SHRI HARISH WADHWA V. THE INCOME TAX OFFICER,

ITA/224/2020

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The case involves Shri Harish Wadhwa, the legal heir of Shri Shivakumar Thanwardas Wadhwa, who appealed against the order of the Income Tax Appellate Tribunal which had dismissed his appeal ex-parte. The Tribunal had earlier confirmed additions made by the Assessing Officer regarding unexplained cash deposits, credit card expenses, undisclosed receipts, and unexplained investments for the assessment year 2013-2014. The High Court found that the Tribunal erred in not considering the appellant's request for adjournment properly and in hearing the case ex-parte without a valid power of attorney, as the appellant was the legal heir and had submitted the request himself.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 754648 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-01-2021
• Assessment Year: misc
• Other Referred Cases: Victoria Memorial Hall Vs. Howrah Ganatantrik Nagarik (2010) 3 SCC 732
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: VIKRAM RAJAGOPAL
• Keywords: Ex-parte hearing; Income tax appellate tribunal; Legal heir; Undisclosed receipts; Unexplained Cash Deposits; Unexplained expenditure; Unexplained investment
• Section: 144; 142(1); 143(2); 68; 69; 69C; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JANUARY, 2021 PRESENT THE HON’BLE MR. JUSTICE SATISH CHANDRA SHARMA AND THE HON’BLE MR. JUSTICE V. SRISHANANDA I.T.A. NO.224/2020 BETWEEN: SHRI. HARISH WADHWA LEGAL HEIR OF SHRI SHIVAKUMAR THANWARDAS WADHWA, AGED ABOUT 47 YEARS 165, 9TH MAIN, RMV EXTENSION, BANGALURU - 560 080 PAN: AAAPW9599G. .... APPELLANT (BY SRI.VIKRAM UNNI RAJAGOPAL, ADVOCATE) AND: THE INCOME TAX OFFICER, WARD-1(1)(1) BANGALORE - 560 095. ... RESPONDENT (BY SRI. K. V. ARAVIND, ADVOCATE) THIS I.T.A. IS FILED UNDER SEC. 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 28.08.2019 PASSED IN ITA NO. 561/BANG/2019, FOR THE ASSESSMENT YEAR 2013-2014. PRAYING TO (a) FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW AS STATED ABOVE AND ANSWER THOSE IN FAVOUR OF THE APPELLANT. 2 (b) SET ASIDE THE ORDER DATED 28.08.2019 IN ITA NO.561/BANG/2019 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, BENGALURU (ANNEXURE- F) IN RELATION TO ASSESSMENT YEAR 2013-2014 AND ALLOW THE SAID APPEAL AND ETC., THIS I.T.A., COMING ON FOR PRELIMINARY HEARING, THIS DAY, V. SRISHANANDA. J., DELIVERED THE FOLLOWING: JUDGMENT This appeal is preferred by the legal heir of Shri Shivkumar Thanwardas Wadhwa under Section 260-A of the Income Tax Act, 1961, being aggrieved by the Order dated 28.08.2019 passed in ITA No.561/Bang/2019 by the Income Tax Appellate Tribunal 'A' Bench, Bengaluru, with the following substantial questions of law: (i) Whether the Tribunal was right in law in hearing the appeal ex-parte qua the appellant without affording the appellant an opportunity of being heard? (ii) Whether the Tribunal was right in law in affirming the Order of the CIT(A) without assigning any reasons? (iii) Whether the Tribunal was right in law in confirming the addition of Rs.24,32,500/- on 3 account of unexplained cash deposits under Section 68 of the Income Tax Act, 1961? (iv) Whether the Tribunal was right in law in confirming the addition of Rs.28,71,972/- (credit card expenses) towards unexplained expenditure under Section 69C of the Act, without considering that the assessee had declared income under the provisions of Section 44AD of the Act? (v) Whether the Tribunal was right in law in confirming the addition of Rs.54,30,000/- towards undisclosed receipts, without considering that the assessee had declared income under the provisions of Section 44AD of the Act? (vi) Whether the Tribunal was right in law in confirming the addition of Rs.1,99,80,919/- towards unexplained investment under Section 69 of the Act, without considering that security transaction tax was duly paid and the income was exempt? 2. Since the matter could be disposed of on a short ground, by consent of the parties, even though the matter is listed for admission, at the stage of admission, the matter is taken up for final hearing. 4 3. Brief facts which are necessary for disposal of the appeal are as under: It is contended that the appellant as an individual deriving income from profession, house property and income from other sources. He further contended that his father Sri Shivakumar Thanwardas Wadhwa passed away on 9.7.2013 and the appellant being the sole legal representative of his father, filed Return of Income of late Shivkumar Thanwardas Wadhya for the assessment year 2013-14 on 8.7.2014 declaring taxable income at Rs.27,78,220/-. It is further contended that the said return for selected for scrutiny and notice u/s.143(2) of the Income Tax Act was issued on 3.9.2015. It is also contended that subsequently notice u/s.142(1) was also issued. The appellant informed the Assessing Officer about the death of his father vide letter dated 20.11.2015. When