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Facts
The assessee's income tax return for AY 2017-18 was reopened by the AO under sections 147/148 based on information regarding interest income and significant cash deposits, which were treated as unexplained money under section 69A. The AO determined the total income at Rs. 1,07,72,214/-. The CIT(A) dismissed the assessee's appeal as un-admitted due to the non-filing of ROI and non-payment of advance tax, prompting the assessee to appeal to the ITAT.
Held
The ITAT, in the interest of natural justice, remitted the matter back to the Jurisdictional Assessing Officer (JAO) to re-examine the assessee's claim that the cash deposits originated from exempt land acquisition compensation. The tribunal noted that the CIT(A) could not entertain the appeal without compliance with section 249(4)(B) and directed the JAO to redo the assessment de novo after providing a fresh opportunity of being heard to the assessee.
Key Issues
Whether the CIT(A) was justified in dismissing the appeal as un-admitted and whether the additions made by the AO for unexplained cash deposits and interest income were valid without providing a proper opportunity to the assessee to explain the source (specifically, exempt land acquisition compensation).
Sections Cited
147, 148, 69A, 144, 144B, 142(1), 249(4)(B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”, NEW DELHI
(Assessment Year: 2017-18) Jeeta Ram, vs. ITO, Ward-1(3), 476, VPO Chandawali Tehsil, Faridabad. Ballabgarh Distt, Faridabad - 121004 (Haryana). (PAN: ANYPR0620C) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Sanjay Tiwari, CA REVENUE BY : Shri Om Parkash, Sr. DR. Date of Hearing : 17.09.2024 Date of Order : 09.10.2024 O R D E R
PER S. RIFAUR RAHMAN, AM :
This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 21.02.2024 for the Assessment Year 2017-18.
2. Brief facts of the case are, an information through AIMS has been received under the information code TDS-194A that the assessee has interest income other than ‘Interest on securities’ of Rs.36,04,500/- and assessee has purchase of time deposits (other than a time deposit made through renewal of another time deposit) (SFT-005) amounting to Rs.40,00,000/-. AO noted that the assessee has also deposited cash in an account other than current account (SFT – 004) amounting to Rs.41,24,302. It was noted by the AO that since the assessee has not filed any return of income, the source and application of the cash deposits needs verification for which the case of the assessee was reopened u/s. 147 of the Income-tax Act, 1961 (for short ‘the Act’) for AY 2017-18 by issue of notice u/s. 148 of the Act dated 28.3.2021 after taking due approval of the competent authority. There was no response from the assessee to the aforesaid notice as well as other statutory notices. The AO noted that the assessee had derived interest income amounting to Rs.1,49,764/- from his saving bank account and Fixed Deposit account during the F.Y. 2016-17 relevant to the AY 2017-18, however, the assessee had not offered the said interest income for tax. The assessee even had not filed his ‘ROI’ for the AY 2017-18. Thus, the entire interest income amounting to Rs.1,49,764/- is being treated as income of the assessee for the AY 2017-18. AO further noted that the assessee has deposited cash and various credit entries in his bank accounts, but such credits are not recorded in the books of account of the assessee. Further, AO observed that the nature and source of such deposits and credit entries made in the bank account were not at all explained, leave alone satisfactory explanation. Therefore, AO held that the aggregate cash deposit and credit entries of Rs.1,06,22,450/- which was deposited / transferred in bank accounts from undisclosed income and the assessee deliberately avoided to provide the details and source of the cash deposit, therefore, the cash deposit / credit entries of Rs.1,06,22,450/- made in the bank accounts of the assessee was treated as unexplained money u/s. 69A of the Act. Accordingly, the income of the assessee was determined u/s. 144 r.w.s. 147 of the Act at Rs.1,07,72,214/- vide order dated 25.03.2022.
Against the aforesaid order of the AO, assessee preferred an appeal before the ld. CIT(A), who vide impugned order 21.10.2024 has dismissed the appeal of the assessee being un-admitted by observing that since the assessee has not filed return of income as well as not paid an amount equal to the amount of advance tax which was payable by him.
