VIKASH KUMAR SHARMA,MUMBAI V. ITO-2(1)(3), AGRA

ITA 159/AGR/2022

AI Insights

The case involves Sh. Vikash Kumar Sharma, who appealed against the order of the CIT(Appeals) which had dismissed his earlier appeal concerning a re-assessment order passed by the Assessing Officer under sections 147/144 of the Income-tax Act, 1961. The re-assessment was based on unexplained cash deposits and investments in immovable properties. The Tribunal noted procedural deficiencies, including the non-provision of reasons for re-opening the assessment and the absence of notice under section 143(2), which hindered effective representation and compliance. The Tribunal found that the CIT(Appeals) had dismissed the appeal without adjudicating on the merits, violating section 250(6) of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 474819 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 21-11-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 16-09-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SRIVASTAVA
• Assessee Lawyers: ANURAG SINHA
• Keywords: Set aside; Reassessment proceedings; Gift; Reopening of assessment; Principle of natural justice; Assessment record
• Section: 147; 148; 142(1); 143(2); 133(6)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AGRA (SMC) BENCH, AGRA BEFORE: SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No. 159/Agr/2022 Assessment Year: 2011-12 Sh. Vikash Kumar Sharma, Gali No. 2, Spmawala Crossing Road, Goregaon East, Mumbai. PAN: COWPS7963E v. Income-tax Officer, Ward 2(1)(3), Agra. (Appellant) (Respondent) Assesseeby : Sh. Anurag Sinha, Advocate Revenue by : Sh. Shailendra Srivastava, Sr. DR Date of hearing :21.11.2024 Date of Pronouncement :29.11.2024 ORDER This appeal in ITA No. 159/Agr/2022 for the assessment year 2011-12 has arisen from the appellate order dated 18.08.2022 (DIN& Order No. ITBA/NFAC/S/250/2022-23/1044801908(1)), wherein the ld. CIT(Appeals) has dismissed the appeal of the assessee, which appeal in turn has arisen from the re-assessment order dated 29.12.2018 passed by Assessing Officer u/s. 147/144 of the Income-tax Act, 1961. 2. Brief facts of the case are that the assessee has deposited cash of Rs.10,89,150/- in his bank account No. 08160100020955 with Bank ITA No. 159/Agr/2022 2 of Baroda during the impugned assessment year, and has purchased two immovable properties during the year under consideration. Based on AIR & CIB information as well as information sought by Assessing Officer u/s. 133(6), notice u/s. 148 dated 29.03.2018 was issued to the assessee requiring the assessee to file return of income within 30 days. Assessee did not file return of income in response to notice u/s. 148. Thereafter, Notices u/s. 142(1) were issued by the Assessing Officer to the assessee.Assessee filed written submissions by email along with bank statement, capital account, cash book, bank book etc. as well as copy of return of income filed earlierfor the impugned assessment year with the department wherein the income of Rs.1,85,940/- was declared. Father of the assessee Shri Nitya Prakash Sharma appeared before the Assessing Officer. It was explained that the Assessee was engaged in the business of catering. Assessee explained that the cash deposit in the bank account of Rs.10,89,150/- was from old savings, gifts received as well as income from business. The assessee explained that he has purchased only one property for Rs.12,31,000/- and payment was made from Bank Account. The Assessing Officer observed that the assessee has not explained the investment made in this property, as ITA No. 159/Agr/2022 3 total receipts shown in the return of income for the year under consideration from business were declared at Rs.5,61,560/- only and the assessee availed presumptive scheme of taxation u/s 44AD. Thus, the assessee is not having sufficient income to make investment to the tune of Rs. 12,31,000/- in purchasing the property. The assessee has claimed that he has received Rs.6,50,000/- as gifts from 11 people. His father also gifted Rs.1,00,000/-. As per Assessing Officer, theassessee could not explain the sources of cash deposit and same remained unexplained also genuineness of gifts could not be proved, which led to the addition of Rs.12,31,000/- in the hands of the assessee. 3.Assessee, being aggrieved, filed first appeal with ld. CIT(Appeals) on 16.01.2019. There were as many as five notices issued by ld. CIT(Appeals), but the same remained non-complied with by the assessee. The ld. CIT(A) dismissed the appeal of the assessee. 4. Still aggrieved, the assessee has filed second appeal before the Tribunal. At the outset, ld. Counsel for the assessee, Shri Anurag Sinha, Advocate submitted that the assessee’s father appeared before the Assessing Officer ,and he was not well versed with the provisions of the Income-tax Act, and hence effective representation could not be ITA No. 159/Agr/2022 4 made before the Assessing Officer. It was further submitted that the assessee had filed two letters dated 26.02.2019 and 16.09.2022 after completion of re-assessment, which are placed on record vide acknowledgement No. 171061810231 dated 26.02.2019 and 521712210222 dated 21.09.2022, seeking copies of order sheet entries along with all the replies filed by the assessee with the department during the course of assessment proceedings. It is the say of ld. Counsel for the assessee that even the reasons recorded for reopening of the assessment were not provided by the Assessing Officer. It was submitted that even notice u/s. 143(2) was not issued to the assessee. The assessee wanted to have the copies of the order sheet entries of the proceedings before the Assessing Officer as well as replies filed by his father during reassessment proceedings, but the same were not provided by the AO, and to avoid any wrong submissions before the ld. CIT(Appeals), the assessee did not submit any reply before the ld. CIT(Appeals). It was submitted that the assessee is not having copies of replies filed by the assessee with the AO. It was submitted that the ends of justice will be met if the matter can be set aside to the file of Assessing Officer instead of ld. CIT(Appeals) , so that effective ITA No. 159/Agr/2022 5 representation can be made before the AO and the AO can then pass reasoned order after verifying the contentions of the assessee. The assessee itself could not get proper representation before the Assessing Officer ,as well the Assessing Officer also failed to discharge its duties by not providing reasons recorded as well by not issuing notice u/s. 143(2) of the Act. 5.2 Learned Sr. DR, on the other hand, submitted that the matter can be set aside back to ld. CIT(Appeals), as the assessee did not file any compliance before the ld. CIT(Appeals) to as many as five notices issued by ld. CIT(A) to the assessee. 6. I have considered the rival submissions and have perused the material on record. I have observed that the case of the assessee was reopened by Revenue u/s. 147 of the Act, as there were cash deposits to the tune of Rs.10,89,150/- with the assessee’s bank account No. 08160100020955 with Bank of Baroda. Notice dated 29.03.2018 u/s. 148of the Act was issued by the AO to the assessee. Further notices u/s. 142(1) were issued by the AO to the assessee during the course of reassessment proceedings. Assessee’s father appeared before the Assessing Officer and filed various details as well as written ITA No. 159/Agr/2022 6 submissions, bank statement, capital account, cash book, bank book and return of income filed with Revenue for the impugned assessment year, as is discernible from the assessment order. It could not be seen whether the assessee filed return in response to notice u/s. 148 of the Act or whether notice u/s. 143(2) was issued by the Assessing Officer. The assessee has raised an issue that the reasons for re-opening of the assessment were not provided to the assessee as well as notice u/s. 143(2) was not issued by the Assessing Officer. It is also claimed by the assessee that father of the assessee appeared before the AO and he was not well versed with the 1961 Act and hence effective representation could not be made before the AO.On merits also, the Assessing Officer has not accepted the contentions of the assessee as to the gifts received by the assessee in cash from 11 persons, which were claimed by the assessee to have been deposited in the bank account. Assessing Officer on its part rejected such gifts without making any further enquiry to verify genuineness of these gifts. No summons u/s 131 to the donors were issued , nor information u/s 133(6) were called by the AO from the donors. The AO rejected other contentions of the assessee without verification. Assessee has filed two letters dated ITA No. 159/Agr/2022 7 26.12.2019 and 16.09.2022 before the AO, in which the assessee has called for all the records including replies filed during reassessment proceedings, order sheet entries as well as documents in possession of the Assessing Officer , but the same are