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Facts
The assessee preferred an appeal against the order of the Ld.CIT(A) which was passed ex-parte. The assessee contended that the assessment was framed without proper opportunity of hearing, and the Ld.CIT(A) dismissed the appeal without delving into merits, despite being duty-bound to do so. The AO had made an addition of ₹27,40,000/- on account of unexplained nature and source of time deposits.
Held
The Tribunal held that the Ld.CIT(A) was duty-bound to decide the appeal on merits and not dismiss it ex-parte. The Tribunal also noted that the AO hurried the assessment order. Therefore, the Tribunal set aside the order of the Ld.CIT(A) and restored the issue back to the AO for de novo consideration, granting one more opportunity to the assessee.
Key Issues
Whether the Ld.CIT(A) was justified in dismissing the appeal ex-parte without going into merits, and whether the assessee should be granted another opportunity to explain the nature and source of deposits.
Sections Cited
250(6)
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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as “the Ld.CIT(A)”), Delhi, dated 26.07.2024 for the Assessment Year (hereinafter referred to as "AY”) 2018-19.
At the outset, it is noted that there is a delay of ‘305’ days in filing of appeal before this Tribunal and the assessee is noted to have filed application for condoning the delay supported with an affidavit. Having gone through the contents of the application as well as the affidavit, we find that there is a sufficient cause for delay but could have avoided if assessee was alert. Therefore, we condone the delay subject to assessee remitting cost of Rs.10,000/- to the State Legal Aid Authority, Hon’ble Madras High Court within three (3) months of receipt of this order; and produce necessary proof of depositing of the same before the AO.
The Ld.AR of the assessee submitted that the impugned action of the Ld.CIT(A) is ex parte qua assessee. He also brought to our notice that assessment has been framed without giving proper opportunity of hearing to the assessee and therefore assessee pleaded for one more opportunity before the AO by relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC).
Per contra, the Ld.DR submitted that though the assessee had been given three (3) opportunities by the Ld.CIT(A), the assessee didn’t avail the same, which led the Ld.CIT(A) to pass the impugned order.
Therefore, he doesn’t want us to interfere with the action of the Ld.CIT(A). He also doesn’t want us to restore the assessment back to the the time-deposits to the tune of ₹27,40,000/-. Aggrieved, the assessee is in appeal before this Tribunal.
Having heard both the parties and after perusal of the records, we note that the impugned order of the Ld.CIT(A) is ex parte qua assessee.
In this regard, we note that the Ld.CIT(A) has stated to have given three (3) opportunities to the assessee, and finding no response to his notices has dismissed the appeal without going into the merits of the grounds of appeal raised by the assessee. We don’t countenance such an action of the Ld.CIT(A) for the simple reason that he was duty bound to decide the grounds of appeal as per sub-section (6) of Section 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘). And therefore, we set aside the impugned order of the Ld.CIT(A) and taking note that the AO during the course of assessment proceedings after reopening the assessment had directed the assessee to prove the nature and source of cash deposits to the tune of ₹97,51,300/-; and pursuant to the same, the assessee submitted before the AO that he was a freelancing collection agent for M/s.Prabha Agency, Guduvanchery. And he explained that he used to collect money due to M/s.Prabha Agency from its sundry debtors and deposit the same in his account to facilitate transfer to M/s.Prabha and to corroborate the same filed copy of P & L a/c, balance-sheet, etc.
Further, the assessee filed confirmation letter from M/s.Prabha Agency which the AO is noted to have acknowledged and that the AO noted that the assessee in the relevant assessment year had deposited ₹1,04,72,300/- in his bank account; and had also purchased time- deposits to the tune of ₹27,40,000/- from the said bank (City Union Bank). According to the AO, the assessee in order to prove the cash deposits had filed confirmation along with the ledger copies which confirms that the cash deposits belong to M/s. Prabha Agencies and further noted that as per the ledger copy furnished, total amount of ₹1,26,34,506/- was collected by the assessee on behalf of M/s.Prabha Agency as an employee of the said Agency. Hence, the AO accepted the claim of the assessee regarding the cash deposits in his bank-account.
But, the AO wasn’t satisfied with the nature and source of ₹27,40,000/- for which he asked the assessee to explain and finding reply not to be satisfactory, he has made addition. On this issue, the Ld.AR brought to our notice that before the AO, the assessee had asked for some more time, but the AO has hurriedly passed the assessment order and therefore, pleaded for one more opportunity before the AO. Having considered the overall facts of the case, we are of the view that one more opportunity should be granted to the assessee to explain the nature and source of ₹27,40,000/-. Hence, we set aside the impugned order of the Ld.CIT(A) and restore the issue of addition of ₹27,40,000/- back to the file of the AO for de novo consideration. The Ld.AR is directed to file the nature and source of the time-deposit of ₹27,40,000/- and the AO after hearing the assessee to pass order in accordance to law after verifying the proof of deposit of ₹10,000/- as directed by us before the State Legal Aid Authority, Hon’ble Madras High Court.
In the result, appeal filed by the assessee is allowed for statistical purposes.