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Facts
The assessee failed to file an income tax return for AY 2016-17. Upon detection of significant cash deposits, the case was reopened. The assessee subsequently filed a return but the Assessing Officer added a substantial amount as unexplained money, leading to an escalated total income. The CIT(A)/NFAC dismissed the appeal ex-parte due to non-prosecution.
Held
The Tribunal held that the CIT(A)/NFAC failed to adjudicate the appeal on merits and dismissed it without proper consideration, violating principles of natural justice. Therefore, the matter was remanded back to the CIT(A)/NFAC for a fresh adjudication after providing a reasonable opportunity of being heard to the assessee.
Key Issues
Whether the CIT(A)/NFAC erred in dismissing the appeal ex-parte without adjudicating the merits and without affording a proper opportunity to the assessee. Whether the additions made by the AO as unexplained money are justified.
Sections Cited
250, 147, 148, 133(6), 143(2), 142(1), 69A, 144, 149(1)(a), 115BBE, 271(1)(C), 234A, 234B, 250(6)
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Income Tax Appellate Tribunal, “A’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 12.9.2024 vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1068641290(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2016-17. The assessee has raised the following grounds of appeal:
Brief facts of the case are that the assessee had not filed his return of income for the assessment year 2016-17. As per the information flagged in accordance with the risk management strategy in the category high risk CRIU/VRU cases formulated by the CBDT, it was seen that the assessee had made total cash deposits of Rs.86,18,000/- with Canara Bank. Accordingly, the case of the assessee had been reopened u/s 147 of the Act and notice u/s 148 of the Act was issued on 23.3.2023. In response to notice, the assessee filed his return of income on 3.4.2023 declaring total income of Rs.5,70,240/-. Further, notice u/s 133(6) of the Act was issued to the Canara bank for furnishing the details of accounts held by the assessee. On perusal of the bank statement furnished by the bank, it was noticed that the assessee made total cash credit of Rs.71,28,000/- and also received Rs.96,910/- from fund transfer maintained with Canara bank, Nandikur branch. After filing of the return in response to notice u/s 148 of the Act, the notice u/s 143(2) of the Act as well as notice u/s 142(1) of the Act were issued by the AO requesting to submit the information/documents/record towards the sources of the cash Gunavantraya, Gulbarga Page 4 of 6 credits made in the bank account. The assessee during the course of assessment proceeding submitted that he had two sources of income i.e. his own agricultural income as well as income from selling of agricultural produce of other farmers living in the vicinity. Further, in proof of being an agriculturist the assessee submitted the property details along with Record of right establishing his agricultural land ownership. The ld. AO firstly observed that the bank account was opened on the same day on which the deposits of Rs. 65,00,000/- were made. Further AO found that the submission of the assessee is not conclusive and without any supporting document. Further, no copy of bills for the purchase of seeds, agricultural products, fertilizers, etc. with respect to the proof related to the agricultural income has been furnished by the assessee and accordingly AO held that all credit entries amounting to Rs.72,24,910/- made during the year in the bank account remain unexplained and the same is added as unexplained money as per the provisions of section 69A of the Act. The AO concluded the assessment u/s 147 r.w.s. 144 of the Act on a total assessed income of Rs.77,95,150/-. Aggrieved by the assessment completed u/s 147 r.w.s. 144 of the Act, the assessee preferred an appeal before the ld. CIT(A)/NFAC.
2.1 The ld. CIT(A)/NFAC dismissed the appeal of the assessee on the ground that as there is no proper response to appeal notices, the appeal is liable to be dismissed in terms of verdicts of the Hon’ble Apex Court in the case of CIT v. B.N. Bhattacharjee and another (10 CTR 354). Further, ld. CIT(A)/NFAC was of the view that as the assessee has failed to produce any substantial evidence to overturn the decision made by the AO in the impugned order, therefore, it has been construed that the assessee is not interested in prosecuting the appeal and accordingly refrained himself from discussion and decision on the grounds of appeal on merits and Gunavantraya, Gulbarga Page 5 of 6 dismissed the appeal of the assessee for non-prosecution. Aggrieved by the order of ld. CIT(A)/NFAC the assessee filed the present appeal before the Tribunal.
3. Before us, At the outset the ld. A.R. of the assessee submitted that the assessee could not submit any document/information/records in response to appeal notices as the assessee was in the process of preparing written submissions and by the time the information could be collected, the order had been passed. It is further submitted that there was also some delay on the part of the assessee in furnishing the details to the advocate as the assessee was not keeping well and undertakes to appear before the CIT(A)/NFAC with the necessary documents/record if the matter is remitted back to the files of CIT(A) for fresh consideration.
Ld. D.R. on the other hand, supported the order of the authorities below.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that assessee could not represent his case before the ld. CIT(A)/NFAC and as there was no proper response to appeal notices except for few adjournment requests and the assessee failed to produce any substantial evidences to overturn the decision made by the AO, the ld. CIT(A)/NFAC dismissed the appeal. Before us, assessee submitted an affidavit dated 28.11.2024 sworn before the Notary stating therein the reason for not appearing before the ld. CIT(A)/NFAC, which is placed on record. On perusal of the order of the ld. CIT(A) it is found that the ld. CIT(A)/NFAC has not adjudicated the issue on merits and dismissed the appeal in limine for non prosecution. As contemplated under section 250(6) of the Act, the ld. CIT(A)/NFAC required to frame the points for Gunavantraya, Gulbarga Page 6 of 6 determination followed by a detailed discussion/ reason for decision before passing the Order. Reliance in this regard can be placed on the decision of the Hon’ble Bombay High Court in the case of PCIT Vs. Premkumar Arjundas Luthra 279 CTR 614. Therefore in the light of the above legal position and considering the prayer of the ld. A.R. of the assessee, we are of the considered opinion that the matter requires to be remanded back to the file of ld. CIT(A)/NFAC with the direction to dispose the appeal denovo on merits as per the law after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to produce all the necessary documents/evidences/informations in support of his claim and shall not seek unnecessary adjournments. In case of further default, the assessee shall not be entitled to any leniency.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.