ANIL,SONEPAT vs. ITO WARD - 1, SONEPAT

The dispute in the present appeal basically relates to addition of an amount of Rs.22,28,600 representing cash deposits made in the bank account.

Briefly, the facts are, assessee is a resident individual. For the year under dispute, assessee had originally filed his return of income under Section 139(1) of the Act declaring income of Rs.1,59,000 under the head “income from other sources”. Subsequently, the assessing officer received information that in the year under consideration, assessee has deposited cash amounting to Rs.12,58,700 in an account maintained with IDBI Bank. On the basis of such information, the assessing officer reopened the assessment under Section 147 of the Act. Alleging that assessee did not comply with the statutory notices issued under Section 148 and 142(1) of the Act. The assessing officer proceeded to complete the assessment ex parte, to the best of his judgment, by invoking the provisions of section 144 of the Act. While doing so, he added back the amount of Rs.12,58,700 to the income of the assessee.

Against the assessment order so passed, assessee preferred an appeal before learned Commissioner (Appeals). In course of appellate proceedings, learned Commissioner (Appeals) noticed that in the return of income filed in response to notice issued under Section 148 of the Act, assessee has shown cash deposits of Rs.22,28,600 in two different bank accounts held in IDBI Bank and Axis Bank. However, on examining the material available on record, learned Commissioner (Appeals) found that the actual deposits in the two bank accounts are to the tune of Rs.24,28,101. On verifying the original return as well as the return filed in pursuance to notice issued under Section 148 of the Act, learned Commissioner (Appeals) observed that there is no cogent evidence brought by the assessee to establish the fact that he was involved in any business activities. Thus, ultimately, he concluded that the alleged receipts of Rs.22,28,600 from the business is nothing but undisclosed income of assessee. Accordingly, she added back the amount of Rs.28,22,600 under Section 69A of the Act.

Before me, learned counsel appearing for the assessee submitted that due to non-service of statutory notices, assessee could not properly represent his case before the assessing officer. However, he submitted, before the first appellate authority assessee furnished various documentary evidences by way of additional evidences, which were forwarded to the assessing officer. He submitted, simply because, evidences were not furnished in course of assessment proceedings, they were not considered by the first appellate authority.

Learned Departmental Representative, though, relied upon the observations of the assessing officer and Learned Commissioner (Appeals), however, he submitted, matter can be re-examined by the assessing officer.

I have considered rival submissions and perused the material placed before me. It is evident, in course of proceedings before the first appellate authority, the assessee had furnished certain additional evidences to prove the source of cash deposits in the bank account. In the remand report, the assessing officer has suggested that the additional evidences should not be entertained under Rule 46A, since, the assessee failed to produce them in course of assessment proceedings. On the basis of such report of the assessing officer, learned Commissioner (Appeals) has not considered the additional evidences furnished by the assessee. In my view, this is in violation of rules of natural justice. When the assessment was completed ex parte, assessee could not have furnished the evidences before the assessing officer. Before the first appellate authority only, the assessee got an opportunity to furnish the evidences. Therefore, the evidences furnished by the assessee should have been considered in their own merits. Further, as it appears from record, before enhancing the income of assessee, no show cause notice was issued to the assessee by first appellate authority. This is against the statutory mandate.

In view of the aforesaid, I am inclined to restore the issue relating to the addition made on the cash deposits in the bank account to the file of the assessing officer for fresh adjudication after considering all the evidences furnished by assessee.

Needless to mention, the assessing officer must provide a reasonable opportunity of being heard to the assessee before deciding the issue. Grounds are allowed for statistical purposes.

In the result, the appeal is allowed for statistical purposes.