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Facts
An individual assessee, who did not file ITR for AY 2018-19, had significant unexplained cash deposits (Rs. 3.93 Cr) and withdrawals (Rs. 4.23 Cr) in his bank account. The Assessing Officer treated the cash withdrawals as unexplained money under Section 69A and taxed other incomes, which was upheld by the CIT(A) due to the assessee's non-compliance and failure to substantiate the transactions.
Held
The Tribunal observed that both the Assessing Officer and the CIT(A) completed the assessment and appeal ex-parte without granting the assessee a reasonable opportunity to present his case or verifying crucial documentary evidence. Consequently, the Tribunal remanded the matter back to the Assessing Officer for a fresh assessment, directing him to conduct proper verification and afford the assessee a fair hearing.
Key Issues
1. Lack of reasonable opportunity and ex-parte assessment proceedings by AO and CIT(A). 2. Justification of treating cash withdrawals as unexplained money u/s 69A without proper verification.
Sections Cited
292BB, 147, 144B, 142(1), 133(6), 69A, 56
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ALLAHABAD BENCH, ALLAHABAD
Before: SHRI SUBHASH MALGURIA & SHRI NIKHIL CHOUDHARY
has been filed by the assessee against the impugned appellate order dated 30/08/2024 (DIN & Order No.ITBA/NFAC/S/250/2024-25/1068160821(1) of learned Commissioner of Income Tax (Appeals). In this appeal the assessee has raised the following grounds:
“1. On the facts and circumstances of the case, the learned Assessing Officer erred in initiating the assessment proceedings without appreciating the facts of the case. The learned Pr.CIT has given the approval mechanically without analyzing the same. Thus, the proceedings initiated by the Assessing Officer and the assessment concluded thereafter was illegal and void- ab-initio and not a curable defect u/s 292BB therefore, the order u/s 147 read with section 144B dated 28/03/2023 deserves to be set aside and quashed.
Without prejudice to the GOA No. 1-2, the Assessing Officer concluded the ex-parte assessment without appreciating the facts of the case. The Assessing Officer concluded the assessment without providing the reasonable opportunity of being heard and compromise his quashi-judicial authority. The action taken by the Assessing Officer was illegal and therefore, liable to be quashed or set aside.”
2. The facts of the case, in brief, are that the assessee is an individual and no return of income was filed by the assessee for the year under consideration. The Assessing Officer noticed that the assessee has made various financial transactions during the financial year 2017-18 relevant to assessment year 2018-19. Accordingly, notices were issued u/s 142(1) of the Act calling for the details of financial transactions. The assessee submitted that he was a business correspondent of Central Bank of India; engaged in service of depositing and transferring the amount. The assessee was asked to submit KYC details of persons from whom cash deposits of Rs.3,93,90,244/- and cash withdrawal of Rs.4,23,16,941/- were collected/re-paid. The assessee was also directed to provide separate list for deposit and withdrawal containing serial no., name and address of the persons, date of deposit/withdrawal, remark whether deposit/withdrawal were made at the customer door steps or elsewhere and dates of deposit/withdrawal through the current account but no details were provided. The Central Bank of India, Kadipur Branch also did not respond to notice issued u/s 133(6), as to the authenticity and genuineness of their letter dated 23/01/2023, which was submitted by the assessee. Accordingly, the Assessing Officer concluded that the source of the cash deposit in his bank account of Rs.3,93,90,244/- and cash withdrawal of Rs.4,23,16,941/- remained unexplained and unsubstantiated by the assessee. Hence, the total withdrawal of Rs.4,23,16,941/- was treated as unexplained money u/s 69A of the Act. Further, the interest received of Rs.8,291 and commission and brokerage of Rs.1,05,214 were taxed u/s 56 of the Act. Aggrieved with the action of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) dismissed the appeal of the assessee observing as under:
Aggrieved with the order passed by learned CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal.
3. We have heard the rival parties and have gone through the material placed on record. In this appeal the assessee has raised two grounds but the only issue which was pressed during the course of hearing is that the assessee was not provided reasonable opportunity to present its case before the Assessing Officer and learned CIT(A). On perusal of records, it is found that the Assessing Officer has completed the assessment ex-parte qua the assessee. When the assessee filed appeal before the learned CIT(A), the learned CIT(A) issued notices on 22/05/2024, 02/07/2024, 25/07/2024 and 22/08/2024 but there was no compliance from the assessee’s side and ultimately the CIT(A) passed the ex-parte order. It is found that the learned CIT(A) did not pass speaking order on merits of the grounds of appeal raised before him. In view of these facts and circumstances, it was felt that the issue in dispute should be restored to the file of the Assessing Officer, with the direction to pass fresh assessment order in accordance with law after verifying the authenticity and genuineness of letter dated 23/01/2023, which was issued by Central Bank of India and submitted by the assessee before the Assessing Officer and after verification of records of deposit/withdrawal in Central Bank of India, Kadipur Branch and after providing reasonable opportunity of being heard to the assessee.
In the result, the appeal of the assessee stands allowed for statistical purposes.
Orders pronounced on 04/04/2025 in accordance with Rule 34(4) of Income Tax (Appellate Tribunal) Rules, 1963