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Facts
During a search and seizure operation under section 132, cash amounting to Rs. 2 crores was found and seized from the assessee's locker. The assessee claimed this as business income, but the Assessing Officer treated it as undisclosed income from 'other sources' under sections 69A read with 115BBE. The first appellate authority disposed of the assessee's appeal ex-parte, confirming the assessment order.
Held
The Tribunal set aside the ex-parte order of the first appellate authority and restored the issues to its file for de novo adjudication. The Tribunal held that the assessee should be given adequate opportunity to furnish evidence and make submissions to establish that the income in dispute is from business.
Key Issues
Whether the first appellate authority was justified in disposing of the appeal ex-parte without providing adequate opportunity of being heard; and the correct classification of Rs. 2 crores cash (business income vs. undisclosed income under 'other sources').
Sections Cited
Section 132, Section 69A, Section 115BBE
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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SHRI SAKTIJIT DEY, VICE- & SHRI AVDHESH KUMAR MISHRA
PER SAKTIJIT DEY, VICE-PRESIDENT
This is an appeal by the assessee against order dated 27.02.2023 of learned Commissioner of Income-tax (Appeals)-27, New Delhi, for the assessment year 2019-20.
We have heard the parties and perused the materials on record. The basic grievance of the assessee is against ex-parte disposal of his appeal, without providing adequate opportunity of being heard.
2. Briefly stated, the assessee is a resident individual. A search and seizure operation under section 132 of the Act was conducted in case of M/s. Faquir Chand Lockers and Vaults Pvt. Ltd., whereunder, assessee’s locker No. 124 was also covered. For the assessment year under dispute, the assessee filed his return of income on 22.03.2020, declaring income of Rs.2,04,87,150/-. As observed by the Assessing Officer, in course of search and seizure operation, cash amounting to Rs.2 crores was found and seized from assessee’s locker. In course of assessment proceedings, the Assessing Officer called upon the assessee to explain the source of such cash. Though, the assessee filed explanation explaining the source of cash and stated that it is out of his regular business, however, the Assessing Officer was not convinced.
Ultimately, he treated it as income from other sources. Against the assessment order so passed, assessee preferred an appeal before learned first appellate authority. However, the appeal was decided ex-parte confirming the assessment order.
Before us, it is the say of the assessee that without providing adequate opportunity of being heard, the appeal has been disposed of. Learned Departmental Representative opposed assessee’s contention. However, he did not raise objection against restoration of issues to learned Commissioner (Appeals) for de- novo adjudication.
Having considered the submissions of the parties, we find that before the first appellate authority the assessee had raised certain additional grounds challenging the decision of the Assessing Officer in applying the provisions of section 69A read with section 115BBE of the Act. It is also observed, though the assessee had offered the income as business income, however, the Assessing Officer has treated it as undisclosed income under the head ‘income from other sources’.
In our view, in the interest of justice, the assessee should be given opportunity to furnish evidence and make submissions to establish his case that the income in dispute is from business, which he may not have got because of ex-parte disposal of the appeal.
In view of the aforesaid, we are inclined to set aside the impugned order of learned first appellate authority and restore the issues arising in the appeal to his file for de novo adjudication after providing due and reasonable opportunity of being heard.
In the result, appeal is allowed for statistical purposes.
Order pronounced in the open court on 9th September, 2024