RAJNEESH SINGH BHADAURIA,GWALIOR V. ITO 3(1) AAYAKAR BHAWAN , GWALIOR

ITA 125/AGR/2023

AI Insights

The case involves Sh. Rajneesh Singh Bhadauria, the appellant, who did not file a return of income for the assessment year 2011-12. The Income Tax Officer reopened the case under section 147 of the Income-tax Act, 1961, due to non-filing and significant cash deposits of Rs. 14,15,900 in the appellant's bank account. The Assessing Officer made additions to the appellant's income, which were upheld by the CIT(Appeals) despite the appellant's non-compliance with notices. The Tribunal found that the CIT(Appeals) did not adjudicate the issues on merits as required by section 250(6) of the Act and remanded the case for a fresh decision.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23166 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-11-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 12-09-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: M.K. AGRAWAL
• Keywords: Set aside; Reassessment proceedings; Salary income; TDS; Assessment record; FORM 26AS
• Section: 147; 148; 142(1); 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 125/Agr/2023 Assessment Year: 2011-12 Sh. Rajneesh Singh Bhadauria, New Tulsi Bihar Near Hanuman Mandir, Sewa Nagar, Gwalior. PAN: AIKPR0356G v. Income-tax Officer, Ward 3(1), Aayakar Bhawan, City Centre, Gwalior. (Appellant) (Respondent) Assessee by : Sh. M.K. Agrawal, Advocate Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing : 27.11.2024 Date of Pronouncement : 27.11.2024 ORDER This appeal in ITA No.125 /Agr/2023 for the assessment year 2011-12 has arisen from the appellate order dated 27.07.2023(DIN& Order No. ITBA/NFAC/S/250/2023-24/1054666434(1)) passed by ld. Commissioner of Income-tax(Appeals), NFAC, Delhi which in turn has arisen from the re-assessment order dated 23.12.2018 passed by Assessing Officer u/s. 147/144 of the Income-tax Act, 1961. 2. Brief facts of the case are that the assessee has not filed its return of income with Revenue for the impugned assessment year. ITA No. 125/Agr/2023 2 Case of the assessee was reopened by Revenue u/s. 147 of the Act. Notice u/s. 148 was issued by the AO on 26.03.2018 which as per AO was duly served on the assessee, but the Assessee did not file any reply to the said notice nor any return of income was filed in persaunt to notice u/s 148.Statutory Notice(s) u/s. 142(1) were also issued by the AO to the assessee, but the same were also not complied with. Show cause notice was also issued by the AO to the assessee u/s. 144, but again the assessee failed to comply with the said notice. Reasons for re-opening of the assessment were recorded by the AO u/s. 147, which are mainly on the ground of cash deposits of Rs.14,15,900/- in the saving bank account and no return of income was filed by the assessee with Revenue for the impugned assessment year. Thus, in the absence of any compliance by the assessee, the Assessing Officer made addition of Rs.14,15,900/- on account of cash deposited in saving bank account with State Bank of India, Phool Bagh, Gwalior. Further, the Assessing Officer made addition of Rs.3,80,189/- received by the assessee from Aristo Pharmaceutical Pvt. Ltd., which was discernible from 26AS of the year under consideration. Thus, total addition of Rs.17,96,089/- with ITA No. 125/Agr/2023 3 respect to deposit/receipts was made to the income of the assessee by the AO u/s. 69A of the Act , treating the same as unexplained and unverifiable from the account of the assessee, which was brought to tax by the AO. 3. Assessee filed first appeal with ld. CIT(Appeals). Ld. CIT(Appeals) issued as many as four notices to the assessee , and on the first two occasions wrt notices dated 18.01.2021 and 04.05.23, the assessee sought adjournments, but so far as remaining two notices dated 06.07.23 and 17.07.2023, there was no compliance on the part of the assessee. Ld. CIT(Appeals) after considering the statement of facts and other material on record dismissed the appeal of the assessee with respect to addition of Rs.14,15,900/- by upholding the order of the Assessing Officer. 3.2 So far as the addition with respect to receipt from Aristo Pharmaceutical Pvt. Ltd. is concerned, ld. CIT(Appeals) observed that the assessee has submitted in Form No. 35 that the assessee has received salary of Rs.5,74,673/- from Aristo Pharmaceuticals Pvt. Ltd. and said company has deducted TDS of Rs.34,565/- from the salary. Assessee has not filed return of income. Ld. CIT(Appeals) ITA No. 125/Agr/2023 4 directed the Assessing Officer to verify the facts and obtain form-16 from the assessee , and accordingly bring to tax salary income and give credit for TDS , after providing reasonable opportunity of being heard to the assessee. 4. Aggrieved, the assessee has filed second appeal with the Tribunal.Ld. Counsel for the assessee Shri M.K. Agrawal, Advocate appeared and submitted that he wants to withdraw adjournment application earlier filed . The adjournment application was allowed to be withdrawn. The ld. Counsel submitted that the ld. CIT(Appeals) has simply dismissed the appeal of the assessee without adjudicating the issues on merits in accordance with law, which is in violation of section 250(6) of the Act. It was further submitted that with respect to second issue of addition of Rs.3,80,189/-, ld. CIT(Appeals) has directed the Assessing Officer to verify the salary received by the assessee from Aristo Pharmaceuticals Pvt. Ltd. and to give credit for TDS.It was submitted that so far no action has been taken by the Assessing Officer in compliance of the directions of ld. CIT(A), although more than one year has passed. It was prayed that the matter may be set aside back to the file of ld. CIT(Appeals) for fresh ITA No. 125/Agr/2023 5 adjudication on merits and direction may be issued to the ld. CIT(Appeals) to grant TDS credit of Rs.34,565/- as is reflected in 26AS, which was deducted from the salary received from Aristo Pharmaceuticals Pvt. Ltd., after due verification of the facts. 