SHRI RAJESH PRANLAL GHATALIA,MUMBAI V. ITO WARD-24(3)(1), MUMBAI, MUMBAI

ITA 2483/MUM/2024

AI Insights

This case involves an appeal by Shri Rajesh Pranlal Ghatalia against the order of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which upheld the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961, treating unexplained cash credits as income. The assessee contested the ex parte order, citing non-receipt of physical notices and argued that the cash credits were explained as having been received from M/s Enam Organics Ltd and M/s Aarey Drugs & Pharmaceuticals Ltd. The Tribunal noted the assessee's non-compliance during the appellate proceedings but decided to remand the case for a fresh examination, emphasizing the principles of natural justice.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25607 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-09-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 08-05-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R.R. MAKWANA
• Assessee Lawyers: AMIT; DHARMIL JHAVERI
• Keywords: Additional evidence; Unexplained cash credit; Principle of natural justice; Non compliance
• Section: 142(1); 68; 234B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRIOM PRAKASH KANT, AM AND MS. KAVITHA RAJAGOPAL, JM ITA No.2483/Mum/2024 (Assessment Year: 2017-18) Shri Rajesh Pranlal Ghatalia 1501/2B Wing, Highland Park CHS 350, Lokhandwala Complex, Andheri (W), Mumbai-400 053 Vs. ITO Ward-24(3)(1) Room No. 616, 6th Floor, Piramal Chamber, Lalbaug, Mumbai-400 014 PAN/GIR No. AACPG 2313 G (Assessee) : (Respondent) Assessee by : Shri Amit & Dharmil Jhaveri Respondent by : Shri R. R. Makwana Date of Hearing : 17.09.2024 Date of Pronouncement : 29.10.2024 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the ex parte order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short),National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2017-18. 2. The assessee has filed an application for condoning the delay of 78 days in filing the present appeal. On perusal of the same, we deem it fit to condone the said delay as there being a ‘sufficient cause’ for the delay in filing the appeal beyond the period of limitation. Delay condoned. 3. The assessee has raised the following grounds of appeal: 2 ITA No.2483/Mum/2024 (A.Y. 2017-18) Shri Rajesh Pranlal Ghatalia vs. ITO B) Grounds of Appeal :- Ground No 1: Opportunity of Hearing:  The appeal was filed in the pre face less period on 24/01/2020. Thereafter all the notices were raised on the Income Tax Portal and no physical notice has been received till date. The assessee is an individual and this been the first case for the assessee under the faceless regime. Ground No 2: Unexplained cash credit u/s 68 worth Rs 2,83,93,367/-  The Ld ITO not justified in making addition u/s 68 for the cash credit treating the same as unexplained cash credit.  The said fact is incorrect as the assessee has already explained the same cash credits has been received from M/s Enam Organics Ltd and M/s Aarey Drugs & Pharmaceuticals Ltd.  Hence when the nature of the credit is explained by the assessee and party from whom the same has been received is also placed on record addition u/s 68 is unjustified and unwarrented. Ground No 3: Levying Maximum rate of Tax:  The Ld. ITO not justified in levying the maximum rate of Tax @ 60% along with 25% surcharge u/s 115BBE. Ground No 4: Levy of interest u/s 234A, 234B and 234C:  The Ld. ITO not justified in levying interest on the above tax addition, which is in dispute. Ground No 5: Initiation of Penalty u/s 271(1)(c):  The Ld. ITO not justified in initiating penalty proceedings u/s 271(1)(c), when the said addition is in dispute. 4. The brief facts are that the assessee is an individual and had filed his return of income for the year under consideration on 30.12.2017, declaring total income at Rs.8,24,760/-. The assessee’s case was selected for limited scrutiny under CASS for the reason of huge cash withdrawals during the year under consideration and notices u/s. 143(2) and 142(1) of the Act were duly issued and served upon the assessee. 5. The ld. Assessing Officer ('A.O.' for short) then passed the assessment order u/s. 143(3) of the Act on 30.12.2019, thereby determining the total income at Rs.2,92,18,131/- after making additions of Rs.2,83,93,367/- as ‘unexplained cash credit’ 3 ITA No.2483/Mum/2024 (A.Y. 2017-18) Shri Rajesh Pranlal Ghatalia vs. ITO u/s. 68 of the Act on the ground that the assessee has failed to furnish any documentary evidence in support of his claim. 6. Aggrieved, the assessee was in appeal before the first appellate authority, challenging the assessment order. 7. The ld. CIT(A) vide order dated 22.12.2023, upheld the addition made by the ld.A.O. for the reason that inspite of several opportunity the assessee has failed to substantiate his claim and has been non compliant throughout the appellate proceedings. 8. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 9. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee has challenged the additions made by the ld. A.O. before the first appellate authority but has been non compliant throughout the appellate proceeding. 10. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee has got a good case on the merits and prayed that the assessee may be given one more opportunity to present his case before the ld. CIT(A). The ld. AR also prayed that the assessee may be permitted to file additional evidences in support of his claim. 11. The learned Departmental Representative ('ld.DR' for short) vehemently opposed to setting aside the issue to the file of the ld. CIT(A) for the reason that the assessee was given several opportunity by the ld. CIT(A) which was not availed by the assessee. 4 ITA No.2483/Mum/2024 (A.Y. 2017-18) Shri Rajesh Pranlal Ghatalia vs. ITO 12. On the above factual matrix of the case, we are of the considered view that the assessee may be given one more opportunity to present his case before the first appellate authority by adhering to the principles of natural justice. We, therefore, remand all these issues back to the file of the ld. CIT(A) for de novo adjudication and also direct the ld. CIT(A) to admit the additional evidences that are proposed to be filed by the assessee and decide the issue on the merits of the case. The assessee is directed to comply with the proceedings without any undue delay on his side. 13. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 29.10.2024 Sd/- Sd/- (O P Kant) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 29.10.2024 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "