant, the AO estimated the net profit at rate of 10% of gross receipts being the total cash and other deposits of Rs.88,49,695/- consequently made an addition of Rs.8,84,970/- and passed the best judgement assessment u/s 144 of the I.T.Act. 5. I have perused the grounds of appeal, statement of facts and the assessment order. The appellant has not produced any material, evidence or documents, which it could rely upon, to controvert the finding of AO. On merit AO's order appears to be reasonable and as per law. Deposit of Rs.10,92,000/- in cash, in old currency, in its account no.15092011008870 maintained with Oriental Bank Of Commerce during period of demonetization has not been disputed by the appellant. No material has been brought on record to show that they were authorized by any order/notification of Govt of INDIA to accept cash in banned currency (SBN) notes. The appellant only furnished byelaws of the society and affiliation certificate of CBSE and the copies of the fee receipt of school but has not furnished the copies of the books of accounts maintained by the society e.g. receipt payment account, income expenditure account, balance sheet, copy of form 10B etc. duly supported by bills/vouchers as proof, which was required to be maintained by the society as per the provisions of the Act during the assessment proceedings. No such materials were furnished during this appellate proceeding too. It would not be out of place to mention here that the Hon'ble ITAT, Chennai Bench in the cases of Vidhiyasekaran Pradeep Malliraj vs. ITO, Non Corporate Ward-1(6),Madurai(ITA No. 398/chny/2022) dated: 07.02.2023 and Raju Ravichandran, Namakkal Vs. ITO, W-2, Namakkal (ITA No. 493/chny/2023) Dt.: 16.02.2023 the addition in respect of cash deposit made by the A.O. has been confirmed, when sale proceeds and debtor realization were made in SBN, banned currency of 500 & 1000 rupees denomination during demonetization. The AO further estimated the net profit ©10 % of the total of other deposits of Rs. 88,49,695/- and added Rs. 8,84,970/- to arrive at the total income of the society, as the appellant failed to provide copies of the books of accounts income expenditure account, balance sheet, copy of form 10B etc. to substantiate its claim. The AO also brought on record that the appellant had neither filed ITR for earlier year nor filed ITR for the year under consideration and also failed to file ITR in response to notice 7 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 u/s 142(1) of the I.T. Act. Further, during the course of this appeal proceeding, no material, documents/ have been provided in support of claim made by the appellant. From the above conduct of the assessee, it is clear that the appellant is not interested in prosecuting its appeal. In the event, I have no reason to interfere with the findings of the AO. In such circumstance, I dismiss the claim of the appellant. 6. In the result, the appeal is dismissed.” 4. The assessee society being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before the Tribunal. 5. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record. 6. Shri Vimal Agrawal, Ld. Authorized Representative (for short ‘AR’) for the assessee society, at the threshold submitted that though the assessee society in its memorandum of appeal filed before the CIT(Appeals) i.e. “Form 35”, had specifically opted out of service of notices/communications from the office of the CIT(Appeals) through email, but no notice intimating the fixation of the appeal was ever physically served upon it. The Ld. AR to fortify his aforesaid contention had taken me through the “affidavit” dated 18.11.2024 filed by the President of the assessee society, which reads as under: 8 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 Further, the Ld. AR had drawn my attention to the memorandum of appeal i.e. “Form 35” that was filed by the assessee society before the CIT(Appeals), which reads as under: (relevant extract) 9 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 Elaborating further on his contention, the Ld. AR submitted that as the assessee society for the aforesaid reason was never validly put to notice about the fixation of the appeal, and thus, remained divested of an opportunity to participate in the proceedings before the CIT(Appeals) and defend its case, therefore, the matter in all fairness requires to be restored to the file of the CIT(Appeals) with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee society. 7. Per contra, Dr. Priyanka Patel, Ld. Sr. Departmental Representative ( for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as pursuant to the faceless regime of disposal of appeals by the CIT(Appeals)’s, the department had dispensed with the physical service of notices, therefore, the contention of the Ld. AR that the assessee society was not validly put to notice about fixation of the appeal did not merit acceptance. 10 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 8. I have thoughtfully considered the contentions of the Ld. Authorized Representatives on the aforesaid issue, i.e. failure on the part of the CIT(Appeals) in validly putting the assessee to notice about the fixation of the hearing of the appeal. Admittedly, it is a matter of fact borne from record that the assessee had in the memorandum of appeal filed before the CIT(Appeals), i.e. “Form 35” had specifically opted out of service of notices/communications from the office of the CIT(Appeals) through email. However, I find that despite the aforesaid fact the CIT(Appeals) on all the four occasions, viz. 04.11.2022 (enabling the assessee to respond w.r.t. grounds of appeal), 17.11.2023, 27.05.2024 and 29.07.2024, had issued the notices intimating the fixation of the appeal in his email account and had failed to physically serve the same upon him. Considering the aforesaid facts, I find substance in the claim of the Ld. AR that as the assessee society for no fault on his part had remained divested of an opportunity to participate in the proceedings before the CIT(Appeals) and defend his case, therefore, the matter in all fairness requires to be restored to his file with a direction to re-adjudicate the same. Needless to say, the CIT(Appeals) in the course of set-aside proceedings shall afford a reasonable opportunity of being heard to the assessee society which shall remain at a liberty to substantiate its contentions on the basis of fresh documentary evidence, if any. Thus, the Grounds of appeal Nos. 1 to 3 11 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 raised by the assessee society are allowed for statistical purposes in terms of the aforesaid observations. 9. Apropos, the Ld. DR's claim that service of notices/communications by the CIT(Appeals)/NFAC pursuant to faceless regime of disposal of appeals is only carried out by dropping the notices /communications/orders in the email address provided by the assessee, I am unable to persuade myself to subscribe to the same. If that would have so, then there was no need to provide for an option to the appellant to receive the notices/communications through e-mail or by any other mode. As the memorandum of appeal in “Form 35” specifically provides an option as to whether or not notices/communications (which includes notices intimating fixation of appeal) are to be sent on email address, therefore, I am unable to comprehend as to on what basis it is claimed by the Ld. DR that the assessee who had opted out of service of all notices/communications through email was validly served with the notices intimating the fixation of the appeal by dropping the said notices in its email account. As regards the email account provided by the assessee in the memorandum of appeal, i.e. personal information/Column 17, the same is only for the purpose of seeking details as sought for in the said columns. Be that as it may, now when the assessee had in the memorandum of appeal in “Form 35” specifically opted out of service of all notices/communications from the CIT(Appeals)'s office through email, 12 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 therefore, I am afraid that the Ld. DR's contention that the assessee society was validly put to notice vide the notices dropped in its e-mail account does not merit acceptance. 10. As I have restored the matter to the file of the CIT(Appeals) in terms of the aforesaid observations, therefore, I refrain from adverting to the merits of the case as had been assailed by the assessee before me, which, thus, are left open. 11. Ground of appeal No.4 being general in nature is dismissed as not pressed. 12. In the result, appeal of the assessee society is allowed for statistical purposes in terms of the aforesaid observations. Order pronounced in open court on 28th day of November, 2024. Sd/- (रवीश सूद /RAVISH SOOD) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 28th 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, 13 Modern Education Development Society Vs. ITO, Ward- Dhamtari ITA No. 463/RPR/2024 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. "