4.2 Ld. Sr. DR has no serious objection to remand the case back to the file of ld. CIT(A) for fresh adjudication. 5. I have considered rival submissions and perused the material on record. I have observed that the assessee has not filed return of income for the impugned assessment year. Case of the assessee was reopened by Revenue u/s. 147. Reasons for reopening of the assessment were recorded by the AO u/s 147 which were mainly owing to non filing of return of income and significant cash deposits to the tune of Rs. 14,15,900/- in the bank account.Statutory notices u/s 148 , 142(1) and 144 were issued by the AO to the assessee during the course of reassessment proceedings. There were no compliances on the part of the assessee to the notices issued by the AO u/s. 148, 142(1) and 144 of the Act. Return of income in pursuance to notice u/s 148 was also not filed by the assesse. Nor, the assessee filed return of income u/s 139. Additions were made by the AO on the ITA No. 125/Agr/2023 6 ground of cash deposited in the bank account namely SBI, Phoolbagh, Gwalior of Rs.14,15,900/-. Further, addition of Rs.3,80,189/- being amount received by assessee from Aristo Pharmaceutical Pvt. Ltd as reflected in Form 26AS was made by the AO. The assessee filed first appeal with the ld. CIT(Appeals). Ld. CIT(Appeals) issued as many as four notices, so far as with respect to notices issueddated 18.01.2021 and 04.05.2023, the assessee sought adjournment, while no compliance was made by assessee to further notices issued by ld. CIT(A) dated 06.07.2023 and 17.07.2023. Ld. CIT(Appeals) dismissed the appeal of the assessee on 27.07.2023 with respect to deposit of cash of Rs.14,15,900/- in the bank account without deciding the issue on merits by simply upholding the re-assessment order of the Assessing Officer. I observe that the ld. CIT(Appeals) has not decided the appeal on merits on the issue of cash deposits of Rs. 14,15,900/- , and simply upheld the reassessment order on the grounds that no details/submissions were made by the assessee.The ld. CIT(A) did not even called for the assessment records and no enquiries were made. The assessee has explained in Form No. 35 in statement of ITA No. 125/Agr/2023 7 fact filed with ld. CIT(A) that cash was deposited in the bank from the past withdrawal from SBI , Phool Bagh, Chauraha Gwalior, but no verification exercise was done by ld. CIT(A) as even assessment records were not called for by ld. CIT(A). As per Section 250(6), the ld. CIT(A) has to state point for determination, decision of ld. CIT(A) and reasoning thereof. The ld. CIT(A) is required and obligated to pass appellate order in compliance with the provisions of section 250(6), as ld CIT(A) is required to pass reasoned and speaking order on merits in accordance with law. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. ITA No. 125/Agr/2023 8 CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co-terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents to support his contentions. Thus, the assessee is equally responsible for its woes. Under these circumstances and fairness to both the parties, in the interest of justice, the appellate order of CIT(A) on the issue of addition to the ITA No. 125/Agr/2023 9 tune of Rs. 14,15,900/- as sustained by ld. CIT(A) is set aside and the matter can go back to the file of ld. CIT(A) for fresh adjudication of the appeal of the assessee on merit in accordance with law after giving opportunities to both the parties.I clarify that I have not commented on the merits of the issues in the appeal. I order accordingly. 5.2 Regarding second issue of addition of Rs.3,80,189/- being amount received from Aristo Pharmaceuticals Pvt. Ltd., the assessee has claimed that the assessee received salary of Rs.5,74,673/- from Aristo Pharmaceuticals Private Ltd. during the year under consideration and income-tax was deducted at source of Rs.34,565/- from the said salary by said Aristo Pharmaceuticals Pvt. Ltd.. The Ld. CIT(Appeals) has already set aside this matter to the Assessing Officer to look into the said addition on account of salary and grant proper relief to the assessee. However, the assessee has not yet been granted any relief on account of salary income and TDS thereon by the AO, despite more than one year having elapsed since ld. CIT(A) passed the appellate order Under these facts and circumstances, I direct the ld. CIT(Appeals) to look into the grievance of the assessee and grant appropriate relief to the assessee after ITA No. 125/Agr/2023 10 verification of facts. With these directions, the matter is restored back to the file of ld. CIT(Appeals). The assessee is directed to file all necessary details , documents and information in context thereof before ld. CIT(A), to enable ld. CIT(A) to verify and thereafter grant appropriate relief. I order accordingly. 6. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 27.11.2024 on the conclusion of the hearing in the presence of both the parties and reduced to writing and signed on 29.11.2024. Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 29/11/2024 *aks/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT Assistant Registrar ITAT Agra "