VINAY S/O SH. SILAKRAM,ROHTAK vs. INCOME TAX OFFICER, WARD-1, JIND

At the outset, the Registry has pointed out that there is a delay of 424 days in filing the present appeal. In response, the Ld. Counsel for the Assessee submitted an application seeking condonation of delay, which has been taken on record.

The Ld. DR opposed the condonation of delay.

We have heard the rival submissions and perused the condonation application placed on record. Upon consideration of the facts and circumstances of the case, we are satisfied that the assessee was prevented by reasonable cause from filing the present appeal within the prescribed period of limitation. Accordingly, the delay of 424 days in filing the appeal is condoned and the appeal is admitted for adjudication.

Briefly, the facts of the case are that on 20.12.2016, during the demonetisation period, cash amounting to Rs. 18,00,000/- in newly introduced currency notes of Rs. 2,000/- was intercepted by the Anti-Terrorism Squad (ATS), Noida from a vehicle bearing No. HR-31K-0028 in which the assessee was travelling. The matter was subsequently handed over to the Income Tax Department.

During the course of proceedings, the statement of the assessee was recorded under section 131(1A) of the Income-tax Act, 1961, wherein the assessee submitted that the cash did not belong to him but pertained to M/s Baljeet Nain & Co., a licensed liquor contractor of Village Kathura, District Sonepat. It was further stated that the said concern is a regular assessee maintaining audited books of account and the cash was being carried for deposit towards excise license fee.

Subsequently, notice under section 142(1) dated 07.12.2017 was issued. In response, the assessee filed return of income on 08.02.2018 declaring income of Rs.

The Ld. Assessing Officer, however, was not satisfied with the explanation furnished by the assessee. The AO held that the assessee failed to establish the source of cash and ownership thereof.

Relying upon the impounded diary and treating the explanation as unsatisfactory, the AO made addition of Rs. 32,26,000/- comprising of:

The additions were made under section 69A read with section 115BBE while framing assessment under section 143(3) vide order dated 05.11.2019. 12. Against the order of the AO the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) dismissed the appeal ex parte vide order dated 09.04.2024 on account of alleged non-compliance with notices. The Ld. CIT(A) did not adjudicate the issues on merits and upheld the additions made by the AO.

Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal.

During the course of hearing the Ld. AR submitted that the order of the Ld. CIT(A) is bad in law as the same has been passed ex parte without providing adequate opportunity of being heard and is a non-speaking order. It was further contended that the assessment itself is void ab initio for want of proper juri iction as no valid notice under section 143(2) and/or section 153A/153C was issued or served.

On merits, the Ld. AR submitted that the seized cash did not belong to the assessee but to M/s Baljeet Nain & Co., which is a regular assessee and the transaction is duly recorded in its books of account. Supporting documentary evidences were furnished before the lower authorities, which were ignored without proper consideration.

Regarding the addition based on diary notings, it was argued that the same were merely rough estimates of a proposed project and had no evidentiary value. It was contended that no addition can be made solely on the basis of uncorroborated loose papers.

It was also argued that the AO has passed a contradictory order by invoking both section 143(3) and section 144 simultaneously, rendering the assessment unsustainable.

Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the assessee failed to discharge the onus cast upon him to explain the source of cash found in his possession. It was contended that the assessee could not conclusively establish that the cash belonged to M/s Baljeet Nain & Co. and therefore the AO was justified in making addition under section 69A. The Ld. DR further submitted that the assessee failed to comply with notices before the Ld. CIT(A), and therefore, the ex parte order passed by the CIT(A) does not call for any interference.

We have heard the rival submissions and perused the material available on record. We find that the assessment in the present case has substantially proceeded ex parte and the Ld. CIT(A) has also dismissed the appeal primarily on account of alleged non-compliance by the assessee. We further notice that the assessee has raised various legal as well as factual grounds challenging the validity of the assessment proceedings as well as the additions made under section 69A of the Act. However, neither the assessment order nor the appellate order demonstrates proper examination of the evidences and explanations which, according to the assessee, were furnished before the authorities below.

It is a settled proposition of law that no person should be condemned unheard and that the principles of natural justice mandate grant of adequate and effective opportunity before fastening tax liability upon an assessee. At the same time, the assessee is also expected to diligently participate in the proceedings before the authorities below. Considering the entirety of the facts and circumstances of the case and in order to provide one final effective opportunity to the assessee to substantiate his claim on merits, we deem it appropriate to restore the matter to the file of the Assessing Officer for fresh adjudication.

Accordingly, the impugned order passed by the Ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer with a direction to decide the issues afresh in accordance with law after affording reasonable and sufficient opportunity of being heard to the assessee. The assessee is directed to fully cooperate in the set aside proceedings and furnish all necessary documentary evidences and explanations in support of his contentions. The Assessing Officer shall also adjudicate all legal grounds raised by the assessee, including the challenge to the validity of proceedings initiated under sections 147/148 of the Act, and thereafter pass a speaking order in accordance with law.

Since the matter is being restored to the file of the Assessing Officer for fresh adjudication, we refrain from expressing any opinion on the merits of the additions or on the legal issues raised in the present appeal and all issues are left open for consideration in accordance with law.

In our considered opinion, the ends of substantial justice would be met by granting one more effective opportunity to the assessee to place all relevant material and evidences on record. Accordingly, the impugned order of the Ld. CIT(A) is set aside and the matter is remanded back to the file of the Assessing Officer for de novo adjudication in accordance with law.

The Assessing Officer shall provide adequate and reasonable opportunity of being heard to the assessee and shall examine all legal as well as factual issues raised before him, including the validity of proceedings under sections 147/148 of the Act, the addition relating to alleged unexplained money under section 69A of the Act, and any other contention which may be raised during the set aside proceedings. The assessee shall also fully cooperate and furnish all documentary evidences as may be required by the Assessing Officer for proper adjudication of the matter.

Before parting, and considering the larger public interest and environmental concerns, we further direct the assessee to deposit a sum of Rs.15,000/- towards plantation of trees of Indian origin having minimum height of four feet as a condition precedent for setting aside the orders of the lower authorities, with JAN VIKAS SHIKSHA SAMITI TRUST (PAN: AACTJ8160E), an NGO engaged in plantation activities on the riverbank of Yamuna near Yamunanagar, Haryana. The plantation activity