NARAVATSINH JAGATSINH CHAUHAN,MEHSANA V. I.T.O. WARD 1, PATAN

ITA 1254/AHD/2024

AI Insights

The case involves three appeals filed by the assessee, Naravatsinh Jagatsinh Chauhan, against the orders passed by the Assessing Officer and confirmed by the CIT(A) under sections 147 r.w.s. 144 and 271(1)(c) of the Income-tax Act, 1961. The appeals were related to the assessment years 2015-16 and 2016-17, concerning unexplained cash credits and penalties for concealment of income. The Tribunal found that the assessments were made ex parte and the CIT(A) dismissed the appeals without discussing the merits. The assessee, being uneducated and unfamiliar with legal procedures, relied on an accountant who failed to file the appeals timely, leading to a delay which was later condoned by the Tribunal. The Tribunal noted the assessee's lack of access to essential documents and materials during the earlier proceedings and decided to remand the case for a fresh assessment, providing the assessee an opportunity to present his case with the necessary documents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314127 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2016-2017
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR LAL
• Assessee Lawyers: CHIRAG SHAH
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Unexplained cash credit; Principle of natural justice; Co-operative Credit Society
• Section: 147; 148; 271(1)(c); 68

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘D’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1253, 1254 and 1255/Ahd/2024 Asstt.Years : 2015-16, 2016-17 and 2016-17 Naravatsinh Jagatsinh Chauhan Satimata Madh Undi Or Geirta Village Via, Vijapur to Gerita Mehsana. PAN : AQDPC 1025 A Vs. ITO, Ward-1 Patan. (Applicant) (Responent) Assessee by : Shri Chirag Shah, AR Revenue by : Dr. Sanjay Kumar Lal, CIT-Dr and Ms.Trupti Patel, Sr.DR सुनवाई क तारीख/Date of Hearing : 07/05/2025 घोषणा क तारीख /Date of Pronouncement: 09/05/2025 आदेश आदेश आदेश आदेश/O R D E R PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER: These three appeals filed by the assessee are directed against separate orders passed by the Assessing Officer under sections 147 r.w.s. 144 and 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], as confirmed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as CIT(A)”] for A.Ys. 2015–16 and 2016–17. Since the issues raised in these appeals are interlinked and arise from a ITA No.1253, 1254 and 1255/Ahd/2024 2 common set of facts and identical additions sustained in an ex parte manner, we proceed to dispose them of by this common order. Condonation of Delay 2. The assessee has filed petitions seeking condonation of delay in respect of the appeals for A.Y. 2016–17, namely ITA No. 1254/Ahd/2024 (quantum appeal) and ITA No. 1255/Ahd/2024 (penalty appeal). As per the noting of the Registry, there is a delay of 150 days in filing ITA No. 1254/Ahd/2024 and a delay of 54 days in filing ITA No. 1255/Ahd/2024. In support of the condonation petitions, the assessee has filed duly sworn and notarized affidavits affirming that the delay occurred due to his reliance on one Shri Dinesh Patel, an accountant who had been entrusted with the responsibility of preparing and filing the appeals before the Tribunal. The assessee, being a tenth standard pass individual from a modest background, was unaware of the legal timelines and was misled into believing that the appeals had been duly filed within the prescribed period. He came to know about the lapse only after receiving recovery notices from the Income Tax Department, which prompted him to inquire into the matter and engage a new representative to file the appeals without any further delay. The affidavits also clarify that the delay was neither intentional nor due to negligence but arose from circumstances beyond the assessee’s control, and that he acted with promptness and diligence once the lapse was discovered. Considering the explanation placed on record, the supporting affidavits, and the overall circumstances including the assessee’s limited educational background and lack of legal awareness, we are satisfied that sufficient cause has been shown for the delay in filing the above appeals. Accordingly, the delay of 150 days in ITA No. 1254/Ahd/2024 and 54 days in ITA No. 1255/Ahd/2024 is condoned, and both appeals are admitted for adjudication on merits. ITA No.1253, 1254 and 1255/Ahd/2024 3 Facts of the case 3. In ITA No. 1253/Ahd/2024 for A.Y. 2015–16, the assessee did not file his return of income. Based on information available under the CRIU/VRU High Risk category on the Insight Portal, the Assessing Officer reopened the case under section 148 of the Act and completed the assessment ex parte under section 147 r.w.s. 144. The AO made an addition of Rs.14,01,00,425/- under section 68 on account of unexplained cash credits in the bank account maintained with Sri Renuka Mata Multi State Co-op Credit Society Ltd. Despite multiple notices, no compliance was made by the assessee. 4. In ITA No. 1254/Ahd/2024 for A.Y. 2016–17, similar proceedings were initiated on the basis of information received post-search in the case of the said Co-op Credit Society. A sum of Rs.2,32,40,022/- was found credited in the assessee’s account. Since the assessee did not file a return or respond to notices under sections 148 and 142(1), the assessment was completed under section 147 r.w.s. 144 by making a full addition of the said amount under section 68 of the Act. 5. In ITA No. 1255/Ahd/2024 for A.Y. 2016–17, penalty of Rs.80,42,907/- was levied under section 271(1)(c) on the above addition, alleging concealment and furnishing of inaccurate particulars of income. The penalty was confirmed by the CIT(A), NFAC without considering any submission on merits. 