SAINATH TRADERS,CHENNAI V. ITO, NCW-6(2), CHENNAI

MA 109/CHNY/2024

AI Insights

The case involves Sainath Traders, who filed a miscellaneous application (MA No. 109/Chny/2024) against an earlier tribunal order (ITA No. 1747/Chny/2024) concerning the assessment year 2017-18. The Tribunal had initially remitted the matter back to the Assessing Officer due to inadequate representation and lack of proper adjudication. The assessee contested that the Tribunal's later decision was made under the wrong presumption of no representation, leading to an erroneous dismissal of their appeal. The Tribunal acknowledged a typographical error regarding the presence of the assessee's counsel during the hearing but upheld the decision on the grounds that the lower authorities had adequately considered the submissions and evidence provided.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470349 (ITAT-CHENNAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-02-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANDHYA RANI KURE
• Assessee Lawyers: S GIRISH KUMAR; A.S.SRIRAMAN; NOT MAKING PROPER
• Keywords: Set aside; Opportunity of being heard; Additional evidence; Unexplained investment
• Section: 254(2); 69

Judgement Text

"Page - 1 - of 12 आयकर अपीलीय अधिकरण, ‘बी’ न्यायपीठ, चेन्नई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH: CHENNAI श्री यस यस विश्वनेत्र रवि, न्यावयक सदस्य एवं श्री अविताभ शुक्ला, लेखा सदस्य क े समक्ष BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./MA No.109 /Chny/2024 (ITA No.1747/Chny/2024) निर्ाारण वर्ा /Assessment Years: 2017-18 Sainath Traders, No.963/7, Cresent Court, Ground Floor, E.V.R.Periyar Road, Chennai-600 084. [PAN: ACXFS6266R] Income Tax Officer, Non-Corporate Ward-6(2), Chennai. (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) अपीलार्थी की ओर से/ Assessee by : S/Shri Girish Kumar & A.S.Sriraman, Advocates. प्रत्यर्थी की ओर से /Revenue by : Ms.Sandhya Rani Kure, JCIT सुिवाई की तारीख/Date of Hearing : 10.01.2025 घोर्णा की तारीख /Date of Pronouncement : 19.02.2025 आदेश / O R D E R PER AMITABH SHUKLA, A.M : This MA has been filed assailing order of this tribunal vide ITA no. 1747/Chny/2024 dated 13.11.2024. The appellant assessee is accordingly requested for recall of the order. 2.0 For the purposes of clarity we deem it appropriate to reproduce the miscellaneous application dated 27.11.2024 made by the appellant assessee “……The appeal filed by the Petitioner on 18.06.2024 in ITA No. 1747/2024 was first posted for hearing before the 'B Bench on 11.09.2024 and wherein the Counsel for the Petitioner/Appellant appeared and sought for adjournment of the said appeal. MA No. 109/Chny/2024 Page - 2 - of 12 However, the Bench after pointing out the lack of proper adjudication/lack of proper representation before the Assessing officer had indicated on remitting the matter back to the file of the Assessing officer on the ground of lack of findings in the assessment order coupled with lack of proper representation before the lower authorities. In such circumstances, the Petitioner/Appellant through its Counsel S.Girishkumar, appearing for S. Sridhar and A.S. Sriraman Advocates on instructions had argued for remitting the matter to the file of the Assessing officer and the Bench after hearing both the sides concluded to remit the matter back to the file of the Assessing officer and had reserved the passing of the order for pronouncement at a later date without going into the merits of the case. The Counsel had not argued the issues emanating from the assessment order on merits. However, it is noted from the impugned order passed on 14.11.2024 that the Bench had decided against the Petitioner/Appellant by deciding the issues on merits on the presumption that there was no representation made on the part of the Petitioner/Appellant. The appellant through the Authorized Representative/Counsel S.Girishkumar, appearing for S. Sridhar and A.S. Sriraman Advocates on the date of hearing i.e. on 11.09.2024 appeared before the Bench and sought for adjournment of the appeal at the mentioning time. The said request was rejected and the Petitioner/Appellant was directed to verify the scope for remanding the matter back to the file of the Assessing officer pointing out the lack of proper adjudication and proper representation by getting instructions. The Counsel for Petitioner/Appellant after receiving instructions had appeared before the Bench when the matter was called for and established a case of lack of proper representation. On this ground, the matter was considered to be argued for remand and reserved for orders without going into the merits of the case. The findings in Para 2.0 of the Tribunal's order dated 13.11.2024 is Completely wrong and erroneous inasmuch as the counsel on record had appeared before the Bench and had established the case for remanding the matter. Further, the presence of the Counsel on Record was also recorded by the Bench officer and incorporated in the body of the order as follows: The Bench after hearing the arguments indicated to remand the matter to the file of the Assessing officer after noting the lack of proper adjudication and lack of complete representation before the