VEPPUR MILK PRODUCERS CO-OP. SOCIETY LTD.,CUDDALORE V. ITO, WARD-4, CUDDALORE

ITA 2988/CHNY/2024

AI Insights

The case involves the Veppur Milk Producers Co-op. Society Ltd., which appealed against the order of the Learned Commissioner of Income Tax (Appeals), Delhi, for the Assessment Year 2018-19. The primary contention was the refusal of the CIT(A) to admit relevant evidences that substantiated the nature and source of cash deposits amounting to Rs.1,03,19,000 in the society's bank account. The AO had initially passed an ex parte order under section 144 of the Income Tax Act, 1961, due to non-receipt of notices by the assessee, leading to the addition of the entire cash deposits as income. The Tribunal criticized the CIT(A)'s rigid adherence to procedural rules without considering the substantive rights of the assessee, referencing several Supreme Court decisions that prioritize justice over procedural technicalities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126644 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: United Bank of India v. Naresh Kumar AIR 1997 SC 3, Associated Journals Ltd. v. Mysore Paper Mills Ltd. [2006] 69 SCL 311 (SC), Owners & Parties interested in MV Vali Pero v. Fernandeo Lopez AIR 1989 SC 2206, TIN Box Co. v. CIT [2001] 249 ITR 216 (SC)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. RAGHUPATHY
• Assessee Lawyers: B.SURESH
• Keywords: Set aside; Additional evidence; Recovery proceedings; Procedural lapse
• Section: 250

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2988/Chny/2024 िनधा\u000eरण वष\u000e/Assessment Year: 2018-19 M/s.Veppur Milk Producers Co-op. Society Ltd. TND 1187, 1, New Street, Veppur, Cuddalore-606 304. v. The ITO, Ward-4, Cuddalore. [PAN: AAABV 1209 L] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.B. Suresh, CA \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.R. Raghupathy, Addl.CIT सुनवाईक\u001aतारीख/Date of Hearing : 20.02.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 23.04.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee Milk Producers Co-op. Society against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 24.07.2024 for the Assessment Year (hereinafter referred to as \"AY”) 2018-19. 2. At the outset, it is noted that there is a delay of ‘56’ days in filing of appeal. According to the assessee, it is a Society of Milk Producers; and ITA No.2988/Chny/2024 (AY 2018-19) M/s.Veppur Milk Producers Co-op. Society Ltd. TND 1187 :: 2 :: mainly, the office bearers are also farmers and therefore, they were not aware of the passing of the impugned order and came to know only when the AO initiated recovery proceedings. Immediately, then the assessee filed an appeal belatedly with ‘56’ days delay. Having gone through the affidavit, we find that the notice issued by the Ld.CIT(A) had gone to the ‘SPAM’ account of the assessee and therefore, the assessee was in the dark about the proceedings going on before the appellate authority/Ld.CIT(A) which led to passing of the impugned order, wherein the Ld.CIT(A) refused to admit the relevant evidences filed by the assessee to prove the cash deposits in its bank account to the tune of Rs.1,03,19,000/-. 3. Further, it was brought to our notice that the AO had passed best judgment assessment u/s.144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘), since the assessee didn’t receive any notices which led to the AO passing the ex parte order adding the entire cash deposits in its Canara bank account. Being aggrieved by the action of the AO, the assessee preferred an appeal before the Ld.CIT(A), wherein, the assessee filed relevant evidences to prove the nature and source of cash deposits. However, the Ld.CIT(A) refused to admit the evidences on the specious plea that the assessee didn’t file any application under Rule 46A(1) of the of the Income Tax Rules, 1962 and thereafter, the Ld.CIT(A) confirmed the ex parte order of AO. We don’t countenance the ITA No.2988/Chny/2024 (AY 2018-19) M/s.Veppur Milk Producers Co-op. Society Ltd. TND 1187 :: 3 :: action of the Ld.CIT(A). Undisputedly, the AO has passed ex parte order making addition of the entire cash deposit in the Canara bank to the tune of Rs.1,03,19,000/- since assessee didn’t respond to the notices issued by the AO on several dates. On appeal, it is noted that the assessee had filed the relevant evidences to substantiate the nature and source of the cash deposits. However, the Ld.CIT(A) has refused to admit the evidences merely on the ground that the assessee didn’t prefer/file any application for admission of evidences. Such an action of the Ld.CIT(A) can’t be accepted. It must be borne in mind that justice should not only be done, but it must be seem to be done. In this context, we take note of the Hon’ble Supreme Court decision in the case of United Bank of India v. Naresh Kumar AIR 1997 SC 3, wherein, it was observed by their Lordships “as far as possible, a substantive right should not be defeated on account of a procedural irregularity which is curable” and in the case of Associated Journals Ltd. v. Mysore Paper Mills Ltd., reported in [2006] 69 SCL 311 (SC), it was observed by the Hon’ble Supreme Court - “… Rules of procedure cannot be a tool to circumvent the justice. In fact, the Rules are laid to help for speedy justice … Technical defects in petition are curable…..”. 4. In Owners & Parties interested in MV Vali Perov. Fernandeo Lopez AIR 1989 SC 2206, it was observed - Rules of procedure are not by themselves an end but means to achieve the ends of justice. Rules of ITA No.2988/Chny/2024 (AY 2018-19) M/s.Veppur Milk Producers Co-op. Society Ltd. TND 1187 :: 4 :: procedure are tools forged to achieve justice and are not hurdles to obstruct the pathway to justice. Construction of a rule of procedure which promotes justice and prevents its miscarriage by enabling the Court to do justice in myriad situations, all of which cannot be envisaged, acting within the limits of permissible construction, must be preferred to that which is rigid and negatives the cause of justice. Procedure is meant to subserve and not rule the cause of justice. Coming back to the case in hand, if the Ld.CIT(A) felt that the assessee had to file an application for admitting the additional evidences, he could have very well asked the assessee to file an application, and then the assessee certainly would have complied, by filing an application and thereafter, the Ld.CIT(A) could have decided the issue in accordance with Rule 46A and thereafter, proceeded to adjudicate the grounds of appeal raised by the assessee in accordance with sub-section (6) of section 250 of the Act. However, the Ld.CIT(A) didn’t bother to do so, therefore, the action of the Ld.CIT(A) can’t be sustained and therefore, we set aside the impugned order and taking note that the AO has also passed ex parte order qua assessee, we restore the assessment back to the file of the AO, since the AO is the primary authority to assess the income of the assessee, it would be in the interest of justice and fair play and as following the Hon’ble Supreme Court decision in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC), we direct the AO to frame fresh assessment after hearing ITA No.2988/Chny/2024 (AY 2018-19) M/s.Veppur Milk Producers Co-op. Society Ltd. TND 1187 :: 5 :: the assessee. The Ld.AR undertakes to appear/file relevant evidences and written submissions before the AO to substantiate the nature and source of the cash deposits and respond to notices issued by the AO. Since there is negligence on the part of the assessee, cost of Rs.5,000/- is imposed, which the assessee should remit to the State Legal Aid Authority, Hon’ble Madras High Court, and produce necessary proof of depositing of the same before the AO and thereafter, the AO to frame the de novo assessment after hearing the assessee in accordance to law. 5. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 23rd day of April, 2025, in Chennai. Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA) लेखा सद\u0003य/ACCOUNTANT MEMBER Sd/- (एबी टी. वक ) (ABY T. VARKEY) \u0005याियक सद\u0003य/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 23rd April, 2025. TLN आदेश क\u001a \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF "