PRAKASH SHAH,SURAT V. .INCOME TAX OFFICER, WARD - 1(3)(8), SURAT

ITA 767/SRT/2023

AI Insights

This case involves an appeal by Prakash Shah against the order of the Commissioner of Income Tax (Appeals), which confirmed the additions made by the Assessing Officer under sections 69 and 147 of the Income-tax Act, 1961. The additions pertained to an unexplained investment of Rs. 20,00,000 and undisclosed interest income. The Tribunal noted the assessee's non-cooperation and failure to provide necessary explanations during the lower proceedings but decided to remit the case back to the Assessing Officer, emphasizing the principles of natural justice and providing the assessee another opportunity to present his case.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473279 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: CHAITALI SHAH
• Keywords: Condonation of delay; Business income; Unexplained investment; Reopening of assessment; Principle of natural justice
• Section: 147; 148; 144; 250; 69

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.767/SRT/2023 Assessment Year: (2013-14) (Physical Hearing) Prakash Shah, 99, Sneh Smruti Society, Rander Road, Adajan, Surat - 395009 Vs. The ITO, Ward – 1(3)(8), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: AEUPS4737E (Appellant) (Respondent) Appellant by Ms. Chaitali Shah, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 02/12/2024 Date of Pronouncement 18/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 14.06.2023 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2013-14. 2. The grounds of appeal raised by the assessee are as under: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in reopening the case of the assessee u/s 147 by issuing notice u/s 148 of the Act. 2. On the facts and circumstances of the case as well as on the subject the learned CIT(A) has erred in confirming the action of assessing officer in making addition of Rs.20,00,000/- on account of unexplained investment u/s 69 of the Act. 3. It is therefore prayed that assessment framed u/s 147 be quashed and/or additions made by the assessing officer may please be deleted. 2 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. The appeal filed by the assessee is barred by limitation by 88 days in terms of provisions of section 253(3) of the Act. The assessee has filed an affidavit giving reasons for delay in filing the appeal of appeal before the Tribunal. In the affidavit, the assessee stated that Ld. CIT(A) has passed order on 14.06.2023. The appeal before this Tribunal was required to be filed on 13.08.2023. However, the assessee filed the appeal on 09.11.2023. Therefore, there is a delay of 88 days. The learned Authorized Representative (Id. AR) submitted that in the Form 35, the email ID of assessee's Chartered Accountant was mentioned. The assessee was dependent on his Chartered Accountant. The appellate order was sent to the email ID of assessee's Chartered Accountant, which was registered on ITD portal. Assessee's Chartered Accountant did not give advice to file timely before ITAT. Only when the recovery notice was issued to the assessee on 28.08.2023 after dismissal of the appeal before CIT(A). The assessee came to know that the adverse order passed by the CIT(A). Thereafter, assessee further consulted Shri Rasesh Shah, Chartered Accountant and filed the appeal belatedly before the Tribunal. The Id. AR requested to condone the delay in the interest of justice. 4. On the other hand, learned Senior Departmental Representative (Id. Sr. DR) for the revenue submitted that assessee has failed to explain 'sufficient cause' for the delay; hence, delay should not be condoned. 3 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah 5. We have heard both the parties on this preliminary issue and note that there is a delay of 88 days. We note that assessee was not negligent but due to lack of advice of his Chartered Accountant, the delay has occurred in filing the appeal before the Tribunal. The delay was neither deliberate nor intentional. The reasons given in the affidavit for condonation of delay would constitute sufficient cause for condone the delay in filing appeal. We, therefore, condone the delay and admit the appeal for hearing. 6. Brief facts of the case are that assessee filed his return of income for AY.2013-14 on 27.03.2014 by declaring total income of Rs.2,78,910/-. The Assessing Officer (in short, 'AO') noticed that assessee had given Rs.20,00,000/- in cash to Shri Nigel Pankaj Irvin as a token for handling a land deal on behalf of assessee during the year under consideration. The case was reopened u/s 148 after obtaining necessary approval. The assessee has earned house property income, interest income and business income. A show cause notice was issued on 12.11.2018. The content of the relevant show cause notice is at page 2 of the assessment order. There was non-compliance to show cause notice and the AO completed the assessment order u/s 144 of the Act. The AO observed that during the investigation, the assessee stated that around 2013, he has received an amount of Rs.20,00,000/- in cash as a token for handling a land deal from Shri Prakash Vadilal Shah. He also stated that he had not filed his return of income and the impugned income of Rs.20,00,000/- was not reflected in his return of income. The assessee has not furnished any explanation regarding 4 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah nature and source of advance given to Shri Nigel Pankaj Irvin Christy despite various opportunities