G. ETHIRAJU,PONDICHERRY vs. ITO, WARD-3,, PUDUCHERRY

The assessee did not file a return of income for the relevant assessment year. The AO received information indicating that the assessee had deposited substantial amounts in a savings bank account during the Financial Year 2010-11. The total cash deposits in the said bank account were reported at Rs.14,54,000/-. During the course of reassessment proceedings, the AO issued notices calling upon the assessee to explain the nature and source of the cash deposits and other credits appearing in the bank account. The assessee was also informed that, in the absence of a satisfactory explanation, the total credits amounting to Rs.18,62,471/- could be treated as unexplained and added to his total income. As the assessee did not respond to the notices issued by the AO, the assessment was completed ex parte u/s. 144 read with section 147 of the Act. The AO made an addition of Rs.18,62,470/- u/s. 68 of the Act towards unexplained credits. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the ld.CIT(A). However, owing to the alleged non- compliance with the notices issued during the appellate proceedings

The ld.Authorised Representative (AR) submitted that the ld.CIT(A) had disposed of the appeal without affording the assessee a proper and effective opportunity of being heard and without adequately examining the grounds of appeal and the explanation concerning the source of the bank deposits. It was submitted that the assessee is an agriculturist owning approximately 15 acres of agricultural land at Pungoor village, where he cultivates sugarcane and grows casuarina trees. In support of this contention, the assessee claims to have documents, including copies of the adangal and patta issued by the competent revenue authorities, evidencing possession of the agricultural land. The ld. AR further submitted that part of the credits in the bank account represented payments received through banking channels from M/s EID Parry Ltd. towards the sale of sugarcane, while certain other deposits represented proceeds from the sale of casuarina trees. It was also contended that some of the cash deposits were made out of earlier withdrawals from the bank account. The ld. AR explained that the assessee, being an agriculturist and unfamiliar with the electronic appellate proceedings, had relied upon another person for filing the appeal and providing an email address. According to the assessee, the hearing notices sent to the email address were not communicated to him, resulting in non-compliance and the ex parte disposal of the appeal. It was further contended that the provisions of section 68 of the Act had been invoked without properly appreciating the nature

The ld. Departmental Representative (DR), on the other hand, relied upon the orders of the authorities below and submitted that the assessee had failed to comply with the notices issued during the assessment and appellate proceedings. Accordingly, the ld. DR prayed that the impugned order be upheld and the appeal be dismissed.

We have considered the rival submissions and perused the material placed before us. The principal issue requiring consideration at this stage is whether the impugned order confirming the addition of Rs.18,62,470/- deserves to be set aside for fresh adjudication in view of the assessee's explanation and the request for an effective opportunity to substantiate the source of the bank deposits. From the material placed before us, it appears that the addition in question was made primarily on account of the assessee's failure to respond to the notices issued during the assessment proceedings. The ld. CIT(A) also confirmed the addition in the absence of satisfactory supporting evidence. In our considered view, the ends of justice would be served by restoring the matter to the file of the ld.CIT(A) for fresh adjudication after granting the assessee a reasonable and effective opportunity of being heard. Such a course would enable the appellate authority to

Accordingly, we set aside the impugned order dated 24.05.2024 passed by the ld. CIT(A) and restore the matter to the file of the ld. CIT(A) for fresh adjudication. The ld. CIT(A) shall provide the assessee a reasonable and effective opportunity of being heard and permit the assessee to furnish relevant documentary evidence in support of the explanations regarding the bank credits, including the alleged sale proceeds of sugarcane and casuarina trees and the source of cash deposits and will examine the material furnished by the assessee, together with the assessment records and the submissions of the Revenue, in accordance with law and pass a fresh, reasoned and speaking order dealing with the grounds of appeal raised by the assessee. The assessee is directed to cooperate with the appellate proceedings, respond to notices issued by the ld. CIT(A), and furnish the relevant evidence within the time allowed. The ld. CIT(A) shall decide the appeal on its merits, uninfluenced by any observations made herein on the merits of the addition. It is made clear that in the event of failure on the part of the assessee to avail the opportunities so granted or to comply with the notices issued by the appellate authority, the Ld. CIT(A) shall be at liberty to dispose of the appeal on merits in accordance with law on the basis of the material available on record.