RANI,SALEM vs. ITO, WARD-1(1), SALEM

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 08.11.2023 for the Assessment Year (hereinafter referred to as "AY”) 2017-18.

At the outset, it is noted that appeal has been filed belatedly by ‘470’ days. In this regard, the Ld.AR drew our attention to the application filed for condoning the delay and the affidavit supporting the averments made therein explaining the cause for the delay. Having gone through the same and since, there is no material to controvert the contents of the application/affidavit, we are inclined to condone the delay and proceed to hear the grounds of appeal raised by the assessee.

Per contra, the Ld.DR opposed such prayer and submitted that the Ld.CIT(A) had given ample opportunities to the assessee but she failed to comply with the requisitions made by the Ld.CIT(A), because of which, the Ld.CIT(A) has passed the impugned order by giving partial relief to the assessee. Therefore, he doesn’t want us to give one more innings to the assessee.

Having heard both the parties and after perusal of the records, we note that the AO got information that assessee had deposited cash/SBNs of ₹10,52,500/- in her bank account maintained with Kotak Mahindra Bank. On the basis of such information, the AO issued statutory notices conveying his desire to conduct scrutiny assessment, especially to find out the nature and source of the SBNs deposited during demonetization period. In this regard, the AO noted that the assessee didn’t file any RoI but pursuant to his notice u/s.142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘), the assessee had filed return showing an income of ₹3,54,190/- which was mainly from business income [trading of fried gram merchant]. And the assessee in her reply about the nature and source of SBNs had submitted that she had cash in hand to the tune of ₹3,02,992/- as on 08.11.2016 and thereafter, had deposited in her account, the sale proceeds (SBNs) from her business in her bank account. However, the AO considered the first deposit of ₹1.40 lakhs made by the assessee on 10.11.2016 as genuine and accepted the explanation of the assessee. But the AO rejected the explanation given by assessee regarding the balance amount of ₹9,12,500/- and treated it as unexplained u/s.69A of the Act. On appeal, the Ld.CIT(A) after taking note of the assessee’s assertion that she had cash in hand as on 08.11.2016 an amount of ₹3,02,992/-, accepted the nature and source of the same and restricted the addition u/s.69A of the Act to the tune of ₹7,49,008/-. Thus, gave partial relief of ₹1,63,492/-.

However, the aforesaid action of the Ld.CIT(A) is noted to have been passed without hearing the assessee. In this regard, the Ld.AR brought to our notice that the assessee never received the notice of hearing from the Ld.CIT(A) due to technical glitches in the internet/e-mail and therefore, notices got dropped in the ‘spam’ account which resulted in assessee being not aware of such notices which prevented the assessee from responding to the same and which ultimately resulted in passing of the impugned appellate order. In the light of the same, we find that there is violation of natural justice and therefore, we are inclined to set aside the impugned order and restore the appeal back to the file of the Ld.CIT(A) with a direction to hear the assessee and consider the relevant documents filed by the assessee and thereafter decide the grounds of appeal raised by the assessee on merits subject to assessee remitting cost of ₹5,000/- 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 Ld.CIT(A) and the Ld.CIT(A) is directed to decide the grounds of appeal in accordance to law after hearing the assessee.

The Ld.AR has undertaken to appear and file the written submissions and other relevant documents in support of grounds of appeal before the Ld.CIT(A), which we expect the assessee to fulfill.

In the result, appeal filed by the assessee is allowed for statistical purposes.