BALARAM VENGADESSAN,PUDUCHERRY vs. ITO, WARD-3,, PUDUCHERRY

& 2471/Chny/2023 Balaram Vengadesan :- 2 -: assessee had made cash deposits amounting to Rs. 17,61,350/- in his bank account maintained with IndusInd Bank but has not filed return of income. In response to the notice, the assessee filed his return declaring a total income of Rs.40,400/-. However, the assessee did not respond to the subsequent notices issued. Therefore, the A.O., in the ex-parte order passed u/s. 144 of the Act, made an addition of Rs.21,66,450/-. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who dismissed the appeal observing that the assessee had neither filed the cash book nor provided any trail of withdrawals and re-deposits to support the peak theory.

The Ld. Authorized Representative (A.R.) submitted that the assessment order was passed ex-parte and that the Ld. CIT(A) also did not provide sufficient opportunity before dismissing the appeal.

On the other hand, the Ld. Departmental Representative (D.R.) relied on the orders of the lower authorities.

We have heard the rival submissions and perused the material available on record. The assessment order in this case has been passed u/s. 144 of the Act. The Ld. CIT(A) has also not examined the cash book or bank statement before confirming the addition. Keeping in view the principles of natural justice, we are of the considered opinion that one more opportunity should be granted to the assessee to substantiate his case before the A.O. Accordingly, we set aside the impugned order and remit the matter back to the file of the A.O. for denovo assessment in accordance with law, after affording reasonable opportunity of being heard to the assessee. The assessee is also directed to comply with all notices issued by the A.O. and to furnish all relevant details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes.

We note that the penalty u/s 271(1)(c) has been initiated during assessment proceeding and levied on the basis of addition made in & 2471/Chny/2023 Balaram Vengadesan :- 4 -: the assessment order. We have already set aside the assessment order, therefore penalty order based on the same assessment order has no leg to stand and does not survive. We further clarify that, since we have restored the quantum appeal to the file of the A.O. for denovo assessment, the A.O will be free to initiate fresh penalty proceeding during the set aside proceeding. Accordingly the penalty levied is cancelled and appeal is allowed.

In the result, both the appeals filed by the assessee are allowed.