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Facts
The assessee did not file an Income Tax Return for A.Y. 2012-13. The AO initiated reassessment proceedings based on information of cash transactions of Rs. 85.93 lakhs and term deposits of Rs. 9 lakhs. The assessee explained the cash as commission from RT Agency Works and term deposits from salary/savings, but failed to provide documentary evidence, leading to ex-parte additions by the AO for commission income and unexplained deposits.
Held
The Tribunal noted that the assessee failed to appear or submit evidence despite multiple opportunities provided by the AO and CIT(A). However, in the interest of natural justice, the Tribunal decided to remit the matter back to the Ld. CIT(A) for fresh consideration on merits, directing the assessee to cooperate.
Key Issues
Whether the ex-parte assessment and additions made by the AO for commission income and unexplained term deposits were valid given the assessee's claim of lack of opportunity and procedural irregularities in serving notices.
Sections Cited
144, 147, 148, 142(1), 133(6), 250, 69
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM“DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI K. NARASIMHA CHARY, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order No.
I.T.A.No.336/VIZ/2024 Venkata Muralidhar Atluri ITBA/APL/S/250/2024-25/1066073538(1) dated 26.06.2024 for the A.Y.2012-13 arising out of order passed under section 144 of the Income Tax Act, 1961 (in short „Act‟) dated 24.12.2019.
Brief facts of the case are that, assessee is an individual and has not filed return of income for the assessment year under consideration. Based on the ITS data, Ld. Assessing Officer [hereinafter in short “Ld. AO"] had information that the assessee had made Cash transactions to the tune of Rs.85,93,500/- and term deposit to the tune of Rs.9,00,000/- in savings bank account during the previous year relevant to assessment year under consideration. Thereafter, after obtaining prior approval of competent authority and recording reason to believe that the income of the assessee has escaped assessment, notice under section 148 of the Act was issued on 30.03.2019 which was returned unserved and further notice was served on 01.04.2019. In response, assessee did not comply with the said notice and no return of income was filed by the assessee in response to the notice issued under section 148 of the Act. Further, notice under section 142(1) of the Act along with detailed questionnaire was issued to the assessee on 26.10.2019. Meanwhile, notice under section 133(6) of the Act was issued to State Bank of India, Gudivada Branch, Andhra Pradesh and also to General Mills. The bank account statement of the assessee from the State Bank of India, Gudivada Branch, Andhra Pradesh was received. Thereafter, a final opportunity of being heard was granted to the assessee vide notice under section Page No. 2
I.T.A.No.336/VIZ/2024 Venkata Muralidhar Atluri 142(1) of the Act dated 13.112.2019. In response to the notice, the assessee filed written submission through ITBA portal on 10.12.2019 and requested to transfer his case to ITO-Ward (1), Gudivada. Ld. AO however, issued another notice under section 142(1) dated 18.12.2019 to the assessee and requested to submit the details as it was not possible to transfer the case and further requested the assessee to furnish submissions. In response to the said notice, the assessee in his written submission on 21.12.2019 through ITBA portal, submitted during the previous year relevant to the assessment year under consideration, he was engaged in RT Agency Works and that he accepted cash from customers in respect of National Permit Renewal fees and the same was deposited in his bank accounts and then remitted to the RT department. Further, assessee submitted that during the said period, assessee received Rs.95,250/- as commission from RT works out of total 635 transactions at the rate of Rs.150/- per transaction. The assessee further submitted that he had made two term deposits of Rs.3,00,000/- each during the period and the source of which was explained as pooling of his salary and family savings. Ld. AO observed that apart from the written submission, no documentary evidence was presented by the assessee during assessment proceeding. Thereafter, Ld. AO proceeded to frame the assessment under section 144 r.w.s. 147 of the Act and estimated the income earned by the assessee by way of commission from RT works at the rate of Rs.500/- per transaction which worked out to be Rs.3,17,500/- [635
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I.T.A.No.336/VIZ/2024 Venkata Muralidhar Atluri transactions X 500 per transaction] and added back the same to the total income of the assessee for the said assessment year as commission income.
Further, as regards the term deposits, the assessee had submitted before the Ld. AO that there were 2 term deposits of Rs.3,00,000/- each. However Ld.AO observed that as per the ITS data available with the department, it was revealed that there were 3 term deposits made for the total amounting to Rs.9,00,000/- with HDFC Bank. Ld. AO observing that as no documentary evidence/details was submitted by the assessee in respect of source of the fund used for making term deposits and therefore added Rs.9,00,000/- back to the total income of the assessee as income from unexplained source.
On being aggrieved, assessee preferred an appeal before Ld. CIT(A) but the assessee even after receipt of the hearing notices on various dates did not file any supporting documents on his contentions as per the grounds of appeal raised by the assessee. Therefore, the Ld. CIT(A) disposed of the appeal based on the merits available on record.
On being aggrieved, assessee preferred an appeal before the Tribunal and raised following grounds of appeal: -
“1. The Order of the Appellate Authority, passed under Section 250 of the Act, passed for the A.Y.2012-13, on 26.6.2024 may be erroneous both in law and also on facts of the case.
