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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD
Before: SHRI SATBEER SINGH GODARA & SHRI LAXMI PRASAD SAHU
O R D E R PER L.P. SAHU, A.M.: This appeal filed by the Revenue is directed against CIT(A), Kurnool’s order dated 30/12/2019 for AY 2009-10 involving proceedings u/s 143(3) r.w.s. 147of the Income Tax Act, 1961 ; in short “the Act”, on the following grounds of appeal:
1. The order of the Ld.C1T(A) is erroneous both on the facts of the case and in Law.
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2. The Id. C1T(A) erred in holding that the AD has no evidence on record is bad in law since credible information and reports are received from the Investigation Authorities of the department as a result of investigations made categorically along with sworn statements recorded from the persons who admitted the fact that they were engaged in the business of accommodating accommodation entries to the beneficiaries, the assessee company being one of such benefitted company during the FY 2008-09 relevant to the AY 2009-10.
3. The Ld. CIT(A) erred in holding that the AD has not given any opportunity to rebut the material used against the assessee though the assessee was duly intimated the information received by the AD and has given an opportunity letter dated 19.12.2016. 4. The Ld.C1T(A) erred in not considering the fact that the assessee who is well aware that the time limitation for completion of assessment gets barred by 31.12.2016 has filed information for the first time on 02.12.2016, at the fag end, and further vide letter dated 23.12.2016 had sought for grant of some more time for furnishing information. The Ld.CIT(A), Kurnool ought to have called for the said information from the assessee during the course of appellate proceedings. 5. Any other ground that may be urged at the time of hearing.”
Briefly the facts of the case are that the assessee is a private limited company engaged in the business of trading in steel. However, it is observed from the details available on record that the assessee had stopped carrying on the business since past ten Years, and, therefore, categorized as a defunct company· Further, the assessee did not file any :- 3 -: M/s Arjun Traders Pvt. Ltd, Hyd.
return of income for the impugned AY 2009-10 either within the due date stipulated u/s 139(1) of the Act, or belatedly u/s.139(4) of the Act.
2.1 In the meanwhile, the AO initiated proceedings u/s.148 of the Act, and issued notice u/s 148 of the Act dated 30/03/2016, calling for the return of income for the impugned AY 2009-10. In response to the notice, the assessee, filed the return of income on 02.12.2016 admitting a total income of Rs. Nil. Accordingly, the AO issued the statutory notices u/s. 143(2) and 142(1) of the Act, and conducted hearings with the AR of the assessee.
2.2 Subsequently, the AO concluded the proceedings u/s. 143(3) r.w.s. 147 of the Act, vide order dated 30.12.2016, determining the total income of the assessee at Rs.1,74,20,000/-. While doing so, the AO assessed a sum of Rs.1,74,20,000/- as income of the assessee said to be cash deposits made in the bank accounts of the assessee.
Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A).
Before the CIT(A), the assessee besides filing written submissions, contended that the AO had failed to discharge burden of proof with regard to alleged cash transactions reflected in the bank accounts of the assessee to the extent
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The ld. CIT(A) after considering the submissions of the assessee and analysing the case with case law allowed the appeal of the assessee by holding that the impugned addition made by the AO to the extent of Rs, 1,74,20,000/- has no legs to stand and accordingly directed the AO to delete the addition.
Aggrieved by the order of CIT(A), the revenue is in appeal before the ITAT.
Before us, the ld. DR submitted that the assessee has not carried any business activity for the past 10 years, but, the cash has been deposited into the assessee’s bank account. He further submitted that the CIT(A) was not justified in allowing the appeal of the assessee without any cogent material for proving genuineness of the transactions in the bank statement of the assessee. He, therefore
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The ld. AR, on the other hand, relied on the order of CIT(A) and submitted that the AO did not disclose any evidence either direct or circumstantial to the assessee before resorting to the impugned addition.
We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. As per the findings of the AO, the assessee has not carried out any business activity and has deposited cash in his bank account. While, allowing the assessee’s, the CIT(A), inter-alia, observed as under: “7.13 Further, the AD has not brought any other material including bank accounts held in the name of the assessee in which the said amounts have been deposited. Also, the AO has not conducted necessary investigation in order to ascertain the nature of the cash deposits and the person from whom the assessee had received the cash. Neither the AD has brought any evidence on record to demonstrate that the alleged unaccounted income received in the form of cash has been converted into fixed deposits or other assets or expended for personal purposes, as the case may be. 7.14 In the normal course, when the AO contemplates assessment of additional income in the hands of the assessee, on the basis of the information collected from his own investigation or received from external sources, then, it is the legal obligation of the AO to provide the assessee the details of information and nature of additional income detected, for his comments and :- 6 -: M/s Arjun Traders Pvt. Ltd, Hyd.
rebuttal, if any. Also, it is well settled legal position that no material can be used against the assessee unless, he is confronted with such material and given an opportunity to rebut the same. Further, in a case, any evidence is used against the assessee without confronting the same to the assessee, such action of the AO can be rendered as illegal, and therefore, any addition made thereof, cannot be sustained in the eyes of the law. 7.15 In the instant case, it is an admitted fact that the AO has not followed this settled position of law. On the other hand, the AO had actually insisted the assessee to furnish the details of the bank accounts in which the alleged cash/ amount was deposited. Further, the AO has not stated in the assessment order the section under which the said amount had been brought to tax as income of the assessee.”
9.1 The ld. DR also contended that the CIT(A) allowed the appeal of the assessee without addressing the issues raised by the AO in his order. Therefore, considering the totality of the case of the case, we remit the issue back to the file of the AO with a direction to decide the appeal taking into consideration the observations of the CIT(A) and contentions of the assessee before the CIT(A) as well as before him in accordance with law after providing reasonable opportunity of hearing to the assessee in the matter. The assessee is directed to substantiate its claim by way of documentary evidence before the AO. Thus, the grounds raised by the revenue are treated as allowed for statistical purposes.
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In the result, appeal of the revenue is allowed for statistical purposes, in above terms.
Pronounced in the open court on 21st September, 2021.