👍👍👍ITAT restore matter to AO as matter was not properly argued before AO for bonafide reasons

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Kishoresinh Hemantsinh Chudasama Pipali Vs DCIT (ITAT Ahmedabad)

Undisputedly, before the ld. CIT(A), none-appeared on behalf of the assessee and the appeal was decided ex parte. I have also gone through the Form no. 35 filed before the ld. CIT(A) and find that the assessee has rightly mentioned that email-id mentioned therein was that of his friend, Shri Gaurangsinh Chudasama, i.e. “gaurangsinhachudasama@gmail.com”. Therefore, the assessee’s explanation for not appearing before the ld.CIT(A) as being misinformed, regarding notices being sent to his authorized representative appears to be true. Even before the AO, I find that the assessee had only filed one letter stating that the source of cash deposits was from the compensation that he had received from his land, and also partly related to his wife’s money, which she had saved and deposited in the bank.

Thereafter, no reply was filed to the AO also. Therefore, the assessee’s plea that his matter was not properly argued before the AO and also not properly appreciated appears to be true. Further, I have noted that the assessee’s consistent stand has been that the cash found deposited pertained to the amount which he received from the Government as compensation on account of acquisition of land under Land Acquisition Act which he withdrew and re­deposited in his bank account over a period of time so as to keep cash handy for purchase of new land. On account of the assessee having been unable to avail opportunity of hearing before both the AO and the ld. CIT(A) for bonafide reasons, as noted above, in the interest of justice, I agree with the ld. counsel for the assessee that the assessee be granted further opportunity of hearing so as to plead and give due explanation duly substantiated with evidence for the source of cash deposited in his bank account. Accordingly, I restore the issue back to the file of the AO for considering of the issue afresh after providing due opportunity of hearing to the assessee in accordance with law.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeals), National Faceless Appeal Centre (NFAC), Delhi (in short referred to as ld. CIT(A)/NFAC) under section 250(6) of the Income Tax Act, 1961 (“the Act” for short) dated 18.8.2022pertaining to the Asstt. Year 2017-18.

2. The ld. counsel for the assessee began by stating that solitary issue in the present appeal pertained to addition made to the income of the assessee on account of cash deposited in his bank account remained unexplained to the tune of Rs.22,01,000/-. The ld. counsel for the assessee contended that his only plea was that since he was not offered adequate opportunity of hearing both before the AO and the Ld. CIT(A),and could not make out his case suitably before them, in the interest of justice therefore he be granted an opportunity of hearing again so that evidences and explanation for the source of cash deposits could be suitable placed before the Revenue authorities. The reason for not having made his case to the lower authorities was stated by the ld. counsel for the assessee that the assessee was not very literate and informed in tax matters, being only 10th pass and he had taken early retirement from the State Government where he was earlier working and was now engaged in agriculture activities; that his assessment proceedings were handled by an income-tax practitioner who had kept him in the dark about the proceedings, and therefore huge addition of Rs. 22.01 lakhs was made by the AO on account of no proper explanation furnished for cash found deposited in his bank account; that even before the ld. CIT(A) on account of certain miscommunication, the appeal remained uncontested. He stated that after his bad experience with the income-tax practitioner who had mishandled his assessment proceedings, he had requested his friend Shri Gaurangsinh Chudasma to engage a Chartered Accountant for filing appeal before the ld. CIT(A); that his friend arranged to file first appeal and mentioned his email-id in Form No.35 being the form in which the appeal is to be filed to the first appellate authority; that all notices accordingly were being received by his friend, who in turn sent the notices to the assessee, but the assessee was under the belief that these notices were being sent to his CA also; while his friend was under belief that the assessee had forwarded the notices to the CA, and therefore, the notices were not reaching the CA under wrong impression of both the assessee and his friend, and therefore, the matter remained unrepresented before the ld. CIT(A).

3. Even on merit, it has been pointed that the assessee had received compensation on account of acquisition of his land by the Government of Rs.24,62,712/- which he had withdrawn from his bank and kept as cash in hand, so as to enable him to acquire another piece of land as and when available immediately. When the cash remained with him for a long period of time, he re-deposited in his bank account, and withdrew it again after sometime; that he had also deposited cash of his wife during the demonetization period and all the cash deposited in the bank was fully explainable. He therefore pleaded that matter be restored back to the AO for considering the assessee’s explanation afresh. An affidavit of the assessee stating the above facts of non-appearance before the ld.CIT(A) and the source of cash deposits was filed before us. The contents of the same are as under:

“I, Kisharsinh HemantsinhChudasama son of Shri Hemantsinh Akhubha Chudasama , aged about 60 years at present residing at Pipli, Dhandhuka, Ahmedabad – 382465, having PAN : AJHPC7073R do hereby solemnly affirm and declare on oath as under: ,

01.1 have been semi literate person having education of 10th pass. I was working in State Transport and after taking the early retirement, I have been doing agricultural activity. I received the agricultural land situated at Old Survey No.660 and new Survey No.72 at Village Pipli, Taluka Dholera, District Ahmedabad ad measuring 16831 square meters in inheritance from ancestors. Such land was compulsorily acquired by Government for construction of four lane road of Sarkhej Dhandjhuka Vataman Bhavnagar Road and Notice under Land Acquisition Act, 1894 was given alongwith the Right to Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 mentioning the compensation amounting to Rs.24,62,7127-(Rupees Twenty Four Lakhs Sixty Two Thousand Seven Hundred Twelve Only) was issued to me on 11/02/2015 Vide Notice No.05/2011 by Second Additional Land Acquisition Officer, District Ahmedabad.

02. Thereafter, after completing certain formalities such amount of Rs.24,62,712/-was credited to my Savings Bank A/c No.607929000445 with The Ahmedabad District Co. Operative Bank Ltd. on 25/03/2015. Since such land was compulsorily acquired by Government, I was in need to purchase another agricultural land. So in order to purchase the agricultural land I was keeping cash on hand so that if any land is suitable for me to purchase and if the land owner becomes ready then I can immediately hand over partial amount to such land owner interested in selling the land to me. With this view, I was , keeping cash on hand with me which were mainly from cash withdrawals from the same bank. Whenever, I feel that now for particular period I do not need cash I was re-deposing such cash to my bank Account with The Ahmedabad District Co. Operative Bank Ltd.

3.1 was having the cash with me which were mainly from Cash withdrawals from the same Bank. On 08/11/2016, Government of India announced the Demonitization of a move that banned high-value currency notes of Rs 500 and Rs 1,000. So people started rushing to the banks for cash deposit of Rs.500/- and Rs.1000/- currency notes resulted in to long queues in the Banks. In Ahmedabad District Co-Operative there was only one cash deposit counter hence the queue were long and cash depositing persons have to wait for hours.

04 My wife has been having leg problem being Osteoarthritis (OA) and it is not possible for her to stand or walk for long time. She requested ma to deposit her cash in to my account with Ahmedabad District Co. Operative Bank but since there were long queues for cash deposit which made the cash deposit activity time consuming and much painful, hence I refused to deposit her cash in to my account. On 12/11/2016, I was going to deposit my cash of Rs. 15,36,500/- in my Account with The Ahmedabad District Co. Operative Bank Ltd., my wife requested me to deposit her cash in to her bank account but I refused to deposit her cash in her account with the reason that the bank has been accepting one cash deposit slip from one-person and if I have to deposit cash in two different accounts then I have once again to stand in the long queue for hours which was painful and time consuming. So my wife requested me to deposit her cash of Rs.9,13,500/- ( Rupees Nine Lakh Thirteen Thousand Five Hundred Only) in my account for which I agreed and deposited my cash of Rs. 15, 36, 5007- and also her cash of Rs.9, 13,5007-aggregating to total cash of Rs.24,50,0007- ( Rupees Twenty Four Lakh Fifty Thousand Only) in The Ahmedabad District Co. Operative Bank A/c.

Reason Why Documents Could Not Be Submitted Before Lower

Authorities

[ I ] Assessment Stage

05. At the time of assessment proceedings, my Income Tax proceedings were being handled by local Income Tax Practitioner and he was also handling my scrutiny assessment matter of the year under consideration. When I was asking him about the status and requirement of details to submit in the Scrutiny Assessment Proceedings, he was saying that he shall submit necessary details, data, documents etc. and intimating me to be free out of any tension.

6. When Assessment order came with the addition of Rs.22,01,000/-, I showed such Assessment Order to him but he did not give any response. When I showed such Assessment Order to my friend Shri Gaurangsinh Chudasama who has been having reasonable knowledge about the Income Tax Laws, ne intimated me that the assessment order has been passed by making the addition amounting to Rs.22,01,000/-being the amount of cash deposited to the Bank during the demonitization period. He also intimated me that adequate details has not been submitted before Assessing Officer during the course of assessment proceedings. So he urgently met the CA and file an appeal before Commissioner of Income Tax (Appeals).

[ II ] CIT(A) Stage

07. Accordingly, I requested my friend GaurangsinhChudasama to meet the CA
and file an appeal before CIT(A). He arranged the filing of first appeal and mentioned his email id in the Form No.35 and on Income Tax Website so that as and when the notice comes through email, he can intimate the CA about the submission date. As and when the notice for submission was coming, Shri Gaurangsinh Chudasama was sending 
me the same. I was under impression that he has also been sending the notice to appeal handling CA and on the other side, Shri Gaurangsinh Chudasama was under impression that I have to send, the notice for submission to appeal handling CA. Thus, due to communication gap between both of us, the notice did not reach to appeal handling CA and the matter was decided on ex-parte basis without being ar,o>6jk merits of the case.

Humble Prayer

Because of the above reasons, I could not submit the submissions, documents, details etc. before the lower authorities. I am semi literate person having education of only 10th pass. I have not been having the knowledge of Income Tax Laws. In fact my knowledge about Income Tax Laws is next to nothing. By not submitting the details, I have not gained anything. I request Honourable Bench of Income Tax Appellate Tribunal to admit the additional evidences. The above information is true to the best of my knowledge and belief.”

4. The ld.DR however opposed the plea of the ld.counsel for the assessee.

5. I have heard rival contentions; gone through the orders of the Revenue authorities below. Undisputedly, before the ld. CIT(A), none-appeared on behalf of the assessee and the appeal was decided ex parte. I have also gone through the Form no. 35 filed before the ld. CIT(A) and find that the assessee has rightly mentioned that email-id mentioned therein was that of his friend, Shri Gaurangsinh Chudasama, i.e. “gaurangsinhachudasama@gmail.com”. Therefore, the assessee’s explanation for not appearing before the ld.CIT(A) as being misinformed, regarding notices being sent to his authorized representative appears to be true. Even before the AO, I find that the assessee had only filed one letter stating that the source of cash deposits was from the compensation that he had received from his land, and also partly related to his wife’s money, which she had saved and deposited in the bank. The same finds mention in the page no.2 of the assessment order at para 2.1 as under:

assessment order

6. Thereafter, no reply was filed to the AO also. Therefore, the assessee’s plea that his matter was not properly argued before the AO and also not properly appreciated appears to be true. Further, I have noted that the assessee’s consistent stand has been that the cash found deposited pertained to the amount which he received from the Government as compensation on account of acquisition of land under Land Acquisition Act which he withdrew and re­deposited in his bank account over a period of time so as to keep cash handy for purchase of new land. On account of the assessee having been unable to avail opportunity of hearing before both the AO and the ld. CIT(A) for bonafide reasons, as noted above, in the interest of justice, I agree with the ld. counsel for the assessee that the assessee be granted further opportunity of hearing so as to plead and give due explanation duly substantiated with evidence for the source of cash deposited in his bank account. Accordingly, I restore the issue back to the file of the AO for considering of the issue afresh after providing due opportunity of hearing to the assessee in accordance with law. Needless to mention, the assessee shall cooperate in the proceedings before the lower authorities for disposal of his case. Thus, the grounds of appeal of the assessee are allowed for statistical purpose.

7. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Court on 29th March, 2023 at Ahmedabad.

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