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Facts
The assessee, an individual earning income from various sources including business and partnership, filed an appeal against an assessment order for AY 2015-16, passed ex-parte under Section 144 due to non-compliance. The CIT(A) confirmed additions of Rs. 2,21,86,186/- as unexplained credits under Section 68 and disallowed Rs. 1,31,730/- claimed under Chapter VI-A, citing the assessee's failure to provide supporting evidence to both the AO and CIT(A). The assessment was reopened based on 'High Risk CRIU/VRU' information from the Insight Portal regarding substantial bank credits.
Held
Despite the assessee's non-cooperative attitude and failure to avail opportunities for hearing, the Tribunal, considering the interest of justice and fair play, and an assurance of compliance from the AR, decided to set aside the assessment order. The matter is remanded to the Assessing Officer for a de novo assessment, granting the assessee a final chance to furnish proper representation and evidence.
Key Issues
1. Whether additions for unexplained credits under Section 68 and disallowance of Chapter VI-A deductions were justified due to lack of evidence. 2. The legality of reopening the assessment based on bank credit verification from the Insight Portal. 3. Whether the assessee should be granted a fresh opportunity for hearing despite prior non-compliance.
Sections Cited
147, 144, 68, Chapter VI-A
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Before: SMT. BEENA PILLAI & SHRI PRABHASH SHANKAR
आदेश / O R D E R
PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order dated 11.06.2024 is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147/144 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 19.03.2022 as passed for the Assessment Year [A.Y.] 2015-16.
A.Y. 2015-16 Dayanand Damodar Patil 2. The grounds of appeal are as under:
Ground No. 1: Addition made u/s 68 on account of Unexplained Credits
The learned officer has erred by making the addition of Rs. 2,21,86,186/- as unexplained credits for the period AY: 2015- 16 u/s-68 of the Income Tax Act, 1961 and the same has been confirmed by the Hon'ble CIT(A). The said addition made and confirmed by the officer is bad- in-law, as the sources from where the addition made was from credits appearing in the bank account. The total credit appearing in the bank statement throughout the year was Rs. 3,13,90,855/- out of which the assessee in the return of income has only considered receipts only upto Rs. 92,04,669/- and balance receipts which is the difference between Rs. 3,13,90,855/- and Rs. 92,04,669/- which amounting to Rs. 2,21,86,186/- has been remained unexplained credits and treated as Unexplained credits u/s 68 of the Income Tax Act, 1961.
Ground No. 2: Addition made deduction claimed under chapter VI-A of sum of Rs. 1,31,730/-
The learned officer has erred by making addition of Rs. 1,31,730/. The only reason for making the addition was the absence of supporting documentary evidence. The only reason for making of the addition was No proof whatsoever has been furnished in support of the claim of deduction of Rs. 1,31,730/-.
A.Y. 2015-16 Dayanand Damodar Patil Ground No. 3: Re-opening is bad-in-law In the present case, the learned assessing officer has re-open the assessment merely based upon data available on the Insight Portal, during the relevant period F.Y. 2014-15, this case was flagged by the Investigation wing on the Insight Portal under High Risk CRIU/VRU information. The bank statements were perused by the officers of Inv. Wing which showed substantial credits in the Bank A/cs. However, re-opening just merely for verifying the credits entries in bank is bad-in-law.
Brief facts of the case are that the assessee an individual filed the return showing income from Rental income, Tower Rent and also business income from supplying of building materials and partner in a Firm.
It is noticed that in this case, assessment order was passed u/s 144 of the Act on account of non-compliance by the assessee to the notices issued by him. Even during appeal proceedings the assessee did not respond earlier but filed a letter with certain enclosures. The ld.CIT(A) in para 5 page-3 of the order has stated that the assessee did not avail opportunities allowed by the AO. Even before him, he failed to furnish any corroborative evidence in support of the ground thus failing to controvert the findings of AO. No evidence or explanation was furnished before him regarding unexplained credit of Rs 2.21 cr in the bank A.Y. 2015-16 Dayanand Damodar Patil accounts. No proof was filed either w.r.t. the claim of deduction of Rs 1,317,30/- either. Accordingly, he dismissed the appeal upholding the assessment order.
The assessee has contended that initially, the case was re- opened u/s 147 of the Income Tax Act, 1961.As per the data available on the Insight Portal, during the relevant period F.Y. 2014-15, this case was flagged by the Investigation wing on the Insight Portal under High Risk CRIU/VRU information. Information revealed that the assessee was maintaining various bank accounts in Saraswathi Bank, RBL Bank and Bank of Baroda. The bank statements were perused by the officers of Inv. Wing which showed substantial credits in the Bank A/cs. However, the re-opening of the assessment just merely for verification entries in banks is not valid and proper. The learned AO has made the addition of only those receipts which has not been reflecting in the computation of income i.e. Total Receipts/Credit in the bank account less Receipts/Credit that has been consider during the filing of return and balance Receipts/Credit has been considered as Unexplained Credits u/s-68 of the Income Tax Act, 1961 which is harsh and bad-in-law. Further, the amount paid towards LIC premium has also been disallowed due to absence of supporting documentary evidence.
A.Y. 2015-16 Dayanand Damodar Patil 5. When the case was called out for hearing, it was proposed by this Bench to send back the case to the ld.AO as no substantive hearing could take place either before him or the CIT(A).It is apparent that both the authorities have allowed reasonable opportunity of hearing to him which was not properly availed. Such a non-cooperative attitude cannot be appreciated. However, it is also true that the issues in hand could not be adjudicated on account of non compliance by the assessee. We take note of the request of the ld.AR sympathetically in the interest of justice and fair play who has pleaded for restoring the matter and has also assured making necessary compliance to the authorities. The provisions of the Act are not penal in nature and any bonafide omission on part of the assessee should not be used against it. Therefore, a last opportunity of hearing is allowed to him to make proper representation before the authorities. The ld. Assessing officer shall give due opportunity of being heard to the assessee in accordance with principles of natural justice in the set aside proceedings for de novo assessment. Needless to state, the assessee will comply with notices and any details sought by the assessing authority without fail, as it will not be allowed any further opportunity of hearing in case of any further non-compliance.
A.Y. 2015-16 Dayanand Damodar Patil 6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 29/11/2024.