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Facts
The assessee, engaged in agricultural activities, did not file an income tax return for AY 2017-18 but deposited Rs. 10,02,000/- during demonetization. Despite claiming the source as agricultural land sale and accumulated savings, the Assessing Officer (AO) treated a belated return as invalid and made an ex-parte assessment under Section 144, adding Rs. 10,00,000/- as unexplained cash credit under Section 69 read with Section 115BBE due to lack of evidence. The CIT(A) dismissed the assessee's appeal.
Held
The Income Tax Appellate Tribunal remitted the matter back to the Assessing Officer, directing that the assessee be given one more opportunity to provide documentary evidence to substantiate the cash deposits. The AO is to examine the evidence and decide the matter on merits, adhering to principles of natural justice.
Key Issues
Whether the ex-parte assessment under Section 144 was valid, and if the addition of Rs. 10,00,000/- as unexplained cash credit was justified, particularly concerning the denial of adequate opportunity to present evidence.
Sections Cited
144, 142(1), 133(6), 69, 115BBE, 69A, 129, 144A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” 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 order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal centre, Delhi [hereinafter in short “Ld.CIT(A)”] vide DIN & Order
I.T.A.No.75/VIZ/2024 Raju Inaparthi No.ITBA/NFAC/S/250/2023-24/1059202552(1) dated 29.12.2023 for the A.Y.2017-18 arising out of the order passed under section 144 of the Income Tax Act, 1961 (in short „Act‟) dated 20.12.2019.
Brief facts of the case are that, assessee being an individual engaged in the business of agricultural activities, did not filed his return of income for the A.Y. 2017-18. Based on the information available with the department it was noticed that the assessee has deposited a sum of Rs.10,02,000/- in his bank account during the demonetization period. Thereafter, notice under section 142(1) of the Act was issued on 21.03.2018 and served on the assessee on 28.03.2018 requesting the assessee to file the return of income for the A.Y.2017-18. In response, assessee submitted that the cash deposits were out of the sale proceeds of agricultural land and accumulated savings from agricultural activity and milk vending over the years. Subsequently, on 31.07.2019 assessee filed his return of income for the A.Y. 2017-18 admitting a total income of Rs.2,98,400/-. Since the return of income was filed belatedly the Ld. Assessing Officer [hereinafter in short “Ld. AO"] treated it as invalid return which is ought to have been filed on or before 31.03.2018. Meanwhile, Ld. AO issued a letter under section 133(6) of the Act to the respective banks and sought for details of cash deposits. Subsequently, issued a show-cause notice dated 23.09.2019 requesting the assessee to explain the source for cash deposits. In response assessee has filed reply on 24.10.2019. Considering the submissions made by Page No. 2
I.T.A.No.75/VIZ/2024 Raju Inaparthi the assessee, Ld. AO concluded that no proper evidences was produced by the assessee and hence assessed Rs. 10,00,000/- as unexplained cash credits under section 69 r.w.s. 115BBE of the Act.
3. Aggrieved by the order of the Ld. AO, assessee filed an appeal before the Ld. CIT(A). Before Ld. CIT(A), Authorized representative of the assessee contended that assessment order was passed exparte under section 144 of the Act and assessee also made similar submissions before Ld. CIT(A). Considering the submissions, Ld. CIT(A) did not accept the contentions of the assessee, thereby dismissed the appeal filed by the assessee.
Aggrieved by the order of the Ld. CIT(A), assessee is in appeal before us by raising following grounds of appeal : -
1. The order of the learned Commissioner of Income tax (Appeals) is not correct and not justified both in law and in the facts and circumstances of the case.
2. The learned Commissioner of Income tax (Appeals) erred in confirming the action of the assessing officer in bringing to tax Rs.10,00,000/- as unexplained cash credit u/s 69A of the IT Act.
The learned Commissioner of Income tax (Appeals) failed to appreciate the fact that the ex parte order passed under section 144 of the Act is in violation of the provisions of section 129 and 144A of the Income tax Act and is against the principles of natural justice.
4. The learned Commissioner of Income tax (Appeals) erred in observing that the appellant has failed to provide any documentary evidence in support of cash deposits in the course of assessment as well as appeal proceedings.
5. The learned Commissioner of Income tax (Appeals) failed to appreciate the fact that the appellant had furnished the details of land holdings, year wise details of sale proceeds of tobacco, proof of sale of Page No. 3
I.T.A.No.75/VIZ/2024 Raju Inaparthi land etc., during the course of assessment proceedings explaining the sources of cash deposits made during the demonetisation period. 6. Any other ground or grounds that may be urged at the time of appeal hearing.”
Ground Nos. 1 & 6 are general in nature and needs no adjudication.
Ground No. 2 is related to the addition of Rs. 10,00,000/- as unexplained cash deposits. On this issue, Ld. Authorised Representative [hereinafter “Ld.AR”] submitted that assessee has filed appropriate evidences before the Ld.AO which was not considered by the Ld. AO who has passed the exparte order under section 144 of the Act. He therefore pleaded that one more opportunity may be provided to the assessee to submit the documentary evidences before Ld. AO and requested for remitting the matter back to the file of the Ld. AO.
Per contra, Ld. Departmental Representative [hereinafter in short “Ld.DR”] relied on the orders of the Revenue Authorities.
We have heard both the sides and perused the material available on record. On a careful perusal of the assessment order, it is noticed that the assessee has submitted reply on 24.10.2019 but has failed to produce any documentary evidences regarding the cash deposits made during the demonetization period. Ld. AO therefore proceeded to frame the assessment under section 144 of the Act. Considering the plea of the Ld.AR that one more
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I.T.A.No.75/VIZ/2024 Raju Inaparthi opportunity may be provided to the assessee to substantiate the cash deposits made during the demonetization period, we are inclined to remit the matter back to the file of Ld. AO by following principles of natural justice and direct the Ld.AO to examine the evidences produced by the assessee and decide the matter in accordance with law on merits. At the same time, we also direct the assessee to produce the related documentary evidences before the Ld. AO without seeking unnecessary adjournments. Ground No.2 raised by the assessee is allowed for statistical purposes.
Since the issue of addition of Rs.10,00,000/- being remitted back to the file of the Ld. AO, other grounds raised by the assessee are not adjudicated.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 07th March, 2025.