provided by AO. The assessee was asked to show cause as to why the said advance of Rs.20,00,000/- should not be treated as unexplained investment. The assessee had failed to furnish any explanation before AO. Hence, the AO has made addition of Rs.20,00,000/- as unexplained investment and added to the total income of assessee u/s 69 of the Act. Further, the AO observed that the assessee has received interest of Rs.1,38,732/- from Vadilal Shah Vimal. The assessee had shown other interest income of Rs.86,888/- only in his return of income. Therefore, assessee had not shown remaining interest income of Rs.51,844/- [Rs.1,38,732 (-) Rs.86,888) in his return of income. The AO asked assessee as to why the interest income of Rs.51,844/- should not be added to total income of the assessee. The assessee failed to reply to the notice of AO. Therefore, the AO made addition of Rs.51,844/- on account of undisclosed interest income. The AO had determined the total income of Rs.22,58,890/- against the returned income of Rs.2,07,050/-. He passed order u/s 144 r.w.s. 147 of the Act on 26.11.2018. 7. Aggrieved by the order of AO, the assessee filed this appeal before the CIT(A). The CIT(A) extracted the submission of appellant, which is at pages 2 to 4 of the appellate order. The findings of the CIT(A) are at pages 4 to 6 of the appellate order. The CIT(A) had condoned the delay and admittd the appeal for adjudication. The CIT(A) observed that assessee has paid Rs.20,00,000/- to Shri Nigel Pankaj Irwin as a token for purchase of land in the year 2013 out of funds 5 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah available with him and not during the year under consideration. The land was in the ownership of St. Zavier's School and Shri Nigel Pankaj Irwin was a trustee of the school. However, Shri Nigel P. Irwin was removed from the post of trustee by the authorities of trustee-school due to embezzlement of cash handling and dealing of land purchase. The assessee has submitted that the addition was wrongly made by AO because there was no transaction during the year under consideration. The CIT(A) concluded that the appellant has not submitted the copy of the FIR filed against Shri Nigel P. Irwin to substantiate that the advance /token had been paid to him in any period other than the AY.2013-14. The appellant neither submitted any evidence to substantiate the source of Rs.20,00,000/- nor comply with the notices/show cause notice during the assessment proceedings. The CIT(A) confirmed the addition made by AO and dismissed the appeal of assessee. 8. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed two paper books containing the validity of re-opening of assessment submitted before the CIT(A) and various case laws. It was submitted that the reasons for re-opening was not given by the AO and the AO has passed the assessment order making various additions. The Id. AR relied upon various decisions in favour of assessee. 9. On the other hand, learned Senior Departmental Representative (Id. Sr. DR) of the revenue supported the order of the lower authorities. He 6 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah submitted that assessee had all along tried not to give any details to AO or CIT(A). 10. We have heard both the parties and perused the materials available on record. We have also deliberated on the decisions relied upon by ld. AR. It is an undisputed fact that the assessee has been totally non-cooperative to the statutory notices and the show cause notice issued to him by the AO. As stated by the ld. AR, the CIT(A) has also passed an ex parte order. We find that the assessee had filed the appeal beyond the specified period but CIT(A) has condoned the delay. Thereafter, on the basis of the submission of the appellant and facts of the case, CIT(A) has passed the order confirming the addition made by AO. The AO had added Rs.20,00,000/- paid in cash by assessee to Shri Nigel Pankaj Irwin. We find that the CIT(A) has confirmed the addition by stating that assessee had not submitted copy of FIR against Shri Nigel P. Irwin or any other evidence to substantiate the source of the impugned sum. Considering all these facts, we are of the view that the assessee was negligent and non-cooperative before the lower authorities. The Id. AR submitted that the non-compliance was neither deliberate nor intentional. He requested that another opportunity may be granted to the assessee to submit all the required explanations and details and plead his case on merit. He also requested that the information with the AO may be provided to the assessee for his rebuttal. We are of the view that the principles of natural justice would call for giving another opportunity of hearing to the assessee. Accordingly, we hold that the interests of justice would 7 ITA No.767/SRT/2023/AY.2013-14 Prakash Shah be met in case the AO re-examines the entire issue afresh. Accordingly, we set aside the order of CIT(A) and remit the matter back to the file of AO with a direction to pass fresh assessment order in accordance with law after granting adequate opportunities of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the AO by not seeking adjournment without valid reasons. With this direction, the appeal of the assessee is allowed for statistical purposes. 11. In the result, appeal of the assessee is allowed for statistical purpose. Order is pronounced in the open court on 18/12/2024 . Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 18/12/2024 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "