SUBRAMANIAN ALEXANDER,CHENNAI vs. ITO NON CORPORATE WARD 7(1), CHENNAI
What did the Tribunal hold?
The Tribunal found that the assessee provided reasons for non-appearance before lower authorities and sought to explain the source of cash deposits. Further verification was deemed necessary.
What were the facts?
The assessee's case was reopened due to significant cash deposits in bank accounts. The Assessing Officer made additions under Section 68 for unexplained cash credit. The CIT(A) passed an ex-parte order as the assessee did not appear.
What were the issues?
Whether the CIT(A) erred in passing an ex-parte order without sufficient opportunity and whether the cash deposits constituted unexplained cash credit under Section 68.
Which sections of the Income-tax Act were involved?
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- Dhakeshwari Cotton Mills Ltd. v. CIT1,061 citing26 ITR 775 · 1954 · SC
Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MANOJ KUMAR AGGARWAL & SHRI. ANIKESH BANERJEE
आदेश /O R D E R आदेश आदेश आदेश
PER ANIKESH BANERJEE, JUDICIAL MEMBER:
The appeal was filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-7/ Chennai [in brevity CIT(A)] order dated 31.07.2019 for Assessment Year 2013-14 bearing appeal no ITA No. 158/CIT(A)-7/2018-19.
The assessee filed grounds of appeal which are extracted as under:
:-2-: ITA. No: 2765/Chny/2019 “1. The Ld. CIT(A) has erred in the facts and circumstances of the case.
2. The Assessing Officer has erred in determining the total income at Rs.1,31,33,300/-as unexplained cash credit u/s 68 of IT Act.
3. The Ld. CIT(A) was wrong in upholding the additions made by the AO.
That the additions were made without providing sufficient opportunity to the appellant to submit evidence in support of his case, thereby violating `principles of natural justice' and thus rendering the impugned order untenable in law.
5. That the Ld.AO completed the assessment in an arbitrary manner wrongly invoking section 68 of IT Act and thereby adding the entire cash deposited in the bank account.
The said amount deposited in the bank represents the advances from various parties for construction of civil work.
At this juncture it is worthwhile to produce Section 68 of IT Act 1961, "Where a sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source Of the same or the explanation offered by him is not satisfactory in the opinion Of Assessing Officer, the sum so credited' .
Section 68 cannot be applied for the bank passbook.
9. That Ld “CIT(A) without any justification came to finding that the appellant is not interested in pursuing this appeal.
The details of the RI filed for 2012-13 and 2014-15 are given below: AY Contract Net profit Profit Receipts Ratio 2012-13 Rs. 74,80,500 Rs. 7,00,070 9.5% 2014-15 Rs. 42,59,100 Rs. 3,40,728 8% 11. It is submitted that assessee filed return of Income upto the A.Y 2018-19 within the time limit except for the A.Y 2013-14 as he was not keeping good health.
Due to his health problem the appellant could not submit the evidence before CIT (A) in support of his claim.
It is prayed that sufficient opportunity may be given to the appellant to submit evidence before CIT (A) in support of his claim.
The addition was just made simply on the basis of whims, surmises and conjectures. Assessment based on mere conjecture, surmises or suspicion is unsustainable in law, as held in Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Vs CIT (1954) 26 ITR 775 (SC).
:-3-: ITA. No: 2765/Chny/2019 15. Therefore, the addition in this regard may kindly be deleted. 16.For the above reasons and other reasons that may be adduced at the time of hearing, the addition made by the Assessing Officer may kindly be deleted and justice be rendered. 17. The Appellant craves leave to amend, alter or delete any of the above grounds of appeal.”
Brief facts of the case are that, the original assessment was made u/s 143(3)/147 of the Act. The ld. assessing officer reopened the case after sending notice u/s 148 of the Act due to deposit of cash of Rs.1,31,33,300/- in Savings bank account of HDFC Bank and Vijaya Bank for the F.Y. 2012-13. The ld. Assessing Officer issued the notice u/s 142(1) of the Act on 24/08/2018 but none appeared.
An addition was made related to credit of cash in HDFC Bank to the tune of Rs.36,41,000/- and in Vijaya Bank to the tune of Rs.94,92,300/- total amount to Rs. 1,31,33,300/-.
4. The assessee filed an appeal before the ld. CIT(A) and the impugned order was passed ex-parte as none appeared before the ld. CIT(A). The notice was duly served upon the assessee but no response was received during the course of appellate proceedings.
The assessee had not filed any adjournment petition either.
Further aggrieved, the assessee is in appeal before us.
:-4-: ITA. No: 2765/Chny/2019 6. After hearing the rival submissions, perusing the material available on record, orders of the authorities below as well as the case-laws cited, we would hold as under.
7. The assessee has filed a paper book which is kept on record, containing a sample agreement, bank statement of Vijaya Bank and HDFC Bank and other documents. The assessee has also filed a brief note and explained that he was unable to take part in the lower appellate proceedings owing to his ill health. The ld. Counsel for the assessee submitted that, the order passed by the ld. CIT(A) is without jurisdiction and that the ld. CIT(A) should have directed the ld. Assessing Officer for further enquiry.
8. As per the ld. Counsel for the assessee, the assessee deposited cash from his contract receipts from the construction. Accordingly, the construction agreement was enclosed in the paper book. The ld. Counsel for the assessee prayed for the matter to be set aside for further verification. The ld. D/R relied on the order of the revenue authorities and pleaded for dismissal of the appeal.
We find that though the assessee had not appeared before the lower authorities but before us he has explained the reasons for his non-appearance and sought to explain the source of cash deposits.
:-5-: ITA. No: 2765/Chny/2019 As further verification is required in the assessee's matter for coming to a substantive conclusion for determining the tax, We deem it fit to set aside the matter to the file of ld. CIT(A). The impugned order is set aside and the matter is restored back to ld. CIT(A) for denovo adjudication after considering the assessee’s evidences. The assessee, in turn, is directed to substantiate its case.
Needless to add that adequate opportunity of hearing shall be granted to the assessee.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in Open Court on 04th May, 2022 at Chennai.
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- Ajaybhai Dineshbhai Bagdai, Near Central… vs The Income Tax Officer, Ward-1(2)(1), New…ITA 74/RJT/2026[2013-14]Status: Disposed19 Oct 2026AY 2013-14
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