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Facts
The assessee filed appeals against orders confirming additions based on cash deposits into bank accounts. The assessee claimed these deposits were from agricultural income, which is exempt. The lower authorities had made additions ex-parte due to non-compliance by the assessee's CA.
Held
The Tribunal held that no prejudice would be caused to the revenue by allowing the Assessing Officer to examine the details and explanations provided by the assessee. The matter was remanded to the Assessing Officer for de novo assessment.
Key Issues
Whether the CIT(A) was justified in confirming additions on an ex-parte basis without properly examining the agricultural nature of income, and if principles of natural justice were violated. Whether remand for fresh assessment is appropriate.
Sections Cited
10(1), 250
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. B.R.R. KUMAR, VICE-Ms. SUCHITRA KAMBLE
O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:-
Delay Condoned The captioned two appeal are filed by the Assessee against the separate orders dated 31.05.2023 & 14.03.2024 passed by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre. Since the issued involved in these two appeals are common, we take the ground of appeal raised in for AY 2016-17 for the purpose of adjudication and the decision in the said appeal will also apply to the other appeal also.
ITA Nos. 557-558/Ahd/2025 Anilkumar B Patel Vs. ITO Asst. Years : (2016-17 & 2017-18) - 2– for AY 2016-17
The assessee has raised the following grounds of appeals:
1.1. The Hon. Commissioner of Income tax (Appeals) has confirmed the addition on an ex-parte basis on the grounds of non-compliance by the appellant's Chartered Accountant (CA), who has been authorized to appear before CIT(A) on behalf of the appellant. The appellant has reasonable grounds for the failure of compliance, which was due to the oversight or negligence of the CA. The appellant had no intention to delay or avoid any information submission. 1.2. The appellant prays that the order passed on an ex-parte basis should be set aside, and the matter be remanded for a fresh hearing, providing the appellant an opportunity to present all relevant documents and explanations. Ground No. 2: Addition of cash deposits into bank account without proper verification 2.1. The Hon. Commissioner of Income tax (Appeals) has confirmed an addition on account of entire cash deposits made in the appellant's bank account during the relevant period, without establishing any nexus between such deposits and undisclosed income. The appellant has been involved in agriculture activities, and the source of funds in the bank account represents legitimate agricultural income, which is exempt under Section 10(1) of the Income Tax Act, 1961. 2.2. The appellant respectfully submits that the cash deposits were made from the income derived from agricultural activities, which has been duly reported in the return of income filed by the appellant. 2.4. The appellant requests that the addition confirmed due to cash deposits in the bank account be deleted as it represents genuine agricultural income, and the appellant be granted a proper opportunity to provide further details or documents to support the same. Ground No. 3: Failure to consider the nature of income (agriculture income) 3.1. The Hon. Commissioner of Income tax (Appeals) has failed to recognize the income from agricultural activities as exempt under Section 10(1) of the Income Tax Act, 1961. The appellant, being an agriculturist, has been Anilkumar B Patel Vs. ITO Asst. Years : (2016-17 & 2017-18) - 3– earning income from agriculture, and the same was reported in the return of income. 3.2. The appellant submits that agricultural income is not subject to taxation, and hence, any amount related to agricultural income should not be considered for assessment purposes. The Hon. Commissioner of Income tax (Appeals) while confirming the addition has not properly examined the nature of the appellant's income and has wrongly treated it as taxable. Ground No. 4: Denial of natural justice and opportunity of hearing 4.1. The appellant was not given a fair opportunity to present the case and explain the nature of the cash deposits in the bank account. The ex-parte order passed by the Hon. CIT(A) has violated the principles of natural justice, as the appellant was not given an adequate chance to provide supporting documents or explanations. 4.2. The appellant submits that they should have been granted an opportunity to explain the nature of the transactions and provide evidence regarding the agricultural income and its deposits into the bank account. Ground No. 5: Erroneous assumption of undisclosed income 5.1. The Hon. CIT (A) has wrongly rejected the appeal and confirming the view of Ld. AO for assuming that the cash deposits into the bank account represented undisclosed income. The appellant submits that the assumption is incorrect, and the deposits were made from legitimate sources, including agricultural income and other sources of income, which have been duly disclosed in the return of income. 5.2. The appellant requests that the addition be deleted, as there is no material or evidence to support the assumption of undisclosed income. Ground No. 6: Request for Remand for Fresh Assessment 6.1. The appellant humbly prays that, in light of the circumstances and the factual position, the matter be remanded to either Hon. CIT (A) or to the Assessing Officer for a fresh assessment, with a proper opportunity to represent the facts and submit necessary documents.
On going through the record, we find that notices u/s.250 of the Act were issued on 15.01.2021, 10.05.2023, 22.05.2023, & 29.05.2023 by the Ld. CIT(A), requesting the assessee to furnish a detailed submission to ITA Nos. 557-558/Ahd/2025 Anilkumar B Patel Vs. ITO Asst. Years : (2016-17 & 2017-18) - 4– substantiate its claim. Despite sufficient time given, the assessee failed to respond to the above notices and not submit any substantial document in support of its contention for deletion of addition. Hence, the Ld.CIT(A) dismissed the appeal of the assessee. We also find that the assessee has not complied even before the Assessing Officer. Before us the Ld. Counsel for the assessee prayed that, given an opportunity, all the details/clarification/explanation would be provided to the revenue authorities. Having gone through the fact, we hold that the no prejudice will be caused to the revenue if the Assessing Officer is allowed to examine the details/explanation/evidence submitted by the assessee. Hence, the matter is remanded to the Assessing Officer for conducting assessment de- novo. The assessee shall comply with the notices issued by the authorities without seeking any unnecessary adjournments.
Since we have remanded the issue to the file of Assessing Officer for assessment de-novo , we also set-aside the common issue in AY 2017-18 for fresh consideration.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.