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Facts
The assessee did not file its income tax return for AY 2019-20. Information revealed significant cash deposits in its current account, leading the Assessing Officer to make an addition of Rs. 6,41,22,545/- under Section 69A. The CIT(A) dismissed the assessee's appeal ex-parte due to non-compliance, which the assessee attributed to an incorrect email address used for issuing notices.
Held
The Tribunal, in the interest of justice, restored the matter to the Assessing Officer for a fresh decision on merits. The assessee will be given due opportunity to explain the sources of its deposits and is directed to make all necessary compliances. The appeal was allowed for statistical purposes.
Key Issues
Whether the ex-parte order by the CIT(A) violated principles of natural justice and whether the addition under Section 69A was justified without providing proper opportunity to the assessee to explain the source of cash deposits.
Sections Cited
250, 69A, 148, 147, 144
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Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi 03.09.2024 passed u/s. 250 of Income Tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year: 2019-20.
The assessee has raised the following grounds in this appeal.
“Ground No. I-Principle of natural Justice- Ex-parte order: 1. On the facts and in the circumstances of the case and in law, the CIT(A) erred in passing the ex-parte order in gross violation of principles of natural justice, without providing an opportunity of being heard and without considering the submission and documentary evidence filed by the appellant.
2. The Appellant prays that the order passed by the CIT(A) be treated as passed in gross violation of principles of natural justice and as such the same be treated as illegal, bad in law, null and void. Ground no. 2- On the facts and in the circumstances of the case and in law the learned Assessing Officer has erred in making an addition of Rs. 6,41,22,545/- under section 69A of Income Tax Act, 1961 without appreciating the explanations and submissions made by the appellant. The appellant craves to leave, to add, to alter or modify the grounds of appeal, as stated above, at any time on or before the hearing of appeal.”
3. The assessee has subsequently taken the following additional grounds: “1. On the facts and circumstances of the case and in la, the learned assessing officer has erred in making addition of Rs. 6,41,22,545/- on the basis of paper collected behind the back of the assessee and without parting with the assessee which is against the principle of the natural justice, therefore the order passed is bad in law and it should be set aside.
2. On the facts and circumstances of the case and in law, the appellant slates that the learned assessing officer has erred in law and fact without allowing the incurred by the assessee to earn the income. The assessing officer has treated gross receipt as the income without allowing expenses incurred by the appellant, the appellant is relying on the case of "DEPUTY DIRECTOR OF INCOME TAX (E) INV. CIRCLE-II” “PETROLEUM SPORTE PROMOTION BOARD ( No. 264/2013 and Ita No. 265/2013.
The learned assessing officer has erred in law and fact in taxing the income u/s. 69A as against treating the gross receipt as a business receipt. The appellant has received all the cash and other deposits in the course of the business, therefore the income should be taxable at the normal tax rate. The appellant is relying on the case of “Asst. Commissioner of income tax, Central Circle-1, Visakhapatnam” vs. “Heerapanna Jewellers” as per ITA NO. 253/Vis/2020.
The Appellant also prays that the order of the assessing officer should be set aside after giving the specific instructions for considering the ground no. 2 & 3 in the order”.
4. Brief facts of the case are that the assessee had not filed its return for AY 2019-20. However, information available on the INSIGHT portal of the department revealed that the assessee had received cash deposits in its current account amounting to Rs. 6,03,04,692/- during the FY 2018-19. Accordingly, a notice u/s 148 of the Act, was issued to the assessee on 31.03.2023. In the AY 2019-20 Kumar Co-op Credit Society Limited absence of any explanation in response to various notices issued, Ld. AO proceeded to finalise the assessment u/s. 147 r.w.s. 144 of the Act after making an addition of Rs. 6,41,22,545/- u/s. 69A of the Act. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). Since no compliance was made in response to notices issued by Ld. CIT(A), he dismissed the assessee’s appeal on the ground that it had failed to substantiate its claim regarding source of deposits. The assessee has now filed an appeal against the order of CIT(A) before the Tribunal. Before us, Ld. AR has submitted that the email on which the notices were issued was incorrect and therefore, no compliance could be made during the assessment proceedings. The assessee has now provided correct email and has requested for providing one more opportunity to explain the sources of deposits before the Ld. AO. Ld. DR has not objected to the above proposition.
After hearing the rival submissions and considering the details made available before us, in the interest of justice, we deem it appropriate to restore the matter to the Ld. AO for a decision afresh on merits after providing due opportunity to the assessee. The assessee is also directed to make requisite compliance before the Ld. AO.
In the result, appeal of the assessee is allowed for the statistical purposes.