BANGARU JAYARAMAN,DHARMAPURI vs. ITO, WARD-1,, DHARMAPURI

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ITA 2538/CHNY/2024Status: DisposedITAT Chennai05 February 2025AY 2012-136 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeals, finding the reasons provided by the assessees to be reasonable and showing sufficient cause. The Tribunal noted that both the AO and CIT(A) had passed ex-parte orders. It acknowledged that notices were issued during the COVID-19 pandemic and that the Supreme Court's suo-motu order extending limitation periods should benefit the assessees. Therefore, the non-compliance with the AO's notices was excused. For the ends of justice and fair play, the Tribunal decided to give the assessees one more opportunity before the AO to prove the nature and source of the cash deposit of Rs. 20,01,000/-. Relying on the decision in Tin Box Company vs. CIT (SC), the assessments were restored de novo before the AO. The Tribunal directed that since the bank account is a joint account of husband and wife, if one assessee proves the nature and source of the deposit, no addition should be made in the hands of the other. The impugned orders of the CIT(A) were set aside.

What were the facts?

The appeals concern Assessment Year 2012-13, filed by Smt. Jayaraman Sagunthala and Shri. Bangaru Jayaraman against ex-parte orders of the CIT(A)-NFAC. The Assessing Officer (AO) initiated reassessment proceedings under Section 148 after receiving AIR information about cash deposits of Rs. 20,01,000/- in a joint savings bank account with Canara Bank. Both assessees had not filed returns for AY 2012-13. Notices under Section 142(1) and a show-cause notice were issued, but the assessees did not appear or reply. Consequently, the AO made best judgment assessments under Section 144, adding Rs. 20,01,000/- under Section 69A in each assessee's hands. The CIT(A) dismissed their appeals ex-parte due to non-appearance.

What were the issues?

1. Whether the Tribunal should condone the delay in filing the appeals, given the circumstances presented by the assessees? 2. Whether the ex-parte orders passed by the AO and the CIT(A) are sustainable, considering the assessees' inability to respond due to the COVID-19 pandemic and the Supreme Court's suo-motu order extending limitation periods? 3. Whether the matter should be restored to the AO for de novo assessment to allow the assessees an opportunity to prove the nature and source of the cash deposits? Assessee's Contentions: The assessees argued that the CIT(A) and AO passed ex-parte orders. They contended that notices under Section 148 and 142(1) were issued during the COVID-19 pandemic, preventing them from responding. They also claimed the cash deposits were from business transactions and sale of agricultural land. They relied on the Supreme Court's suo-motu order excusing/extending limitation periods during the pandemic. Revenue's Contentions: The revenue did not explicitly record arguments for the respondent. However, their presence and participation in the hearing indicate their opposition to the assessees' claims.

Which sections of the Income-tax Act were involved?

Section 144,Section 148,Section 142(1),Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEYAND

Hearing: 23.12.2024Pronounced: 05.02.2025

अपीलाथ� की ओर से/ Appellants by : Shri P.M. Kathir, Advocate +,थ� की ओर से /Respondent by : Shri Keerthi Narayanan, JCIT सुनवाईकीतारीख/Date of Hearing : 23.12.2024 घोषणाकीतारीख /Date of Pronouncement : 05.02.2025 आदेश / O R D E R PER ABY T. VARKEY, JM:

These are appeals filed by the respective assessees against the orders of the Ld. Commissioner of Income Tax (Appeals)-NFAC, & 2538/Chny/2024 (AY 2012-13) Jayaraman Sagunthala & Bangaru Jayaraman (hereinafter in short “CIT(A)") dated 27.06.2024 & 17.05.2024 respectively for assessment year 2012-13 (hereinafter in short “AY").

2.

At the outset, we note that these appeals were filed with a delay of 35 days & 76 days respectively. On perusal of the applications filed for condonation of delay supported by affidavits and submissions of the Ld. AR and Ld. DR, we find the reasons explained by the assessees are reasonable and shows sufficient cause which prevented them in filing the appeals in time. Thus, the delay of 35 days in filing ITA condoned and the appeals are admitted for adjudication.

3.

At the outset, the Ld.AR of the assessee pointed out that the Ld.CIT(A)/NFAC has passed ex-parte orders qua both the assessees. And that the AO has also passed best judgment assessments u/s.144 of the Income Tax Act, 1961 [herein after “Act”] i.e., ex-parte orders.

4.

