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Facts
The assessee filed his return of income for AY 2017-18, declaring a total income of Rs.3,47,020/-. The case was selected for scrutiny due to large cash deposits during the demonetization period. The Assessing Officer (AO) issued notices for explanation of cash deposits, but the assessee's initial response was deemed unsatisfactory.
Held
The Tribunal held that the assessee deserves one last opportunity to present his case. Therefore, the file was restored to the Assessing Officer with a direction to provide one last opportunity to the assessee to present his case and produce necessary evidence.
Key Issues
Whether the CIT(A) erred in passing an ex-parte order without giving proper opportunity to be heard and in treating cash deposits as unexplained income and applying Section 115BBE.
Sections Cited
142(1), 144, 69A, 115BBE, 271AAC
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, SMC BENCH, LUCKNOW
Before: SHRI. SUDHANSHU SRIVASTAVA
Assessment Year: 2017-18 Shri Ram Misra v. ITO C/o Sanjay Saxena Sitapur 12, Pratap Enclave Bisrat G.T. Road Shahjahanpur TAN/PAN:ADJPM6858Q (Appellant) (Respondent) Appellant by: Shri Sanjay Saxena, C.A. Respondent by: Shri Sanjeev Krishna Sharma, D.R. Date of hearing: 20 02 2025 Date of pronouncement: 21 02 2025 O R D E R
This appeal has been preferred by the assessee against order dated 24.05.2024, passed by the Addl/JCIT(A)-2, Surat for Assessment Year 2017-18.
The brief facts of the case are that the assessee had e- filed his return of income for the year under consideration on 05.08.2017, declaring a total income of Rs.3,47,020/-. The case of the assessee was selected for scrutiny under CASS for the reason of “Large value cash deposits during demonetization period The Assessing Officer (AO) as compared to Returned Income”. issued statutory notices to the assessee, requiring the assessee to furnish the source of cash deposits in his bank accounts. In response to which, the assessee filed reply through Income Tax Business Application (ITBA) portal, stating therein as under:
“I had withdrawn AO.10,00,000/- from my bank account no. 3516140126 running with SBI Sidhauli Sitapur on 10 June 2016 for expenses on Agriculture for protection of willed grazing animals as wired protection supported with cemented pillars and other agricultural reforms etc. but due to change of the program I re-deposited the amount in my Account No. 35070100010324 running with Bank of Baroda of AO.16,000/- as on 15 Nov 2016 AO.500000/- as on 19 Nov 2016 and Rs.500000/- as on 19 Nov 2016 with Punjab Sindh Bank in my account no 09601000000578 for which statement of ACCOUNT are being enclosed herewith for your kind consideration.”
2.1 Since the AO was not satisfied with the aforementioned reply furnished by the assessee, he issued notice under section 142(1) of the Income Tax Act, 1961 (hereinafter called “the Act’), requiring the assessee to submit proper explanation. Since the assessee failed to furnish any reply, the AO called for information from State Bank of India, Sidhauli Branch, Sitapur, Bank of Baroda, Sidhauli Branch, Sitapur and Punjab and Sindh Bank, Sidhauli Branch, Sitapur. From the bank statements, etc. furnished by these banks, the AO noticed that the assessee had made following cash deposits in his bank accounts during the year under consideration:
Bank/Institution Branch Account Number Amount in Rs. name/IFSC Cash Credit State Bank of India, Sitapur 35162140126 - 3,90,203/- Sidhauli Branch Bank of Baroda, Sidhauli Sitapur 35070100010324 6,17,000/- 3,35,000/- Branch Punjab and Sindh Bank, Sitapur 09601000000578 5,00,000/- - Sidhauli Branch 2.2 In view of the above facts, the AO held that the assessee had no explanation in respect of the nature and source of cash deposits made in his bank accounts during the year under consideration. The AO, therefore, proceeded to complete the assessment on the basis of Best Judgment Assessment, after issuing show cause notice to the assessee. While completing the assessment under section 144 of the Act, the AO treated the cash deposits of Rs.10,16,000/- made by the assessee in his bank accounts during the demonetization period as his unexplained income and added the same to the total income of the assessee under section 69A of the Act.
The Assessing Officer also invoked the provisions of section 115BBE of the Act and also initiated penalty proceedings under section 271AAC of the Act.
4. Aggrieved, the assessee preferred an appeal before the Ld. First Appellate Authority. However, the appeal before the Ld. First Appellate Authority came to be dismissed ex-parte qua 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 the Addl/JCIT(A)-2, Surat by raising the following grounds of appeal:
That the CIT (Appeals) passed ex-parte order ignoring the adjournment application and without giving proper opportunity of being heard, which is liable to be cancelled.
2. That the Id. CIT(A) erred on facts and in law in Rs.10,16,000/- as Unexplained Money deposited in bank account u/s 69A of the Income Tax Act, 1961.
3. That the Id. CIT(A) erred on facts and in law in applying 60% Tax and surcharge as per section 115BBE of the Income Tax Act, 1961 as this rate was not applicable to A.Y. 2017- 18 not it was to be applied as per facts and circumstance of the case.
The appellant reserves a right to add/alter/amend any ground of appeal at the time of its hearing.
During the course of hearing before me, the Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that no proper compliance could be made before the AO. He further submitted that certain details and documents relating to the transactions entered into by the assessee during the year under consideration could not be filed before the AO. The Ld. A.R. prayed that if an opportunity is given, he undertakes to produce all the relevant documents in support of his claim before the AO.
The Ld. Senior D.R. had no objection to the restoration of appeal to the file of the Assessing Officer as requested by the Ld. A.R.
I have heard both the parties and have also perused the material on record. Looking into the facts of this case, I am of the considered view that the assessee deserves one last opportunity to present his case and, therefore, in the interest of substantial justice, I restore this file to the Office of the Assessing Officer with the direction to provide one last opportunity to the assessee to present his case and produce the necessary evidences in support of the impugned transactions entered into by the assessee during the year under consideration. I 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 shall 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 21/02/2025.