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Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD
Before: SHRI LALIET KUMAR
O R D E R PER LALIET KUMAR, J.M. The appeal of the assessee for A.Y. 2017-18 arises from the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dt.04.07.2023 invoking proceedings under section 144 of the Income Tax Act, 1961 (in short, “the Act”).
2. The grounds raised by the assessee reads as under :
“1. The Appellant submit that during the financial year 2016-17 he deposited an amount of Rs. 10,45,000/- in Allahabad Bank Account, which is received for the sale consideration of Residential Plot wide Document No. 4553/2017 for Rs. 15,20,000/-.
The Appellant also submit that remaining amount of Rs. 4,75,000/- he purchase a residential Plot wide Document No. 130/2017 for Rs. 4,45,000/- and the remaining amount of Rs 30,000/- he used for the registration expenses.
3. The Appellant has issued with a notice by the Income Tax Officer, Ward No. 1, Kurnool for the explanation of funds deposited in the Alhabad Bank Account. The appellant personally attended the office of the Income Tax Officer, Ward No.1, Kurnool with a letter on 16-09-2019 and explained the matter to the assessing officer, who advised him to file the letter through office tappal.
The Appellant followed the instructions of the assessing officer dropped the letter in office tappal. The Appellant submit that the assessing officer without any notice have passed the proceedings and levied the tax and penalty to an amount of cash deposited in the Allahabad Bank account of Rs. 13,11,642/- which is arbitrary and contrary to law.
The Appellant has filed an appeal before the Honourable Commissioner of Income Tax (Online) disputing tax and Penalty of Rs. 13,11,642/-. But the Appellate Authority without giving personal hearing have partly allowed the appeal.
6. The Appellant further state that injustice was made to him by partly allowing the appeal petition. Hence, the appellant preferred this appeal as the total amount of deposit was out of sale consideration. Which has to be taxed under the head income from long term capital gains. A Working sheet is enclosed to this grounds of appeal
and the same is part and parcel of the grounds of appeal.
7. The Appellant Submit that as per head long term capital gains he has no liability to pay the tax. The tax levied was on assumptions and surmises which is not tenable in the eye of law. The Appellant submitting all the registered document for your kind perusal and make the necessary orders as you think fit for the appellant. The Appellant has neither done any business nor has received any other income except the amount received for sale of residential Plot. Hence, the appellant has to assess under the head income from long term capital gains.
8. The Appellant Prays the Honourable Income Tax Appellate Tribunal to quash the orders of the Honourable Commissioner, National Faceless Appeal Centre, Delhi. As the first Appellate Authority has not given an opportunity to prove the same.”
Facts of the case, in brief, are that assessee being the firm has not filed its Return of Income U/s. 139(1) of the l.T,Act, 1961 for A.Y. 2017-18. Hence, a Notice U/s. 142(1)(i) dated 14-03- 2018 was issued and served on the firm. Thereafter, proceedings U/s. 144 r.w.s. 142(1) were initiated and Notices U/s. 142(1)(ii) of the I.T.Act were issued, calling for documentary evidences. In the meanwhile, copies of the Account Statement for the Fin. Year 2016- 17 of assessee firm was obtained under section 133(6) of the I.T.Act, and thereafter found that an amount of Rs. 10,45,000/- was deposited by the firm in Specified Bank Notes during demonetization period. In response to the Notices U/s. 142(1)(ii) served, the firm's partner Sri Vadde Nanda Suresh had filed a letter dated 16-09-2019, wherein he had stated that he had entered into negotiations with a party for sale of his empty plot and received an amount which was deposited into the firm's bank account. In support of his claim, he had furnished a Copy of the Registered Sale Deed dated 31-05-2017 vide Document No. 4553/2017 for a Sale Consideration of Rs. 15,20,000/-.
