MR. NARENDRA KUMA RBAL,KEONJHAR V. INCOME TAX OFFICER, KEONJHAR WARD, KEONJHAR

ITA 178/CTK/2025

AI Insights

The case involves Mr. Narendra Kumar Bal, who appealed against the order of the Commissioner of Income Tax (Appeals)-2, Bhubaneswar, which was passed under section 250 of the Income Tax Act, 1961, for the assessment year 2011-12. The appeal was initially barred by limitation, but the Tribunal condoned the delay due to the appellant's health issues. The primary issues in the appeal included the enhancement of gross contract receipts, rejection of books of account, denial of depreciation, and additions made for unexplained investments and undisclosed bank balances. The Tribunal noted that the Commissioner had not properly adjudicated these issues and had not provided a reasoned decision, leading to the setting aside of the Commissioner's order and remitting the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396634 (ITAT-CUTTACK)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Other Referred Cases: Sterlite Industries (India) Ltd. vs. Addl. CIT, Ajji Basha Vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Depreciation; Unexplained investment
• Section: 143(3); 142(1); 133A

Judgement Text

"आयकर अपीलीय अधिकरण कटक पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH AT KOLKATA [वर्चुअल कोटु] [Virtual Court] श्री संजय शमाु, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal Vs. Income Tax Officer, Keonjhar Ward, Keonjhar (Appellant) (Respondent) PAN: AFFPB0578L Appearances: Assessee represented by : None (Adjournment appln. filed). Department represented by : S.C. Mohanty, Sr. DR. Date of concluding the hearing : May 13th, 2025 Date of pronouncing the order : May 29th, 2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)- 2, Bhubaneswar [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2011-12 dated 28.03.2023, Page | 2 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. which has been passed against the assessment order u/s 143(3) of the Act, dated 13.03.2014. 1.1. The Registry has informed that the appeal filed by the assessee is barred by limitation by 651 days. An application seeking condonation of delay has been filed by the assessee stating as under: “1. That the First Appeal order passed by the Id. CIT(A) was received on 31.03.2023 and according to the statute the Second Appeal should have be filed within 60 days from the date of the order received that is on or before 30.05.2023, but the same is filed on 10.03.2025. Therefore, the delay made of about 649 days in filing of the said Appeal before this Hon'ble forum. 2. That, the Appellant due to frequent cardiac problems and regular treatments from the year 2022 to 2024 he was in disturbed/distress mind and not in a position to consult an advocate for taking further course of action to file the Second Appeal before this Hon'ble Tribunal. Therefore, in the process about 649 days of delay caused in filing the said Appeal, which may please be condoned otherwise the Appellant will suffer irreparable loss. 3. That the delay made in filing of the Second Appeal is not deliberate or negligence or any malafide intention and there was genuine hardship involved for not filing the said Appeal in time. Further, it may be taken into consideration that the Appellant has no benefit by resorting to delay in filing the Second Appeal, hence delay may kindly be condoned and the appeal may be admitted for merit hearing. 4. That, there exists sufficient and reasonable cause to condone the delay in filing the said Appeal and the Hon'ble Mumbai Tribunal in the case of Sterlite Industries (India) Ltd. vs. Addl. CIT (2006) 102 TT) (Mumbai) 53 :(2006) 6 SOT 497 (Mumbai) laid down the following proposition on power of Tribunal to condone delay: \"The expression 'sufficient cause or reason' as provided in sub-s. (5) of s. 253 of the Act is used in identical position in the Limitation Act, 1963 and the CPC. Such expression has also been used in other sections of the IT Act such as Secs. 274, 273, etc. Keeping in mind the authoritative pronouncement of the Supreme Court, it is an admitted position that the words 'sufficient cause' appearing in sub-s. (5) of s. 253 of the Act should receive a liberal construction so as to advance substantial justice. It must be remembered that in every case of delay, there can be some lapse of the litigant concerned. That alone is not enough to turn down the plea and to shut the doors against him. If explanation does not smack of mala fide or Page | 3 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. does not put forth a dilatory strategy, the Court must show utmost consideration to such litigant. Further, the length of delay is immaterial, it is the acceptability of the explanation and that is the only criteria for condoning the delay.