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Income Tax Appellate Tribunal, “SMC - B” : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI LAXMI PRASAD SAHU
Per George George K, Vice President:
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 24.05.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
The grounds raised read as follows:
1. The learned CIT(A), Bangalore erred in passing the order in the manner he did.
2. The learned CIT(A), erred in making addition to the extent of Rs. 21,07,000 without appreciating the submission of the appellant. 3. The learned CIT(A) failed to appreciate that the assessee is actively involved in agricultural activities, and the funds deposited are solely
derived from agricultural income. Hence he ought to have deleted the addition. 4. The learned CIT(A) erred to appreciate that the appellant has no other business other than agriculture income. Hence he ought to have deleted the addition. 5. The appellant craves leave to add, amend or alter any of the foregoing grounds. 6. For these and any other grounds that may be urged before the Hon'ble ITAT, it is prayed that the Hon'ble ITAT may allow the appeal with cost.
Brief facts of the case are as follows:
Assessee is an individual. For the Assessment Year 2017-18, return of income was filed on 22.08.2017 declaring Nil income. The assessee in the said return of income had disclosed net agricultural income of Rs.12,10,000/-. The assessment was selected for limited scrutiny to examine the cash deposit made during the year as well as the cash withdrawals. Notice under section 143(2) of the Act was issued on 25.08.2018. Subsequently, several notices were issued under section 142(1) of the Act. The assessment was taken up for e-assessment through e-proceedings and the notices were generated online and sent to the assessee on his registered email ID. During the course of assessment proceedings, the AO obtained bank statement of the assessee. On examination of the bank statement, it was noticed that assessee had made aggregate cash deposit of Rs.23,90,000/- and cash withdrawal of Rs.17 lakhs during the year. Since there was no response to the various notices issued under section 142(1) of the Act, proposal was also sent by the AO to complete the assessment proceedings under section 144 of the Act. Since there was no response to the show cause notice, assessment was completed vide order dated 25.11.2019. The AO tabulated the cash in hand / excess cash deposited of Rs.14 lakhs. Further AO also calculated the cash withdrawn from online transfers to assessee of Rs.7,07,000/- and made an aggregate addition of Rs.21,07,000/- under section 69 r.w.s. 115BBE of the Act. The relevant finding of the AO in making the addition read as follows:
“In view of the above and after considering the sources of cash deposits from cash withdrawals, the excess cash deposits in this case has been worked out to Rs. 14,00,000/- and the cash withdrawn from the online money received other than the online transferred out has been worked out to Rs 7,07,000/-. The assessee has failed to substantiate the nature and sources of cash deposits and cash withdrawal made during the year and therefore the cash deposits and cash withdrawals aggregating to Rs. 21,07,000/- is hereby treated as unexplained income of the assessee and added to his total income as unexplained investment u/s. 69 of the Income Tax Act, 1961 under the head Income from Other Sources.”
Aggrieved by the order of the assessment in making the addition of Rs.21,07,000/- assessee filed an appeal before the CIT(A). The CIT(A) passed an ex-parte order without adjudicating on merits. The reason for the CIT(A) in deciding the case ex-parte was that the assessee did not respond to the notices issued from the Office of the CIT(A) dated 03.03.2021, 07.02.2023, 21.04.2023 and 09.05.2023.
Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. The assessee has filed a Paper Book enclosing there in the bank statements, copy of the income tax returns filed for the Assessment Years 2016-17 and 2017-18, copy of the RTC for holding agricultural land, copy of the returns of persons from whom assessee had received money online, chart for deposit and withdrawal made by the assessee, etc. The learned AR submitted that assessee is an aged person and is having agricultural background. It was submitted that assessee was not computer literate and was not aware of the notices sent from the Office of the AO or the CIT(A). Hence, assessee could not take part in the assessment proceedings or in the appellate proceedings. It was submitted that in the interest of justice and equity, one more opportunity may be provided to the assessee to represent his case before the AO since assessment has been completed under section 144 of the Act (though wrongly mentioned under section 143(3) of the Act).
Learned Standing Counsel supported the orders of the AO and the CIT(A).
I have heard the rival submissions and perused the material on record. It is admitted fact that assessee had disclosed substantial agricultural income in the return filed for Assessment Years 2016-17 and 2017-18. Assessee has also produced RTC which proves that he is holding agricultural lands. It was also noticed that for the relevant Assessment Year, the total cash deposit is Rs.23,93,000/- and cash withdrawal is of Rs.17 lakhs. The AO in the impugned order at pages 2 and 3 had worked out the excess cash deposit of Rs.14 lakhs and added the same under section 69 of the Act. Apart from the excess cash deposit worked out, the AO has also worked out the cash withdrawals on account of online money received by the assessee of Rs.7,07,000/- and also brought the same to tax under section 69 of the Act aggregating to Rs.21,07,000/-.
I strongly deprecate the nonchalant attitude of the assessee in not responding to the notices issued from the Office of the AO and CIT(A). However, in the interest of justice and equity, I am of the view that assessee ought to be provided one more opportunity to represent his case. Since assessment has been completed under section 144 of the Act, I deem it appropriate to remit the matter to the AO. Assessee is directed to co-operate with the Revenue and furnish necessary documents in support of his case. The assessee is directed not to seek unnecessary adjournment. AO shall afford a reasonable opportunity of hearing to the assessee before a decision is taken in the matter. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.