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Facts
The assessee, an individual, filed a return for AY 2017-18. During demonetization, the AO noticed a cash deposit of Rs. 20 lakhs in the assessee's bank account, which the assessee failed to explain despite multiple notices. The AO treated this as unexplained money U/s 69A and taxed it U/s 115BBE, completing the assessment U/s 143(3) and determining a total income of Rs. 24,56,310/- against a returned income of Rs. 4,56,310/-. The Ld. CIT(A)-NFAC dismissed the assessee's appeal ex-parte due to non-compliance.
Held
The Tribunal found that the CIT(A) ought to have disposed of the case on merits instead of passing an ex-parte order. Considering the assessee's prayer and the issues, the matter was remitted back to the CIT(A)-NFAC for fresh consideration, providing one more opportunity to the assessee to be heard, with a caution for prompt cooperation.
Key Issues
Whether the CIT(A) was justified in passing an ex-parte order without providing a proper opportunity of being heard to the assessee, and if the cash deposit during demonetization was unexplained money.
Sections Cited
143(3), 143(2), 133(6), 142(1), 69A, 115BBE, 250
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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRIK NARASIMHA CHARY, HON‟BLE & SHRI S BALAKRISHNAN, HON‟BLE
सुनवधईकीतधरीख/ Date of Hearing : 18/02/2025 घोर्णधकीतधरीख/Date of Pronouncement : 05/03/2025 O R D E R PERS. BALAKRISHNAN, Accountant Member :
This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi (“Ld. CIT(A)-NFAC”) vide DIN & Order No. ITBA/NFAC/S/250/2024-25/1070491884(1), dated 20/11/2024 for the AY 2017-18 arising out of the order passed U/s. 143(3) of the Income Tax Act, 1961 (“the Act”), dated 31/10/2019.
Briefly stated the facts of the case are that the assessee is an individual, filed his return of income on 10/03/2018 for the AY 2017-18 admitting a total income of Rs. 3,75,670/-. The case was selected for „limited scrutiny‟ through CASS to verify the „cash deposits during demonetization period”. Accordingly, notice U/s. 143(2) of the Act, dated 22/09/2018 was issued to the assessee to produce evidence in support of his return of income filed. However, there was no compliance by the assessee. As per information available with the Department, the Ld. AO noticed that the assessee has made cash deposit of Rs. 20 lakhs in his bank account of the assessee during demonetization period. The Ld. AO also obtained the information from the bank U/s. 133(6) of the Act. Based on the information available with the Ld. AO, a notice U/s. 142(1) of the Act was issued to the assessee from time to time. However, there was no compliance from the assessee. Considering the assessee‟s non-compliance to the notices issued and also in the absence of any evidence to explain the source of cash deposits made by the assessee, the Ld. AO treated the cash deposits of Rs. 20 lakhs made during demonetization period as unexplained money U/s. 69A of the Act and taxed the same U/s. 115BBE of the Act. The Ld. AO completed the assessment U/s. 143(3) of the Act and determined the total income of the assessee at Rs. 24,56,310/- against the returned income of Rs.4,56,310/-. While passing the assessment order, the Ld. AO also initiated the penalty proceedings. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld.CIT(A)-NFAC.
On appeal, the Ld. CIT(A)-NFAC passed ex-parte order and 3. dismissed the appeal of the assessee. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The impugned appellate order dated 20/11/2024 in ITBA/NFAC/S/250/2024-25/1070491884(1) passed U/s. 250 of the act by the Ld. CIT(A), NFAC is unjust and uncalled for.
2. The Ld.CIT(A) ought to have appreciated the fact that the appellant is a retired employee and has made cash deposits in his bank account only of his superannuation benefits received on his retirement.
The appellant has got no other sources of income except pension income for the previous year 2016-17 relevant to the AY 2017-18. So the Ld. CIT(A) ought to have appreciated the fact that there was not even an iota of chance or scope to have unexplained money.
The Ld. CIT(A) ought not have viewed and drawn adverse inference against the appellant for non-response to notices issued during the course of the impugned assessment proceedings in view of the fact that non-compliance on the part of the appellant occurred under the unavoidable and exceptional circumstances beyond the control of the appellant due to ill health and hence the Ld. CIT(A) ought to have appreciated the fact that the appellant was prevented by reasonable and sufficient cause from complying with the notices issued during the course of the impugned assessment proceedings.
5. The Ld. CIT(A) ought to have appreciated the fact that the appellant is a retired employee and he has not much educated and hence is not acquainted with the operation of computer system and browsing into emails etc so he was not aware of the notices, proceedings and consequences of the IT Act.
6. The Ld. CIT(A) ought to have appreciated the fact that the appellant has got clear and explainable sources for the impugned cash deposits of Rs. 20 lakhs in his bank account and hence the same never represented any explained money. Moreover, the sources of the appellant ie., superannuation benefits were clearly emanated through banking channels only on his retirement and hence the appellant’s grounds of appeal
and contentions were fully supported by credible and clinching evidence.
7. It is also noticed that there is a mistake in the first page of the Asst. Order dated 31/10/2019 as the admitted income was mentioned at Rs. 3,75,670/- and whereas the correct admitted income by appellant was Rs. 4,56,310/-.
8. The Ld. CIT(A) ought to have sustained the addition of the impugned cash deposit of Rs. 20 lakhs which was made from the superannuation benefits of the appellant on retirement as unexplained money U/s. 69A of the Act as the said deposits never represented unexplained money by any stretch of imagination and hence the provisions of section 69A r.w.s 115BBE of the Act are not applicable to the appellant’s case in any view of the matter.”
4. At the outset, the Ld. Authorized Representative [Ld. AR] submitted before us that the Ld. CIT(A)-NFAC had passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the assessee may be provided with one more opportunity to pursue his case before the Ld. CIT(A)-NFAC.
Ld. DR, on the other hand, objected to the submissions of the Ld.AR and argued that sufficient opportunities had been provided to the assessee, however, on the given dates of hearing, neither the assessee nor his Representative appeared before the Ld. CIT (A)-NFAC. Under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the orders passed by the Ld. Revenue Authorities do not call for any interference and the appeal of the assessee may be dismissed.
We have heard the rival submissions and carefully perused the material available on record. On examining the facts of the case, we find that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, none appeared on behalf of the assessee before the Ld. CIT(A)- NFAC on the given dates of hearing. Hence, the Ld. CIT(A)-NFAC left with no other option except to pass ex-parte order based on the material available on record. On a perusal of the facts of the case, in our view, the Ld. CIT(A)-NFAC ought to have disposed of the case on merits instead of passing the ex-parte order. Under these circumstances, considering the prayer and the submissions of the Ld. AR and the issues involved in the appeal, in the interest of justice, we hereby remit the matter back to the file of Ld. CIT(A)-NFAC for a fresh consideration of the matter thereby providing one more opportunity to the assessee of being heard. At the same breath, we also hereby caution the assessee to promptly co-operate before the Ld. Revenue Authorities in their proceedings failing which the Ld. Revenue Authorities shall be at liberty to pass appropriate orders in accordance with law and merits based on the material available on the record. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.