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Facts
For AY 2011-12, the assessment was completed ex-parte u/s 144, adding Rs. 63,44,000/- as unexplained cash deposits and disallowing Rs. 54,450/- u/s 80C. The CIT(A) dismissed the assessee's appeal, confirming the additions, stating the assessee failed to explain the source of cash deposits and did not appear or effectively represent their case. The assessee contended non-receipt of show-cause notices and lack of opportunity to explain.
Held
The Income Tax Appellate Tribunal set aside the CIT(A)'s orders for both the quantum appeal (ITA No. 814/DEL/2020) and the consequential penalty appeal (ITA No. 815/DEL/2020). The matter was restored to the file of the CIT(A) for fresh adjudication on merit, after providing the assessee a reasonable opportunity of being heard, emphasizing the need to subserve principles of natural justice.
Key Issues
1. Whether the CIT(A) was justified in summarily dismissing the quantum appeal without examining the merits of the assessee's submissions or verifying the service of show-cause notices. 2. Whether the addition of unexplained cash deposits and disallowance u/s 80C, and the consequential penalty u/s 271(1)(c), could be sustained when the assessee claimed denial of natural justice and lack of opportunity to explain.
Sections Cited
144, 143(2), 142(1), Chapter VI-A, 80C, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘A’: NEW DELHI
Before: SHRI KUL BHARAT & SHRI BRAJESH KUMAR SINGH
ORDER PER BRAJESH KUMAR SINGH, AM,
These two appeals filed by the assessee are directed against the order of the learned Commissioner of Income Tax (Appeals)-33 ( in short ‘the CIT(A), Delhi, dated 30.09.2019 pertaining to Assessment Year 2011-12.
2. The grounds of appeal raised by the assessee in reads as under:-
“1. That the learned CIT(Appeals)-33 has erred in law as well as on facts of the case in sustaining addition of Rs. 6398400/- made to the taxable income of the assessee by Assessing Officer treating the cash deposit in the bank amounting to RS 6344000 and disallowance of deduction under chapter VIA of IT Act as income of the appellant. Thus the addition sustained is totally wrong, illegal and excessive in nature.
That before making the addition of income, no show cause notice was served on the appellant, service of which is compulsory. Thus addition made without serving show cause notice is totally wrong, illegal and excessive in nature and is against principle of natural justice.
That the order passed by the Hon'ble CIT Appeals) upholding the order of the learned Assessing Officer is bad in law and is liable to be quashed as the Hon'ble CIT(Appeals) and the learned Assessing Officer has not considered the facts and materials of the case and has made addition without providing any opportunity to the appellant to explain the same.
4. That the addition made by the Assessing Officer and upheld by the learned CIT (Appeals) is based merely on suspicion, surmises and conjectures and that the learned CIT (Appeals) ought to have deleted the addition made.
That Ld CIT Appeals has wrongly sustained the disallowance of Rs.54450, being payment of LIC and Tuition fee of children correctly claimed deduction u/s 80C of Chapter VI-A.3. Brief facts of the case: 3. Brief facts of the case: In this case, the assessment was completed by an order dated 21.03.2014 u/s 144 of the Act at a total income of Rs.67,01,800/- as against the returned income of Rs.3,03,350/-. In the assessment order, unexplained cash deposited by the assessee in his saving bank account amounting to Rs.63,44,000/- was added and further deduction claimed under chapter VIA amounting to Rs.54,450/- was denied.
Aggrieved with the order, the assessee filed an appeal before the CIT(A)-33, Delhi. The CIT(A) vide order dated 30.09.2019 dismissed the appeal of the assessee. The CIT(A) in para 6 of his order held as under:-
6.1 Briefly stated, the facts of the case are that the impugned assessment order was passed by the Assessing Officer ex-parte as the Assessee did not respond to the notice u/s 143(2) and notices u/s 142(1) of the IT Act. As per the AIR information, the Assessee had deposited a sum of Rs.63.44 lacs in his saving bank account with Oriental Bank of Commerce. Through show cause notice the Assessing Officer asked the Assessee to explain as to why cash deposited in the saving bank account may not be treated unexplained and added to the total income. Since no explanation was furnished by the Assessee, the Assessing Officer added Rs.63,44,000/- as unexplained cash deposits in the saving bank account. 6.2 In the written submission dated 25.09.2019 sent by mail, the Appellant has, inter alia, submitted that he is a bhagat katha vachak. The order of the Assessing Officer was unjust and illegal. The notice issued by the Assessing Officer was not received by him due to poor quality of postal services and negligence of legal representative of the Appellant. The show cause notice issued by the Assessing Officer remained unserved. The Appellant did not get the opportunity to explain the deposits in the bank account. The Appellant has submitted certain documents without explaining the relevance thereof. Moreover, these documents were not submitted before the Assessing Officer. 6.3 In view of the facts stated above, I find that the Appellant failed to explain the source of the cash deposits in the bank account. Accordingly, the addition is confirmed.
5. During the appellate proceedings, none appeared on behalf of the assessee. As per records, it is seen that the assessee either did not appear on earlier occasions or only sought an adjournment in the matter. Therefore, hearing of this case was taken up and the matter is decided on the basis of materials available on record and after hearing the ld. DR.
On perusal of the order of the CIT(A), it is seen that that the CIT(A) noted the submission of the assessee that the show-cause notice dated 11.03.2014 for adding the amount of Rs 63,44,000/- was not received by the assessee and the assessee did not get the opportunity to explain the deposits in the bank account. The CIT(A) also observed that the assessee had submitted certain documents without explaining the relevance thereof and also noted that these documents were not submitted before the AO. In view of these facts, the CIT(A) held that the assessee failed to explain the source of cash deposits in the bank account and dismissed the appeal of the assessee.
6.1. The above action of the CIT(A) is not justified as he summarily dismissed the appeal without discussing the merits of the documents submitted by the assessee and the reasons for his finding that the same were not relevant. Further, the ld. CIT(A) also did not examine the fact as to whether the show-cause notice issued by the AO vide letter dated 11.03.2014 was served to the assessee or not. Therefore, in the given facts of the case, it is seen that the assessee could not make effective representation before the AO and the ld. CIT(A) did not examine the submissions of the assessee and the documents filed by him.
Therefore, in the given facts of the case and in order to 7. subserve the interests of natural justice and to provide an opportunity to the assessee to effectively represent his case, the order of learned CIT(A) is set aside and the matter is restored to the file of learned CIT(A) for decision afresh on merit, after providing reasonable opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
In this appeal, the assessee has filed six grounds of appeal and all the grounds are related to the levy of penalty u/s 271(1)(c) of the Act amounting to Rs.19,60,296/-. The above penalty was levied by the AO vide order dated 12.09.2014 against the addition of Rs.63,44,000/- on account of unexplained cash deposits.
10. Since, the quantum appeal in the case of the assessee has been set-aside to the file of the Ld. CIT(A), this penalty appeal is also set-aside to the file of the CIT(A) for fresh adjudication after providing reasonable opportunity of being heard to the assessee.
Grounds are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 24th May, 2024.