6. The assessee filed three separate appeals before the learned CIT(A), challenging the reassessment orders passed under section 147 r.w.s. 144 for A.Ys. 2015–16 and 2016–17, and the penalty order passed under section 271(1)(c) for A.Y. 2016–17. In all three matters, the appeals were dismissed ex parte by the learned CIT(A) on the ground that despite issuance of statutory notices under section 250 on multiple occasions, the assessee failed to file any submission on the ITBA portal. In each ITA No.1253, 1254 and 1255/Ahd/2024 4 appeal, the assessee had filed an application for condonation of delay explaining that the delay occurred as the matter was initially entrusted to a tax practitioner who failed to file the appeals in time, and the default came to light only upon receipt of demand notices, following which a Chartered Accountant was appointed. The learned CIT(A) condoned the delay in all three cases but proceeded to confirm the respective additions and penalty on merits owing to the complete absence of representation and supporting material. The assessee's principal contention across both quantum years was that he was engaged in Angadia business, where cash belonged to third parties and his role was limited to handling such transfers against nominal commission. However, in the absence of any evidence or explanation placed on record, these contentions were not examined by the appellate authority. The distinct factual details of the appellate orders are tabulated below: Particulars A.Y. 2015–16 A.Y. 2016–17 (Quantum) A.Y. 2016–17 (Penalty) CIT(A) Order Date 13.05.2024 14.11.2023 22.02.2024 Section under which AO passed the order 147 r.w.s. 144 147 r.w.s. 144 271(1)(c) Addition/Penalty Confirmed Rs.14,01,00,425 (u/s 68) Rs.2,32,40,022 (u/s 68) Rs.80,42,907 Notices Issued u/s 250 19.01.2024, 29.01.2024, 06.02.2024, 06.03.2024, 29.04.2024 06.10.2023, 25.10.2023, 02.11.2023 19.01.2024, 29.01.2024, 06.02.2024 7. Aggrieved by the orders of CIT(A), the assessee is in appeal before us raising following grounds: Appeal No.: ITA No. 1253/Ahd/2024 1. The assessment order passed under section 147 r.w.s. 144 of the Income Tax Act by the Assessing Officer and confirmed by the first appellate authority under section 250 is bad in law and deserves to be uncalled for. ITA No.1253, 1254 and 1255/Ahd/2024 5 2. The Assessing Officer as well as the first appellate authority has erred in law and on facts in making and confirming respectively the addition of Rs.14,01,00,425/-. The same deserves to be deleted. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing. Appeal No.: ITA No. 1254/Ahd/2024 1. The assessment order passed under section 147 r.w.s. 144 of the Income Tax Act by the Assessing Officer and confirmed by the first appellate authority under section 250 is bad in law and deserves to be uncalled for. 2. The Assessing Officer as well as the first appellate authority has erred in law and on facts in making and confirming respectively the addition of Rs.2,32,40,020/-. The same deserves to be deleted. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing. Appeal No.: ITA No. 1255/Ahd/2024 1. The penalty order passed under section 271(1)(c) of the Income Tax Act by the Assessing Officer and confirmed by the first appellate authority under section 250 is bad in law and deserves to be uncalled for. 2. The Assessing Officer as well as the first appellate authority has erred in law and on facts in levying and confirming respectively the penalty of Rs.80,42,907/-. The same deserves to be deleted. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing. 8. During the course of hearing before us, the learned Authorised Representative submitted that the assessee is an uneducated and economically modest individual, having studied only up to the 10th standard, and is entirely unfamiliar with legal and procedural requirements under the Income-tax Act. It was submitted that the assessee did not file any return of income for the relevant assessment years, as he was under the bona fide belief that his earnings did not exceed the taxable threshold. The AR further submitted that the additions made by the Assessing Officer under section 68 of the Act were based on information relating to certain cash deposits in a bank account ITA No.1253, 1254 and 1255/Ahd/2024 6 opened in the assessee’s name with Sri Renuka Mata Multi-State Co- operative Credit Society Ltd. The AR drew attention to the sworn affidavits filed by the assessee, wherein it is affirmed that the said bank account was opened at the behest of the society's branch manager, who offered to operate the account through third parties in exchange for nominal financial assistance by way of commission. The assessee had signed blank cheques and other documents as instructed, without understanding the nature of the transactions subsequently carried out in the account. The AR contended that the assessee had no ownership or control over the deposited funds and acted under the mistaken impression that his name was being used only as a formality for facilitating banking transactions of others. It was further submitted that the assessee was never furnished with a copy of the statement or material relied upon by the Assessing Officer, despite making repeated requests, and this denial of access to core evidence severely impaired his ability to defend the additions either at the assessment stage or before the CIT(A). The AR also submitted that the CIT(A) dismissed the appeals ex-parte without considering the substance of the assessee’s grievance, and that the opportunity to be heard on merits was effectively denied. In view of the peculiar facts of the case, including the assessee’s limited capacity, absence of documentary access, and the non-speaking ex-parte appellate orders, the AR prayed that the matters be restored to the file of the Assessing Officer for fresh adjudication after furnishing the requisite material and affording reasonable opportunity of being heard. 