SHRI DHANWANT SINGH ,PATHANKOT V. INCOME TAX OFFICER WARD-1, PATHANKOT

ITA 366/ASR/2024

AI Insights

The case involves Dhanwant Singh Bajwa, the appellant, who contested the orders passed by the Income Tax Officer, Ward-1, Pathankot, and the CIT(A), National Faceless Appeal Centre, Delhi. The appellant challenged the assessment order which treated deposits totaling Rs. 84.50 lakhs in his bank accounts during the demonetization period as unexplained cash deposits under section 69 of the Income Tax Act, 1961, and taxed them under section 115BBE. The CIT(A) upheld the assessment, leading to the appeal. The Tribunal found that the CIT(A) had not adjudicated the appeal on merits and remanded the case for a detailed examination of the grounds of appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31100 (ITAT-AMRITSAR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Other Referred Cases: Commissioner of Income Tax v. Prem Kumar Arjun Dass Luthra (HUF), Sh. Ankush Sharma v. ITO, Ward-6, Kathua, Muzafar Ahmad Kawdari v. ITO, Ward-3(2), Srinagar, Sh. Manjit Singh v. ITO, Sh. Salochan Bir Singh v. DCIT, Exemptions, Central Circle-1, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Unexplained investment; TDS; Non passing of speaking order
• Section: 144; 142(1); 250; 69; 44AD; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (VIRTUAL COURT) BEFORE SH. UDAYAN DASGUPTA, JUDICIAL MEMBER AND SH. KRINWANT SAHAY, ACCOUNTANT MEMBER I.T.A. No. 366/Asr/2024 Assessment Year: 2017-18 Dhanwant Singh Bajwa, H. No. 51, Patel Nagar, Gurdaspur Road, Pathankot, 145001 Punjab [PAN: BGPPS 8910K] (Appellant) Vs. Income Tax Officer, Ward-1, Pathankot, Income Tax Office, Dhangu Road, Pathankot-145001, Punjab (Respondent) Appellant by Respondent by : : Sh. P. N. Arora, Adv. . Sh. Davinder Pal Singh, Sr. DR Date of Hearing Date of Pronouncement : : 17.12.2024 31.12.2024 ORDER Per Udayan Dasgupta, J.M.: This appeal is preferred by the assessee against the order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi passed u/s 250 of the Income Tax Act, 1961 dated 06.06.2024 which is emanated from the order of the ITO,Ward-1, Pathankot dated 26.12.2019 u/s 144 of the I.T. Act, 1961. 2 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO 2. The grounds of appeal taken by the assessee in Form No. 36 are as follows: “1. That the Assessment Order dated 26/12/2019 passed by the Income Tax Officer, Ward - 1, Pathankot u/s 144 of the Income Tax Act, 1961 and the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 06/06/2024 thereby confirming the order of the Assessing Officer (AO) are both against the facts of this case and are untenable under the law. 2. That no reasonable and proper opportunity of being heard was allowed by the AO before passing the order u/s 144 thereby making an addition of Rs.84,50,000/-. As such the order passed by the AO is liable to be cancelled. Similarly, the CIT(A) has also grossly erred in confirming the order of the AO without appreciating the facts of this case and without applying his mind. As such the order passed by the Ld. CIT(A) thereby confirming the order of the AO is bad in the eyes of law and the same is liable to be cancelled. 3. That no notice of hearing was received by the assessee. As such, the ex- parte order passed is bad in the eyes of law and the same is liable to be cancelled. 4. That the Ld. CIT(A) was not justified in rejecting the appeal in limine without adjudicating the grounds of appeal raised before him. The CIT(A) should have decided the grounds of appeal raised before him. 5. That the order of the CIT(A) is bad in the eyes of law as he has not decided the case on merits even. 6. That the CIT(A) failed to appreciate that the AO should have served the notice as per clarification issued by CBDT vide Letter F. No. 225/363/2017-ITA.IIl, North Block, New Delhi dated 15th November 2017, Clause (3) on handling of cases as per the Standard Operating Procedure (SOP) clause (5) which states that notice u/s 142(1) shall be issued electronically as well as through postal. Thus, the Board’s instructions have not been followed by the AO. As such the order passed is bad in the eyes of law and the same is liable to be cancelled. 7. That the Ld. CIT(A) has grossly erred in confirming the addition without appreciating the reply dated 30/09/2019. A copy of the said letter is made part & parcel of grounds of appeal. As such the order of the CIT(A) is bad in law as well as on facts and as such the addition made at Rs. 84,50,000/- may be deleted. Alternatively the addition made is very high & excessive. 8. That the CIT(A) has grossly erred in confirming the interest charged u/s 234A at Rs.18,93,004/- and Rs.21,54,108/- u/s 234B of the IT Act, 1961. No reasonable and proper opportunity of being heard was allowed before charging these interests. 3 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO As such the interests charged are liable to be deleted. Alternatively, the interests charged are very high & excessive. 9. That any other grounds of appeal which may be argued at the time of hearing of the appeal.” 