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Facts
The assessee, a society promoting education, filed its return declaring Nil income. The department initiated proceedings under Section 147 due to information of substantial cash deposits in bank accounts. The Assessing Officer (AO) treated these deposits as undisclosed income under Section 69A.
Held
The Tribunal held that the AO did not provide proper opportunity to the assessee and only gave one day to present facts and evidence. Therefore, the appeals were restored to the AO for a fresh decision after affording a reasonable opportunity of hearing to the assessee.
Key Issues
Whether the assessee was provided with a reasonable opportunity of being heard by the AO, and whether the additions made were justified given the circumstances.
Sections Cited
147, 148, 142(1), 69A, 144, 144B, 115BBE, 271(1)(c), 282, 127, 11, 12, 10(23C), 250(6)
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Income Tax Appellate Tribunal, LUCKNOW BENCH “A”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY
2.0 Since the facts of the case and the issue involved in both the appeals are identical, for the sake of convenience, we dispose of both the appeals by this common order.
Firms, Society & Chits, Lucknow as Non-Profit Organization (NGO) with an object to promote education in rural areas. The assessee-trust filed its return of income for the year under consideration on 30.09.2016, declaring income at Nil. Subsequently, the Income Tax Department received information that the assessee had made cash deposits to the tune of Rs.76,03,606/- in its various bank accounts maintained with United Mercantile Co-operative Bank and Gramin Bank of Aryavart. Accordingly, proceedings under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) were initiated against the assessee after issuing notice under section 148 of the Act, requiring the assessee to file the return of income. In response to the notice, the assessee filed Form No.7, as the ITR filing site was non-functional at the relevant time due to spread of Covid – 19. Thereafter, the National Faceless Assessment Centre, issued notice under section 142(1) of the Act to the assessee. In response to the same, the assessee filed a detailed reply dated 17.12.2021 along with documents sought for by the Assessing Officer (AO). Subsequently, the assessee filed written submissions dated 25.03.2022 and 29.03.2022 before the AO. The AO, after considering the submissions of the assessee, concluded that the assessee had come forward with such evidences/certificate etc. at the fag end of the proceedings and the same had remained unsubstantiated on the part of the assessee. He, therefore, treated the cash deposits amounting to Rs.76,03,606/- as undisclosed money of the assessee and added the same to the income of the assessee under section 69A of the Act. The AO completed the assessment under section 147 of the Act read with sections 144 and 144B of the Act, assessing the total income of the assessee at Rs.76,03,610/- as against Nil income returned by the assessee.
2.2 The AO also invoked the provisions of section 115BBE of the Act and initiated penalty proceedings under section 271(1)(c) of the Act, separately.
3.0 Aggrieved, the Assessee preferred an appeal before the NFAC which dismissed the appeal of the assessee for non- compliance by the assessee.
4.0 Now, the assessee has approached this Tribunal challenging the orders of the AO as well as the NFAC by raising the following grounds of appeal:
(1) the order appealed against is contrary to the facts, law and principles of natural justice.
(2) In any case, the addition so made and sustained by the authorities below is too much high and excessive.
(3) The additions had been made without appreciating the facts of the case and law applicable thereto and grounds of appeal in the right prospective.
(4) The notices issued, as mentioned in order, has not been served in accordance with the provision of section 282 of Income Tax Act, 1961 read with rule 127 Income Tax RULES. the appellant rely upon the cases of :- a. Idream social edtech foundation versus CIT (Exemption) - [2024] 163 taxmann.com 539(Chandigarh-ITAT) b. Aastitva Jain Family trust vs ITAT Agra Dated 17.01.2025 c. Sohum charitable trust vs. CIT (Exemp.) Dated 10.01.2023 d. Boards Notification No. 4/2017 Dated 03.04.2017
(5) The claim as per section 11, 12 of Income Tax Act, 1961 has not been granted without assigning any reason thereto the appellant is a registered charitable institute running colleges and entitled for exemption under section 10(23C) of income tax act, 1961
(6) The learned CIT (appeal) has not passed order in accordance with the provision under section 250(6) the EX- PARTE order by CIT appeal without adjudicating issues on merits is not sustainable. The appellant strongly rely upon the case of M/s Jain steel corporation versus ITO.
(7) Mere Uploading of communication in e-portal is not sufficient mode of communication under section 282 of Income Tax Act and Rule 127.
(8) For these and any other grounds which may be raised on or before hearing of the appeal.
5.0 None was present for the assessee when the appeal was called out for hearing nor was any adjournment application moved in this regard. However, looking into the facts of the case, we proceed to adjudicate the appeal ex-parte qua the assessee.
6.0 Since the order passed by the AO was under section 144 of the Act and the NFAC had dismissed assessee’s appeal in limine, the ld. CIT (D.R.) had no objection to the restoration of appeal to the file of the Assessing Officer.
7.0 We have heard the Ld. CIT (DR) and have also perused the material on record. In the impugned appellate order, the NFAC had observed, at page 4 para 3 of his order, that the AO has not allowed proper opportunity to the assessee and provided only one single day to bring on record all the facts/evidences. Looking into the specific facts of this case, we are of the considered view that the assessee deserves one more opportunity to present its case and, therefore, we restore this file to the Office of the Assessing Officer with the direction to provide an opportunity to the assessee to produce the necessary evidences in support of the impugned transactions entered into by the assessee during the year under consideration. We also caution the assessee to fully comply with the directions of the Assessing Officer in the set-aside proceedings when called upon to do so, failing which, the Assessing Officer would be at complete liberty to pass the order in accordance with law, based on the material available on record even if it is ex-parte qua the assessee. for assessment year 2017-18, similar addition of Rs.1,47,67,806/-, being the cash deposits made by the assessee in its various Bank accounts during the year under consideration, was made under section 69A of the Act.
10.0 Aggrieved, the Assessee preferred an appeal before the NFAC, which dismissed the appeal of the assessee for non- compliance by the assessee.
11.0 Similar grounds, as raised in , have been raised by the assessee in this appeal. On identical set of facts and similar reasons, we have set aside the order of the NFAC and restored the matter to the AO for assessment year 2016-17. Accordingly, the order of the AO for assessment year 2017-18 is also set aside and the matter is restored to the file of the AO for deciding same afresh after affording reasonable opportunity of hearing to the assessee.
12.0 In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open Court on 31/07/2025.