Loading judgment…
Facts
The assessee, an NRI, did not file an income tax return for AY 2017-18, believing he had no taxable income in India. The AO made an addition of Rs. 1,33,98,246 under Section 69A for unexplained bank deposits during demonetization, after an ex-parte assessment under Section 144, claiming notices were sent to an old address. The CIT(A) dismissed the assessee's appeal ex-parte due to non-prosecution, as the assessee was hospitalized and undergoing medical treatment during the relevant period.
Held
The Tribunal found that the assessee was genuinely ill and unable to participate in proceedings before the CIT(A). Considering the additional evidence regarding source of deposits (bank statements, confirmations, inter-bank transfers) could not be examined, the Tribunal set aside the CIT(A)'s order and remanded the matter to the AO for fresh adjudication after proper verification and providing the assessee an opportunity of hearing.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal ex-parte when the assessee could not attend due to medical reasons, and whether the addition under Section 69A for unexplained deposits without proper verification was valid.
Sections Cited
69A, 142(1), 144
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘ DB-A ‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
(िनधा�रण वष�/Assessment Year: 2017-18) Shri Aijas Mohiuddin Vs. Income Tax Officer Hyderabad Ward 7(1) PAN:AJBPA3676Q Hyderabad (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri GVN Hari, Advocate राज� व �ारा/Revenue by:: Shri Gurpreet Singh, Sr.AR सुनवाई की तारीख/Date of hearing: 31/07/2025 घोषणा की तारीख/Pronouncement: 06/08/2025 आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal by the assessee is directed against the order dated, 2/12/2024 of the learned CIT (A)-NFAC Delhi, for the A.Y.2017-18.
The assessee has raised the following grounds of appeal:
1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.
2. The learned Commissioner of Income Tax (Appeals) is not justified in dismissing the appeal Ex-Parte.
3. Without prejudice to the above, The learned Commissioner of Income Tax (Appeals) is not justified in sustaining the addition of Rs.1,33,98,246 made by the assessing officer u/s 69A of the Act towards unexplained deposits in the bank accounts of the appellant.
The Appellant craves leave to amend, alter, add or delete any ground of appeal at any time or during the hearing of the appeal.”
The learned Counsel for the assessee submitted that the assessee is an NRI and was not having any taxable income in India and therefore, the assessee did not file any return of income for the year under consideration. The Assessing Officer has issued notice u/s 142(1) and then framed the assessment u/s 144 of the Act on 3/12/2019 whereby an addition of Rs.1,33,98,246/- was made u/s 69A of the Act on account of cash deposits and other deposits in the bank account of the assessee. He has pointed out that the notices were issued by the Assessing Officer at the old addresses of the assessee and therefore, the assessee could not receive the notices. Therefore, there was no compliance or response on behalf of the assessee to those notices. The learned Counsel for the assessee submitted that the assessee has filed the appeal before the learned CIT (A) but due to the ill health of the assessee who was undergoing the medical treatment and was also admitted in the Hospital during the relevant period, the assessee could not participate in the proceedings before the learned CIT (A) and consequently, the appeal of the assessee was dismissed due to non-filing of submissions/documents/explanations. The learned Counsel for the assessee has referred to the medical report of the assessee as well as the certificate issued by the Page 2 of 6 Hospital to show that during the month of October, 2024, the assessee was hospitalized and was under the treatment and therefore, the assessee could not respond to the notices issued by the learned CIT (A) in the month of October, 2024. He has thus pleaded that the impugned order of the learned CIT (A) may be set aside, and the matter may be remanded to the record of the Assessing Officer to verify and examine the relevant evidence/details which has been filed by the assessee as an additional evidence to explain the source of the deposits and the credits in the bank account of the assessee. The learned Counsel for the assessee has also referred to the petition filed by the assessee for admission of additional evidence and submitted that due to the reasons as explained above, the assessee could not produce the relevant details and evidence to explain the source of these deposits and other credits in the bank account of the assessee. He has pointed out that majority of the credits are only the transaction of transfer from one bank to another bank and assessee has also filed confirmation along with bank account statements.
4. On the other hand, the learned DR has submitted that despite sufficient opportunities given by the Assessing Officer as well as the learned CIT (A), the assessee has not responded to any of the notices issued by the authorities below. Thus, it is manifest that the assessee has shown a very casual approach to the proceedings pending before the Assessing Officer as well as before the learned CIT (A). He has relied upon the impugned order of the learned CIT (A).
We have considered the rival contentions as well as the relevant material available on record. The assessee has filed the copy of the Passport to show that during the year under consideration, a total duration of stay in India is 165 days and therefore, the residential status of the assessee in India is an NRI. The assessee is working as an Engineer in Saudi Arabia and drawing the income outside India. The assessee has not filed any return of income on the belief that there is no taxable income of the assessee in India. The Assessing Officer on the basis of information of deposits of cash of Rs.12,30,000/- in the bank account of the assessee during the demonetization period issued a notice u/s 142(1) of the Act but there was no response on behalf of the assessee. The assessee has explained that due to change of the address of the assessee, the notices issued by the Assessing Officer were not received and therefore, the assessee was unaware about the proceedings initiated by the Assessing Officer. The Assessing Officer finally passed the assessment order u/s 144 of the Act and made the addition of the entire credit in the bank account of the assessee u/s 69A of the Act. The assessee challenged the action of the Assessing Officer before the learned CIT (A), but the appeal of the assessee was dismissed due to non- prosecution on behalf of the assessee.
6. It is apparent from the impugned order of the learned CIT (A) that after issuing the initial notice dated 16/08/2023, the next notice was issued after a gap of more than one year on 03/10/2024 and then on 21/10/2024 and 30/10/2024.
Page 4 of 6 Therefore, the last 3 notices were issued in the month of October, 2024 but there was no compliance to these notices by the assessee. The assessee has now filed the medical record of the assessee to show that the assessee was undergoing the treatment and also admitted in the hospital during the said period. The assessee was under complete rest during the months of October & November 2024. Thus, we are satisfied that the assessee could not participate in the proceedings before the learned CIT (A) due to his ill health and undergoing treatment. The assessee has also filed a petition for admission of the additional evidence comprising of sthe details of the amounts credited in the bank account of the assessee including the deposits and source of the cash deposits. The assessee has also filed copy of the bank account statement and confirmation letters from the persons from whose bank accounts certain amounts were transferred. Since the assessment order was passed u/s 144 of the Act and the learned CIT (A) has also dismissed the appeal of the assessee for non-prosecution, therefore, the additional evidences filed by the assessee remained unverified and unexamined. Accordingly, in the facts and circumstances of the case and in the interest of justice, we set aside the impugned order of the learned CIT (A) and remand the matter to the record of the Assessing Officer for fresh adjudication after proper verification and examination of the relevant record filed by the assessee to explain the source of the deposits made in the bank account of the assessee. Needless to say, before passing the fresh order, the assessee be given an appropriate opportunity of hearing.
In the result, appeal filed by the assessee is allowed for statistical purposes.