PURAN MAL CHAJED,UDAIPUR V. ITO WARD 2(1) UDAIPUR, UDAIPUR

ITA 23/JODH/2024

AI Insights

The case involves Puran Mal Chajed, the appellant, who contested the orders of the Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the assessment year 2017-18. The appellant did not file a return of income, leading to the issuance of a notice under section 148 of the Income Tax Act, 1961. Subsequently, an ex-parte assessment was made under section 144, resulting in the addition of Rs. 3,50,27,000 as unexplained money under section 69A. The CIT(A) upheld the AO's decision, leading to the current appeal before the ITAT. The ITAT noted the lack of adequate opportunity given to the assessee to present his case and remanded the matter back to the AO for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 471468 (ITAT-JODHPUR)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-10-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 11-01-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA OJHA
• Assessee Lawyers: SHRAWAN KUMAR GUPTA
• Keywords: Business income; Opportunity of being heard; Additional evidence; Principle of natural justice
• Section: 147; 148; 144; 142(1); 139(1); 69A; 80C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE: DR. S. SEETHALAKSHMI, JUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 23/Jodh/2024 Assessment Year: 2017-18 Puran Mal Chajed 1, Chhajed Bhawan, Khempur, Post Aamli Mavli, Udaipur. [PAN: AGCPC5099H ] (Appellant) Vs. The ITO, Ward-2(1), Udaipur. (Respondent) Appellant by Sh. Shrawan Kumar Gupta, Adv. Respondent by Sh. Rajendra Ojha, CIT Date of Hearing 23.10.2024 Date of Pronouncement 27.11.2024 ORDER Per:DR. S. Seethalakshmi, JM: This appeal filed by assessee is arising out of the order of the Ld. CIT(A), National Faceless Appeal Centre, Delhi dated 26.12.2023 [here in after “CIT(A)/NFAC”] for assessment year 2017-18, which in turn arise from the order dated 17.03.2022 passed under section 147 r.w.s. 144 read with section 144B of the Income Tax Act (here in after “Act”) by the AO. I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 2 2. In this appeal, the assessee has raised following grounds: - “1.1 The impugned assessment order u/s 147 rws 144/1448 dated 17.03.2022 as well as the notice u/s 148 and the action taken by the Id. AO u/s 147 are bad in law and on facts of the case, for want of jurisdiction, barred by limitation, without proper approval or satisfaction and various other reasons and hence the same may kindly be quashed. 1.2. The Id. AO has grossly erred in law as well as on the facts of the case order in passing the Ex-party order u/s 144 rws147 without providing the adequate and reasonable opportunity of being heard to the assessee in gross breach of law and are bad in law, invalid, illegal and on facts of the case, and hence the same may kindly be quashed and the resultant addition may kindly be deleted in full. 2. The id. CIT(A) has grossly erred in law as well as on the facts of the case in passing exparty order without providing adequate and reasonable opportunity of being heard in the gross breach of law. Hence the additions so made by the Id. AO may kindly be quashed and delete. 3. Rs.3,50,27,000/-: The Id. CIT(A) has grossly erred in law as well as on the facts of the case in confirming the addition of Rs.3.50.27000/- u/s 69A made by the Id. AO on account of entire cash deposited in the bank account during the year as unexplained money in place of business receipts, on which only N.P. rate was to be applied on the business receipts as per books of account and declared. The Ld. AO and CIT(A) both have also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the addition so made by the Id. AO is also being contrary to the real facts of the case and not according to the provision of law, hence the same may kindly be deleted in full. 4. The Id. AO has also grossly erred in law as well as on the facts of the case invoking the provisions of Sec. 115BBE for faxing the income at the higher rate, without issue any show cause notice and also not applicable in the present case. The Ld. AO has also erred in not considering the vital facts and material available on record in their true perspective and sense. Hence the provisions of Sec. 115BBE so invoked are also being contrary to the real facts of the case and not according to the provision of law, hence the same is illegal, bad in law. against the principle of natural justice the same may kindly be deleted in full. 5. The Id. AO has grossly erred in law as well as on the facts of the case in charging the interest u/s 234A, B,C. The interest so charged is being totally contrary to the provision of law and on facts of the case and hence same may kindly be deleted in full. 6. That the appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.” I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 3 3. Brief fact of the case is that no return of income u/s 139(1) was filed by the assessee for the A.Y. 2017-18. Notice u/s 148 of the Act dated 25.03.2021 was issued and served upon the assessee on the e-mail ID provided in the ITR as well as on the e-filing account of the assessee within statutory period by the AO after recording reasons and after obtaining statutory approval, as per provisions of section 151 of the Act. In response to notice u/s 148 of the I.T.Act. 1961, assessee neither filed return of income nor filed any reply. Notice u/s 142(1) of the I.T.Act, 1961 dated 26- 11-2021 was issued to the assessee with the request to furnish the return of income. Again no response was made by the assesse. Thereafter, the case was transferred to the National e- Assessment Centre on 11.11.2021 in compliance to the notification issued by the CBDT regarding faceless assessment Scheme. Again notice u/s 142(1) alongwith questionnaire was issued to the assesse on 02-12-2021 fixing the case of 16-12-2021. In response to this notice, the assesse filed balance sheet & P&L account and stated that the \"taxable income is covered under nil taxable slab, the deduction under chapter VI 80C is Rs. 60,860/-. In the P & L