\" Therefore, a liberal approach may please be adopted to condone the delay as the Appellant is a heart patient and under regular treatment.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay and admit the appeal for adjudication. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “A. For that, the order of the forums below are illegal absurd, improper and excessive in the facts and circumstances of the case, hence the orders passed are liable to be deleted. B. For that, the Id. AO has enhanced the gross contract receipt to Rs.1,25,43,448/- without any valid reasons and over and above the contract receipt showing in Form No.26AS, thus, rejection of Books of account, such enhancement and estimation of contract receipt @8% is excessive in the fact of this case, hence addition of alleged net profit at Rs.10,03,475/- is liable to be deleted. C. For that the forums below are totally unjustified to deny the depreciation claimed by the Appellant, thus, the depreciation being statutory allowance should have been allowed. D. For that, the passing of the order by the forums below on irregular and irrelevant manner caused unnecessary enhancement of the total income and the addition of Rs.1,16,898/- made for non-disclose of closing balance of bank account should be deleted as the order of assessment passed by rejecting the books of account U/s.145(3) of the IT Act and estimation made @8% from the gross income receipt. E. For that, the addition of Rs.3,50,000/- as unexplained investment in house construction during the year on the basis of estimation report made by the IIT is bad in law and liable to be deleted. Page | 4 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. Other grounds will be urged at the time of hearing.” 3. Brief facts of the case are that the assessee is an individual and during the year under consideration derived income from execution of contract work in the name and style of his proprietorship concern M/s. Maa Tarini Traders. The assessee filed the return of income for the AY 2011-12 on 24.10.2011 showing total income of Rs. 4,45,550/-. A survey was conducted u/s 133A of the Act in the business premises of the assessee on 25.03.2011. The return of income was selected for scrutiny as per Clause-(d) of the guidelines of CBDT vide F.No.225/97/2012/ITA-II dated 23.08.2012. Accordingly, notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee. The notices were responded to by the Ld. AR of the assessee. During the course of survey operation, it was found that the assessee had constructed a double storied house. The assessee was asked to produce the details along with documentary evidence in support of the construction of house and the source of investment. The Ld. AR stated that the assessee had invested a sum of Rs. 21,00,000/- in construction of the building till the end of the FY 2010-11 and the investment made during the financial year 2010-11 was Rs. 3,00,000/-. However, the Ld. AR could not produce any documentary evidence in support of the cost of construction made during the FY 2010-11. On going through the report of the Inspector of Income Tax, the Assessing Officer (hereinafter referred to as Ld. 'AO') found that the investment of Rs. 3,50,000/- remained unexplained hence, added the same to the total income of the assessee. During the course of assessment proceeding, the assessee was also asked to produce the books of account, bills & vouchers in support of his contract business. The Ld. AR produced some ledger accounts and bills & vouchers for verification but no cash book was Page | 5 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. produced for verification. On going through the details, the Ld. AO found discrepancies in the books of account maintained by the assessee for the FY 2010-11 relevant to the AY 2011-12 and according to him the books were not reliable and the profit shown by the assessee from the business activity was not accepted as true and correct. Therefore, the Ld. AO rejected the books of account u/s 145(3) of the Act and proceeded to estimate the profit of the assessee from the business activity on the gross contract receipts @ 8%. The Ld. AO found that the assessee maintained current account with Union Bank, Keonjhar and the bank account with closing balance of Rs. 1,16,898/- had not been reflected in the books of account, hence, the Ld. AO treated the same as undisclosed asset in the hands of the assessee and added the deposits in the account to the total income. The Ld. AO assessed the total income of the assessee at Rs. 13,78,510/- and framed the assessment u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who adjudicated the ground nos. 1 & 4 raised by the assessee and dismissed the appeal of the assessee by observing as under: “4.2 The AO noted that as per ITI's report