Brief facts are that the AO received AIR (Annual Information Report) information that there were cash deposits amounting to Rs.20,01,000/- in their savings bank account with M/s. Canara Bank. The AO also noted that & 2538/Chny/2024 (AY 2012-13) Jayaraman Sagunthala & Bangaru Jayaraman both the assessees had not filed their return of income for the relevant AY (AY 2012-13). The AO in order to ascertain the sources of the cash deposits made in the aforesaid bank account issued notices u/s.148 of the Act to both the parties on 28.03.2019 and thereafter notices u/s.142(1) of the Act were issued on 08.03.2021 & 13.09.2021 and followed by a show- cause dated 24.09.2021; and since, the assessees neither appeared nor filed any reply, the AO passed best judgment assessment u/s.144 of the Act by making an addition of Rs.20,01,000/- u/s.69A of the Act in both their hands by passing separate assessment orders on 29.09.2021.

5.

Aggrieved, the assessees preferred an appeal before the Ld.CIT(A), who dismissed the appeals citing the reason that despite giving notices and fixing the appeal on eight occasions, none appeared/filed written submissions before him. Therefore, he dismissed the appeals ex-parte qua both assesses. Aggrieved by the impugned actions of the Ld.CIT(A)/NFAC, both the assessees are before us.

6.

We have heard both the parties and perused the records. It is noted that the assessee’s are husband & wife (Husband: Shri Bangaru Jayaraman and Wife: Smt.Jayaraman Sagunthala) and both were having a & 2538/Chny/2024 (AY 2012-13) Jayaraman Sagunthala & Bangaru Jayaraman joint account in the Canara Bank. In the said bank account, the first name was of the husband and second name was that of the wife. According to the husband, his total income for the AY 2012-13 was Rs.1,79,510/-, which was below the taxable limit and therefore, he was not required to file the return of income. According to the wife, she didn’t have any income from any source during the relevant year under consideration and therefore, didn’t file any return of income. According to the husband, he is engaged in the business of providing building materials / stones and the cash deposits was out of such business transaction. In other words, the cash deposit in question were receipts from the trading of stones as well as sale of agricultural land of 2.16 acres at Rs.1,08,000/-. According to Ld.AR, the notice u/s.148 and notices u/s.142(1) of the Act were all issued during the Covid/Pandemic period and therefore, the assessees could not respond to the notices issued by the AO.

7.

We note that the AO had issued notices u/s.142(1) of the Act dated 08.03.2021 and 13.09.2021 as well as the show cause notice (SCN) dated 24.09.2021 which were issued during the Covid period. Therefore benefit of the Hon’ble Supreme Court, suo-motto order excusing / extending limitation period (from 20.03.2020 to 28.03.2022 and was even extended to 90 days)

& 2538/Chny/2024 (AY 2012-13) Jayaraman Sagunthala & Bangaru Jayaraman should be given to assessee’s and therefore, we are of the view that the assessees non-compliance to the notices issued by the AO u/s.142(1) of the Act and SCN dated 24.09.2021 needs to be excused; and having noted so, we are of the view that as per the scheme of Income Tax Act, the AO is the primary authority who is vested with the power to examine the facts as well as law to determine the correct taxable income of the tax payer. Since the Ld.CIT(A) as well as the AO has passed ex-parte order qua assessee, for the ends of justice and fair play, we are of the view that one more opportunity should be given to the assessee before the AO for proving the nature and source of cash deposit in the joint account of the husband & wife in the Canara Bank account to the tune of Rs.20,01,000/-. For such a decision, we rely on the decision of the Hon’ble Supreme Court in the case of Tin Box Company vs. CIT, reported in [2001] 249 ITR 216 (SC) and restore the assessments de novo before AO. Since the bank account in question is held in the name of husband as the first holder of the account, the assessment needs to be framed in the hands of the husband and it is trite law that the same amount cannot be again taxed in the hands of the wife. With the aforesaid observation, we set aside the impugned orders of the Ld.CIT(A) and restore the assessments back to the file of the AO to de novo assess the income of the assessee i.e., with regard to the nature and & 2538/Chny/2024 (AY 2012-13) Jayaraman Sagunthala & Bangaru Jayaraman source of the cash deposit to the tune of Rs.20,01,000/-. The assessees are directed to file written submissions as well as file the relevant evidences to prove the nature of source of Rs.20,01,000/- and the AO is directed to frame assessment in accordance to law and considering that assessee’s are husband & wife and holds joint account, if one of the assessee’s proves the nature and source of the deposit, no addition in the hands of other should be again made.

8.

In the result, the appeals of both the assessees are allowed for statistical purposes. Order pronounced on 05th February, 2025 at Chennai.

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