account the assessee has shown gross receipts at Rs. 99,49,018/-. Again notice u/s 142(1) was issued to the assessee on 28.12.2021 and he was requested to file some information regarding nature of business, purchases shown at Rs. 96,52,118/- and source of cash deposit of Rs. 2,24,27,000/-. But no response was filed by the assessee. Again the assessee has not filed any response. Thereafter, show I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 4 cause notice u/s 144 of the IT Act dated 02.02.2022 was issued and asked the assessee as to why the assessment should not be completed under section 144 as per the income mentioned in the notice. Further, it is seen that the assessee has submitted that the cash deposit is from the business receipts which is received from sale of goods. In reply dated 16.12.2021, he filed a copy of P & L account in which gross receipts was shown at Rs. 99,49,018/- whereas in reply dated 06.02.2022, the assessee has stated that all the cash Rs. 2,24,27,000/- was his business receipts. Therefore the assessee himself filed contradictory reply. Moreover the assessee has failed to substantiate his claim and the submission of the assessee cannot be considered merely on the explanation offered without any documentary evidence. Further, on examining the bank statements of the assessee for the year under consideration, it is seen that the assessee had made a cash deposit amounting to Rs. 3,50,27,000/- during the year. The assessee is silent on this issue and despite the fact that there is a huge amount of cash deposit in the assessee’s bank account, the assessee failed to submit any explanation regarding the source and credibility of the cash deposit. The assessee offered no satisfactory explanation about the nature and sources of the acquisition of money deposited into bank accounts. Hence the assessee has failed to discharge his onus to explain the source of the money. Accordingly, the entire cash deposits of Rs. 3,50,27,000/- in its above mentioned bank account(s) treated as unexplained money and is therefore, deemed as income of I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 5 the assessee u/s 69A of the IT Act, 1961 for the previous year 2016-17 relevant to the assessment year 2017-18. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below:- “9. In view of the above, the undersigned is left with no option but to decide the case on the basis of material available on record. Bare perusal of the facts shows that the appellant has not pursued the appeal despite being granted several opportunities as elaborated supra. The appellant has jeopardized the case by not responding despite several opportunities that were provided. Even after requesting for adjournment as mentioned supra, the appellant did not file any tenable reply. Thus, it is evident from the above discussion that the appellant is not interested in pursuing his appeal & is just using dilatory tactics. Sufficient opportunities were provided to the appellant (vide the notices referred supra) to come up with the ground-wise written submissions alongwith documentary evidence in support of the contentions raised by the appellant vide grounds of appeal & statement of facts. No tenable reply has been furnished in response to the Notices issued. So, the contentions raised by the appellant vide Grounds of Appeal & the Statement of Facts cannot be taken on face value. Therefore, the contentions of the appellant are hereby rejected. DETERMINATION AND DECISION ON THE MERITS: 10. APPELLATE FINDINGS: 10.1 Grounds of Appeal of the Appellant alongwith additional/revised Grounds of Appeal No. 1 to 6 of the appellant pertains to reopening of the case us 147, invoking of section 115BBE and addition of Rs. 3.50.27.000/- made under section 69A of the Act by the AO vide order dated 17.03.2022 under section 147/144 of the Act. The Ld. AD made above said addition as he noticed that the Appellant has failed to explain the source of cash deposits in his bank accounts (detail of bank account is not mentioned by AO in his order). It appears from the order of the AO that the Appellant did not dispute the facts mentioned by the AO. During assessment proceedings, the Appellant gave some information to the AO regarding his business activities and stated that the said cash is result of his cash sales. According to the AD, the Appellant did not furnish complete detail so addition was made. During the appellate proceedings, it is noted that the Appellant did not furnish complete information and written submission to substantiate his claim that the cash is out of his sales. He kept taking adjournments due to one or another reason. On the basis of few documents, which he has submitted, are sufficient to prove that the cash is cut of his business and sales. Keeping in view of this, the grounds of appellant are dismissed I have further noted that the Lu. AO I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 6 has initiated proceedings us 147 after recording of reason and also justified in applying provisions of section 115BBE as the addition is made u/s 69A of the Act. 11. In the result, the appeal of the appellant is dismissed.” 5. As the assessee did not receive any favors from the appeal so filed before ld. CIT(A). The present appeal is filed against the said order of the ld. CIT(A) before this tribunal on the grounds as reiterated in para 2 above. In support of the grounds so raised the ld. AR appearing on behalf of the assessee has placed reliance on the written submission which is extracted herein below:- “FACTS: 1. The brief facts of the case are that the assessee is a regular IT assessee but for the year he has not filled his ROI due to brother of assessee was hospitalized in that period. As the assessee is having income from business from the trading of cattle feed. The Id. AO has issued the notice u/s 148 on 27.03.2018(PB4), on the reason that\" The assessee is individual. No return of income has been filed by the assessee for the year under consideration Perusal of Information description reveals that during the year under consideration