SURYARAO MUDRAGADA,RAJAHMUNDRY vs. INCOME TAX OFFICER, WARD-1(1), RAJAMAHENMDRAVARAM

In the above cited appeal, Ld.AO made addition, as the assessee was not able to explain the source of cash deposits made during the demonetization period and hence the same were treated as unexplained. As the assessee was aggrieved by the addition made by the Ld.AO, an appeal was filed before the Ld.CIT(A) and for the detailed reasons mentioned in the order of Ld.CIT(A) passed by him u/s 250 of the Act, the additions made by the Ld.AO were upheld and appeal of the assessee was dismissed. In other words, cash deposit of Rs.15.77 lakh made by the assessee on 01.12.2016 was held to be unexplained by the assessee and accordingly, the same was treated as undisclosed income of the assessee for the A.Y.2017-18. Accordingly, this amount was brought to tax u/s 69A of the Act under the head “other sources” and this undisclosed income was charged to tax as per the provisions of section 115BBE of the Act.

As the appellant did not get relief from the First Appellate Authority, the appeal was escalated to ITAT. Before the ITAT, the appellant has stated that the bank statement, cash book, rental income details, profit and loss account and balance sheet were filed for proving the source of deposits made into the bank account. While going through the appeal papers filed before ITAT, the Bench has pointed out that the appellant passed away before the Ld.CIT(A) passed the order. It was observed by the Bench that the legal heirs were not brought on record before the Ld.CIT(A). Since the Ld.CIT(A) passed order before the death of the appellant, the proper procedure is to bring legal heirs on record who should be given an opportunity of being heard before passing the appeal order. This fact of death of appellant, it appears, was not brought to the notice of Ld.CIT(A). The Ld.AR of the appellant was informed to file amended Form 35 by legal heirs containing the grounds of appeal before the Ld.CIT(A) and take up appeal before the First Appellate Authority. With these directions, the issue is remitted back to the file of the Ld.CIT(A) and the appellant is directed to file amended Form 35 before the Ld.CIT(A) as mentioned above.

In the result, appeal filed by the Assessee is allowed for statistical purpose.