VARAHA VENKATA SURYANARAYANA RAJU BHUPATHIRAJU,HYDERABAD vs. ACIT, CENTRAL CIRCLE-1(2), HYDERABAD

Although a number of grounds have been raised by the assessee, however, these all relate to the order of the learned CIT (A) in confirming the addition of Rs.7,30,500/- made by the Assessing Officer u/s 69A of the I.T. Act.

Facts of the case, in brief, are that the assessee is an individual and is engaged in the business of infrastructure related projects and contracts. He filed his return of income on Page 1 of 4 25.12.2019 admitting total income of Rs. 1,09,45,560/-. A search and seizure action u/s 132 of the Act was carried out in the case of the assessee on 27.09.2018. The case of the assessee was taken up for scrutiny being “Specified year”. Accordingly, the Assessing Officer issued statutory notices u/s 143(2) and 142(1) of the I.T. Act to which the AR of the assessee appeared before the Assessing Officer from time to time and filed the requisite details.

The Assessing Officer noted that during the course of search proceedings, cash of Rs.7,30,500/- was found and seized in the case of the assessee. He, therefore, asked the assessee to furnish the source of the cash so found during the course of search proceedings u/s 132 of the I.T. Act. The assessee claimed that the cash represents his past savings. However, the Assessing Officer rejected the explanation of the assessee in absence of furnishing of supportive documentary evidence to support the claim and made addition of the same u/s 69A of the I.T. Act to be taxed u/s 115BBE of the I.T. Act.

Since the assessee did not appear before the learned CIT (A) despite number of opportunities granted, the learned CIT (A) in the ex-parte order passed by him made the addition made by the Assessing Officer.

Aggrieved with such order of the learned CIT (A) the assessee is in appeal before the Tribunal.

The learned Counsel for the assessee at the outset submitted that due to unavoidable circumstances, the AR of the assessee could not appear before the learned CIT (A) for which the learned CIT (A) in the ex-parte order passed by him sustained Page 2 of 4 the addition made by the Assessing Officer. He submitted that in the interest of justice, the assessee should be given an opportunity to substantiate his case before the learned CIT (A).

The learned DR, on the other hand, heavily relied on the order of the Assessing Officer and the learned CIT (A). He submitted that when the assessee could not furnish any documentary evidence before the Assessing Officer to substantiate the source of the cash found during the course of search and since the assessee did not appear before the learned CIT (A) despite number of opportunities granted, therefore, the request of the learned Counsel for the assessee for setting aside the issue is not justified. He submitted that the learned CIT (A) had also decided the issue on merit and has given valid reasons while sustaining the addition made by the Assessing Officer. He accordingly submitted that the order of the learned CIT (A) be upheld and the grounds raised by the assessee should be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. It is an admitted fact that the Assessing Officer made the addition of Rs.7,30,500/- u/s 69A of the I.T. Act being unexplained cash found during the course of search on the ground that the assessee could not substantiate with documentary evidence to show that the cash so found was our of past savings. We find despite six opportunities granted by the learned CIT (A), there was no compliance from the side of the assessee for which the learned CIT (A) was constrained to pass the ex-parte order wherein, he, after deciding the issue on merit sustained the addition made by the Assessing Officer. It is Page 3 of 4 the submission of the learned Counsel for the assessee that in the interest of justice, the assessee should be given an opportunity to substantiate his case before the learned CIT (A). Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the learned CIT (A) with a direction to grant one last opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the learned CIT (A) on the appointed date without seeking any adjournment under any pretext failing which the learned CIT (A) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.