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Facts
The assessee's appeal concerned an addition of Rs.35,08,000 made by the Assessing Officer on account of unexplained cash deposits. The assessee, a cement trader and regular income tax filer, claimed these deposits were business receipts and inadvertently failed to file the income tax return, despite engaging a Chartered Accountant and filing an audit report.
Held
The Tribunal noted that the assessment was made ex parte under section 144 of the Act without notice. The assessee's counsel argued that the deposits were of business nature and that the assessee had made efforts for compliance. Considering the facts, the Tribunal held that it was in the interest of justice to give the assessee an opportunity to present their case.
Key Issues
Whether the addition made on account of unexplained cash deposits is sustainable when the assessment was ex parte and the assessee was not given an opportunity to present their case?
Sections Cited
250, 144, 142(1)
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Income Tax Appellate Tribunal, PATNA “SMC” BENCH, VIRTUAL HEARING AT KOLKATA
Before: SRI SANJAY GARG
order : 13.02.2025 ORDER The captioned appeal has been preferred by the assessee against the order dated 12.08.2024 of the Ld. Commissioner of Income Tax (Appeal), National Faceless Appeal Centre, Delhi [hereinafter referred to as Ld. ‘CIT(A)’] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for Assessment Year (AY) 2017-18.
The assessee in this appeal is aggrieved by the action of the Ld. CIT(A) in confirming the addition made by the Assessing Officer of Rs.35,08,000/- on account of unexplained cash deposits in the bank account of the assessee.
At the outset, the Ld. Counsel for the assessee has invited my attention to the impugned assessment order to submit that the same is an ex parte/best judgement order u/s. 144 of the Act. The Ld. Counsel for the assessee has submitted that the assessee is in the business of cement trading. That the assessee is a regular filer of the income tax return. That the total turnover of the assessee in the year under consideration was Rs.6.42 crore. That the assessee had engaged a Chartered Accountant to look into his income tax compliances and procedures. That the said Chartered Accountant filed the I.T.A. No.: 575/PAT/2024 Surya Dev Yadav, AY : 2017-18 audit report in Form 3CB of the Act and even, he also deposited the self assessed tax to the department. However, inadvertently, he forgot to file the income tax return. Even the notice issued u/s. 142(1) of the Act issued by the Assessing Officer also escaped attention and did not come to the notice of the assessee or his Chartered Accountant. Therefore, the assessment proceedings were carried out u/s. 144 of the Act without notice to the assessee resulting into the impugned addition.
3.1. The Ld. Counsel for the assessee has submitted that the bank deposits in question were out of receipts of business/sales of the assessee. The Ld. Counsel has further submitted that the aforesaid facts were brought to the notice of the Ld. CIT(A). That a belated return was also filed. That the Ld. CIT(A) had also called upon a remand report from the Assessing Officer. However, since the remand report was not received by the ld. CIT(A) even after issuing multiple reminders, the Ld. CIT(A) confirmed the additions made by the Assessing Officer.
3.2. The Ld. Counsel for the assessee has submitted that the assessee has a fair case on merits. That the assessee is a businessman and the aforesaid deposits were out of business receipts of the assessee. The assessee tried his best to make income tax compliances. Even audit report was also duly furnished and self assessment tax was also deposited. He, therefore, has submitted that the assessee may be given an opportunity to represent his case before the Assessing Officer.
The Ld. DR, however, has relied on the findings of the lower authorities.
Considering the overall facts and circumstances of this case, in my view, the interests of justice will be well served, if the assessee is given an opportunity to present his case before the Assessing Officer. Impugned order of the Ld. CIT(A) is accordingly, set aside and the matter is restored to the file of the Assessing Officer for assessment afresh on the issue. Needless to say, the Assessing Officer will give proper opportunity to the assessee to present his case and thereafter to decide the matter in accordance with law.
I.T.A. No.: 575/PAT/2024 Surya Dev Yadav, AY : 2017-18 6. In the result, the appeal of the assessee stands allowed for statistical purposes.