not provided by the AO to the assessee. The assessee has claimed that since AO has not provided information called for by the assessee vide letters dated 26.12.2019 and 16.09.22 , the assessee did not filed replies before the ld. CIT(A) to avoid any wrong information being filed before ld. CIT(A). The ld. CIT(A) dismissed the appeal of the assessee ex-parte in limine without deciding the issues arising in the appeal on merits . It is observed that the assessee has also raised legal issues challenging invocation of provisions of Section 147 by the AO, and the same is not adjudicated by ld. CIT(A). No enquiries were made by ld. CIT(A) before dismissing the appeal of the assessee, and even assessment records were not called by ld. CIT(A). It is true that the assessee on its part also did not comply with the notices issued by ld. CIT(A) during appellate proceedings. The ld. CIT(A) has to state point for determination, his decision and reasons thereof. The ld. CIT(A) passed an ex-parte order in limine without deciding the issues arising in appeal on merits. Even ITA No. 159/Agr/2022 8 legal issues were not adjudicated by ld. CIT(A). The appellate order passed by ld. CIT(A) is clearly in violation of Section 250(6). The appellate order passed by ld. CIT(A) is not final , as it is subject to appellate proceedings with higher appellate authorities. The appellate order passed by ld. CIT(A) is subject to further appeal with ITAT u/s 253. The appellate order passed by ITAT is subject to further appeal before Hon’ble High Court u/s 260A. The judgment and order passed by Hon’ble High Court is also subject to challenge before Hon’ble Supreme Court. Thus, the appellate order passed by ld. CIT(A) is not a final order, as it is subject to challenge before higher appellate authority. Thus, Reasons which weighed in the minds of the adjudicating authority while adjudicating appeal on merits of the issues are cardinal as the higher appellate authority can then adjudicate appeal on the issues arising in appeal before them, based on decision and reasoning of ld. CIT(A) in deciding the issues. If the ld. CIT(A) simply dismiss the appeal merely because the assessee did not comply with the notices issued by ld. CIT(A) in limine without adjudicating issues arising in the appeal on merits , such order is not sustainable in the eyes of law keeping in view provisions of Section 250(6) , and also ITA No. 159/Agr/2022 9 higher appellate authorities will be deprived to see what weighed in the mind of the ld. CIT(A) while adjudicating appeal as it will be an order passed without reasoning on the issues on merits . The appellate order of the CIT(A) is clearly in violation of section 250(6) of the Act and liable to be set aside. Merely stating the assessment order passed by AO is upheld, and that the assessee has not submitted details/documents is not sufficient. The ld. CIT(A) is not toothless as his powers are co- terminus with the powers of the AO., which even includes power of enhancement. It is equally true that the assessee also did not complied with the notices issued by ld. CIT(A) and did not file the requisite details/documents during appellate proceedings to support his contentions. It is also observed that the AO had rejected the contentions of the assessee without making any verification and investigation of facts. With respect to 11 donors from whom the assessee has claimed to have received gifts were never summoned by the AO u/s 131 nor information was called u/s 133(6) from these donors, and plea of the assessee was outrightly rejected by the AO. Similarly, other contentions of the assessee were rejected by the AO without making further enquiries/verifications.It is claimed that even ITA No. 159/Agr/2022 10 reasons for re-opening of assessment were not provided by the AO, and even notices u/s 143(2) were not issued. In the fitness of the things and in the interest of justice and fairness to both the parties , since the matter requires investigation/verification of facts and the issue raised by the assessee goes to the root of the matter, it will be fit and appropriate that the matter can be set aside back to the file of Assessing Officer for de novo assessment after providing proper opportunity to the assessee in accordance with principles of natural justice. I clarify that I have not commented on the merits of the issue. I order accordingly. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 29/11/2024. Sd/- (RAMIT KOCHAR) ACCOUNTANT MEMBER Dated: 29/11/2024 *aks/- "