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Facts
The assessee filed an appeal against an ex-parte order by the CIT(A) for AY 2017-18. The additions were made under Section 69A for cash deposits and under Section 44AD for alleged business income. The assessee claimed that explanations could not be provided due to circumstances beyond their control.
Held
The Tribunal noted that the assessee failed to furnish details to the CIT(A) and AO. However, in the interest of justice, the matter was restored to the Assessing Officer for a de novo assessment, with directions for the assessee to cooperate fully.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without appreciating facts, and whether cash deposits and business income additions were justified without providing the assessee a proper opportunity to explain.
Sections Cited
69A, 44AD, 147, 148, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned This appeal is filed by the Assessee against the appellate order dated 07.12.2019 passed by the Commissioner of Income Tax (Appeals) Anand/National Faceless Appeal Centre, Delhi, relating to the Assessment Year 2017-18. 2. The assessee has raised the following grounds of appeals:
The Learned CIT (Appeals) has erred in passing an Ex-parte order and dismissing the appeal of the Appellant without appreciating the facts and circumstances of the case. It is submitted that the responses could not be filed towards notices issued during the course of Appellate proceeding only due to circumstances beyond the control of the Appellant. In view of this, Arvindbhai L Chaudhary Vs. ITO Asst. Year : 2017-18 - 2– the lower authorities may please be directed to hear the appellant again and the additions made of Rs 28,44,794/- kindly be deleted after fresh verification of details and evidences in the interest of justice.
The Learned Asst Unit has erred in invoking the provisions of Section 69A of the Act while making the addition of Rs 14,80,500/- towards cash deposits made for the year. It is submitted that the cash deposits made during the year were duly recorded in books of accounts and therefore the provisions of Section 69A of the Act are just not attracted in case of Appellant. It is therefore submitted that the action of lower authorities invoking the provisions of Section 69A of the act is completely incorrect and the entire addition made of Rs 28,44,800/- be deleted. 2.1 The Learned CIT (Appeals) has erred in confirming the addition made of Rs 14,80,500/- towards cash deposits treating the same Unexplained money u/s 69A of the Income Tax Act. It is submitted that the cash deposits made are out of sale proceeds received in cash and out of cash on hand available at that time, however necessary details and explanations could not be filed before lower authorities because of Ex- parte orders. On the facts and circumstances of the case, it is prayed before your honours that Learned CIT (Appeals)/Ld AO may please be directed to hear the appellant again along with all the details and evidences available and the addition made of Rs 14,80,500/- on account of cash deposits made be deleted. The same be held accordingly. 3. The Learned CIT (Appeals) has erred in confirming the addition of Rs 13,64,294/-made by AO applying provisions of Section 44AD of the Act considering income 8% of total credit entries reflected in bank account of Rs 1,70,53,667/- during the year It is submitted that the all the credit entries reflected in bank account are not business receipts/turnover and further the profit margin in business of the Appellant is very negligible as reported in Form 3CD filed and by no stretch of Imagination, the profit @ 8% can be determined in case of Appellant. On the facts and circumstances of the case, it is prayed before your honours that business income may please be restricted as disclosed in the Audited accounts and Tax Audit Report filed and remaining addition made be deleted accordingly The same please be held now. 4. The Order passed by the learned CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now. 5. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing of appeal. Arvindbhai L Chaudhary Vs. ITO Asst. Year : 2017-18 - 3– 3. On perusal of the record, we find that the assessee was granted various opportunities of hearing to furnish details, clarifications, and explanations to substantiate the source of cash deposits. However, despite several notices issued by the Ld. CIT(A), the assessee failed to submit any submissions or supporting documents. Consequently, the Ld. CIT(A) upheld the action of the Assessing Officer and dismissed the appeal. We also find that the assessee even failed to submit any details/supporting evidence to prove the source of the cash deposit before the Assessing Officer. The Ld. Counsel for the assessee prayed that, given an opportunity, all the details/clarification/explanation would be provided to the revenue authorities. Hence, in the interest of justice, we set aside the order of the Ld. CIT(A) and restore the matter back to the file of the Assessing Officer for de novo assessment, after affording due opportunity of being heard to the assessee. The assessee shall submit all the relevant bank statement/submission/document before the Assessing Officer and comply with the notices issued by the revenue authorities without seeking any unnecessary adjournments.
In the result, the appeal of the assessee is allowed for statistical purposes.