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Facts
The assessee did not file income tax returns for Assessment Years 2010-11 and 2011-12. The Assessing Officer (AO) reopened the case based on information about substantial cash deposits in the bank account. The AO made an addition of Rs. 2,95,02,129/- (10% of total credit entries) and Rs. 63,20,000/- (cash deposit) as unexplained income.
Held
The Tribunal noted that the assessee claimed non-receipt of hearing notices from the CIT(A) and requested an opportunity to present their case. The Tribunal found that the CIT(A) did not decide the appeal on merits. Therefore, the appeals were restored to the CIT(A) for fresh adjudication on merits.
Key Issues
Whether the additions made by the AO as unexplained cash credit were justified, and if the assessee was denied a proper opportunity to be heard by the lower appellate authority.
Sections Cited
68, 147, 133(6), 250(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI AMARJIT SINGH & MS. KAVITHA RAJAGOPAL
O R D E R PER AMARJIT SINGH, ACCOUNTANT MEMBER: These appeals filed by the assessee are directed against the different order of ld. CIT(A), NFAC, Delhi pertaining to A.Y. 2010-11 & 2011-12. Both these appeals are adjudicated together by this common order.
The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case and in the law, the ld. ACIT and ld. CIT(A) also erred in addition of Rs. 2,95,02,129/- to the total income as unexplained cash credit u/s 68 of the Act being Adhoc addition of net profit assumed at 10% of Rs. 29,50,21,290/- being gross credit entries in the bank account.
& 1088/Mum/2024 Sorrento Petrochemicals Private Limited A.Y. 2010-11 & 2011-12 2. On the facts and circumstances of the case and in law, the ld. ACIT and ld. CIT(A) has erred in confirming the addition of cash deposits of Rs. 63,20,000/- to the total income as unexplained cash credit u/s 68 of the Act.
3. The assessee prays to give natural justice by giving a proper opportunity of being heard by assessing the said case by setting aside the order passed u/s 144 r.w.s. 147.
Appellant craves leave to add, amend, modify, alter and/or withdraw the grounds of appeal at the time of hearing.”
Fact in brief is that assessee has not filed return income for A.Y. 2010-11. The case of the assessee was reopened u/s 147 of the Act on the basis of information available of Non-filers Monitoring System (NMS) that it had deposited in the form of cash of more than Rs. 10,00,000/- in the bank account. The Assessing Officer has also collected information from the bank u/s 133(6) of the Act and observed that during the F.Y. 2009-10 in the accounts of the assessee there were credit entries of Rs. 30,13,41,290/- made during the year (out of this an amount of Rs. 63,20,000/- was cash deposit). The assessee has neither filed any detail nor made any compliance to the notices of hearing issued by the Assessing Officer. In the absence of any submission and explanation from the assessee, the AO has treated the amount deposited in cash of Rs. 63,20,000/- as unexplained money u/s 68 of the Act. The assessing officer has also noticed credit entries of Rs. 29,50,21,290/- for the F.Y. 2009-10 in the bank account maintained with Kapol Cooperative Bank Ltd., Mumbai by the assessee and 10% of the said credit entries i.e. Rs. 2,95,02,129/- was treated as income of the assessee in absence of any explanation from the assessee.
4. The assessee filed appeal before the ld. CIT(A). However, the assessee has not made any compliance to the notice of hearing issued & 1088/Mum/2024 Sorrento Petrochemicals Private Limited A.Y. 2010-11 & 2011-12 during the course of appellate proceedings, therefore, the ld. CIT(A) has dismissed the appeal of the assessee sustaining the addition made by the assessing officer.
Heard both the sides and perused the material on record. During the course of appellate proceedings before us, the ld. Counsel submitted that assessee has not received the notice of hearing issued by the ld. CIT(A) and requested to provide more opportunity for adjudicating the case of the assessee on merit before the First Appellate Authority. We consider that neither the ld. CIT(A) has adjudicated the case of the assessee on merit as contemplate u/s 250(6) of the Act on the basis of material placed on record nor the assessee has made any compliance before the ld. CIT(A) therefore in order to decide the appeal of the assessee on merit, we consider it appropriate to restore the case of the assessee to the file of the ld. CIT(A) for deciding afresh on merit in accordance with the provisions of section 250(6) of the Act after providing 3 more opportunities to the assessee to make submission on the points raised by the First Appellate Authority. The assessee is also directed to make due compliance before the ld. CIT(A) without any failure. Accordingly, the appeal of the assessee is allowed for statistical purposes.
On the same reason as discussed while adjudicating the appeal of the assessee vide as supra in this order, this appeal of the assessee is also restored to the file of the ld. CIT(A) for deciding afresh as directed in the finding of ITA 1087/Mum/2024. Therefore, applying the finding of ITA 1087/Mum/2024 mutatis
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the open court on 29.08.2024.