INCOMETAX OFFICER, TANUKU vs. VENKATA SURYA DURGA RAJU KOPPISETTI, THIMMARAJUPALEM

The learned Commissioner of Income Tax (Appeals) is justified in appreciating the fact that during remand proceedings the Assessing officer did not bring on record any positive evidence to negate the submissions of the appellant that the actual deposits were only Rs.107.24 lacs but not Rs.820.58 lacs.

Succinctly stated, the A.O., based on information that though the assessee during the subject year had made cash deposits of Rs. 8,20,58,150/- in his bank account but had not filed his return of income for the year under consideration, initiated proceedings under Section 147 of the Act. Notice under Section 148 of the Act dated 27.03.2021 was issued to the assessee.

As the assessee failed to respond to the notices issued by the A.O. under Section 142(1) of the Act, therefore, he proceeded to frame the assessment to the best of his judgment under Section 144 of the Act.

During the course of assessment proceedings, the A.O. observed that the assessee during the subject year had made cash deposits of Rs. 8,20,58,150/- in his three bank accounts as under :

Aggrieved, the assessee carried the matter in appeal before the CIT(A).

Apart from that, it was the claim of the assessee that as he had not made any cash deposits of Rs. 820.58 lacs as observed by the A.O., therefore, the addition so made by him based on misconceived and incorrect facts could not be sustained and was liable to be quashed.

The CIT(A), based on the aforesaid contentions of the assessee, called for a remand report from the A.O. In compliance, the A.O. filed his remand report, which we deem it apposite to cull out as under :

The CIT(A) made a copy of the remand report available to the assessee for his comments. Once again, the assessee reported that he had, during the subject year, only made deposits of Rs. 107.24 lacs in his bank account. It was the assessee's claim that the addition of Rs. 820.58 lacs (supra) made by the A.O. based on incorrect facts, could not be sustained and was liable to be struck down. The assessee further contended that as the A.O. had based on incorrect facts assumed jurisdiction and reopened his case, therefore, the consequential assessment so framed by him could not be sustained and was liable to be vacated.

We find that the CIT(A), after deliberating upon the written submissions filed by the assessee and the remand report/ rejoinder of the assessee, vacated the entire addition of Rs. 820.58 lacs by observing as under :

On a perusal of the findings and observations of the CIT(A), we find that the A.O. in his remand report dated 09.02.2024, had inter alia dealt with the claim of the assessee that he had filed with the A.O. a requisition for obtaining the copy of the assessment order and demand notice for A.Y. 2016-17. The A.O. in the context of the aforesaid issue, had observed that based on the request of the assessee vide letter dated 01.11.2022, a letter vide DIN & Letter No.ITBA/COM/F/17/2022-23/1046694808(1) dated 02.11.2022 enclosing a copy of the assessment order u/s 147 r.w.s. 144 r.w.w. 144B of the Act and a demand notice under Section 156 of the Act dated 17.03.2022, passed by NFAC, Income Tax Department, Delhi, for A.Y. 2016-17 was provided to the assessee. Elaborating further, it was in the context of the aforesaid facts regarding making available a copy of the 14 and 330/Viz/2025 & C.O.36 and 37/Viz/2025 Venkata Surya Durga Raju Koppisetti assessment order and demand notice that the A.O. had observed that the claim of the assessee regarding providing of assessment order and demand notice for A.Y. 2016-17 was found to be in order.

We find that the CIT(A) misdirected himself regarding the aforesaid observations of the A.O. vide his two-liner observation, concluded that considering the remand report of the A.O., the impugned addition of Rs. 8,20,58,150/- is directed to be deleted. We have perused the observations of the CIT(A) and are unable to comprehend as to on what basis and reasoning the addition of Rs. 8,20,58,150/- (supra) had been vacated by him. We are seriously taken aback with the manner in which the CIT(A), without giving any cogent reason or observation, has vacated the addition made by the A.O. Once again, we may herein observe that there is no whisper in the CIT(A) order regarding the reason for deleting the addition made by the A.O. under Section 69A of the Act. As observed hereinabove, the observation of the CIT(A) that the A.O. had accepted the claim of the assessee and found the same to be correct is factually incorrect. We will mince no words in observing that the addition made by the A.O. under Section 69A of the Act, amounting to Rs. 8,20,58,150/- has been vacated by the CIT(A) based on an absolutely non-speaking order, which by no means imagination can be endorsed and sustained on our part.

We thus, in terms of our aforesaid observations, set aside the matter to the file of the CIT(A) with a direction to re-decide the appeal based on a speaking and reasoned order. Needless to say, the CIT(A) shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee.

Before parting, we herein deprecate the manner in which the present appeal had been disposed of by the CIT(A) based on a non- speaking order which is devoid and bereft of any reasoning, which, thus has resulted to multiplicity of litigation that could have been avoided had there been a speaking and a reasoned order.

Resultantly, the appeal filed by the Revenue is allowed for statistical purposes.

We shall now deal with C.O.36/Viz/2025 filed by the assessee.

As the objections raised by the assessee in his aforesaid cross-objection are subsumed in our aforesaid observations, based on which the matter has been restored to the file of the CIT(A) for a fresh adjudication, therefore, we do not deem it necessary to independently deal with the same, and the same are disposed of on the same terms.

Resultantly, the C.O. No.36/Viz/2025 filed by the assessee is allowed for statistical purposes. and C.O.No.37/Viz/2025

First, we will take of the appeal of Revenue in ITA No.330/Viz/2025.

The Revenue has assailed the order passed by the CIT(A), NFAC, Delhi dated 27.03.2025, wherein he has vacated the penalty imposed by the A.O. under Section 271(1)(c) of the Act dated 28.09.2022. The Revenue has assailed the impugned order on the following grounds of appeal before us :

The assessee craves leave to add or delete or amend or substitute any ground of appeal

Resultantly, the appeal filed by the Revenue is allowed for statistical purposes in terms of our aforesaid observations.

We shall now deal with C.O.37/Viz/2025 filed by the assessee.

As the C.O. is merely supportive, therefore, our observations recorded while disposing of the appeal filed by the Revenue in arising from the order passed by the CIT(A) vacating the penalty imposed by the A.O. under Section 271(1)(c) of the Act, shall apply mutatis mutandis for disposing of the present Cross-Objection.

Resultantly, the C.O.No.37/Viz/2025 filed by the assessee is allowed for statistical purposes.

To sum up, both the appeals filed by the Revenue and the Cross-Objections filed by the assessee are allowed for statistical purposes in terms of our aforesaid observations.