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2. Taking note of the fact that despite incorporation of CHANGED AND CORRECT ADDRESS' while filing the appeal petition in Form No.35, dated 24.01.2020 as that "D.No.2/56, CHOWTAPALLI village, Gudivada Rural, Krishna District, Andhra Pradesh, Pin code No.521323, (Mobile No.8897328646), the Ld. Appellate Authority issued Notices to the 'Old address at Mumbai' (as evidenced by the. Order under Sec.250, dated 26.06.2024) itself and thereby the assessee could not comply with the hearing notices purported to have been issued by him and in the circumstances, issuance of the appellate order, aforesaid, ON EXPARTE BASIS may be DEVOID OF ANY MERIT and hence the same may not be SUSTAINABLE IN THE EYES OF LAW.
3. In the facts and circumstances of the case, recorded at 'GROUND No.2 above', the various judicial precedents relied upon by the 1st appellate authority may have no relevance at all and hence the impugned appellate order may be VOID IN LAW.
4. Taking note of the fact that the initial and basic Notice under Sec.148 was not got served on the assessee and instead the same was got served on a stranger, viz., M/s. General Mills India Pvt. Ltd., (vide discussion made by the A.O. in the impugned Asst. Order at a para 2 thereof) and also considering the fact that such 'ground' with regard to non service of Notice under Sec.148 of the Act contained in the aforesaid appeal petition in Form No.35, the Ld. 1st appellate authority ought to have adjudicated this legal issue before drawing adverse conclusions against the assessee / and exercising OPTION to dismiss the appeal. 5. In the facts and circumstances of the case recorded in the annexed statement of facts (vide Para(6) thereof, it may kindly be noticed that the addition of Rs.3,17,500/- may be devoid of any merit and hence unsustainable in law. 6. In the facts and circumstances of the case, recorded in the annexed statement of facts (vide para 7 thereof), it may kindly be noticed that the impugned addition of Rs.9,00,000/- towards term deposits under Sec.69 of the Act may be VOID. IN LAW 7. In the facts and circumstances of the case recorded in the annexed statement of facts, it is humbly requested that the aforesaid assessment order under sec.144 r.w. 147 of the Act dt.24.12.2019 may be ordered to be ANNULLED and/or the additions of Rs.3,17,500/- and Rs.9,00,000/- cited supra may be ordered to be deleted, in conformity with law. 8. Taking note of the fact that the interest of Rs.34,655/- pertaining to the deposits for the 2 years, it is humbly requested that the excess interest of Rs.12,617/- may be ordered to be deleted
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9. For these reasons and other reasons which may be advanced at the time of hearing the appeal, it is requested that the relies sought for may be allowed in accordance with enacted law and also judge made law.”
At the outset, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that Ld. AO and Ld.CIT(A) passed exparte order without providing adequate opportunity of being heard to the assessee, therefore, considering additions/disallowance made by the Ld. AO, Ld.AR pleaded that the matter may be remitted back to the file of the Ld. CIT(A).
On the other hand, Ld. Departmental Representative [hereinafter in short “Ld. DR”] relied on the order of the Ld.CIT(A) and submitted that assessee has not utilized the opportunity provided by Ld.CIT(A). Therefore, the order passed by Ld. CIT(A) is exparte order and she pleaded to confirm the orders passed by the Revenue Authorities.
We have heard both the sides and perused the material available on record. On a perusal of the assessment order as well as Ld.CIT(A) order, it is observed that even though the Ld. AO as well as Ld.CIT(A) provided opportunity on several occasions, assessee could not appear nor complied to the notices issued. Considering the submissions of the Ld. AR and totality of facts and keeping in view the additions / disallowance made by the Assessing Officer, in the interest of providing substantial justice, we are of the opinion that assessee should be given one more opportunity of being heard. Therefore,
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I.T.A.No.336/VIZ/2024 Venkata Muralidhar Atluri considering the facts and circumstances of the case and in order to meet the principles of natural justice, we are of the view that it is a fit case to remit the matter back to the file of the Ld. CIT(A) for fresh consideration and decide the case on merits. Assessee is directed to cooperate with the proceedings before the Ld. CIT(A) without seeking unnecessary adjournments. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 07th March, 2025.
Sd/- Sd/- (के.नरधिम्हाचारी) (एि बालाकृष्णन) (K.NARASIMHA CHARY) (S. BALAKRISHNAN) न्याधयक िदस्य/JUDICIAL MEMBER लेखा िदस्य/ACCOUNTANT MEMBER Dated: 07.03.2025 Giridhar, Sr.PS आदेशकीप्रनतनलनपअग्रेनर्त/ Copy of the order forwarded to :- निर्धाऩरती/ The Assessee : 1. Venkata Muralidhar Atluri Door No. 2/56, Chowtapalli Gudivada Rural Mandal Krishna District Andhra Pradesh – 521323 रधजस्व/ The Revenue : 2. Income Tax Officer – Ward – 1 Opp. Bhaskar Takikies Gudivada – 521301 Krishna District, Andhra Pradesh 3. The Principal Commissioner of Income Tax नवभधगीयप्रनतनिनर्, आयकरअपीलीयअनर्करण, नवशधखधपटणम /DR,ITAT, Visakhapatnam 4. The Commissioner of Income Tax 5. गधर्ाफ़धईल / Guard file 6. //True Copy// आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam
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