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Facts
The assessee, who did not file an income tax return for A.Y. 2020-21, had cash of Rs. 70 lakhs found during a police inspection, leading to a warrant under Section 132A and reopening of assessment under Section 147. The Ld. AO completed an ex-parte assessment under Section 144, making additions for short-term capital gains on sale of plots (Rs. 1,91,87,000/-) and securities (Rs. 30,91,342/-), and unexplained cash deposits under Section 68 (Rs. 15,44,215/-), determining a total income of Rs. 2,38,22,557/-. The Ld. CIT(A) dismissed the appeal for non-prosecution, and a penalty of Rs. 90,000/- was also levied under Section 272A(1)(d) for non-compliance with statutory notices.
Held
The Tribunal set aside both the assessment and penalty orders to the file of the Ld. AO for de novo adjudication on merits, granting the assessee one more opportunity to furnish all necessary evidences and explanations. The Ld. AO is directed to provide an adequate opportunity of being heard and decide the issues as per law, with the assessee directed to cooperate without seeking unnecessary adjournments.
Key Issues
Whether the ex-parte additions made by the AO regarding capital gains from property and securities, and unexplained cash deposits, were justified without proper opportunity to the assessee; and whether the penalty imposed for non-compliance should be sustained.
Sections Cited
139, 132A, 147, 148, 144, 68, 272A(1)(d)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA
ORDER PER MADHUSUDAN SAWDIA, A.M.: These appeals are filed by Shri Papi Reddy Ankannagari (“the assessee”), feeling aggrieved by the separate orders passed by the Learned Commissioner of Income Tax (Appeals), Hyderabad-11 (“Ld. CIT(A)”), both dated 29.11.2024 respectively for the A.Y. 2020-21. Since these appeals are related to the same assessee and for the same A.Y. 2020-21, they are heard together and one consolidated order is being passed for the sake of convenience and brevity.
The assessee has raised the following grounds of appeal :
The brief facts of the case are that, the assessee is an individual who did not file the return of income under section 139 of the Income Tax Act, 1961 (“the Act”) for A.Y. 2020-21. During a vehicle inspection by the police, cash of Rs.70 lakhs was found in possession of the assessee. Thereafter, a warrant of authorisation under section 132A of the Act was executed on 12.11.2021 and possession of the cash was taken over by the Revenue from the police on 15.11.2021.
The case of the assessee was reopened under section 147 of the Act and notice under section 148 of the Act was issued on 29.03.2022. As there was no compliance on the part of the assessee, the Learned Assessing Officer (“Ld. AO”) proceeded for ex parte assessment under section 144 of the Act. On perusal of record, the Ld. AO noted alleged sale of five plots during the relevant previous year for an aggregate consideration of Rs.1,91,87,000/-. In the absence of any evidence of cost of acquisition, the entire amount was treated as short-term capital gains. The Ld. AO further noted sale of securities of Rs.30,91,342/- and in the absence of any details, taxed the entire amount as short-term capital gains. Further, in the absence of any details, the Ld. AO brought to tax Rs.15,44,215/- under section 68 of the Act being the highest peak balance against total credits of Rs.18,89,319/- in the assessee’s Union Bank of India account.
1. Accordingly, the Ld. AO completed the assessment under sections 147 r.w.s. 144 of the Act on 02.03.2023 determining the total income at Rs.2,38,22,557/-.
Aggrieved with the order of Ld. AO, the assessee filed appeal before the Ld. CIT(A). The assessee did not respond to the notices issued by the Ld. CIT(A). Accordingly, the Ld. CIT(A) dismissed the appeal for non-prosecution.
Aggrieved with the order of Ld. CIT(A), the assessee is in further appeal before this Tribunal. At the outset, the Learned Authorised Representative (“Ld. AR”) submitted that the assessee could not produce relevant evidence and documents in support of its claim before the lower authorities. He contended that the assessee is now in a position to furnish necessary supporting evidences and explanations in respect of the disputed additions. Therefore, the Ld. AR pleaded before the Bench that in the interest of justice, the case of the assessee may be set aside to the file of the Ld. AO for fresh adjudication on merits after considering the evidences and explanations which the assessee proposes to file.
Per contra, the Learned Departmental Representative (“Ld.
DR”) strongly objected to such request, submitting that adequate opportunities had already been provided to the assessee before the lower authorities, and therefore no further indulgence is warranted.
We have carefully considered the rival submissions and perused the material available on record. It is a matter of record that the assessee could not produce relevant evidences before the lower authorities in respect of its claim. At this stage, the assessee has come forward with an undertaking that it is now ready to produce supporting evidences and explanations in support of its claim.
Considering the totality of facts and circumstances, and in the larger interest of justice, we are of the view that one more opportunity deserves to be granted to the assessee. Accordingly, we set aside the issue to the file of the Ld. AO for de novo adjudication on merits. The assessee is directed to furnish all necessary evidences and explanations in support of its claim. The Ld. AO shall provide adequate opportunity of being heard to the assessee and thereafter decide the issues as per law. At the same time, the assessee is also directed to fully cooperate with the Ld. AO during the proceedings without seeking any unnecessary adjournments.
7. In the result, the appeal of the assessee in is set aside for statistical purposes.
The only issue involved in this appeal relates to the addition of Rs.90,000/- towards penalty levied by the Ld. AO under section 272A(1)(d) of the Act. The penalty was imposed on account of failure to comply with statutory notices. Both the lower authorities passed the orders ex parte due to non-prosecution and non-appearance on the part of the assessee. In this regard, we have heard the rival submissions and perused the material available on record. We note that the penalty proceedings under section 272A(1)(d) of the Act have been concluded ex parte at both the stages due to non- appearance of the assessee. Considering the principles of natural justice, and keeping in view the request of the Ld. AR for providing one more opportunity, we are inclined to restore the matter to the file of the Ld. AO for de novo adjudication. Accordingly, the Ld. AO is directed to afford adequate opportunity to the assessee to file submissions and explanations in support of his case, and thereafter pass a speaking order in accordance with law. The assessee is also directed to extend full cooperation to the revenue authorities and not to seek unnecessary adjournments.