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Facts
The assessee, a NRI residing in the USA, had a substantial cash deposit of Rs. 68,22,000 in her ICICI Bank account during the assessment year 2016-17, and she did not file her return of income. The case was reopened under section 147/148, and despite notices, there was no response from the assessee. The Assessing Officer treated the cash deposit as unexplained income under section 69A and added interest income, determining the total income accordingly. The assessee claimed she was unaware of the notices due to residing abroad.
Held
The Tribunal noted that the reassessment was completed under section 147/144 without the assessee filing her return of income and that there was a large cash deposit. Despite the lack of response from the assessee to the lower authorities, and the CIT(A) not admitting the appeal, the Tribunal, in the interest of justice, decided to remit the issue back to the AO for denovo consideration. The AO was directed to provide three reasonable opportunities for the assessee to be heard.
Key Issues
Whether the reassessment proceedings and order were valid when the assessee, a NRI, claimed to be unaware of notices, and whether the ex-parte assessment order should be set aside or remanded for fresh consideration.
Sections Cited
250, 147, 144, 69A, 234B, 234C, 249(4)(b), 282A, 127A, 148, 271(1)(b), 139(1)
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI. LAXMI PRASAD SAHU & SHRI. SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This appeal filed by the assessee is against the ex-parte Order passed by the CIT(A) vide DIN and Order No.ITBA/NFAC/S/250/2024- 25/1069914481(1) dated 24.10.2024, on the following grounds of appeal:
1. The present appeal is being filed against the order of the Commissioner of Income Tax (Appeals) [CIT (A)] dated 24/10/2024, passed under section 250 of the Income Tax Act, 1961, in connection with the assessment order under section 147 read with section 144 for the Assessment Year 2016-17. Based upon the facts and circumstances of the case, the Assessment Unit has erred in considering the cash deposits of Rs. 68,22,000 as unexplained income u/s 69A of the Act Page 2 of 5 2. The learned Assessing Officer has erred in levying interest under section 234B&234C of the Act.
3. The appellant was not given an Single opportunity to provide Explanation by National Faceless Appeal Centre to seek exemption from the provisions of Section 249(4)(b) and declared the Appeal Filed as lnfructuous. This constitutes a procedural error and Deprived the Appellant from being heard.
4. That the Assessment Unit has erred in law and on facts in passing the assessment order dated 24.08.2023 in a manner contrary to the provisions of the Income Tax Act, 1961.That the assessment order passed by the learned Assessing Officer (Assessment Unit) is invalid and void ab initio as the Digital Signature Certificate (DSC) of the assessment unit used to sign the assessment order had expired at the time of signing, thereby rendering the order unsigned and invalid in law. That the absence of a valid and effective signature on the assessment order contravenes Section 282A of the Income Tax Act, 1961, which mandates that all electronic communications must be authenticated in the prescribed manner.That the non- compliance with the requirements of a valid DSC as prescribed under Rule 127A of the Income Tax Rules, 1962, invalidates the assessment order and deprives it of any legal sanctity.
Briefly stated, the facts of the case are that assessee is NRI and tax resident of USA. During the impugned Assessment Year, there was substantial amount of cash deposited in assessee’s ICICI Bank account amounting to Rs.68,22,000/- and the assessee has not filed her return of income. As per the information received, the case was reopened under section 147/148 of the Act and notice under section 148 of the Act was issued to the assessee and the assessee was allowed time to file return of income within 30 days from the receipt of the notice. However, there was no response from the assessee’s side. During the course of reassessment proceedings, various notices were issued to the assessee. But there was no compliance and the notices were delivered to the assessee’s registered email ID in the IT Web Portal. The AO also quoted the policy framed by the Income Tax Department regarding delivery of the notice in this digital era, which is laid down by the CBDT as under: "The notice shall deemed to have been delivered in accordance with paragraph 10 of the CBDT's SO 3264 (E) which states that every notice Page 3 of 5 or order shall be delivered to the addressee, being the assessee, by way of placing an authenticated copy thereof in the assessee's registered account; or sending an authenticated copy thereof to the registered email address of the assessee or his authorised representative; or uploading an authenticated copy on the assessee's Mobile App; and followed by a real time alert".
Continuously there was non-compliance of the statutory notices issued from time to time to the assessee. A notice under section 271(1)(b) of the Act was also issued to the assessee but there was no response. A show cause notice was issued to the asessee on 15.11.2023 which was served upon the assessee proposing to pass best judgment assessment under section 144 of the Act, inspite of that, there was no compliance. Accordingly, the AO treated the entire cash deposit made into her bank account as unexplained income under section 69A of the Act and AO found that the bank has credited interest income of Rs.94,384/- which was income from other sources and added to the total income of the assessee. Resultantly, the assessed income was arrived at Rs.69,16,384/-.
Aggrieved from the above Order, assessee filed appeal before the learned CIT(A) stating the facts that the assessee is residing in USA and she is NRI and she was not aware of the notices being sent to her email ID and only recently while logging into her income tax account she got to know about the Order under section 147/144 of the Act being passed against her and stated that assessee has complete details of the cash deposits and would like to provide complete details of the same. Assessee could not respond to the notice is a procedural lapse and she is not liable for such huge tax. During the course of appellate proceedings before the learned CIT(A), there was no response from the assessee’s side and learned CIT(A) noted that as per Sl. No95 of Form 35, assessee has not paid any advance tax and appeal was not admitted.
Page 4 of 5 5. Aggrieved from the above Order, assessee filed appeal before the Tribunal. Learned Counsel for the assessee submitted that assessee is NRI and is tax resident of USA. During the Financial Year 2015-16 relevant to Financial Year 2016-17. The notice issued by the AO on registered email ID was not seen by the assessee Therefore, she was unable to reply to any of the notices. These notices sent by the learned CIT(A) could not be seenalso and the assessee came to knowonlythe demand was generated by the Revenue Officer, the learned Counsel for the assessee requeseted , undertook that if a chance is given to the assessee, assessee will comply to the notices for substantiating her case and further requested that the matter may be sent back to the AO for fresh adjudication.
On the other hand, learned DR relied on the Order of the lower authorities and submitted that the learned CIT(A) has rightly dismissed the appeal of the assessee since the assessee did not pay advance tax and therefore CIT(A) has not rightly admitted the appeal. Various notices were issued by both the authorities below. This shows negligence on the part of the assessee in income tax reassessment proceedingsand objected for sending back file to the AO.
Considering the rival submissions, we noted that assessee is NRI and the reassessment is completed under section 147/144 of the Act. The assessee has not filed her return of income u/s 139(1) and 148 sldo. We noted from the submissions of facts that there is a huge cash deposit in her bank account during the Financial Year amounting to Rs.68,22,000/-. In this regard, from the statements of facts submitted by the assessee it is noticed that there has been consistent transfer of money to her father who would withdraw the money from the bank account and hold the cash and the same cash has been deposited by her father and we also noted that there was no response from the assessee’s side before both the authorities below and also the learned CIT(A) has also not admitted the appeal. Considering the totality of facts and circumstances and in Page 5 of 5 the interest of justice, we are remitting this issue back to the file of the AO for denovo consideration and AO is directed to give three reasonable opportunity of being heard to the assessee and assessee is directed to comply with all notices. In case of failure, no second leniency shall be granted to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the court on the date mentioned on the caption page.