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Facts
The assessee failed to file a return of income for AY 2013-14. The AO discovered cash deposits of Rs.1,38,36,000/- in the assessee's bank accounts and initiated reassessment proceedings. Despite notices, the assessee did not respond, leading to an ex-parte assessment order adding the cash deposits under Section 69A of the Income Tax Act, 1961.
Held
The Tribunal held that the assessee did not get a proper opportunity to prove the nature and source of the cash deposits before the AO. The Tribunal restored the assessment to the file of the AO for a de novo assessment, citing the Supreme Court's decision in TIN Box Co. v. CIT.
Key Issues
Whether the assessee was provided with adequate opportunity by the AO to prove the nature and source of cash deposits before making an addition under Section 69A, especially considering the notices were issued during the Covid-19 pandemic.
Sections Cited
69A, 148, 147
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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R PER ABY T. VARKEY, JM:
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 27.11.2024 for the Assessment Year (hereinafter referred to as "AY”) 2013-14.
The main grievance of the assessee is against the action of the Ld.CIT(A) confirming the action of the AO making an addition of Rs.1,38,36,000/- u/s.69A of the Income Tax Act, 1961 (hereinafter referred to as "the Act”)
The brief facts are that the assessee didn’t file any return of income (RoI) for AY 2013-14, and the AO came to know that assessee has deposited cash of Rs.1,38,36,000/- in some of his bank accounts during the year and didn’t file any RoI, therefore, he re-opened the assessment by issuing notice u/s.148 of the Act dated 26.03.2021; and further issued statutory notices directing the assessee to prove the nature and source of cash deposits. However, finding no response from the assessee, the AO added the entire cash deposits u/s.69A of the Act by passing the assessment order on 30.03.2022, which action of the AO has been confirmed by the Ld.CIT(A).
Aggrieved, the assessee is in appeal before this Tribunal.
We have heard both the parties and perused the material available on record. The main grievance of the assessee is that the assessee didn’t get proper opportunity before the AO who is the primary authority under the Act to assess the income of the assessee. Drawing our attention to the assessment order, the Ld.AR showed us that only two (2) notices were issued by the AO i.e. on 25.12.2021 & 04.03.2022. According to the assessee, the first notice was issued during Covid-19 pandemic (second wave) and therefore, the assessee can’t be faulted for not responding to it; the other notice, the assessee didn’t receive the same which led to the AO passing an ex parte order wherein the entire cash deposits was added as his income. Citing the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC), he pleaded for one more opportunity to be granted before the AO to prove the nature and source of cash deposits. The Ld.DR doesn’t want us to give one more opportunity to the assessee. Be that as it may, we find that in the present case, only two (2) notices were issued by the AO, one on 25.12.2021 & another on 04.03.2022, which fact is discernable from the caption of the assessment order [refer Item No.8 of the caption of assessment order] and agrees with the Ld.AR that the first notice was issued during the Covid-19 pandemic period and thereafter, has issued only one notice, and thereafter, has made addition of Rs.1,38,36,000/- i.e. the entire cash deposits in the bank account of the assessee.
Considering the facts discussed, we are of the view that assessee didn’t get proper opportunity before the AO to prove the nature and source of cash deposits, therefore, we are of the view that the assessment need to be restored back to the file of the AO for de novo assessment as held by the Hon’ble Supreme Court in the case of TIN Box Co. (supra). Having said so, we are also of the view that there is negligence on the part of the assessee, hence cost of Rs.15,000/- is imposed which the assessee should remit to the State Legal Aid Authority, Hon’ble Madras High Court, and produce necessary proof of depositing of the same before the AO and thereafter, the AO to frame the de novo assessment after hearing the assessee in accordance to law. The assessee is directed to file written submissions/relevant documents before the AO and the AO to frame assessment in accordance to law after hearing the assessee. If the assessee fails to do so, the AO is at liberty to pass order in accordance to law after giving reasonable opportunity to the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.