ARVIND KUMAR,JIND, HARYANA vs. INCOME TAX OFFICER, JIND

That the order of the Learned Commissioner of Income Tax (Appeals) is bad in law and on facts, as the appeal has been dismissed without proper appreciation of the genuine reasons for non-appearance, despite the appellant being prevented by sufficient cause due to medical grounds.

That the order of the Learned Assessing Officer (Ld. AO) is bad in law, contrary to facts of the case, and against the principles of natural justice and equity.

That the Ld. AO grossly erred in passing the impugned assessment order under section 144 of the Income Tax Act, 1961, without affording adequate and proper opportunity of being heard to the appellant and in violation of the CBDT's guidelines on fair procedure.

That the Ld. AO erred in law and on facts in completing the assessment under section 144 merely on the basis of two short-dated notices

That the Ld. AO erred in making an addition of 13,19,000 by treating the cash deposits in the bank account as unexplained income under section 69A, without issuing any show-cause notice or seeking any explanation from the appellant, and further erred in invoking section 115BBE on such addition. The entire addition and consequential demand are unjustified and liable to be deleted.

That the assessment order dated 16.11.2019 passed under section 144 is invalid, being made in undue haste, without due process, and contrary to the principles of natural justice.

That the appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal at or before the time of hearing of this appeal.

Briefly the facts of the case are that the assessee is an individual engaged in business of trading of mattresses, cotton fabric and plastic furniture. For the relevant assessment year 2017–18, the assessee did not file the return of income within the prescribed time. Based on information available with the department, it was noticed that the assessee had deposited cash amounting to Rs.13,19,000/- in his bank accounts maintained with Central Bank of India during the demonetization period. Accordingly, notices under section 142(1) were issued from time to time requiring the assessee to file return of income and explain the source of cash deposits. However, the assessee failed to comply with the notices within time and did not furnish any satisfactory explanation along with supporting documents such as books of account or cash book.

1 During the course of assessment proceedings, the assessee, through counsel, submitted that the cash deposits were out of day-to-day business sales and earlier cash withdrawals. However, the Assessing Officer observed that the assessee failed to produce books of account, vouchers, quantitative details of stock, and complete details of creditors and unsecured loans.

2 In absence of supporting evidence, the Assessing Officer held that the assessee failed to discharge the onus of proving the source of cash deposits and treated the entire amount of Rs.13,19,000/- as unexplained money under section 69A of the Act. The same was taxed under section 115BBE and total income was assessed at Rs.13,19,000/-.

Against the order of the AO the assessee went in appeal before the Ld. CIT(A). Before the CIT(A), the assessee raised various grounds challenging the validity of the assessment order, violation of principles of natural justice, and addition made under section 69A. However, during appellate proceedings, multiple notices were issued to the assessee, but no effective compliance was made. Except for seeking one adjournment, the assessee failed to furnish any written submissions or documentary evidence in support of his claim.

1 The CIT(A) observed that the assessee was not interested in pursuing the appeal and, therefore, decided the appeal on the basis of material available on record. It was further held that the assessee failed to discharge the burden of proof regarding the source of cash deposits even on merits. Accordingly, the CIT(A) upheld the addition made by the Assessing Officer and dismissed the appeal.

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

1 The Ld. AR further submitted that the assessee had in fact filed return of income in response to notice under section 142(1) and also furnished details, but the same were not properly considered by the Assessing Officer. It was argued that the cash deposits were duly explained as arising from business receipts and redeposit of earlier withdrawals. It was also contended that the Ld. CIT(A) dismissed the appeal ex-parte without appreciating the genuine reasons for non-compliance and without adjudicating the issues on merits.

2 The Ld. AR prayed that the matter be restored to the file of the Assessing Officer for fresh adjudication after considering the evidences.

Per contra, the Ld. DR supported the orders of the lower authorities and submitted that sufficient opportunities were granted both during assessment and appellate proceedings. It was argued that the assessee failed to furnish basic evidences such as books of account, cash book, and supporting documents to substantiate the claim of business receipts.

1 The DR further submitted that the burden of proof lies on the assessee to explain the source of cash deposits, which has not been discharged. Therefore, the addition made under section 69A was justified and the order of the CIT(A) deserves to be upheld.

We have heard the rival submissions and perused the material available on record. It is observed that the addition of Rs.13,19,000/- has been made by the Assessing Officer on account of unexplained cash deposits under section 69A of the Act. From the records, it is evident that though the assessee had submitted certain explanations during the assessment proceedings, the same were not supported by proper books of account and documentary evidences. At the same time, it is also noticed that the assessment was completed under section 144 and the appellate order was passed ex-parte without effective representation from the assessee.

1 Accordingly, we set aside the order of the Ld. CIT(A) and restore the matter to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall provide adequate opportunity of being heard to the assessee and decide the issue afresh in accordance with law after considering all evidences that may be furnished by the assessee. The assessee is also directed to cooperate in the proceedings and furnish all necessary details without seeking unnecessary adjournments.

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

""थ"/ The Respondent 3. आयकर आयु"/ CIT 4. आयकर आयु" (अपील)/ The CIT(A) 5. िवभागीय "ितिनिध, आयकर अपीलीय आिधकरण, च"ीगढ़/ DR, ITAT, CHANDIGARH 6. गाड" फाईल/ Guard File