HARISH KUMAR,MANDI GOBINDGARH vs. INCOME TAX OFFICER, WARD-1, GOBINDGARH

That on the facts, circumstances and legal position of the case, the Worthy CIT(A),NFAC in Appeal No. CIT (A), Patiala/10465/2019-20has erred in passing order dtd. 05.09.2024in contravention of provisions of S.250 of the Income Tax Act, 1961 (hereinafter referred to as “Act").

That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the impugned addition of Rs. 16,88,000/- u/s 69A by holding the cash deposit as unexplained money from undisclosed sources without considering that the bank account number does not pertain to the assessee.

That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in treating credit card transactions of Rs. 19,89,621/- as Business receipts and estimating income at 1% thereon without any evidence, leading to an unjustified addition of Rs. 19,896/-.

That on facts, circumstances and legal position of the case, Worthy CIT(A) has erred in confirming the action of Ld. AO in imposing tax rate of 60% u/s 115BBE plus surcharge thereon on above addition made u/s 69A in Ground No. 3, even when if the said addition is accepted academically, the same could only have been taxed at normal slab rates.

That on facts, circumstances and legal position of the case, the order passed by Ld. AO and then by Worthy CIT(A) deserves to be quashed since the 2 same have been passed without affording reasonable opportunity of being heard to the appellant. 6.That the appellant craves leave for any addition, deletion, or amendment in the grounds of appeal on or before the disposal of the same.

Briefly stated, the facts of the case are that the assessee is an individual who filed his return of income declaring income of Rs.3,28,250/-. The case was selected for scrutiny under CASS. During the course of assessment proceedings, statutory notices were issued from time to time; however, the assessee failed to comply with the same. Consequently, the assessment was completed ex-parte u/s 144 r.w.s. 143(3) of the Income Tax Act, 1961. 3.1 The Assessing Officer, on the basis of information available on record, observed that the assessee had deposited cash amounting to Rs.16,88,000/- during the demonetization period and had also made credit card payments aggregating to Rs.19,99,621/-. In absence of any explanation from the assessee, the Assessing Officer treated the cash deposits as unexplained money u/s 69A of the Act and further estimated income @1% on credit card transactions amounting to Rs.19,896/-. Accordingly, the total income was assessed at Rs.20,36,150/- as elaborately discussed in the assessment order and reproduced in the appellate order at pages 2 to 6 .

Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The assessee, inter alia, raised a specific ground that the bank account in which the alleged cash deposits were made did not belong to him and therefore the addition made u/s 69A of the Act was liable to be deleted. The assessee also challenged the estimation of income on credit card transactions and the applicability of section 115BBE, as reflected in the grounds of appeal placed on record .

1 The Ld. CIT(A), however, observed that despite issuance of several notices during appellate proceedings, the assessee failed to appear or file any submissions. It was further noted that the assessee had remained non-compliant even during the assessment proceedings. In view of such conduct, the Ld. CIT(A) dismissed the appeal for non-prosecution and also proceeded to confirm the additions on merits on the basis of material available on record.

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

During the course of hearing, the Ld. AR submitted that the Ld. CIT(A) has erred in dismissing the appeal without proper adjudication on merits. It was contended that the assessee could not effectively represent his case before the lower authorities due to reasonable cause. The Ld. AR further submitted that the very foundation of the addition is erroneous inasmuch as the bank account does not belong to the assessee and this crucial aspect has not been examined at any stage. It was, therefore, prayed that the matter may be restored to the file of the Ld. CIT(A) for fresh adjudication.

Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the assessee has consistently failed to comply with notices and has not discharged the onus cast upon him. It was thus contended that the order of the Ld. CIT(A) deserves to be upheld.

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessment in the present case has been framed ex-parte due to non-compliance on the part of the assessee. It is also a matter of record that the assessee did not appear before the Ld. CIT(A) despite several opportunities, resulting in dismissal of the appeal for non-prosecution. 8However, we find that the Ld. CIT(A), being the first appellate authority, is duty bound to adjudicate the issues on merits in accordance with the provisions of section 250(6) of the Act, which mandates passing of a speaking order stating the points for determination, the decision thereon and the reasons for such decision. The powers of the Ld. CIT(A) are co-terminus with that of the Assessing Officer and he is required to examine the issues independently.

1 In the present case, the primary contention of the assessee that the bank account in question does not belong to him goes to the root of the addition made u/s 69A of the Act. Such a contention required proper verification and adjudication by calling for necessary evidences or remand report from the Assessing Officer. The impugned order does not reflect any such exercise having been carried out in a meaningful manner.

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3 At the same time, we cannot lose sight of the conduct of the assessee who has remained non-compliant both during the assessment as well as appellate proceedings. Such conduct not only delays the administration of justice but also burdens the judicial system.

4 Accordingly, while restoring the matter to the file of the Ld. CIT(A), we impose a cost of Rs.10,000/- upon the assessee. The said amount shall be deposited with the Old Age Home run by Red Cross Society, Sector 15, Panchkula, India within a period of one month from the date of receipt of this order. The assessee shall furnish proof of such deposit before the Ld. CIT(A) at the time of fresh appellate proceedings. Failure to comply with this direction shall entail appropriate adverse inference.

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