Natural justice rules were broken, and the matter was returned to the AO by the ITAT
Fact and issue of the case
Both the appeals have been filed by the assessee against the order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi even dated 14.09.2022 in respect of Assessment Year: 2017-18
The assessee has raised the following common grounds of appeal in ITA No. 208/Asr/2022 and ITA No. 37/Asr/2023
That the impugned demand order passed by Ld Commissioner of Income Tax (Appeals) is arbitrary, unwarranted, unjustified and exorbitant which deserves to be deleted
The Ld. Commissioner of Income Tax (Appeals) in para 5.3 of the Order U/S 250 of Income Tax Act, 1961 has erred to acknowledge the fact that Service of Notice is a jurisdictional requirement and has completely overlooked the judgment in the matter of Commissioner of Income Tax (Central)-I Vs Chetan Gupta on 15 September, 2015, Delhi High Court As per Section 148, “ITO shall serve upon the Assessee a notice before assessment, reassessment or re-computation”
In this instant case, Onus is not on the assessee to inform the department regarding his address as the Assessing Officer clearly has the knowledge of the appellant’s actual address vis a vis Bank Statements
Further, it is settled law that it is the duty of the revenue to establish that the service of an order or a notice was made on the assessee himself or on somebody duly authorized by him in that behalf and it is pertinent to mention that the appellant never received any of the mandatory notices as mentioned in the impugned assessment order hence the impugned assessment order passed by the Ld. A.O and sustained by the Ld Commissioner of Income Tax(Appeals) is void ab initio, vague and bad in law and deserves to be quashed
We would also like to emphasize on the case law of “DCIT Circle-18(1), Room No. 211 A, CR Building, New Delhi. Vs. Usha Stud & Agricultural Frams (P) Ltd, Khasra 22/2, 4,4,/1,7/1, 8, 9, 12, 13,14, near 21A, Palam Farms, Shalarpur Bijwasan, New Delhi IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H : NEW DELHI
Where it has been corroborated by the Worthy ITA T Bench of Delhi “When the assessee pleads that he has not been properly served with any notice, it is for the Department to place the relevant material to substantiate the plea that the assessee was served with prior notice. In the present case, no material is on record to show that the person to whom the notice is alleged to have been served was specifically authorized to receive notice, rather that person is not identifiable till date despite repeated requests made on behalf of the appellant and even after instructions by the undersigned, the A. O, has not been able to name the person to whom the notice was served. “The most fundamental requirement on service has not been established
In the instant case also, the postal reference numbers which are in fact provided by the department itself vide written order u/s 7(1) of the RTI Act 2005, dated 02-03-2022 are untraceable online and no information is available with the postal department regarding such postal references as per RTI reply letter from postal office dated 21-05-2022 bearing Letter No. RTI/SKGPO/2022-23/Bashir Ahmad Sofi
Our explanations regarding source of cash deposits have not been considered by the Ld. Commissioner of Income Tax (Appeals) in para 3.1 of the Order U/S 250 of Income Tax Act, 1961. Where documentary evidence in the form of bank statements itself reveals that the appellant had retirement benefits and pin savings which has also been noted and bifurcated by the Ld. Commissioner of Income Tax (Appeals) in Para 5.3.2 of the Order U/S 250 of Income Tax Act, 1961
The Ld. Commissioner of Income Tax (Appeals) in Para 5.3.2 of the Order U/S 250 of Income Tax Act, 1961 is of the opinion that it is not plausible/logical on part of the appellant to confine/keep/hold the timely withdrawn cash with him for several months or even years. However, the Worthy ITAT Bench Bengaluru has affirmed the appellant’s submission relevant to holding of withdrawn money and considered it plausible and justifiable, in the case of
Col. Rajan Sharma 894, Jalvayu Towers NGEF Layout Sadananda Nagar Bengaluru 560038
Observation of the court
Heard rival contentions, perused the material on record, impugned order, and written submission of the appellant. Admittedly, the lower authorities have passed orders ex parte qua the assessee in violation of principles of natural justice, as no reasonable opportunity of being heard has been granted to the assesse in absence of service of notices as mentioned in the impugned order. The Ld. AR placed reliance on the decision of ITAT, Amritsar Bench, Amritsar in the case of Sh. Manjit Singh ITO, Ward 3(2), Amritsar in ITA No: 44/Asr/2022, order dated 17/11/2022 relating to AY 2017-18. (APB, Pgs.6-15). Accordingly, he pleaded that since, revenue authorities have violated the principles of natural justice, therefore, this case may be set aside and restored back to the file of the Assessing Officer in the interest of natural justice
Furthermore, he undertakes to fully assist the department and to fully cooperate in the matter of assessment proceedings. 8. The Hon’ble ITAT Amritsar Bench in the case of Sh. Manjit Singh v. Income Tax Officer in ITA No. 44/Asr/2022 dated 17.11.2022 vide para 8, 9 & 10 has held as under
We have carefully considered the submission of both the sides, assessment order, impugned order and material placed on record. Admittedly, there is an addition of an amount of Rs.35,04,500/- towards cash deposits in bank account maintained with Punjab National Bank in Bank of India in a staggered manner from 18th Nov., 2016 to 29th Nov., 2016 by the authorities below in exparte proceedings qua the assessee. It is seen that aggrieved with the exparte assessment order, the assessee preferred an appeal before the Learned CIT(A), NFAC Delhi who too decided this appeal ex-parte without appreciating the facts and merits of the case as per the contentions raised by the appellant before us
From the Impugned order, it is evident that the CIT(A) while passing the order has only reproduced the grounds of appeal raised by the assessee and the assessment order while dismissing the appeal of the assessee in limini without deciding the case on merits. We hold that the impugned order passed by the CIT(A) is a non-speaking being passed without application of mind to the issues raised in the grounds of appeal
In view of the principles of natural Justice and considering the factual matrix of the case, we are of the considered view, that the appellant assessee should get an opportunity to explain and substantiate the nature cash deposits in the alleged bank account with the support of material evidence relevant for the year under consideration. Accordingly, we consider it deem fit to restore back the matter back to the file of the Ld. AO to pass de novo assessment after considering the written submission and evidences filed on record before him during the appellate proceedings, and to be filed in fresh proceedings after granting sufficient opportunity of being heard to the assessee. No doubt, the assessee shall cooperate in the fresh proceedings
On parity of facts, following coordinate bench decision in the case of “Sh. Manjit Singh v. Income Tax Officer’, (Supra) we consider it deem fit to restore back the matter back to the file of the Ld. AO to pass de novo assessment order after considering the written submission and evidences filed on record and may be filed before him during the fresh proceedings after granting sufficient opportunity of being heard to the assesse
In the result, the appeal of the assesse in I.T.A. No. 208 & 37/Asr/2022 is allowed for statistical purpose and in I.T.A. No. 37/Asr/ 2023 is dismissed as withdrawn
Order pronounced in the open court on 28.04.2023
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
Read the full order rom here
Bashir-Ahmad-Sofi-Nowhatta-Vs-ITO-ITAT-Amritsar-2
