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Facts
During the demonetization period, the assessee deposited Rs. 14,00,000/- (Rs. 9 lakhs in SBI and Rs. 5 lakhs in IndusInd Bank). The assessee failed to file an Income Tax Return and did not respond to notices, leading to an ex-parte assessment under Section 144, with an addition of Rs. 14,00,000/- as unexplained money under Section 69A. The CIT(A) dismissed the assessee's first appeal for similar reasons.
Held
The Tribunal observed that while the assessment was completed ex-parte due to non-participation and non-filing of ITR, the benefit of Section 10(26) could be applicable. Therefore, the case is remanded to the Assessing Officer for a de-novo assessment, providing the assessee an opportunity to be heard and substantiate their claims, and consider the applicability of Section 10(26).
Key Issues
1. Whether the assessment completed ex-parte by adding unexplained money for demonetized currency deposits is valid when the assessee failed to file an ITR and respond to notices. 2. Whether the case should be remanded to the Assessing Officer for a de-novo assessment to allow the assessee to claim the benefit of Section 10(26).
Sections Cited
Income Tax Act, 1961, Section 250, Section 144, Section 69A, Section 10(26)
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Income Tax Appellate Tribunal, : GAUHATI BENCH: GUWAHATI
Before: SHRI RAJESH KUMAR, HON’BLE & SHRI MANOMOHAN DAS, HON’BLE
ORDER
PER MANOMOHAN DAS, JM
The assessee filed this appeal against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, [NFAC] Delhi (hereinafter referred to as the (“CIT(A)” dated 11.07.2024 passed under Section Page 1 of 4 Kakugha Ayemi -Vs- The ITO, Ward -1 , Dimapur AY: 2016-17 & AY 2017-18 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) and pertains to the Assessment Year [AY] 2017-18.
The brief facts of the case are that, in the intervening night of 8th and 9th November, 2016 the Central Government announced the demonetization of all bank notes of the denomination of Rs. 500 and Rs, 1,000. It was also announced that new bank notes of denomination of Rs. 500 and Rs. 2000 will be issued to replace the demonetized bank notes. The assessee had deposited the following amounts in the bank after 8th November 2016 and before 31st of December 2016: (i) State Bank of India , Dimapur Rs. 9,00,000/- (ii) Indusind bank, Dimapur Rs. 5,00,000/- No return of income was filed by the assessee and there was no respond to the several notices issued to him. Since, there was no respond from the assessee, the assessment has been completed u/s 144 of the Act making addition of Rs. 14,00,000/- as unexplained money u/s 69A. Being aggrieved, the assessee filed 1st appeals before 3. the ld. CIT(A). The ld. CIT(A) vide order dated 11.07.2024 dismissed the appeals of the assessee.
Being aggrieved, the assessee filed the present appeal before the Tribunal.
We observe that, the ld. CIT(A) dismissed the appeal of the assessee citing the reasons that the assessee failed to furnish return of income. The provision of section 10(26) of the Act also considered by the ld. CIT(A), but due to non- filing of return of income did not consider the additional Page 2 of 4 Kakugha Ayemi -Vs- The ITO, Ward -1 , Dimapur AY: 2016-17 & AY 2017-18 evidence furnished by the assessee and finally dismissed the appeal of the assessee.
We observe that, the assessee failed to participate in the assessment proceedings. Therefore, assessment was completed under section 144 of the Act. The provision of section 10(26) can be pressed into service by the assessee, and for this purpose, it is our considered opinion that, the case of the assessee should be remanded to the learned Assessing Officer. Accordingly, we remand the case to the file of the ld. AO for de-novo assessment. We direct the ld. AO to reframe the assessment after giving the assessee an adequate opportunity of being heard. At the same time, we direct the assessee to substantiate his claims before the ld. AO. The Ld. DR also has no objection in remanding the case of the assessee to the ld. AO for reconsideration. Thus, we allow the appeal of the assessee for statistical purposes only.