RANGESH TYAGI,AGRA V. ITO, AGRA

ITA 132/AGR/2023

AI Insights

The case involves Rangesh Tyagi, the appellant, who contested the addition of Rs.18,50,000 to his income as unexplained deposits during the demonetization period. The Assessing Officer had made this addition under Section 69A of the Income-tax Act, 1961, following a limited scrutiny of cash deposits. The CIT(Appeals) dismissed the appeal ex parte, not addressing the merits of the case, which led to the filing of a second appeal with the Tribunal. The Tribunal noted the lack of a reasoned decision from the CIT(Appeals) and the failure to call for assessment records, leading to the decision to remand the case for a thorough examination.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474820 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 22 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: 2017-2018
• Appeal Filed On: 05-10-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: ANSHUL GARG
• Keywords: Set aside; Assessment record
• Section: 143(3); 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 132/Agr/2023 Assessment Year: 2017-18 Rangesh Tyagi, D-12, Kamla Nagar, Agra. PAN: AALPT8637M v. Income-tax Officer, Ward 2(1)(3), Agra. (Appellant) (Respondent) Assesseeby : Sh. Anshul Garg, 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.132 /Agr/2023 for the assessment year 2017-18 has arisen from the appellate order dated 10.08.2023(DIN& Order No. ITBA/NFAC/S/250/2023-24/1055041740(1)) passed by ld. Commissioner of Income-tax(Appeals), NFAC, Delhi, which in turn has arisen from the assessment order dated 16.12.2019 passed by Assessing Officer u/s. 143(3) of the Income-tax Act, 1961. 2. Brief facts of the case are that the assessee filed return of income with Revenue on 13.03.2018, declaring income of Rs.4,29,030/- and agricultural income of Rs.12,55,000/- . Case was ITA No. 132/Agr/2023 2 selected by Revenue for framing limited scrutiny under CASS for the reason ‘Cash deposits during demonetization period’. Notice u/s. 143(2) was issued by the AO to the assessee, on 14.08.2018. The AO also issued statutory notices u/s 142(1), during assessment proceedings. The assessee participated in the assessment proceedings. The assessee is deriving income from remuneration from partnership firm, M/s. Tyagi Coldware House,apart from share of profit from this firm. The assesseeis also having income from other sources and agricultural income. 2.2 The assessee is maintaining following bank accounts ,as under : PNB : 1842000100178443 PNB KCC : 184200880000012 Kotak Mahendra Bank : 0711409505 OBC : 11862151001727 2.3 The explanation submitted by the assessee in respect of cash deposits and withdrawals during the impugned assessment year with respect to four accounts are reproduced by the Assessing Officer at page 2 & 3 of the assessment order. With respect to amount deposited during the demonetization period, the assessee submitted before the Assessing Officer as under : Amount Name of Bank Date of Source of deposit ITA No. 132/Agr/2023 3 deposited during the demonetization period Deposit Rs.2,40,000/- OBC Bank 17.11.2016 Past Savings Rs.1,00,000/- Kotak Mahindra Bank 21.12.2016 Cash withdrawal from PNB Bank on 07/12/2016 of Rs.1,00,000/- Rs.2,50,000/- PNB Bank 10.11.2016 Cash withdrawal from PNB Bank on dated 01/10/2016 Rs.50,000/-, 06/10/2016 Rs.1,00,000/-, 08/10/2016 Rs.1,00,000/- 2,50,000/- PNB CC Bank A/c 10.11.2016 Receipt of sale of Agriculture Proceeds and amount received on behalf of farmers and cash in hand available on that date Rs.5,00,000/- PNB CC A/c 12.11.2016 Rs.7,50,000/- PNB CC A/c 25.11.2016 2.4The Assessing Officer rejected the contentions of the assessee with regard to explanation as to sources of cash deposits in the aforesaid bank accounts, and made the addition of Rs.18,50,000/- u/s. 69A being unexplained deposits, to the income of the assessee. 3. Aggrieved, the assessee filed first appeal with the ld. CIT(Appeals). Ld. CIT(Appeals) issued as many as five notices to the assesseeduring appellate proceedings, but they were not complied with by the assessee as no reply was submitted by the assessee. Ld. CIT(Appeals) dismissed the appeal of the assessee ex parte by upholding the assessment order passed by the Assessing Officer. ITA No. 132/Agr/2023 4 4. Still Aggrieved, the assessee has filed second appeal with the Tribunal. At the outset, ld. Counsel for the assessee, Shri Anshul Garg, Advocate submitted that the ld. CIT(Appeals) has passed an ex-parte order in limine without deciding the issues on merits, which is in violation of Section 250(6) of the Act ,and prayers were made that the matter may be set aside back to the file of ld. CIT(Appeals) for fresh adjudication. It is stated by ld. Counsel for the assesseethat if an opportunity is granted, the assessee will duly comply with the notices issued by ld. CIT(Appeals) and submit all the details/ explanations/replies as called for by ld. CIT(A), so that the matter can be decided by ld. CIT(Appeals) on merits in accordance with law. 4.2 Ld. Sr. DR fairly submitted that the department has no objection if the mater can go back to the file of ld. CIT(Appeals) for fresh adjudication, as on perusal of the order of ld. CIT(Appeals) ,it is discernible that the ld. CIT(Appeals) has not decided the issues on merits. 5. I have heard the rival submissions and perused the material on record. I have observed that the case of the assessee was selected by Revenue for framing limited scrutiny under CASS for the reasons ITA No. 132/Agr/2023 5 ‘Cash deposits during the demonetization period’. The assessee has filed return of income on 13.03.2018 declaring income of Rs.4,29,030/- and agricultural income of Rs.12,55,000/-. The assessee is deriving income from remuneration and share of profits in partnership firm M/s. Tyagi Coldware House. The assessee has earned income from other sources as well agricultural income. There are four bank accounts maintained by the assessee and the assessee gave explanation as to the cash deposits/cash withdrawals from the bank. Said explanation did not find favour with the Assessing Officer and additions of Rs.18,50,000/- were made by the Assessing Officer to the income of the assesseeu/s. 69A of the Act, with respect to cash deposits made by the assessee in the said bank accounts during the demonetisation period. Assessee filed first appeal with ld. CIT(A), which was dismissed by the ld. CIT(Appeals) ex parte in limine without deciding the issues arising in appeal on merits. It is true that the ld. CIT(Appeals) has issued as many as five notices to the assessee, and there was no compliance on the part of the assessee. However, I observe that the ld. CIT(Appeals) too has not decided the issues arising in the appeal on merits.The ld. CIT(A) is required and obligated to pass order in ITA No. 132/Agr/2023 6 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. I have observed that the ld. CIT(A) did not even called for the assessment records from the AO. I have observed from the assessment order that the assessee has claimed that the amount of Rs. 12,50,000/- was deposited in cash in PNB CC A/c (Rs. 2,50,000/- on 10.11.2016, Rs. 5,00,000/- on 12.11.2016 and Rs. 7,50,000/- on 25.11.2016) during demonetisation periodwherein theassessee has claimed that the said cash was deposited from receipts from sale of agricultural proceeds and amount received from farmers and cash in hand available. I have also observed from the assessment order that the assessee has declared agricultural income of Rs. 12,55,000/-. It was incumbent on learned CIT(A) to have given its decision/reasons as to how the submissions of the assesseeas were made before the AO cannot be accepted, before dismissing appeal of the assessee and saddling assessee with tax liability. No exercise to verify the contentions of the assessee was made by ld. CIT(A) and simply assessment order was upheld. Even assessment records were not called for by the ld. CIT(A). I have further observed from the ITA No. 132/Agr/2023 7 assessment order that so far as cash deposits of Rs.2,50,000/- in PNB ( other than PNB CC account maintained by the assessee) is concerned , the assessee has explained before the AO that the amount was deposited back from the cash withdrawal earlier made by the assessee . The assessee has even given date of withdrawal from the said PNB Account , which were claimed to be deposited back. Similar were the contentions with respect to cash deposits in Kotak Mahindra bank. It was incumbent on ld. CIT(A) to have made enquiries and to have called for assessment records to verify the contentions of the assessee, before dismissing the appeal of the assesseeand saddling assessee with huge tax liability. Reference is drawn to provisions of Section 250(4) . As per Section 250(6), the ld. CIT(A) has to state point for determination, decision of the ld. CIT(A) and reasoning thereof. Merely upholding order of the AO and dismissing the appeal of the assessee , without independent application of mind and reasoning by ld. CIT(A) is not in compliance of Section 250(6). 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 ITA No. 132/Agr/2023 8 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. 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 ITA No. 132/Agr/2023 9 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) 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 order accordingly. I clarify that I have not commented on the merits of the issues in the appeal. 6. In the result, appeal of the assesseeis allowed for statistical purposes. Order pronounced in the open court on 27.11.2024on 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/- "