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Facts
The assessee failed to file an income tax return for AY 2017-18. Despite notices and opportunities, no compliance was made. The AO gathered information about cash deposits during the demonetization period and proceeded to make an assessment under Section 144.
Held
The Tribunal set aside the impugned order and remanded the case back to the CIT(A) on a denovo basis. The assessee was directed to cooperate with the Department and not seek adjournments.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without proper opportunity of hearing and upholding the addition of unexplained cash deposit under Section 69A and Section 115BBE.
Sections Cited
253, 250, 142(1), 133(6), 144, 68, 115BBE, 246A, 69A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH
Before: SHRI VIKRAM SINGH YADAV & SHRI PARESH M. JOSHI,
आदेश/ORDER
PER PARESH M. JOSHI, JM
1. This is an appeal filed by the assessee under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as Act) before this Tribunal. The assessee is aggrieved by the order dated bearing No. ITBA/APL/S/250/2023- 24/1060513672(1) dated 05.02.2024 of CIT(A) passed under Section 250 of the Act. The relevant assessment
ITA 669/CHD/2024 A.Y. 2017-18 2 year is 2017-18 and the corresponding previous year is from 01.04.2016 to 31.03.2017.
Delay of 55 days is condoned for which sufficient cause is shown. Appeal taken up for hearing.
Factual Matrix 2.1 That the assessee had not filed return of income for assessment year 2017-18.
2.2 That Department of Income Tax had a credible information that the assessee had deposited cash of Rs.10,21,500/- in account No. 914010012129112 in the Axis Bank during the demonetization period from 09.11.2016 to 31.12.2016 whereas the return of income was not filed.
2.3 That a notice under Section 142(1) of the Act was issued by ld. AO on 16.08.2019 to the assessee requiring the assessee to file return of income on or before 26.08.2019. In response thereto, no compliance was made by the assessee as no return of income was filed by the assessee.
ITA 669/CHD/2024 A.Y. 2017-18 3 2.4 That thereafter, statement of bank account maintained by the assessee for the above referred period was obtained by invoking the provisions of Section 133(6) of the Act. Accordingly, notice under Section 142(1) of the Act alongwith letter providing the assessee opportunity of being heard and requiring the assessee to show cause as to why assessment may not be completed under the provision under Section 144 of the Act on the issue of cash deposit of Rs.10,21,500/- and on the issue of cash deposit of Rs.8,48,000/- during the pre and post demonetization period during Financial Year 2016-17.
However, the statutory notice remained uncomplied with.
2.5 However, in order to adopt judicious approach and in the interest of principal of natural justice, opportunity through show cause letter along with notice u/s 142(1) of the Act dated 18.09.2019, sent through E- mail as well as speed post was given to the assessee wherein he was asked to explain the source of these cash deposits. The detailed show cause letter is re-produced as under:
ITA 669/CHD/2024 A.Y. 2017-18 4
(i) Notice u/s 142(1) of the Income Tax Act for AY. 2017-18 dated 16 08 2019 was issued to you for filling your income tax return for the assessment year 2017-18 within the due time. (ii) In response to the above notice you did not file your income tax return for the A.Y. 2017-18 and hence became fail in making compliance to above referred notice. (iii) This A.O has gathered the relevant material on record that cash deposits of Rs. 10.21.500/- was made by you in your bank account No. 914010012129112 with Axis Bank during demonization period i.e. 09.11.2016 to 30.12.2016. iv) Besides, cash during the pre demonetization period and dining the post demonetization period has also boon deposited by you in your above referred bank account for Rs. 8,48,000/-. v) In the above mentioned facts and circumstances, opportunity of being heard is given to you before making the assessment for A.Y. 2017-18 in your case under the provisions of Section 144 of Income Tax Act requiring you to show cause :-
as to why the amount of Rs. 1021500/- deposited in cash during demonetization period in your referred above bank i.e 9.11.2016 to 30.12.2016 may not be treated as unexplained cash deposit in your referred above bank account as per provisions of section 68 of the Act and be considered your income for the assessment year 2017-18. 2. as to why the amount of Rs.848000/- deposited in cash during pre demonetization period (1.4.2016 to 8.11.2016) and during the post demonetization period (3112.2016 to 31.3.2017) by you in your above referred bank may not be treated as unexplained cash deposit in your bank account as per provisions of section 68 of the Act and be considered your income for the assessment year 2017-18. Your reply should be given on or before 26.9.2019 failing which the assessment will be completed by treating as if you have nothing to say in this regard. Notice u/s 142(1) of the IT. Act 1961 is also issued.”
2.6 In response to the above show cause and the opportunity of being heard along with notice u/s 142(1) of the Act, neither anybody from assessee side attended the proceedings nor the assessee filed any written reply till date.
ITA 669/CHD/2024 A.Y. 2017-18 5 2.7 That by an assessment order dated 24.11.2019 an income of Rs.10,21,500/- was held chargeable to tax under Section 115BBE of the Act.
2.8 That assessee being aggrieved by the aforesaid assessment order dated 24.11.2019 preferred first appeal under Section 246A of the Act before CIT(A) who by impugned order has dismissed the appeal.
2.9 That assessee being aggrieved by the impugned order has preferred appeal before us and has raised following grounds of appeal :
1. That the Ld. Commissioner of Income Tax (Appeals) has erred in passing an ex-parte order without affording a proper opportunity of hearing which is against the Principles of Natural Justice and as such the order passed is arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the passing of the order under section 144 of the Act which is arbitrary and unjustified.
3. Without prejudice to the above, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the addition of Rs. 10,21,500/- made on account of alleged unexplained cash deposit in the bank account treating the same to be unaccounted income of the assessee applying the provisions of Section 69A which is arbitrary and unjustified.
4. That the assessee is an agriculturist and the source of cash deposit is sale of crop (Wheal and Paddy) and as such the addition made and upheld is arbitrary and unjustified.
5. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging of tax at 60% applying the provisions of Section I15BBE which are not applicable in the instant case.
ITA 669/CHD/2024 A.Y. 2017-18 6 6. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
7. That the order of the Ld. Commissioner of Income tax(Appeals) is erroneous, arbitrary, opposed to the facts of the case and thus untenable.”
Record of Hearing
The hearing in the matter took place before us on 22.01.2025 when both ld. AR for assessee and ld. DR for Revenue appeared. Both of them were heard patiently.
Ld. AR frankly stated that both the orders of the lower authorities are ex-parte and it would be just fair and convenient that impugned order be set aside. The ld. AR too conquered with the submission of ld. AR and finally left it to this Tribunal to take appropriate decision in accordance with law.
Observations,Findings & Conclusions 4.1 We have examined the records of the case and have heard rival submissions. We notice that in the impugned order, it is clearly recorded that despite opportunities after opportunity, the assessee has failed
ITA 669/CHD/2024 A.Y. 2017-18 7 to present its case on merits and has not pursued first appeal effectively. However, we are of the considered opinion that impugned order should be set aside and one more final opportunity be given to the assessee to present his case before CIT(A).
4.2 Accordingly, we set aside the impugned order and remand the case back to CIT(A) on denovo basis. We direct assessee to cooperate with Department and not to seek any adjournment.
ORDER 5.1 In result, appeal of the assessee is allowed as and by way of remand on denovo basis.
5.2 Allowed for statistical purposes.