3. The facts of this case are that the assessee has deposited an amount of Rs. 30 lacs in Bank A/c No. xxxxxx18439 with United Commercial Bank, Rs. 35 lacs in his Bank A/c No. xxxxxxx12914 with Hindu Co-operative Bank Ltd. and further an amount of Rs.2 lacs in his saving Bank A/c No. xxxxxxx50968 with Punjab Gramin Bank, during the financial year 2016-17 (demonetization period). In absence of any return on record, proceedings were initiated vide notice u/s 142(1) of the Act, 1961. In response to such notice, the asessee’s AR appeared and furnished copy of return of income filed belatedly on 23.09.2019 and submitted reply to the questionnaire issued. It was submitted by the assessee that the assessee is a building contractor and has filed his return as per the provisions of section 44AD of the Act, 1961 and since the return of income has been filed on 23.09.2019 which is belated return, the said return has been treated as non-est by the Assessing Officer. However, further details were called for by the Assessing Officer but the assessee failed to explain the source of cash deposit in bank during the demonetization period. During the course of assessment proceedings, the assessee failed to provide any documentary evidence relating to the existence of his contract business. The entire credits in the bank account (both cash and credit) amounting to Rs.84.50 lakhs, has been treated as 4 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO unexplained u/s 69 of the Act, 1961 and has been taxed at rates provided u/s 115BBE of the Act. 4. The matter was carried in appeal before the first appellate authority and the ld. CIT(A) has dismissed the said appeal by passing a very cryptic order and observed as follows: This assessment is completed exparte u/s144 due to noncooperation and non-compliance of the assessee. The assessee has not been able to prove existence of any business. In the absence of any plausible explanation the entire deposit was rightly treated as unexplained cash deposits of the assessee u/s69 attracting the provisions of section 159BBE. The assessment of Rs.8550000 as unexplained investment u/as69 r w s 115BBE is confirmed. 5. The ld. AR of the assessee submitted before us that no proper opportunity of hearing has been allowed by the ld. CIT(A) and a non speaking order has been passed without adjudication on merits of the case regarding the grounds of appeal. In support of his contention, the ld. AR of the assessee relied on the decision of the Bombay High Court in the case of Commissioner of Income Tax v. Prem Kumar Arjun Dass Luthra (HUF) reported in 297 CTR 0614 to argue that it is incumbent on the ld. CIT(A) to make necessary enquiry before passing the order, and the ld. first appellate authority is obliged to decide each of the points arising out of the appeal, that is the ground of appeal on merits of the case and the same should have been discussed even in an ex-parte order. He further submitted that the ld. CIT(A) has no power to dismiss an appeal on account of non prosecution without discussing the merits of the case. In 5 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO support of his contention he also relied on the judgment of the ITAT Amritsar Bench in the case of Sh. Ankush Sharma v. ITO, Ward-6, Kathua in ITA No. 93/Asr/2024 order dated 30.04.2024, and further relied on the co-ordinate Bench judgments in the case of Muzafar Ahmad Kawdari v. ITO, Ward-3(2), Srinagar in ITA No. 29/Asr/2023 order dated 12.05.2023, in the case of Sh. Manjit Singh v. ITO in ITA No. 44/Asr/2022 order dated 17.11.2022 and the decision of ITAT Chandigarh Bench ‘B’ in the case Sh. Salochan Bir Singh v. DCIT, Exemptions, Central Circle-1, Ludhiana in ITA No. 657/CHD/2023 order dated 11.06.2024. 6. Per contra, the ld. DR relied on the order of the ld. CIT(A). 7. We have heard the rival contentions and considered the materials on record and we find that the first appellate authority has dismissed the appeal without adjudicating the same on merits on the grounds contained in the memorandum of appeal. We further find that the assessee has deposited cash in bank account during demonetization period, the source of which could not be properly explain before the Assessing Officer in course of assessment proceedings, in spite of repeated opportunities. We also find that the assessee is stated to be engaged as a building contractor and it has been submitted by him that the profits have been declared in his return of income as per presumptive section 44AD of the Act, 1961 but it is not ascertainable in absence of any bank statement before us, as to whether there is any matching withdrawals from the bank accounts in which the credits has been made 6 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO including cash deposits. It is further noted that the assessee has not been able to produce any documentary evidences relating to his business of contract e.g. work order, TDS certificates u/s 194C, etc. and the ld. CIT(A) has also observed that the assessee has not been able to prove any existence of business. 8. Considering all the facts of the case, and also the fact that the ld. CIT(A) has not passed an order on merits of the case, we find it fit and proper to remand the matter back to the files of the ld. CIT(A) to pass an order, adjudicating on all the grounds contained in the memorandum of appeal on merits of the case and we also direct the assessee to furnish all bank statements, and documentary evidences in support of his contract business to satisfactorily explain the cash, deposited in his bank account during the demonetization period, including the source of all credits entries in the said bank account and shall fully co-operate in the appellate proceedings. Needless to say that the assessee will be allowed reasonable opportunity of being heard. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in accordance with Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 as on 31.12.2024 Sd/- Sd/- (Krinwant Sahay) (Udayan Dasgupta) Accountant Member Judicial Member 7 I.T.A. No. 366/Asr/2024 Dhanwant Singh v. ITO *GP/Sr.PS* Copy of the order forwarded to: (1)The Appellant: (2) The Respondent: (3) The CIT concerned (4) The Sr. DR, I.T.A.T True Copy By Order "