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Facts
The assessee, a small businessman selling impounded vehicles on commission, faced an addition of Rs. 14,25,430/- for cash deposits made into a bank account during A.Y. 2011-12. The assessment was completed ex-parte under Section 144, and the first appeal before the CIT(A) also resulted in an ex-parte order, as the assessee claimed non-receipt of notices and that the deposits were explainable as sale proceeds.
Held
The Tribunal noted the assessee's plea for an opportunity to explain the source of cash deposits. Consequently, the order of the CIT(A) was set aside, and the matter was restored to the file of the Assessing Officer for fresh adjudication, ensuring the assessee is given proper opportunity to present evidence.
Key Issues
Whether the additions made towards cash deposits were justified given the assessee's explanation that they were proceeds from the sale of vehicles on commission, and whether the ex-parte orders by the AO and CIT(A) were valid due to alleged non-service of notices.
Sections Cited
144, 249(4)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC” DELHI
Before: SHRI PRADIP KUMAR KEDIA
PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [‘CIT(A)’ in short] dated 28.12.2023 arising from the assessment order dated 29.12.2018 passed by the Assessing Officer (AO) under Section 144 of the Income Tax Act, 1961 (the Act) concerning A.Y. 2011-12.
As per the grounds of appeal, the assessee has challenged the first appellate order and assailed the additions towards cash deposits of Rs.14,25,430/-.
3. When the matter was called for hearing, the ld. counsel for the assessee submits at the outset that assessee is a small businessman doing work on commission basis for selling of old vehicles which is impounded by the bank in the course of lending business. The assessee sold the vehicles belonging to the bank and other customers on commission basis and the cash received on sale of such vehicles are deposited in the bank account. Such cash deposits are also withdrawn thereafter and reimbursed to the bank. Such deposits in the bank account are transferred to the bank retaining the commission amount. The source of cash deposits is thus fully explainable from the documentary evidences. The ld. counsel next submitted that the assessee could not appear before the AO since he was not privy to any notices served in this regard. None of the notices were served upon the assessee. The assessment was completed ex-parte without the knowledge of the assessee. The matter was carried to the CIT(A) through the counsel appointed for such purposes. The erstwhile counsel however merely filed the appeal but did not bother to attend the proceedings. The first appellate order was also thus passed ex-parte. The ld. counsel referred to the bank statement to prove his bona fides and submitted that by resorting to such non-attendance he does not stand to benefit in any manner, more so, when clinching evidences are available to support the cash deposits out of sale proceeds of vehicles on behalf of the bank. The ld. counsel further pointed out that impediment of Section 249(4) invoked by the CIT(A) is not applicable in the instant case since the assessee has already filed the return of income declaring total income at Rs.1,56,369/- on which no tax liability arises at all. The ld. counsel urged for suitable relief.
The ld. DR for the Revenue, on the other hand, relied upon the respective orders passed by the CIT(A) and the AO.
I have carefully considered the rival submissions and perused the first appellate order and the assessment order. The material referred to and relied upon in the course of hearing was also perused.
The ld. counsel for the assessee contends that cash deposits are out of sale proceeds vehicles impounded by the bank owing to non-performance of contractual obligation by the borrowers. The assessee seeks to challenge the adverse findings of the AO and the CIT(A) by documentary evidences. It is the case of the assessee that cash deposits are fully supportable from the documentary evidences by way of bank statement placed before the Tribunal. The circumstances for non-attendance before the AO as well as before the CIT(A) as explained on behalf of the assessee appears satisfactory also cannot be brushed aside.
In the totality of the circumstances, I find traction in the plea of the assessee that he deserves one more chance to explain the source of cash deposits. The order of the CIT(A) is thus set aside and the matter is restored back to the file of the AO for fresh adjudication of the issue in accordance with law. It shall be open to the assessee to explain the source of cash deposits by adducing evidences as may be considered expedient. The Assessing Officer shall give proper opportunity to the assessee to represent his case. The assessee is cautioned to dutifully attend the proceedings before the AO without any demur.
In the result, the appeal of the assessee is allowed for statistical purposes. Order was dictated and pronounced in the open Court on 19th June, 2024.