9. The Departmental Representative raised no objection in restoring back all three appeal to the file of Assessing Officer. 10. We have carefully considered the rival contentions, the materials placed on record, the affidavits filed by the assessee in support of condonation of delay, and the ex parte orders passed by the learned CIT(A) in all three appeals. It is evident from the record that the ITA No.1253, 1254 and 1255/Ahd/2024 7 assessment orders for both A.Ys. 2015–16 and 2016–17 were passed under section 147 r.w.s. 144 of the Act, in absence of any compliance by the assessee, and were based on alleged unexplained cash deposits in the bank account of Sri Renuka Mata Multi-State Co-operative Credit Society Ltd. The assessee’s case, as submitted by way of an affidavit, is that he was a small commission agent in the Angadia business, that the bank accounts were operated by others, and that he had no ownership over the funds deposited therein. However, the said explanation was not supported by documentary evidence at the assessment stage or before the CIT(A), resulting in confirmation of additions and levy of penalty under section 271(1)(c). 11. Before us, the learned Authorised Representative has submitted that the assessee is an uneducated individual with limited financial means, who acted under the influence and guidance of an accountant who misled him regarding timely filing of appeals. Affidavits have been placed on record explaining the reasons for the delay in filing the Tribunal appeals, which we have already condoned by separate order. It is also submitted that the assessee was not furnished with the copies of the statement or material relied upon by the Assessing Officer while making the additions, despite repeated efforts to obtain the same. The learned AR therefore urged that the matter be remanded to the file of the Assessing Officer to enable the assessee to submit his explanation and supporting material, and to ensure fair opportunity of hearing in accordance with principles of natural justice. 12. We find merit in the contentions of the assessee. The fact that the assessments were framed ex parte, and that the CIT(A) also disposed of the appeals in a summary manner without any discussion on merits, clearly points to a denial of proper opportunity. While the assessee failed to discharge his obligations during the earlier proceedings, the explanation now furnished in the form of sworn affidavits, coupled with ITA No.1253, 1254 and 1255/Ahd/2024 8 his limited educational background and lack of legal knowledge, warrants one final opportunity to present his case. 13. We also note that the assessee has placed on record sworn affidavits explaining the background of the cash deposits, claiming that the bank account in question was opened at the behest of the branch manager of the credit society and was operated by third parties, with the assessee receiving only a nominal commission per transaction. The assessee has further averred that he was unaware of the nature and scale of transactions undertaken through the said account. These claims, which go to the root of the matter and form the basis of the explanation against the additions under section 68 and the levy of penalty under section 271(1)(c), have not been verified at any stage of the proceedings. In our considered view, the facts as stated in the affidavits require proper examination by the Assessing Officer. It is only after such factual verification, including inquiry into the ownership and control of the deposits and the alleged role of the assessee in the banking transactions, that a just conclusion can be drawn in accordance with law. 14. At the same time, we cannot ignore the fact that the assessee remained grossly non-compliant throughout the original and appellate proceedings, both before the AO and the CIT(A), resulting in wastage of judicial time and resources. Therefore, in order to deter such conduct and to inculcate a sense of responsibility in the litigating public, we deem it appropriate to impose a cost of Rs.10,000/- per appeal, to be paid by the assessee to the credit of the Income Tax Department. 15. Accordingly, the orders passed by the CIT(A) as well as the Assessing Officer are set aside, and the matters are restored to the file of the Assessing Officer with a direction to adjudicate the issues afresh after furnishing the assessee a copy of the material relied upon and affording ITA No.1253, 1254 and 1255/Ahd/2024 9 adequate opportunity of being heard. A cost of Rs.10,000/- per appeal is levied on the assessee, which shall be deposited to the credit of the Income Tax Department within 30 days from the receipt of this order. Proof of such deposit shall be furnished to the Assessing Officer during the remand proceedings. 16. In the result, all three appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the Court on 9th May, 2025 at Ahmedabad. Sd/- Sd/- (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER Ahmedabad, dated 09/05/2025 "