LABH SINGH,SIRSA vs. ITO, WARD 01, SIRSA

Aggrieved by the assessment order, the assessee carried the matter in appeal before the Ld. CIT(A). It is observed from the appellate order that several notices were issued during the course of appellate proceedings; however, the assessee did not appear nor filed any documentary evidence in support of his case. The Ld. CIT(A), therefore, proceeded to decide the appeal on the basis of material available on record and upheld the action of the Assessing Officer, holding that the assessee had failed to discharge the onus cast upon him to explain the source of cash deposits.

Before us, the Ld. Authorized Representative submitted that both the assessment as well as appellate proceedings were completed ex-parte and the assessee could not properly represent his case due to circumstances beyond his control. It was contended that the assessee is an agriculturist and the cash deposits were from explained sources, however, due to non-compliance, the relevant evidences could not be placed before the lower authorities. It was thus pleaded that the matter may be restored to the file of the Assessing Officer for fresh adjudication after providing one more opportunity to the assessee.

Per contra, the Ld. Departmental Representative relied upon the orders of the lower authorities and submitted that sufficient opportunities were provided at both stages but the assessee failed to avail the same. It was thus contended that no interference is called for in the findings of the Ld. CIT(A).

We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessment in the present case has been framed ex-parte under section 144 of the Act and the addition has been made on account of cash deposits in the bank account of the assessee. It is further evident that even during the appellate proceedings, the assessee failed to appear and no supporting evidences were furnished before the Ld. CIT(A), who consequently upheld the addition made by the Assessing Officer. Thus, the addition in the present case has been sustained primarily on account of non-compliance and absence of evidences on record.

At the same time, it is a settled principle of law that the rules of natural justice require that a reasonable opportunity of being heard must be provided to the assessee to substantiate his claim. Considering the facts of the present case, particularly that the assessment was completed ex-parte and the addition is substantial in nature, we are of the considered view that the assessee deserves one more opportunity to present his case on merits before the Assessing Officer.

However, we also cannot ignore the conduct of the assessee in not responding to multiple notices issued during assessment as well as appellate proceedings. Therefore, in order to balance the interest of justice with the need for ensuring compliance, we deem it appropriate to restore the matter to the file of the Assessing Officer subject to imposition of cost.

Accordingly, the impugned order passed by the Ld. CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for fresh adjudication. The Assessing Officer shall provide adequate and reasonable opportunity of being heard to the assessee and decide the issue in accordance with law. The assessee is also directed to cooperate in the proceedings and furnish all necessary evidences to substantiate his claim regarding the source of cash deposits.

The assessee is further directed to deposit a sum of ₹10,000/- (Rupees Ten Thousand only) in the PGI Poor Patients Welfare Fund, Chandigarh, within a period of one month from the date of this order and furnish proof of the same before the Assessing Officer. In case of failure to comply with this direction, the Assessing Officer shall be at liberty to proceed in accordance with law and draw appropriate adverse inference.

In the result, the appeal of the assessee is allowed for statistical purposes.