VITHALBHAI HARJIBHAI PATEL,SURAT V. ITO, WARD3(2)(4), SURAT

ITA 138/SRT/2025

AI Insights

The case involves an appeal by Vithalbhai Harjibhai Patel against the order of the Commissioner of Income-tax (Appeals), which confirmed the addition of Rs.24,53,007 as unexplained income for the Assessment Year 2016-17. The addition was initially made by the Assessing Officer due to insufficient evidence provided by the assessee to substantiate the cash in hand reported. The CIT(A) dismissed the appeal due to non-compliance with hearing notices. The Tribunal found that the CIT(A) had not adhered to the mandate of section 250(6) of the Income-tax Act, 1961, which requires a speaking order, and thus set aside the CIT(A)'s order and remitted the matter back for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717167 (ITAT-SURAT)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 07-02-2025
• Other Referred Cases: CIT vs. B. N. Bhattacharya (1997) 118 ITR 461 (SC), CIT vs. Multiplan India Pvt. Ltd. reported in 38 ITD 320 (Delhi Trib.), Vipul Logistic & Warehousing (P) Ltd. vs. ITO (Delhi Trib.)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY UKE
• Assessee Lawyers: KAMLESH BHATT
• Keywords: Set aside; Opportunity of being heard; Corroborative evidences
• Section: 142(1); 271(1)(c)