Assessing officer. The mistake in wrongly presuming the non-appearance of the counsel before the Bench on the date of hearing on 11.09,2024, the Bench deviated completely from the open court observations/conclusions reached because of the wrong presumption of non-appearance of counsel and decided the case on merits by dismissing the appeal filed by the Appellant without hearing. MA No. 109/Chny/2024 Page - 3 - of 12 The Bench based on the facts and grounds available before them had decided the issues by stating that the appellant had not adduced any additional evidences in support of Grounds of Appeal in Para 4.0 of the impugned order. In the open court proceedings, the Bench indicated that the Bench may impose cost for the mistakes/lapses committed by the Petitioner/Appellant by not making proper representation before the JA0 with a view to set aside the Assessment for de novo adjudication. The said open court hearing including the conclusions reached therein is completely overlooked and brushed aside possibly because of the time lag between the date of hearing and date of passing the impugned order. When the matter was passed over for getting instructions, Mr. S. Girishkumar sought instructions through WhatsApp from his office senior and the photo of the WhatsApp is attached herewith to prove the bonafides and correctness of the facts brought out in the present petition filed in terms of proviso below Rule 24 of the Income Tax Appellate Tribunal Rules, 1963. In such circumstances, the mistake committed in the impugned order dated 13.11.2024 may be recalled in the interest of justice. ….” 3.0 The Ld. DR argued that there is no merit in the MA moved by the assessee and that in the absence of any mistake apparent from records the same cannot be entertained. 4.0 Before proceeding further, it is deemed necessary to give a brief background of the controversy for its judicious adjudication. Order u/s 143(3) dated 29.11.2019 was passed by the Ld. AO making additions of Rs.57,98,500/- u/s 69 and of Rs.14 lakhs on account of capital introduction, in respect of the assessee firm engaged in trading of scrap. The assessment year under consideration pertains to FY-2016-17 during which demonetization was introduced by the Government of India from 08.11.2016 to 31.12.2016. From the perusal of bank details of the assessee the Ld. AO had noted that the assessee had deposited MA No. 109/Chny/2024 Page - 4 - of 12 specified bank notes (SBN), in cash, amounting to Rs.57,98,500/- in its bank account maintained with Bank of India vide account number 802520110000322. The said deposits were made between the period 07.12.2016 to 19.12.2016. The Ld. AO had further noted that a partner of the assessee firm namely Shri R.Murugan had brought in fresh capital of Rs.14 lakhs out of which Rs.6 lakhs was related with the amount offered by him in VDIS. From the personal capital account of the partner, the Ld. AO discerned that there were no withdrawals casting doubts qua introduction of fresh capital of Rs.14 lakhs. The Ld. AO has made elaborate details of above on page-2 of his order supra. The Ld. AO has recorded that the compliance of the assessee particularly qua SBN’s, in satisfactorily explaining the above discrepancy was inadequate. Before the Ld. First Appellate Authority, the appellant assessee contested the order of the Ld. AO in making the impugned additions and filed written submissions as evident from para 4 on page 3 of the Appellate order dated 6/2/24. From the perusal of grounds of appeal extracted on page 2 & 3 of the appellate order supra, it is crystal clear that no challenge was made regarding the order of the Ld.AO being passed ex- parte or without giving proper opportunity. The assessee has merely raised a challenge against the Ld. AO for subscribing to a different interpretation of the evidences produced by it for arriving at its MA No. 109/Chny/2024 Page - 5 - of 12 conclusions. It appears that the assessee firm filed the same set of details before the Ld. CIT(A) for his adjudication. 4.1 As regards the addition of Rs.57,98,500/-, the Ld. CIT(A) held, in para 5.1 at page-4 of his order , that the Ld. AO has omitted to consider, appellants declaration of Rs.14 lakhs made under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) and gave relief of the said amount to the assessee. As regards the balance amount of Rs.43,98,500/- (Rs. 57,98,500 – 14,00,000), the same was confirmed with the observations, in para 5.2 of the order, that “… the appellant simply stated that the impugned cash was deposited out of cash collection from the debtors which was very much reflected in his books of accounts. However, no documentary evidence such as name, address and PAN of the debtors from whom the cash was received. The onus of the appellant to prove the genuineness that is claim I having received the amount from its debtors remain under charged and AO hence the addition of Rs.43,98,500/- on account of cash deposits as undisclosed income u/s 69 of the Income Tax Act 1961 is confirmed….”. 