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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI GEORGE GEORGE K & SHRI LAXMI PRASAD SAHU
O R D E R Per George George K, Vice President:
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 15.05.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18.
Brief facts of case are as follows:
Assessee, an individual, filed the return of income for Assessment Year 2017-18 on 31.03.2018, declaring total income of Rs.13,39,130/-. The assessment was selected for scrutiny and notice under section 143(2) was issued on 09.08.2018 for verifying the cash deposits made in assessee’s bank account. Assessee was requested to furnish the source of cash deposits amounting to Rs.35,16,050/-. In response to the notices issued, assessee filed financial statements along with the profile of the firm stating that he is running the proprietary concern in the name of Anusha Enterprises which deals with all types of waste papers. Since assessee did not file any details with regard to the source of cash deposits along with supporting documents, the AO completed the assessment under section 143(3) of the Act vide order dated 26.11.2019. In the assessment completed under section 143(3) of the Act, an addition amounting to Rs.35,16,050/- was made under section 69A of the Act and special rate was applied under section 115BBE of the Act.
Aggrieved by the Assessment Order, assessee filed appeal before the First Appellate Authority (FAA). Before the CIT(A), notices were issued for furnishing written submissions. Since there was no response to the notices issued from the office of the FAA, the CIT(A) confirmed the addition made in the Assessment Order.
Aggrieved by the Order of the CIT(A), asessee has filed the present appeal before the Tribunal. The learned AR submitted that the assessee could not appear before the FAA since proceedings by the Debt Recovery Tribunal (DRT) was initiated against the assessee and he was in great financial difficulty. It was submitted that assessee was running from pillar to post to settle the issues in the proceedings before the DRT and did not examine email wherein the notices from the Office of the FAA was sent. Further, the learned AR submitted that out of the total addition amounting to Rs.35,16,050/- two of the additions pertaining to cash deposits in Canara Bank account (in A/c Nos.405201002718 and 414285000016 for Rs.11,03,000/- and Rs.6,00,000/- respectively) which belongs to the partnership firm viz., M/s. R. S. Papers, cannot be brought to tax in the hands of the assessee under section 69A of the Act. Further, learned AR submitted that in the Assessment Order, in the computation statement, the AO has made an addition of Rs.46,31,159/- as income from other sources whereas the addition under section 69A of the Act is Rs.35,16,050/-. It was submitted that the AO has considered the business income declared by the assessee amounting to Rs.11,15,109/- also for the purpose of addition and treated Rs.46,31,159/- (Rs.35,16,050/- + Rs.11,15,109/-) as income from other sources which amounts to taxing the said amount of Rs.11,15,109/- twice.
The learned DR supported the orders of the AO and the CIT(A).
We have heard the rival submissions and perused the material on record. From the Office of the FAA, four notices were issued directing the assessee to file written submissions / documents as regards the source of cash deposits. Since there was no response to the notices issued, the CIT(A) has passed an ex-parte order confirming the addition made by the AO. The assessee’s claim is he failed to take note of the notices issued from the FAA’s Office since he was busy with the proceedings under the DRT. We strongly deprecate the assessee in not responding to the notices issued from the Office of the FAA. However, in the interest of justice and equity, we are of the view that one more opportunity ought to be provided to the assessee to furnish the necessary documents / written submissions in support of the source of cash deposits.
Since the AO had made a double addition amounting to Rs.11,15,109/- and also added the cash deposits with M/s. Canara Bank which is claimed to be of the partnership firm, we are of the view that the matter needs to be examined by the AO. Accordingly, the issue raised in this appeal is restored to the files of the AO. The assessee is directed to co-operate with the Revenue and shall not seek unnecessary adjournments in the matter. The AO is directed to afford reasonable opportunity of being heard 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.
Pronounced in the open court on the date mentioned on the caption page.