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Before: Shri V. Durga Rao & Shri Manjunatha, G.
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 12.05.2023 relevant to the assessment year 2017-18.
Brief facts of the case are that the assessee is a firm and in the business of importing and selling of PVC materials, which is a stop filer. A notice under section 142(1) of the Income Tax Act, 1961 [“Act” in short] was issued on 13/03/2018 calling the assessee to prepare a true and correct return of income in respect of which the assessee was assessable under the Act during the previous year relevant to assessment year 2017- 18. As per provisions of section 142(1) of the Act, the assessee was required to furnish the said return of income as required to be furnished as per the conditions and manner prescribed in Rule 12 of the Income Tax Rules, 1962, on or before 31.03.2018. But the assessee had failed to furnish return of income for AY 2017-18 either under section 139 of the Act (on or before 31.03.2018) and failed to furnish Income Tax Return (|TR) in response to notice issued under section 142(1) of the Act. On the basis of data analytics and information gathered during the phase of online verification under Operation Clean Money. the income Tax Department gathered a list of assessees who had deposited substantial cash in bank account(s) during the demonetisation period (9th November, 2016 to 30th December, 2016), but have not filed Income tax return for AY 2017-18. The data revealed that the assessee had deposited cash of ₹. 78,211000/- in its various seven bank accounts during the demonetisation period (9th November, 2016 to 30th December, 2016) in old currency (₹.500 & ₹.1000 notes) but had not filed Income Tax Return (ITR) for AY 2017-18 neither under section 139 of the Act nor in response to notice issued under section 142(1) of the Act and therefore the source of cash deposits made in old currency remained unexplained. Since the assessee did not file income tax return within the time in response to the notice under section 142(1) of the Act, the case was selected for scrutiny under the provisions of section 144 of the IT Act 1961. Consequently, the Assessing Officer issued summons under section 131 of the Act and served on Mr. S. Jayakrishnan and Mr. D Sathish, partners of the assessee-firm Yesjay Exports on 01.08.2019. On 13-08-2019 Mr. S Jayakrishnan and Mr. D. Sathish, partners of Yesjay Exports, appeared and statements were recorded from them. Further the details of bank accounts of the assessee were taken from the insight portal and KYC details, Aadhar, Bank pay - in slips, bank statements from 01.04.2015 to 31,03.2018 were obtained u/s 133(6) from the banks and examined. On various dates, the assessee had also submitted its bank books, partners’ ledgers, sales ledger, purchase ledger, cash book and debtor’s ledger.
2.1 From the submissions of the assessee firm, the Assessing Officer observed that the receipts into its bank accounts comprised of sales, inter branch transfers, loans taken from the banks, NBFCs and private parties and advance received from customers. Confirmatory letters from the creditors and explanations regarding the total unexplained credits into the bank accounts of the assessee firm were sought for by the Assessing Officer. However, no confirmatory letters have been produced by the assessee firm before the Assessing Officer. Thus, after obtaining approval from the competent authority, the Assessing Officer proposed additions. The assessee provided the reconciliation of its Books of accounts with its bank statement as a response to the show cause notice issued by the Range Head. From the reconciliation, it could be observed that the assessee during the FY 2016 - 2017 had performed various transactions and the transactions to the extent of ₹.14,81,76,720/- were not explained satisfactorily. Further, the assessee has deposited ₹.78,21,000/- during the course of demonetization period and not explained with supporting documents. Moreover, considering the net profits of the previous three assessment years, the Assessing Officer worked out the business income at ₹.4,09,92,346/- and assessed the total income of the assessee at ₹.18,91,69,066/- and completed the assessment under section 144 of the Act dated 30.12.2019.
The assessee carried the matter in appeal before the ld. CIT(A). Despite various opportunities afforded, the assessee has not furnished any reply to any of the notices issued by the ld. CIT(A). Thus, the ld. CIT(A) dismissed the appeal filed by the assessee.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that since the assessee was prevented by reasonable cause, he was unable to furnish any details before the authorities below and prayed that one more opportunity may be afforded to substantiate his case.
On the other hand, the ld. DR strongly supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the absence of filing of return of income and various details sought for from the assessee, the Assessing Officer has completed the assessment under section 144 of the Act. The ld. CIT(A) has also afforded ample opportunities by issuing various hearing notices, but the assessee was refrained from attending the appellate proceedings and has not furnished any submission. Thus, the appeal filed by the assessee is liable to be dismissed. However, in order to meet the ends of natural justice, we are of the considered opinion that the assessee shall be afforded one more opportunity of being heard to substantiate its case before the Assessing Officer. Accordingly, we set aside the appellate order and remit the matter back to the file of the Assessing Officer to afford one more opportunity of being heard to the assessee to substantiate his case with suitable explanation and evidences and thereafter decide the issue in accordance with law subject to the condition that the assessee should pay ₹.10,000/- to the State Legal Aid Authority, Hon’ble Madras High Court and produce necessary proof of payment of cost before the Assessing Officer.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 17th October, 2023 at Chennai.