3.1. During the course of assessment, Assessing Officer found from the sale deed that said V.Nanda Suresh had received the Sale Consideration in cash on 31-05-2017. As such his claim of receipt of Cash in Fin. Year 2016-17 for deposit into the firm's account is not acceptable. Accordingly, a Show Cause Notice was issued and served. Accordingly, the total income proposed to be brought to tax was Rs. 11,19,180/-. However, till date, there has been no response to this Show Cause Notice. As such, after due 3 verification of the information gathered U/s. 133(6) of the I.T.Act, the proceedings U/s. 144 r.w.s. 142(1) of the I.T.Act, in the case of the firm are completed by assessing the Total Income at Rs. 11,19,180/-. Thus, assessment order was passed on 20.10.2019 u/s 144 of the Act. Further, Penalty proceedings U/s. 270A were also initiated, for underreporting. Further, Penalty proceedings U/s. 271AAC(1) were initiated, on account of addition made U/s. 69A of the I.T.Act. Furthermore, Penalty proceedings U/s. 271F are initiated, for non filing of Return of Income as per the provisions of section 139 of the I.T. Act.
4. Feeling aggrieved with the order of Assessing Officer, assessee filed an appeal, which was later migrated to the ld.CIT(A), NFAC, Delhi, who partly allowed the appeal of assessee by observing as under :
“6.2 On Merits: During appellate proceedings the appellant was asked to furnished copy of the bank statement, but the appellant has not replied. In statement of facts even bank account number is not given. In the absence of any submission and documents the source of investment in property remains unproved. However, various courts have given allowance for past savings and cash in hand in such cases. Therefore, in the interest of equity and justice it will be reasonable to give allowance of Rs.3,00,000/- for past savings and cash in hand. Thus, addition on accounts of cash deposits is restricted to Rs.7,45,000/-. Addition of Rs.74,180!- made by AO is sustained in the absence of any submission. The grounds of appeal are 'Partly Allowed'.
5. Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before me.
Before me, ld. AR for the assessee submitted that during the course of assessment, the assessee had personally visited the office of Assessing Officer and had explained the case of the assessee and submitted the details of source of cash. However, the Assessing Officer has quite contrary noted that assessee has not appeared on the dates given in the order. On appeal also, the assessee suffered from the same fate. The learned Authorized Representative further submitted that the lower authorities decided the issue without discussing the factual details of the case and hence, requested that the matter may be sent back to the lower authorities for a fresh review, taking into consideration of the circumstances.
On the other hand, the learned Departmental Representative did not object to remanding the matter back to the lower authorities.
I have heard the rival submissions and perused the material on record. On perusal of the record, I find that the Assessing Officer did not accept the explanation and held the cash deposit of Rs.10,45,000/- as unexplained income and added the same to the income of the assessee and further, as the bank account of the assessee firm contains other credits of Rs.9,27,250/-, Assessing Officer had estimated the net profit @ 8% which comes to Rs.74,180/-. Thus, Assessing Officer made a total addition of Rs.11,19,180/- to the total income of the assessee. In the order of ld.CIT(A), it was mentioned that though the assessee was given sufficient time and opportunity, however, the assessee has not made any compliance and he has also given the details of the dates of notices and hearing on which assessee firm did not turn up, in a tabular form, at Para 4 of his order. Thereafter, the ld.CIT(A) after following the case laws mentioned in its order from Para 6.1, restricted the addition on account of cash deposits to Rs.7,45,000/- and sustained the addition of Rs.74,180/- made by the Assessing Officer in the absence of any submission. Thus, granted partial relief to the assessee.
In light of the above, though, invariably the appeal of the assessee is required to be dismissed on account of non- compliance, however, considering the totality of the facts and circumstances and in the interests of justice, one more opportunity is granted to the assessee to appear and contest the case before the Assessing Officer. Hence, I remand back the appeal to the file of Assessing Officer for passing fresh order after affording due opportunity of hearing to the assessee in accordance with law subject to payment of costs of Rs.2,000/- (Rupees Two Thousand only) to be deposited in the Prime Minster Relief Fund within one month or from the date of receipt of this order or whichever is earlier. Further, the assessee is directed to appear before the Assessing Officer on the date of hearing fixed by the Assessing Officer and shall file all the documents / evidence in support of its case. In case, the assessee failed to file any documents in support of its case, Assessing Officer shall decide the matter in accordance with the law. Accordingly, the appeal of assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 21st September, 2023.