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.138/SRT/2025 Assessment Year: (2016-17) (Hybrid hearing) Vithalbhai Harjibhai Patel, 101-102, Harihari Society, Katargam Surat - 395004 Vs. The ITO, Ward – 3(2)(4), Surat èथायीलेखासं./जीआइआरसं./PAN/GIR No: ABCPP0940K (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) Appellant by Shri Kamlesh Bhatt, CA Respondent by Shri Ajay Uke, Sr. DR Date of Hearing 04/08/2025 Date of Pronouncement 19/08/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 18.06.2024 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the Assessment Year (AY) 2016-17. 2. Grounds of appeal raised by the assessee are as under: “1. In view of the facts and circumstances of the case the Ld. CIT(A), New Delhi erred in law and in facts, in dismissing the appeal and thereby confirming the addition of Rs.24,53,007/- and hence Your Appellant PRAYS that the Order of NFAC be set aside and the matter be restored to the file of NFAC to dispose off the appeal afresh after giving the reasonable opportunity of being heard to the appellant.” 3. The appeal filed by assessee is barred by 175 days in terms of provisions of Section 253(3) of the Act. The assessee has filed an affidavit giving reasons Printed from counselvise.com 2 ITA No.138/SRT/2025/AY.2016-17 Vithalbhai Harjibhai Patel for delay in filing of appeal before the Tribunal. In the affidavit, it has been stated that order of CIT(A) dated 18.06.2024 had been dismissed due to non- compliance of the notices of hearing. One of his clerks created an e-mail id with a password in his name for the client. Due to Covid-19, all staff members left the job and thereafter some new staff were recruited. He was unaware of the e- mail Id as it was created by one of his staff, who left the job in 2019. After receiving the message from Income-tax Department, he came to know about the penalty proceedings by the Income-tax Department. Thereafter, he informed old staff, who were handling the matters and sought details of the e- mail id for changing the password. Thus, the appellant came to know about the matter in December, 2024. The learned Authorized Representative (ld. AR) submitted that the delay was due to circumstances beyond its control. He requested to condone the delay in the interest of justice and decide the appeal on merit. 4. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that the Bench may decide the matter as it thinks fit. 5. We have heard both the parties on this preliminary issue of delay in filing appeal. In the affidavit, it is submitted that the appellant came to know about the dismissal of appeal after receipt of the penalty proceedings in his message. The delay was neither deliberate nor intentional. Moreover, the assessee is not going to be benefitted by filling appeal belatedly. It is fairly settled that when Printed from counselvise.com 3 ITA No.138/SRT/2025/AY.2016-17 Vithalbhai Harjibhai Patel technical consideration and cause of substantial justice are pitted against each other, the cause of substantial justice may be preferred. We, therefore, condone the delay and admit the appeal for hearing. 6. The facts of the case in brief are that the assessee had e-file his return of income for AY 2016-17 on 18.03.2017, showing total income of Rs.2,61,490/-. The return was processed u/s 143(1) of the Act, accepting the income declared by the assessee. The case was selected for limited scrutiny under CASS due to reason “Whether cash in hand shown in return of income is correct”. Various notices were issued u/s 143(2), 142(1) and 142(1) r.w.s. 129 of the Act, but the assessee had not properly responded to them. The assessee submitted copies of computation of income, bank account statement and cash book without any supporting evidence. The Assessing Officer (in short, ‘AO’) observed that the assessee had not furnished the complete details as called for. A final show cause notice was issued to the assessee on 11.12.2018, which is at para 2 of the assessment order. In response, the assessee filed his reply on 13.12.2018. The AO observed that the assessee had shown high cash in hand of Rs.44,49,175/-. The assessee had not proved the transaction of such cash generated/received to him by giving documentary evidence. The assessee shown cash in hand Rs.19,96,168/- for AY 2015-16 and Rs.44,49175/- for AY 2016-17. Since the assessee failed to furnish supporting details, the difference of cash in hand of Rs.24,53,007/- was treated as unexplained income and added it to the total Printed from counselvise.com 4 ITA No.138/SRT/2025/AY.2016-17 Vithalbhai Harjibhai Patel income of the assessee. Penalty proceedings u/s 271(1)(c) also initiated by the AO. 7. Aggrieved by the order of AO, the assessee filed appeal before CIT(A). The CIT(A) issued 5 notices fixing the hearing on 31.12.2020, 11.05.2023, 12.07.2023, 24.04.2024 and 11.06.2024, but there was non-compliance on the part of the assessee. He observed that the appellant had not filed any written submission during the appellant proceedings. The appellant was not keen to pursue the appeal, and no material had been brough on record in support of the grounds taken in appeal. He relied on the decisions in cases of CIT vs. B. N. Bhattacharya (1997) 118 ITR 461 (SC), CIT vs. Multiplan India Pvt. Ltd. reported in 38 ITD 320 (Delhi Trib.) and Vipul Logistic & Warehousing (P) Ltd. vs. ITO (Delhi Trib.). Hence, the CIT(A) upheld the findings of the AO and dismissed the appeal. 8. Aggrieved by the order of CIT(A), the assessee filed the present appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a paper book, which includes letter dated 13.12.2018 with cash book and ledger for the year with supporting vouchers for AY 2016-17 and bank statements for the bank accounts for AY 2016-17. He submitted that all the documents were submitted before the lower authorities. The ld. AR also submitted that the CIT(A) passed an ex parte order without hearing the appellant on merit. He submitted that the non-compliance of the notices was not deliberate on the part of the appellant. The appellant is now ready to submit all details and evidences in support of the grounds raised by him before CIT(A). Printed from counselvise.com 5 ITA No.138/SRT/2025/AY.2016-17 Vithalbhai Harjibhai Patel He requested that one more opportunity may be given to the appellant to plead his case on merit. 9. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) of the revenue supported the order of CIT(A). He submitted that the CIT(A) has passed the order due to non-compliance of the notices by the appellant. He would, however, have no objection if the matter is restored to file of CIT(A). 10. We have heard both the parties and perused the materials available on record. The AO made addition of Rs.24,53,007/-, being the difference of cash in hand between the preceding year and the year under consideration. The CIT(A) has dismissed appeal because the appellant did not respond to the five notices issued by him. After considering the contentions of both parties, we find that the CIT(A) has not passed an order as per the mandate of section 250(6) of the Act and dismissed the appeal of assessee only on the ground of non-compliance. The ex parte order passed by the CIT(A) is clearly violative of the express provisions of section 250(6) of the Act. The underlying rationale of the provision is that such orders are subject to further appeal to the appellate Tribunal. Speaking order would obviously enable a party to know precise points decided in his favour or against him. Considering the facts and circumstances of the case and the fact that the assessment order was confirmed by CIT(A) in ex parte order, we are of the considered view that the assessee deserves one more opportunity to plead his case on merit. In the interest of justice, we set aside the order of CIT(A) subject to payment of cost of Rs.10,000/- (Rupees ten Printed from counselvise.com 6 ITA No.138/SRT/2025/AY.2016-17 Vithalbhai Harjibhai Patel thousand only) to the credit to “District Legal Services Authority, Surat” within 3 weeks after receipt of this order and remit the matter back to the file of CIT(A) with a direction to pass fresh order in accordance with law, after granting adequate and reasonable opportunity of hearing to the assessee. The assessee is directed to be vigilant and to furnish all details and explanation as needed by the CIT(A) by not seeking adjournment without valid reason. 11. In the result, appeal of the assessee is allowed for statistical purposes. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 19/08/2025 Sd/- Sd/- (DINESH MOHAN SINHA) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 19/08/2025 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat Printed from counselvise.com "