4.2 As regards the addition of Rs.14 lakhs as unexplained accretion in capital account, before the Ld. CIT(A), the appellant had stated that Rs.6 lakhs is from PMGKY supra and Rs.8 lakhs represents drawings. MA No. 109/Chny/2024 Page - 6 - of 12 The Ld. CIT(A) gave the assessee part relief of Rs.6 lakhs with the following remarks in para 5.3 of his appellate order. “…. Addition on a/c of Capital introduced in capital a/c of the Partner, the A.O. made an addition of Rs.14,000,00/- as unexplained investment in the capital a/c of the partner when confronted, the appellant stated that R, 6,00,000/- is out of the cash declared by it under PMGKDS and remaining Rs.8,00,000/- in out of drawings. The contention of the appellant is partially true on the facts and circumstances of the case. It is no dispute that it declared Rs.6,00,000/- each in the name of two partners of the partnership firm under PMGKDS and Rs6,00,000/- in the capital account accretion in the name For Murugan stands explained whereas the explanation of the appellant with regard to the balance Rs.8,00,000/- is non-tenable on the facts and circumstances of the case. The drawing of Mr. Murugan as per capital a/c are just Rs.1,80,000/- for the entire year which a re not suffice for his household expenses. No other explanation has been offered by the appellant for the same. Accordingly, after allowance of Rs.6,00,000/- the cash declared under PMGKDS, the addition in this regard amounting to Rs. 8,00,000/- the cash declared under PMGKDS, the addition in this regard amount to Rs. 8,00,000/- is hereby confirmed. The appellant succeeds partially on this ground of appeal…..” 4.3 Perusal of order of Ld. AO as well as Ld. First Appellate Authority do not indicates that the impugned orders were ex-parte orders whereby decisions were arrived by the lower authorities without giving any opportunity of being heard. No such contest has been made by the assessee either before the Ld. First Appellate Authority qua order of Ld. AO or is it discernable from the order of Ld. First Appellate Authority extracted supra. 4.4 On the impugned date of hearing before us that is 11.09.2024 the Ld. Counsel of the assessee Shri S. Girish Kumar, Advocate appeared and requested for grant of adjournment. Not satisfied with the justification of collection of details from the client, he was asked to MA No. 109/Chny/2024 Page - 7 - of 12 comment on the merits of the case. At this stage it was submitted that both the lower authorities viz the Ld. AO and the Ld. CIT(A) has passed ex-parte orders and hence the same may be remitted back to the file of the Ld. AO. The Ld. DR had placed his reliance on the order of lower authorities stating that no such case is made out. The case was therefore taken as heard. While considering the order of the lower authorities discussed herein above, it was noted that the same was based upon consideration of the submissions made and evidences produced by the assessee during course of proceedings before lower authorities and that no case of any ex-parte decision making was made out. It was noted that there was full application of mind by the lower authorities towards the submissions made and evidences produced while drawing their conclusions. The assessee was requested for filing of details etc which it had produced. Based upon whatever was filed by the assessee, a decision was taken by the lower authorities. Accordingly, since no case of any alleged ex-parte order by lower authorities was made out, and the order of the Ld. First Appellate Authority was found to be a very judicious order in as much as he has given all relief to the assessee, to the extent possible, qua its submissions, the same was sustained. Pertinently vide ground of appeal No.13 before us the assessee had contested that the Ld. First Appellate Authority had not MA No. 109/Chny/2024 Page - 8 - of 12 given any proper opportunity, including grant of personal hearing, before passing his order. 5.0 During the course of present hearing the assessee has assailed the order dated 13.11.2024 on several counts. It has been argued that the assessee had asked for an adjournment which was denied and the case was instead heard. It is trite law that a court has powers to give adjournment in matters where sufficient cause exists. In the present case no such sufficiency was established by the Ld. Counsel. It is the case of the assessee that as it was only the first hearing on which the adjournment was sought it ought to have been given. There is no judicial prescription which provides that adjournment, if sought, is to be compulsorily given in the first hearing. Grant of adjournment is not a routine exercise but decision is to be taken on the basis of contemporaneous facts and circumstances of the case warranting grant of adjournment. 