JASMER SINGH,NARAINGARH, AMBALA vs. ITO, WARD-2, AMBALA

Briefly, the facts of the case are that the assessee, an individual pensioner and agriculturist, did not file return of income for the relevant assessment year. Based on information of cash deposits aggregating to Rs.11,98,000/- during the demonetization period (09.11.2016 to 31.12.2016) in three bank accounts (SBI, Axis Bank, and HDFC Bank), proceedings u/s 142(1) were initiated. 2.1 The Assessing Officer noted that despite several statutory notices, the assessee failed to produce supporting documentary evidence. The assessee explained that cash deposits were out of earlier withdrawals of Rs.15,35,000/- made in January–February 2016 intended for purchase of agricultural land which did not materialize. 2.2 The AO rejected the explanation observing that the withdrawals were nearly 10 months prior to the deposits, holding that such long retention of cash was 2 improbable. Accordingly, the AO treated the entire sum of Rs.11,98,000/- as unexplained money u/s 69A, in addition to adding Rs.15,000/- as commission income from “Golden Trust Financial Services Ltd.” and interest income of Rs.6,577/-. The total income was assessed at Rs.14,10,968/- and taxed u/s 115BBE 3. Against the order of the AO the assessee preferred appeal before the CIT(A), NFAC, but did not file the return of income nor deposit any amount equal to advance tax payable.

The CIT(A), after issuing notice u/s 249(4)(b) requiring proof of payment of advance tax, recorded that the assessee neither responded to the notice nor deposited the required amount. Citing the mandatory condition prescribed under Section 249(4)(b), the CIT(A) held that where no return is filed, the appeal cannot be admitted unless an amount equal to the advance tax payable has been paid. As the assessee failed to comply, the CIT(A) dismissed the appeal as not maintainable/infructuous without going into the merits 5. Aggrieved by the order of the Ld. CIT(A), the ssessee has filed the present appeal before the Tribunal.

During the course of hearing Ld. AR contended that:  The assessee is a small agriculturist and pensioner, whose income is below the taxable limit. Cash deposits were duly explained as arising from earlier withdrawals for  proposed land purchase; hence, the source stands explained. The CIT(A) dismissed the appeal mechanically without affording opportunity  to cure procedural defects or without exercising discretion under the proviso to Section 249(4)(b) which empowers the authority to exempt the appellant from pre-deposit on sufficient cause being shown. Reliance was placed on judicial precedents that liberal interpretation must  be adopted in the case of small taxpayers and that dismissal for technical default defeats the principles of natural justice. It was submitted that lenient view be taken in the present case considering  the age and occupation of the assessee 7. Per contra the Ld. DR submitted that: