Is Your CIT(A) Order Truly Based on Merits? ITAT Calls for Re-Adjudication

You might be interested to know that the ITAT has recently highlighted the importance of orders being passed on their true merits.

In a case where the assessee hadn't furnished his return of income for A.Y. 2008-09, the Revenue found that the assessee deposited cash of Rs. 35,00,000/- in his bank account.

Consequently, the case was reopened under Section 147.

Despite the issuance of statutory notices, the assessee couldn't provide any documentary evidence, leading to an addition of Rs. 9,19,883/-. The assessment order was passed under Section 144 r.w.s. 147 of the Act.

The CIT(A) dismissed the matter without representation, and there was no discussion on the merit of the case.

The assessee's appeal highlighted that the CIT(A) had not passed the order on the merits of the issues contested.

The ITAT, after hearing both sides, noted that the CIT(A) had not adequately considered the evidence presented. Therefore, in the interest of justice, the ITAT decided -

It would be appropriate to remand the matter back to the CIT(A) for proper adjudication. The assessee is expected to be given a fair opportunity for a hearing, adhering to the principles of natural justice.

It's essential for you to understand that orders, especially those from the CIT(A), should be based on the true merits of the case. This ensures that justice is served and that taxpayers are given a fair chance to present their side of the story.

Court Name : ITAT Ahmedabad

Parties : Gunvantbhai Chhitubhai Nayak vs ITO

Decision Date : 12 July 2023

Judgement ref : I.T.A. No. 97/Ahd/2023

O R D E R

The appeal filed by the assessee is against the order passed by the Ld. Commissioner of Income Tax (Appeals)-5, (in short “Ld. CIT(A)”),

Vadodara on 18.02.2019 for A.Y. 2008-09.

2. The grounds of appeal raised by the assessee are as under:

“1. The learned CIT(Appeals) has erred in estimating profits @ 25% thereon,

making addition of Rs. 9,19,883/- as Income from business without considering the facts and circumstances of the case. CIT(Appeals) has also ignored other returns filed by the assessee. Assessee only demands another opportunity to submit business expense evidences as he was not in a position to submit the same before due to reasons which are not in control of assessee.

2. Your assessee also demands that if he be able to satisfy his lower profit percentage and reduce his tax liability, his Interest liability should also be deleted.

3. Further assessee had no intentions to conceal the income. He is a regular tax payer. He just missed to file his Income tax return for the AY 2008-09. He has filed his return for all other assessment years. Also on receipt of Notice, he himself declared that he had business receipts of Rs. 36,79,531/- Due to the circumstances he just could not submit evidences to prove his profits. He prays to set aside the demand notice issued u/s 156.

4. That having regard to the facts and circumstances of the case, the Ld. Assessing Officer has erred both on facts and in law in deciding the appeal ex parte in violation of the principles of natural justice and without granting to the assessee a fair, proper and meaningful opportunity and the findings of the Ld. Assessing Officer that the assessee is not serious and sincere to pursue the case is wholly incorrect and in disregard of the fact that there was reasonable cause for alleged non-compliance on the dates fixed for hearing.

5. That the relief prayed for may kindly be allowed and the order of the CIT(Appeals) may kindly be quashed, set aside, annulled or modified.”

3. There is a delay of 1397 days in filing the present appeal. The

assessee has explained the detailed affidavit that the assessee is a farmer

was doing trading business in drumstick which is purely seasonal and

highly price sensitive business. The Ld. D.R. during the hearing submitted

that the assessee is an illiterate person and is not well-versed with the

English language and therefore, despite engaged in the professional C.A. /

consultant was not aware that the same has to be followed up. Due to the

death of the assessee’s A.R. and the closure of the office of the said A.R.

assessee was not in possession of the required documents to file the appeal

before the Tribunal in due course.

4. From the perusal of the records the Ld. D.R. submitted that the

assessee has not explained the details of the delay from 18.02.2019 when

the CIT(A) pass the order till the demand notice i.e. dated 20.03.2020 which

is prior to the Covid period. Thus, the Ld. D.R. vehemently oppose the

condonation of delay.

5. Heard both the parties and perused all the relevant material available

on record. It is pertinent to note that the assessee has taken advice of legal consultant and the said legal consultant hence given the reference of the C.A. to the assessee, after taking advice the assessee was not aware that the said matter has to be pursued with legal consultant as well as the C.A. In fact, the assessee’s ignorance due to his illiteracy cannot be the reason to not to condone the delay. This is a peculiar circumstances in the present assessee’s case where the consultant had died and therefore, the assessee could not file the appeal within the time limit. The explanation given by the assessee appears to be genuine and therefore, in the interest of justice the delay is condoned. This delay condonation should not be taken a precedent but is the exception in the present case only.

6. Now coming to the facts of the case, it appears that the assessee has

not furnished is return of income for A.Y. 2008-09 and from the

information gathered by the Revenue it appears that the assessee deposited

cash of Rs. 35,00,000/- in his bank account. The case was reopen under

Section 147 and statutory notices were issued but was not able to furnish

any documentary evidences and therefore, the Assessing Officer made

addition of Rs. 9,19,883/-. The assessment order is under Section 144 r.w.s.

147 of the Act. From the perusal of the order of the CIT(A) it appears that

the CIT(A) has dismissed the matter on the basis of not representation of the case. There was no discussion on the merit of the case.

7. The Ld. A.R. submitted that the matter may be remanded back to the

file of the CIT(A) for proper adjudication of the evidences and the reopen of the assessee for giving opportunity of hearing and thereafter pass the order.

8. The Ld. D.R. relied upon the assessment order and the order of the

CIT(A).

9. Heard both the parties and perused all the relevant material available

on record. It is pertinent to note that the CIT(A) has not passed the order on merits of the issued contested by the assessee. Therefore, in the interest of justice it will be appropriate to remand back this matter to the file of the CIT(A) for proper adjudication of the issues contested therein and after taking cognizance of the evidences filed by the assessee decide the case on merit. Needless to say, the assessee be given opportunity of hearing by following principle of natural justice. It is pertinent to note that the assessee will fully cooperate in the appellate proceedings before the CIT(A).

10. In result, appeal of the assessee is partly allowed for statistical

purpose.

This Order pronounced in Open Court on 14/07/2023

Sd/-

(SUCHITRA KAMBLE)

JUDICIAL MEMBER

Ahmedabad; Dated 14/07/2023

TANMAY, Sr. PS TRUE COPY

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IN THE INCOME TAX APPELLATE TRIBUNAL

“SMC” BENCH, AHMEDABAD

BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER

I.T.A. No. 97/Ahd/2023

(Assessment Year: 2008-09)

Gunvantbhai Chhitubhai Nayak

C-13, Govardhan Park 3,

P.O. Chhani Jakatnaka, Vadodara

Vs. ITO

Ward-1(2)(3),

Vadodara

[PAN No.ABWPN3858L]

(Appellant) .. (Respondent)

Appellant by : Shri Malav Shah, A.R.

Respondent by : Shri B. P. Makwana, Sr. D.R.

Date of Hearing 12.07.2023

Date of Pronouncement 14.07.2023