5.1 The Ld. Counsel for the assessee has argued that while rejecting its request for adjournment, we had accepted assessee’s arguments of ex-parte orders having been passed by the lower authorities and to remit the matter back to the Ld. AO and that by such an event happening, the assessee could not get an opportunity to argue its case on merits. The Ld. Counsel of the assessee fiercely argued that arguing one’s case on MA No. 109/Chny/2024 Page - 9 - of 12 merits is fundamental right and the same cannot be deprived. The issue of alleged ex-parte orders passed by lower authorities has been discussed in detail in the preceding paragraphs and it has been established that no such case is made out. In fact the position narrated by the Ld. Counsel for the assessee was incorrect and not borne out from records. The suggestion of ex-parte order and consequent request of remitting it back to the Ld.AO was thus based upon wrong facts. We are of the view that no case is made out of accepting the suggestion of the appellant assessee which was seminal to communication of wrong facts. Ground of appeal no.13 raised by the assessee in the main appeal shows its lax understanding of the present appellate proceedings. The order of Ld. CIT(A) is a part of faceless regime in which no physical hearing is granted. There is only a provision of video conferencing if requested by the assessee. The assessee’s claim that no physical hearing is granted before concluding its case is thus patently irrelevant to the present faceless working. There is nothing on record to suggest that any request for any video conferencing was made and that the same was not granted. 5.2 During the course of present proceedings, the counsel for the assessee repeated the arguments of ex-parte orders, however on being asked, it could not substantiate its arguments. It was argued by the MA No. 109/Chny/2024 Page - 10 - of 12 assessee that it could not place for consideration all the evidences before the lower authorities. The assessee however could not justify as to what prevented it from placing the same before the lower authorities during assessment / appellate proceedings. During the course of hearing the assessee also could not justify as to how the order of lower authorities fell in the definition of ex-parte orders. The Ld. Counsel for the assessee merely harped upon the issue of not being provided opportunity to argue its case on merits. The undisputed and inalienable right to argue its case was available with the assessee when the case came up for hearing on 11.09.2024. Discussions made herein above shows that the assessee was not serious to prosecute its case on merits. Firstly it sought adjournment on unsatisfactory grounds and when the same was declined it chose to digress the issue by saying that lower authorities had passed ex-parte orders and therefore the case be remitted back to the Ld.AO. It is a settled principle of law that setting aside order of lower authorities is not luxury available to the litigants, but a power of the court which deserves to be exercised with caution, care and in judicious manner. Remission of a matter is to be made only in cases where overwhelming interests of justice warrants the same. 6.0 We have heard rival submissions in the light of material available on records. The MA moved by the appellant assessee, assails the order MA No. 109/Chny/2024 Page - 11 - of 12 of this tribunal dated 13.11.2024 supra, on two counts. Firstly that it was passed as an ex-parte even though its councel Shri S.Girish Kumar, Advocate was present in the hearing and secondly that the decision to not remit the matter to the Ld. AO is a decision which is not in conformity with the proceedings of the day. Consequently, request has been made to recall the order. At the outset it is seen that there is sufficient force in the contest of the assessee raised vide following observations of the bench on para-1 of page-2 of its order “…. We have considered the justification put forth by the assessee, even though the assessee was not present during hearing….”, in view of the fact that we have recorded in the cause title of the order that the appellant was represented by “Shri.S.Girish Kumar, Advocate”. It appears that by way of an inadvertent typographical omission, the impugned mistake, had creeped into the order. The impugned mistake is amenable within the purview of section 254(2) of Income Tax Act r.w. Rule-34A of the Appellate Tribunal Rules and hence is rectified. Accordingly, the phrase “….even though the assessee was not present during hearing…” is removed from the order. Coming to the second limb of the request of the appellant assessee to recall the order per se we have noted that during the course of the present hearing the Ld. Counsel for the assessee could not convince us as to how the impugned mistake, now raised through this MA No. 109/Chny/2024 Page - 12 - of 12 miscellaneous application is amenable within the purview of section 254(2) of Income Tax Act r.w. Rule-34A of the Appellate Tribunal Rules. Accordingly, we are of the considered view that there is no case made out, for any recall of the order dated 13.11.2024 made by MA No.109/Chny/2024. Accordingly, miscellaneous application of the assessee is partly allowed. 7.0 In the result the miscellaneous application of the assessee is partly allowed. Order pronounced on 19th , February -2025 at Chennai. Sd/- (यस यस नवश्विेत्र रनव) (SS VISWANETHRA RAVI) न्यानयक सदस्य / Judicial Member Sd/- (श्री अनमताभ शुक्ला) (AMITABH SHUKLA) लेखा सदस्य /Accountant Member चेन्नई/Chennai, नदिांक/Dated: 19th , February -2025 . KB/- आदेश की प्रतितिति अग्रेतिि/Copy to: 1. अिीिार्थी/Appellant 2. प्रत्यर्थी/Respondent 3. आयकर आयुक्त/CIT - Chennai 4. तिभागीय प्रतितिति/DR 5. गार्ड फाईि/GF "