the assessee's investment in construction of the house was Rs. 6.5 lakh as against Rs. 3 lakh claimed by the assessee. In the absence of suitable explanation, the AO added the differential amount of Rs 3.5 lakh as unexplained investment. The AR submitted that there is no logic behind the extra addition to the building as per the Inspector report which is baseless & imaginary & liable to be quashed. Though the assessee contended that the total investment was Rs. 21.26 lakh and the same was reflected in the balance sheet, no evidence has been submitted regarding this. In its absence, I am constrained to concur with the AO. This ground is dismissed. ….. ….. Page | 6 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. 6. In the result, the appeal is dismissed.” 4. Before the Bench, the assessee had filed an application seeking adjournment for a month. However considering the facts of the case, the application for adjournment was not allowed and the appeal was heard with the assistance of the Ld. DR who had no objection if the order of the Ld. CIT(A) is set aside as the assessee could not make proper representation before him. 5. We have gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The Ld. CIT(A) issued four notices to the assessee in the course of the appeal but no compliance was made to any of the notices issued. Even before the Ld. AO, the cash book required to be produced was not produced and the net profit rate of 8% was applied on the turnover of Rs. 1,25,43,448/- and further addition was made on account of the closing balance in the current account which was not disclosed. As no evidence was submitted, the only addition of Rs. 3,50,000/- contested before the Ld. CIT(A) was confirmed by him. Ground No. 2 relating to the overall addition, which included additions on account of net profit after rejecting the books of account and the addition on account of closing balance in the current account was considered as general in nature and in the view of the Ld. CIT(A) needed no separate consideration. On perusal of the appellate order, it is noticed that while the Ld. CIT(A) has discussed non- compliance on the part of the assessee as the notices sent were not complied with but he has not adjudicated the appeal on merit as Ground No. 2 relating to overall addition has not been adjudicated. In this respect, it is relevant to examine the provisions of section 250(6) which are reproduced as under: Page | 7 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. “250(6) – The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision.” 6. Thus, section 250(6) of the Act casts a duty on the Ld. CIT(A) to pass an order in appeal which should state the points for determination and the decision as well as the reason for arriving at such decision. In the present case before us, the Ld. CIT(A) has not mentioned the reasons after examining the records while disposing of the appeal. The Ld. CIT(A) has neither adjudicated upon various grounds of appeal nor has passed a reasoned order for arriving at the decision, as is required u/s 250(6) of the Act. We further note that in Ajji Basha Vs. CIT (2019) 111 taxmann.com 348 (Madras) it has been held that a speaking order on merits with reasons and findings is to be passed by Commissioner (Appeals) on basis of ground raised in assessee's appeal; he cannot dispose the assessee's appeal merely by holding that Assessing Officer's order is a self-speaking order which requires no interference. Hence, the Bench was of the view, that considering the facts of the case and as no proper representation was made and the other additions have not been adjudicated upon by the Ld. CIT(A), the assessee should be granted another opportunity in the interest of justice to make the required submissions for the reliefs claimed. 7. After examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter back to the Ld. CIT(A) for disposal of the grounds taken by the assessee on merit, by passing a speaking order. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments and rule 46A of the I.T. Rules, Page | 8 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. 1962 shall also be followed, if required. Accordingly, all the grounds taken by the assessee in his appeal are allowed for statistical purposes. 8. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29th May, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 29.05.2025 Bidhan (P.S.) Page | 9 I.T.A. No.: 178/CTK/2025 Assessment Year: 2011-12 Mr. Narendra Kumar Bal. Copy of the order forwarded to: 1. Mr. Narendra Kumar Bal, At-Kamargoda, College Road, Keonjhargarh, Keonjhar, Odisha, 758001. 2. Income Tax Officer, Keonjhar Ward, Keonjhar. 3. CIT(A)-2, Bhubaneswar. 4. CIT- 5. CIT(DR), Cuttack Bench, Cuttack. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "