The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT)set aside the order of the Commissioner of Income Tax (Appeals)[CIT(A)] and directed the National Faceless Appeal Centre (NFAC) to resolve the appeal alongside the pending assessment matter
Digamber Jain Swadhyay Mandir Trust ,the appellant-assessee,maintained a Derasar (temple), Atithi House (guest house), and Bhojanshala (mess) in Songadh (Palitana, Bhavnagar, Gujarat). For the assessment year (AY)2016-17, the trust filed its return of income on 14.09.2016, declaring nil income.
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During scrutiny, the AO identified unexplained cash deposits totaling Rs. 1,34,40,611 in the Bank of India. After the trust failed to respond, the deposits were added to the total income, leading to a tax demand.
The AO later acknowledged that the tax should have been calculated under Section 115BBE at 60% but mistakenly assessed it at 30% instead. A show cause notice was subsequently issued to the trust regarding the correct tax rate of 60%.
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The AO found the assessee’s explanations for the cash deposits inadequate and concluded that they were unexplained, resulting in a revised tax demand at 60% under Section 115BBE of the Act. In response, the assessee filed an appeal with the NFAC, but the CIT(A) upheld the rectification order as legally correct, leading to the dismissal of the assessee’s appeal.
An 82-day delay was noted in filing the appeal. The assessee submitted a notarized affidavit explaining that, following the regular assessment order under Section 143(3) dated 06.12.2018, an appeal was pending before the NFAC. The assessee mistakenly believed that a separate appeal against the rectification order was unnecessary, a misunderstanding clarified by the Chartered Accountant(CA).
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Although the Departmental representative(DR)initially objected to the delay, he ultimately left the decision to the Bench, which accepted the reasons provided in the affidavit and condoned the 82-day delay, allowing the main appeal to proceed.
The Tribunal observed that the Senior Counsel, representing for the assessee, contended that the CIT(A) did not acknowledge the pending appeal against the original assessment order under Section 143(3) (E-filing Acknowledgment No. 404914390030119 dated 03.01.2019) and incorrectly disposed of the rectification order appeal without addressing the main appeal, which required remanding to the NFAC.The CIT-DR, supported the decisions made by the lower authorities.
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The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member)consequently set aside the CIT(A) order and instructed the NFAC to adjudicate both appeals together, ensuring the assessee was given a proper opportunity for a hearing.
In conclusion, the appeal was allowed.
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