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Facts
The assessee, an agriculturist, did not file an income tax return for AY 2017-18, believing their income was below the taxable limit. The AO issued notices under Section 142(1) and 144 for cash deposits during demonetization, which the assessee claims were not received. The AO treated the deposits as unexplained income under Section 69A. The CIT(A) dismissed the appeal ex-parte.
Held
The Tribunal held that the assessee, being an agriculturist and potentially not having access to electronic systems, was denied a proper opportunity to present their case. The Tribunal remitted the issue to the AO for a fresh denovo order after providing an opportunity to the assessee.
Key Issues
Whether the assessee was denied natural justice and proper opportunity to present their case before the AO and CIT(A) regarding unexplained cash deposits from agricultural activities?
Sections Cited
142(1), 144, 69A, 234A, 234B, 234C, 156, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC-‘C’ BENCH : BANGALORE
Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER These are the two appeals filed by the assessee challenging the orders of the NFAC, Delhi dated 16/07/2024 in respect of the A.Y. 2017-18.
Even though the assessee filed two appeals, in both the appeals the assessee had challenged the single order passed by the Ld.CIT(A). The appeal in was filed through e-filing but both the appeals were numbered separately as if the appeals are filed against two different & 1905/Bang/2024 orders of the Ld.CIT(A). Therefore we are taking up the appeal filed physically i.e. and adjudicated the same in the following order. The assessee has raised the following grounds of appeal:
1. The learned CIT(A) and AO had grossly erred in passing the order without giving due consideration of the facts and records lying before the officer.
2. The learned CIT(A) and AO had erred in passing an order without duly considering the facts as to the nature.
3. The learned CIT(A) and AO had grossly erred in not giving an opportunity of being heard before making the addition, thus denying the very basic principles of natural justice.
4. The impugned order as such is bad in law in so far not considering the facts of the case, non-applying the principles of natural justice, and hence fit for quashing.
5. The addition u.s 69A on account of cash deposits during the year is bad in law and the conditions mentioned thereunder to invoke section 69A are not satisfied;
6. The source of cash deposits is evident from the information and documents available on the records and therefore the addition u.s 69A is liable to be deleted.
7. The Ld.CIT(A)/A0 have erred in law and on facts in not providing the benefit of peak negative cash and telescoping;
8. The Ld.AO/CIT(A) have failed to appreciate the background of the Appellant that requires him to transact in cash.
9. Based on the above, the Ld.A0 has erred in levying interest u.s 234A/B/C of the Act;
10. Based on the above, the Ld.AO has erred in law and on facts in issuing notice of demand u.s 156 and also initiating penalty proceedings; (Total tax effect: Rs.272,216/-) On the basis of the above grounds and other grounds which may be urged at the time of hearing with the consent of the Honorable Tribunal, it is prayed that the order passed under section 250 upholding the order & 1905/Bang/2024 passed u.s 144 of the Act, to the extent it is against the Appellant, be quashed and the relief sought to be granted.”
3. The brief facts of the case are that the assessee is an individual and also an agriculturist and for the A.Y. 2017-18, the assessee had not filed their return of income for the reason that his income would be below the limit prescribed under the Act. The AO issued a notice u/s. 142(1) of the Act for the reason that cash was deposited during the demonetization period but no return was filed. It seems that the assessee has not received the notice sent through the portal and therefore he has not filed any reply to the notice issued u/s. 142(1) as well as to the notice issued u/s. 144 of the Act and therefore the AO treated the amount deposited during the demonetization period and also amount credited into his bank account as unexplained money and treated the same u/s. 69A of the Act. As against the said assessment order, the assessee filed an appeal before the Ld.CIT(A) and in form 35, the assessee in the personal information column specifically stated that no notice / communication is to be sent to the email ID mentioned in form 35. The assessee being an agriculturist and also not having enough knowledge in the operating of the systems, had failed to view the portal and he was under the impression that notices will be sent physically. Therefore, the assessee had not responded to the notices issued by the Ld.CIT(A) except for one notice he submitted an adjournment petition. Therefore the Ld.CIT(A) had decided the appeal ex-parte and dismissed the appeal filed by the assessee.
As against the said order, the assessee is in appeal before this Tribunal and contended that no effective opportunity has been granted to the assessee.
At the time of hearing, the Ld.AR filed a paper book enclosing the synopsis as well as an application for admission of the additional evidences such as sales invoices of agricultural produces, details regarding the average yield of the agricultural produce and land records apart from filing the copies of the bank account statements. The Ld.AR further contended that & 1905/Bang/2024 the assessee is an agriculturist and all his income are only from the agriculture and the deposits made into the bank account during the demonetization period is also related to the sale proceeds of the agricultural produce and the monies withdrawn from the bank earlier to the demonetization period and therefore prayed to set aside the assessment. Further, the Ld.AR submitted that the assessee being an illiterate person, had failed to respond to the notices and infact, no physical notice was received by him from the AO as well as from the Ld.CIT(A) and therefore the documents in support of his case could not be produced before the authorities and prayed one opportunity to appear before the AO and substantiate their case with the records. The Ld.DR submitted that the assessee had not availed the opportunities granted by the AO as well as by the Ld.CIT(A) and therefore prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
We have perused the assessment order which was made u/s. 144 of the Act since the assessee had neither filed their return of income nor replied to the notices issued by him. The assessee submitted that he being an agriculturist living in a remote area have no access to the electronic datas and therefore he has not replied to the notices issued by the AO. Further, the contention of the assessee is that his income is only from the agricultural activities and therefore his income will not attract the provisions of the Act and hence his income would be below the limit prescribed under the Act and therefore on that belief no return was filed by the assessee. Similarly, before the Ld.CIT(A), the assessee in form 35 had specifically stated that notices / communications need not be sent to the email ID mentioned therein. But in spite of that it seems that the notices were sent to the email IDs. By taking into consideration of the above said facts and circumstances, we are of the view that one more opportunity may be granted to the assessee to appear before the AO and produce all the records relevant & 1905/Bang/2024 to the issue. We also make it clear that the additional documents filed in this appeal may also be furnished before the AO and demonstrate before the AO that all the cash deposits made into their bank account are nothing but the proceeds of the agricultural activities.
With the above observation, we remit this issue to the file of the AO to pass a denovo order afresh in accordance with law after hearing the assessee. In view of the above order by us in and the same is dismissed as infructuous.
Order pronounced in the open court on 06th January, 2025.