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Facts
The assessee, a Grampanchayat, failed to file a return of income or respond to notices from the Assessing Officer (AO). The AO passed an ex-parte best judgment order under Section 144 of the Income Tax Act, treating cash deposits of Rs. 62,32,101/- as unexplained and making additions under Section 69A. The assessee appealed to the CIT(A) which confirmed the addition.
Held
The Tribunal restored the issue to the file of the Jurisdictional Assessing Officer (JAO) for de novo adjudication, considering the assessee's claim of exemption under Section 10(20) and the potential to explain the credits. The assessee was directed to cooperate and provide necessary details.
Key Issues
Whether the cash deposits in the Grampanchayat's bank account, representing tax and other receipts, are exempt from income tax under Section 10(20)/10(20A) and whether the addition made under Section 69A was justified without a proper hearing.
Sections Cited
10(20), 10(20A), 147, 144, 69A, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, A BENCH, PUNE
Before: Dr. MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER:
This appeal by the assessee pertaining to Assessment Year 2018-19 is directed against the order of ld. CIT(A) National Faceless Appeal Centre, Delhi (NFAC) dated 08.11.2024 u/s.250 of the Income-tax Act, 1961 which is arising out of the Assessment Order for A.Y. 2018-19 passed u/s.147 r.w.s. 144 by ITO, Kolhapur, dated 29.03.2023.
The Assessee has raised following grounds of appeal:-
1. On the facts and circumstances of the case and in law the CIT(NFAC) erred in confirming the addition made by the ITO of Rs.62,32,101/-representing the total of cash deposits in its bank accounts not accepting submission of the appellant that: a. The appellant a local authority all the deposits made by it being collection of gram panchayat taxes and other receipts in the performance of its function as laid and allowed by the Constitution of India to Gram Panchayats and hence its entire income is exempt u/s 10(20A) being local authority. b. The entire deposits representing only the gross collection, the addition of the whole amount is incorrect. The appellant prays that the ITO be directed to delete the addition. The appellant craves leave to add to, amend, alter, delete or modify all or any of the above ground of appeal or raise a new ground of appeal before or at the time of hearing.”
3. At the outset ld. counsel of the assessee submitted that the assessee is a local authority and the income earned is exempt u/s 10(20) of the Act and the alleged deposits are made out of collection of Grampanchayat, Pachgaon taxes and other receipts. He however submitted that for inevitable reason assessee could not appear before the A.O. for furnishing the details of expenditure, the source of cash deposits and other credits in its bank account maintained with HDFC bank Ltd. He prayed that the issue raised on merit regarding addition u/s 69 of the Act may be restored to the file of the ld. AO for “Denovo” adjudication.
4. On the other hand ld. DR supported the orders of lower authorities and stated that assessee had been given sufficient opportunity by both the lower authorities but there was no compliance.
5. We have heard rival contentions and perused the record placed before us. The assessee is a Grampanchayat located at Pachgaon district, Kolhapur and is an association of Persons. The appellant did not file the return of income and failed to respond to any of the notice issued by the AO, and ld. AO was constrained to pass ex-parte order u/s 144 of the I.T. Act by treating the entire cash deposits of Rs. 62,32,101/- as unexplained deposit and made for additions u/s 69A. The alleged credits were deposited in the bank account maintained with HDFC bank, Kolhapur Branch. We notice that the assessee has neither appeared before the ld. AO nor before ld.
CIT(A). Ld. AO has passed best judgement u/s 144 and ld. CIT(A) has not dealt with the merits of the case on ground of non compliance.
However considering the contentions of the ld. counsel for the assessee claiming that the assessee is eligible for exemption u/s 10(20) of the Act and that the assessee has complete details to explain the alleged credits in the bank account, we in the interest of justice and being fair to both the parties deem it proper to restore the issue raised on merit to the file of ld. Jurisdictional Assessing Officer (JAO) for “denovo” adjudication. Ld. JAO shall provide reasonable opportunity of hearing to the assessee. We also direct the assessee to remain vigilant and not to take adjournment unless otherwise required for reasonable cause and also update the correct email Id/Postal Address and Mobile No. to ld. JAO and also update them on the Income Tax Website. Thus all the Ground of appeal raised by the assessee are allowed for stastical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this 10th day of February, 2025.