the matter stood thus, appellant received a show cause notice on 15.3.2016 seeking why the assessment should not be completed as is contemplated under Section 144 of the Income Tax Act. Respondent also interalia sought details about un-explained cash deposits, un- explained credit card expenses, un-explained investment and 5 un-disclosed receipts. It is further contended that appellant responded to the notice and sent a detailed reply on 22.3.2016. Assessment Officer was not satisfied with the explanation offered by the appellant and completed the assessment and passed an order u/s.143(3) of the Act determining the income at Rs.3,22,34,821/- as against the income mentioned in the Return at Rs.27,78,220/- and raised a demand for payment of tax of Rs.1,36,95,640/-. Being aggrieved by the said order dated 29.3.2016, appellant preferred an appeal before the CTT on 8.7.2016. It is further contended that the appellant filed a detailed written submission before the C.I.T.(A)-6, Bengaluru with all necessary enclosures on 12.1.2018. It is further contended that the C.I.T. did not consider the written submission and confirmed the order of the Assessing Officer by dismissing the appeal on 15.1.2018. Being aggrieved by the said order, the appellant preferred an appeal before the Income Tax Appellate Tribunal [hereinafter referred to as 'ITAT' for short] in ITA No.561/Bang/2019. It is further contended that on 13.8.2019 when the appeal was heard before the Income Tax Appellate Tribunal, an adjournment was sought for by 6 the appellant which was rejected by the Income Tax Appellate Tribunal and the matter was heard exparte. Whereby the Income Tax Appellate Tribunal dismissed the appeal by order dated 28.8.2019 which is the subject matter of this appeal. 4. Learned counsel for the appellant vehemently contended that the Tribunal erred in hearing the appeal exparte qua the assessee without affording reasonable opportunity of being heard. It is also contended that the Tribunal ought to have afforded a reasonable opportunity for the appellant to ventilate his grievances. He relied on the judgment of Victoria Memorial Hall Vs. Howrah Ganatantrik Nagarik reported in (2010) 3 SCC 732 and contended that the order of the Tribunal sans any reasons of whatsoever and therefore, the order of the Tribunal is incorrect. 5. Per contra, learned counsel appearing for the Revenue supports the impugned judgment. In the light of the arguments advanced, we perused the records. As we 7 notice from the order of the Income Tax Appellate Tribunal, that the Tribunal in para No.3 has mentioned as under: \"3. This appeal was fixed for hearing on 13.08.2019 and the notice of hearing was duly served on the assessee. On this date, somebody appeared with letter seeking adjournment. But this letter is not signed by Shri Harish Wadhwa the appellant being the legal heir of Shri Shivkumar Thanwardas Wadhwa. But this letter is signed by somebody for Shri Harish Wadhwa. No power of attorney could be produced by the person who appeared with this letter and hence, request of adjournment was rejected and the appeal of the assessee was heard ex-parte qua the assessee. The ld. DR of revenue supported the order of ld. CIT(A).\" 6. It is pertinent to note that as on the date of hearing before the Income Tax Appellate Tribunal Sri Shivakumar Thanwardas Wadhwa was no more and his son who is the appellant had sent a request letter. The Tribunal failed to note that Shivkumar Thanwardas Wadhwa had expired in the year 2013 and therefore, he could not have appear nor execute any power of attorney. The very fact that the letter 8 which was signed by Harish Wadhwa, was not considered by the Tribunal on the pretext that there was no power of attorney executed by Shivakumar Thanwardas Wadhya shows that without application of mind by the Tribunal, the matter has been disposed of by the Tribunal and also without properly adverting to the relevant facts involved in the case. 7. Therefore, we are satisfied that the order passed by the Tribunal needs to be set aside and proper opportunity to be afforded to the appellant herein to ventilate his case before the Tribunal. Accordingly, following order is passed without expressing any opinion on the substantial questions of law raised in the appeal. Hence, we are of the opinion that the matter requires re-consideration by the Tribunal after affording sufficient opportunity. We make it clear that all contentions available for the purpose to be urged before the Tribunal and the Tribunal shall consider the same in accordance with law. Accordingly, following order is passed: Appeal is allowed. The impugned order dated 28.8.2019 passed by the Income Tax Appellate Tribunal in ITA No.561/Bang/2019 is set aside and the matter is 9 remanded to the Tribunal for fresh consideration in accordance with law. Parties shall appear before the Tribunal on 15th February, 2021 without any further notice. Ordered accordingly. Sd/- JUDGE Sd/- JUDGE PL* "