What did the Tribunal hold?

The Tribunal noted that the assessee did not appear before the lower authorities, preventing examination of explanations. To ensure natural justice, the case was restored to the AO for a fresh examination of the issues.

The assessee declared a total income of Rs. 3,12,640/- and the AO, in the absence of the assessee's response to notices, made an addition of Rs. 14,50,955/- on account of unexplained bank deposits. The CIT(A) dismissed the assessee's appeal for non-appearance.

What were the issues?

Whether the addition on account of unexplained bank deposits is justified when the assessee was not provided an opportunity to explain the source of funds before the AO and CIT(A).

Om Prakash Mandal vs I.T.O., Ward - 1 (3) | ITAT Varanasi 2023

Income Tax Appellate Tribunal, Circuit Bench, Varanasi

Before: Shri B.R. Baskaran (AM) & Shri Amit Shukla (JM)

For Appellant: Shri Arvind Shukla

For Respondent: Shri A.K. Singh

Hearing: 26.09.2023Pronounced: 09.11.2023

The assessee has filed this appeal challenging the order dated 04-10- 2019 passed by Ld CIT(A), Varanasi and it relates to the assessment year 2016-17. The assessee is aggrieved by the decision of Ld CIT(A) in confirming addition of Rs.14,50,955/- relating to unexplained bank deposits made by the AO.

We heard the parties and perused the record. The assessee filed his return of income for the year under consideration declaring a total income of Rs.3,12,640/-. The return of income was selected for limited scrutiny. However, the assessee did not respond to the notices issued by the AO. Hence the AO completed the assessment to the best of his judgment u/s 144 of the Act. The AO noticed that the assessee has maintained three bank accounts and during the year under consideration and the aggregate amount of deposits made into these bank accounts was Rs.14,50,955/-. The AO

2 Om Prakash Mandal . treated the same as unexplained deposits and assessed the same as income of the assessee.

Before Ld CIT(A) also, the assessee did not appear and hence the Ld CIT(A) dismissed the appeal of the assessee. Aggrieved, the assessee has filed this appeal.

The Ld A.R submitted that the assessee is a small businessman running a small shop of general merchandise. During the year under consideration, he has declared turnover of Rs.29,80,000/- and computed income @ 10% u/s 44AD of the Act. He submitted that the impugned deposits represent his business transactions only. He submitted that the turnover of the assessee is double the amount of deposits and accordingly, he submitted that impugned deposits should be considered to have been explained.

On the contrary, the Ld D.R submitted that the assessee did not appear before the AO as well as before Ld CIT(A).

We have heard rival contentions and perused the record. We noticed earlier that the assessee did not appear before both the AO and Ld CIT(A). Before us, the Ld A.R has submitted some explanation with regard to the sources of deposits. However, we notice there was no occasion for the tax authorities to examine those explanations, since the assessee did not appear before them. Hence we are of the view that, in the interest of natural justice, the assessee may be provided with one more opportunity to present his case properly before the AO. Accordingly, we set aside the order passed by Ld CIT(A) and restore all the issues to the file of AO for examining it afresh duly considering information and explanations that may be furnished by the 3 Om Prakash Mandal .

assessee. We also direct the assessee to fully cooperate with the assessing officer for expeditious completion of the assessment.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.

Order pronounced on 09.11.2023.

OM PRAKASH MANDAL,VARANASI vs. I.T.O., WARD - 1 (3), VARANASI

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