the assessee has made cash deposit amounting to Rs. 2.24,27,000 into bank account. The source of cash deposit remained unexplained due to failure on the part of the assessee to file return of Income\" (PB3). Thereafter the Id. AO has issued the notice u/s 142(1) in response thereto the assesee filed the reply(PB16-18) and due to some health issue the assessee could not filed the complete details. Hence the Id. AO has passed the Ex-party assessment u/s 144 and made the addition of Rs.3.50.27,000/- u/s 69A on account of entire cash deposits in the bank account in place of net profit as the cash deposits were out of the sale or business receipts. Against which assessee has filed the appeal before the Id. CIT(A) and the Id. CIT(A) has confirmed the action of the Id. AO and also confirmed the addition. I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 7 Before the Id. CIT(A) assessee has made compliance on every date but assessee sought adjournments and in last adjournment Id. CIT(A) has not allowed and not given the date and passed the ex-party order without going in to merit of the case and dismissed the appeal of the assessee. Hence this appeal. SUBMISSIONS: Your firstly we would like to submit that the amount which were deposited in the bank account in cash were out of cash sales of the assessee as business receipts. As assessee was engaged in the trading of cotton seeds, cattle feeds etc. The bank statements were provided to the AO, the assessee having sales register, vat return also having GST No. all the sales declared in the GST. Hence the Id. AO has wrongly made the entire cash deposit in place of only net profit rate we have filed before your honor, Sales ledger A/c, GST return, bank statements, Trading, P&L account B/s Trial Balance etc. trial, which is proving the contention of the assessee. Hence all the above details may kindly be considered and taken on records. As the assessment being the Exparty before the Id. AO and Id. CIT(A), hence in the interest of natural justice we pray before your honor to restore the matter to the Id. AO with the direction to calculate or apply the net profit in the present matter, because only net income or profit to be taxed not the entire business receipts. Hence in view of the above facts, circumstances and legal position entire addition may kindly be deleted in full.” 6. During the course of hearing, the ld. AR for the assessee prayed that the Ld. CIT(A) and the AO both have passed the ex-parte order and the assessee was not provided adequate opportunity of being heard. Thus, the assessee may be provided one more opportunity to advance his arguments/submissions before the ld. AO on merits as the orders of the both the authority are ex parte, and the assessee prayed to grant one chance to provide the details in connection with the I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 8 merits of his case and the additional evidence to support the contention will reduce the liability of tax substantially and therefore, in the interest of equity and natural justice the assessee praying for the one chance before the ld. AO advanced the merits of the case because of health issue with the assessee he could not place on record details of hearing merits of case. 7. Per contra, ld. DR objected to the prayer of the assessee and submitted that even the assessee did not represent case before the ld. AO and CIT(A) both stage and now assessee praying for equity and justice. Therefore, in that case if the Bench feels the matter may be restored to the file of the Assessing Officer, then with fine may be sent back to the file of the ld. AO. 8. We have heard both the parties and perused the materials available on record. The bench noted from the order of Ld. CIT(A) that the appeal of the assessee was dismissed by the ld. CIT (A) for want of non-prosecution of the appeal. The assessee did not appear or filed any reply to the notices which were issued by the Ld. AO during the assessment proceedings, finally the assessment completed ex-parte assessment u/s 147 r.w.s. 144 read with section 144B of the Act on 17.03.2022. The Bench further noted the grievance from the grounds of appeal of the assessee wherein he submitted that “ The Ld. AO has grossly erred in law as well as on the facts of the case order in passing the Ex-party order u/s 144 rws147 without providing the adequate and reasonable opportunity of being heard to the assessee in gross I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 9 breach of law and are bad in law, invalid, illegal and on facts of the case, and hence the same may kindly be quashed and the resultant addition may kindly be deleted in full. The id. CIT(A) has grossly erred in law as well as on the facts of the case in passing exparty order without providing adequate and reasonable opportunity of being heard in the gross breach of law. Hence the additions so made by the Id. AO may kindly be quashed and delete. Looking to these aspect of the matter the Bench feels that the assessee could not advance their arguments / submissions to contest the case before the ld. CIT(A) and the ld. AR for the assessee also prayed to give one more opportunity to submit the evidences concerning the issue in question, with grounds so raised by the assessee, to decide it afresh by providing one more opportunity of hearing. Considering that aspect of the matter we hold to remand back the matter to the file of the ld. AO as the order of assessment is also ex-parte. Thus, the ld. AO will decide the issue based on evidence and submission of the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during the course of proceedings before the ld. AO. 9. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. AO independently in accordance with law. I.T.A. No. 23/Jodh/2024 Puran Mal Chajed vs. ITO 10 In the result, the appeal filed by the assessee is allowed for statistical purposes. Sd/- Sd/- (Rathod Kamlesh Jayantbhai) (DR. S. Seethalakshmi) Accountant Member Judicial Member Dated 27/11/2024 *Ganesh Kumar, Sr. PS Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order "