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Facts
The assessee did not file a return of income for AY 2015-16. The AO reopened the case based on information of cash deposits and purchase of immovable property. The AO added cash deposits of Rs. 62,23,835/- and the estimated fair market value of the property (Rs. 34,95,000/-) as unexplained income.
Held
The Tribunal noted non-compliance by the assessee but, considering the peculiar facts and the assessee's prayer, decided to grant one more opportunity. The case was restored to the Assessing Officer to allow the assessee to present their case and evidence.
Key Issues
Whether the assessment order and additions made are valid when the assessee was not given a reasonable opportunity to present their case and evidence, and whether the reopening was done correctly.
Sections Cited
147, 144, 69A, 50C, 148A, 271F, 271(1)(c), 271(1)(b), 234A, 234B, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “B”, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA & SHRI NIKHIL CHOUDHARY
This appeal has been preferred by the assessee against order dated 29.01.2025, passed by the National Faceless Appeal Centre, Delhi (NFAC) for Assessment Year 2015-16.
The brief facts of the case are that the assessee had not filed the return of income for the year under consideration. The Income Tax Department was in possession of information that during the year under consideration, the assessee had made cash deposits of Rs.20,70,000/- in Allahabad UP Grameen Bank and had also purchased an immovable property valued at Rs.30,00,000/-. The case of the assessee was reopened under section 147 of the Income Tax Act, 1961 (hereinafter called “the Act’) and statutory notices were issued to the assessee. Since there was no compliance from the side of the assessee, the Assessing Officer (AO) called for bank account statement of account No.614570100001958 maintained with Aryavart Bank, Trikolia, Sitapur and purchase/sale deed from the Office of the Sub-Registrar, Palia Kalan, Lakhimpur Khiri.
2.1 From the bank statement, it was noticed by the AO that the assessee had made cash deposits amounting to Rs.62,23,835/- in his bank accounts during the year under consideration. Since the assessee had not offered any explanation about the nature and source of the aforesaid cash deposits, the AO treated the amount of Rs.62,23,835/- as unexplained money and added the same to the income of the assessee under section 69A of the Act.
2.2 It was also noticed by the AO that the assessee had sold an immovable property (Gata No.627, Gram Gadniya, Pargna-Palia) on 16.02.2015 at Rs.30,00,000/-. The AO estimated the fair market value of the same at Rs.34,95,000/- and added the same also to the income of the assessee under section 50C of the Act.
2.3 The AO completed the assessment under section 147 read with section 144 of the Act, computing the total income of the assessee at Rs.97,18,835/-.
2.4 The AO also initiated penalty proceedings under sections 271F, 271(1)(c) and 271(1)(b) of the Act, separately.
3. Aggrieved, the Assessee preferred an appeal before the Ld. First Appellate Authority. Later on, the case of the assessee was migrated to NFAC, which dismissed the appeal of the assessee for the reason of non-compliance by the Assessee.
Now, the Assessee has approached this Tribunal challenging the orders of the AO as well as NFAC by raising the following grounds of appeal:
On the facts and circumstances of the case, order passed by learned authorities below are illegal and bad in law as the same have been passed without having jurisdiction upon the assessee.
2. On the facts and circumstances of the case, the order passed by the learned AO u/s 148A(d) is bad both in the eye of law and on facts. The order so passed by Ld. AO u/s 148A(d) needs be annulled.
On the facts and circumstances of the case, the order passed by the learned AO u/s 147/144 is bad both in the eye of law and on facts. The order so passed by Ld. AO needs be annulled as the same is passed without service of notice u/s 148.
4. The order passed by Ld. AO is barred by limitation as the same was not served on the assessee within the limitation period prescribed in the Act. 5. (a) The order is a high-pitched assessment wherein agriculture income and sale proceeds of agriculture land credited in Bank Account are added to the income and the circle value of the agriculture land is again added to income. (b) The Ld. Authorities have erred in law as well as in facts in adding Rs.62,23,835/- to the income of the assessee as unexplained investment/ undisclosed income. (c) The Ld. Authorities have erred in law as well as in facts in adding Rs.34,95,000/- to the income of the assessee as unexplained investment/ undisclosed income. (d) That the addition has been made ignoring the fact that it is the duty of the department to prove that the amounts credited in bank are income of the assessee. 6. That the addition has been made without any further investigation having been made, only on the basis of presumption. 7. On the basis of facts and circumstances of the case, Ld. AO has erred both in law as well as on facts in charging interest under section 234A and 234B of the of the L.T. Act 1961. 8. On the facts and circumstances of the case, the learned Authorities 3 below have erred, both on facts and in law, in making the additions without providing the assessee reasonable opportunity of being heard in gross violation of principle of natural justice.
The assessee reserves the right to add, amend and delete any of the above grounds of appeal.
During the course of hearing before us, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that both the authorities below have passed ex-parte orders without affording reasonable opportunity of hearing to the assessee. The Ld. A.R. also submitted that the agriculture income and sale proceeds of agriculture land credited in Bank Account were added to the income and the circle value of the agriculture land was again added to income of the assessee. The Ld. A.R. prayed that the matter may be restored to the file of the AO and if an opportunity is given, the assessee will produce all the relevant documents relating to the claim regarding sale proceeds of agricultural land before the AO.
The Ld. Sr. D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R.
We have heard both the parties and have also perused the material on record. We find that there was non-compliance on behalf of the assessee before the NFAC as well as before the AO. However, looking into the peculiar facts of this case and the prayer of the Ld. A.R., we are of the considered view that the assessee deserves one more opportunity to present his 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 present his case and to produce the necessary evidences in support of the claim regarding sale proceeds of agricultural land. 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.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Order pronounced in the open Court on 23/05/2025.