Aggrieved assessee is an appeal before us raising following grounds of appeal:-
“1. The learned Income NFAC. has grossly erred both in law and on facts in determining the total income of the Appellant at Rs. 1,07,72,214/- in an order of assessment dated 25.03.2022 under sections 147 and 144 of the IT Act. WITHOUT PREJUDICE ' 2. Ld. Commissioner of Income Tax (Appeals) dismissed the appeal without going into the merits of the case.
Impugned order is liable to be set aside as it is passed without granting any fair and proper opportunity of being heard and the same is contrary to the principle of natural justice.
Appellant was not able to response to the notices issued under section 142(1) of the IT Act on 20.12.2021 and 20.01.2022 issued by the department due to severe health issue and family/professional difficulties. Hence, there is no ill intention of the Appellant in present case and there was a reasonable cause for the Appellant for no causing appearance on the date of fixed for hearing.
Income Tax demand imposed on the Appellant is not tenable.
The Appellant will submit submissions on merits at the time of hearing.
The Appellant, prays for proper consequential relief in view of the bona fide submissions made herein before the Hon'ble Tribunal.
The Appellant pleads for the opportunity of being heard.
Whether there is delay in filing appeal.
The Appellant craves for leave to amend/alter/modify or add to any of the submissions made hereinabove. In nutshell the proceedings initiated under section 147 of IT Act and the assessment so made under sections 147 read with 144 of IT Act be held to be without proper justification. Further, addition made along with interest levied may kindly be deleted and appeal of the Appellant be allowed. In any case it be held that demand raised is altogether excessive.
At the time of hearing, ld. AR for the assessee submitted that AO has passed the assessment order u/s. 147 r.w.s. 144 read with section 144B of the Act and ld. CIT(A) has dismissed the appeal without going into the merits of the case, without granting any fair and proper opportunity of being heard, which is contrary to the principle of natural justice. He further submitted that ld. CIT(A) rejected the appeal on the ground of non-deposit of advance tax u/s. 249(4)(B) of the Act, but he failed to appreciate that advance tax in the form of TDS of Rs.3,68,790/- already lies in the account of assessee which is refundable to the assessee. He further submitted that the assessee was not able to respond to the notices issued under section 142(1) of the Act on 20.12.2021 and 20.01.2022 issued by the department due to severe health issue and family / professional difficulties and therefore, there was no ill intention of the assessee and there was a reasonable cause for the assessee for non-appearance on the date of fixed for hearing. It was further submitted that the assessee was not provided any opportunity of being heard due to non-service of proper notice. It was the further contention of the ld. AR that assessee’s consultant, Shri Mukesh Yadav was in jail and the AO failed to serve the proper notice through the address of the assessee available in the records of the AO. Ld. AR submitted that the assessee has received the compensation for compulsory acquisition of land of Rs.69.04 lakhs which consists of land cost and interest compensation. The whole amount is exempt from tax. Hence, ld. AR has requested to give one more opportunity to the assessee to canvass his case before the JAO by remitting back the issues in dispute to the file of the JAO in order to redo the assessment afresh, after giving adequate opportunity of being heard to the assessee.
Ld. DR relied upon the orders of the authorities below.
7. Considered the rival submissions and the material placed on record. In our considered view, it would be in the interest of natural justice, if the contention of the ld. AR regarding nature of compensation received from the State Government and in case the assessee demonstrate that the cash deposit is out of the above compensation then the assessee should be treated accordingly. Once the income is exempt and the addition is unwarranted, the issue cannot be remitted to ld. CIT (A) as the CIT (A) cannot entertain the appeal unless the provisions of section 249(4)(B) is complied. Therefore, we are inclined to remit this issue back to the file of JAO to verify the contention of the assessee and redo the assessment de novo after giving opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on this 9th day of October, 2024.
Sd/- sd/-
(SUDHIR PAREEK) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 09.10.2024 TS