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Facts
The assessee, an individual engaged in trading, did not file returns for AY 2015-16 and 2018-19. The AO reopened assessments based on substantial cash deposits and made additions for alleged bogus sales and undisclosed sources. The CIT(A) confirmed the additions, adjudicating only on additional grounds.
Held
The Tribunal noted that the assessee was not given sufficient opportunity by the AO to submit details, and the CIT(A) did not adjudicate the main grounds on merits. The Tribunal found that the assessee's contentions regarding the validity of additions and the opportunity to be heard were valid.
Key Issues
Whether the assessee was provided with sufficient opportunity to present their case and whether the CIT(A) correctly adjudicated the grounds of appeal.
Sections Cited
148, 147, 144, 144B, 56, 68, 145(3), 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BANGALORE “A” BENCH, BANGALORE
Before: Ms. Padmavathy S. & Shri Prakash Chand Yadav
Mohammed Shabbeer Housain The Income Tax Officer Kembhui Yadgir vs. Shorapur, Yadgir, Karnataka PAN – AGXPH5731J (Appellant) (Respondent) Assessee by: Smt. Pratibha R., Advocate Revenue by: Shri D.K. Mishra, CIT-DR Date of hearing: 23.10.2024 Date of pronouncement: 24.10.2024 O R D E R Per Bench These appeals by the assessee are against separate orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [CIT(A)], both dated 11.07.2024 for Assessment Years (AY) 2015-16 and 2018-19.
The commons grounds raised by the assessee for both AYs pertain to the addition made by the Assessing Officer (AO) towards unexplained cash deposits in the bank accounts and alleged bogus turnover. The assessee also raised legal grounds on the validity of reopening of assessment.
The assessee is an individual engaged in the business of trading in Toor. The assessee did not file the return of income for both the assessment years 2015- & 1702/Bang/2024 Mohammed Shabbeer Housain Kembhui 16 and 2018-19. Based on the information that the assessee has made substantial cash deposits in various bank accounts the AO reopened the assessment for both the assessment years under consideration. The assessee in response to notice u/s. 148 of the Income Tax Act, 1961 (the Act) filed return of income for AYs 2015- 16 & 2018-19. The AO issued various notices to the assessee and the assessee has responded to few of the notices to make submissions. Since the assessee did not respond to the Show Cause Notice (SCN), the AO completed the assessment u/s. 147 r.w.s. 144 r.w.s. 144B of the Act in which the AO made additions towards alleged bogus sales and cash deposited from undisclosed sources. For AY 2015- 16 the AO also made addition of Rs. 1,28,002/- u/s. 56 of the Act. Aggrieved, assessee filed further appeal before the CIT(A).
Before the CIT(A) besides the grounds on merits, the assessee raised additional grounds contending that section 68 cannot be applied in respect of income from a source which has already been taxed which would amount to double taxation. The assessee also raised the additional ground that no addition can be made u/s. 68 where the books of accounts have been rejected by the AO and that the income should have been estimated on reasonable basis once the books are rejected. Before the CIT(A) the assessee also furnished various details such as invoices, bank statements etc., along with written submissions contending that the additions made by the AO are not tenable on merits. The CIT(A) adjudicated only the additional grounds rejecting the contentions of the assessee and confirmed the additions made by the AO based on the additional grounds raised by the assessee. The assessee is in appeal before the Tribunal against the order of the CIT(A).
The learned A.R. submitted that the assessee is hailing from a small town and is not well educated. Therefore is submitted that the assessee was not aware of the various notices issued by the AO. The ld AR further submitted & 1702/Bang/2024 Mohammed Shabbeer Housain Kembhui that the assessee has responded to few of the notices but could not submit the complete details sought for by the AO due to lack of sufficient time being provided to submit the details by the AO. The learned A.R. also submitted that before the CIT(A) the assessee furnished all the details but the CIT(A) adjudicated only the additional grounds raised by the assessee and has not adjudicated the main grounds which the assessee raised on merits. Accordingly the learned A.R. prayed for one more opportunity to contend the additions made on merits before the lower authorities.
The learned D.R., on the other hand, submitted that the assessee has been non cooperative and therefore supported the orders of the lower authorities.
We have heard the rival contentions and perused the material on record. Based on the information that the assessee has deposited cash in various bank accounts and not filed return of income the AO reopened the assessment u/s. 147 of the Act. From a perusal of the assessment order as extracted below we notice that the assessee has responded to the notices issued u/s. 142(1) of the Act but has not responded to the show cause notice: -
Types of Date of Date of Response of Date of Response Remarks, notice/ notice/ compliance the assessee response if type (Full/ if any communication communi- given received / not received part/ cation received adjourn- ment) 148 29.03.2022 - Not Received - - - 142(1) 30.09.2022 10.01.2022 Not Received - - - 142(1) 31.10.2022 09.11.2022 Not Received - - - Issued letter 14.11.2022 19.11.2022 Received 24.11.2022 - - 142(1) 10.01.2023 13.01.2023 Not Received - - - 142(1) 17.01.2023 19.01.2023 Received 25.01.2023 - - 143(2) 17.01.2023 19.01.2023 Received 25.01.2023 - - SCN 27.01.2023 01.02.2023 Received 07.02.2023 - - Final SCN 09.03.2023 11.03.2023 Not Received - - - It is further noticed that the last of the notice was issued on 09.03.2023 seeking response by 11.03.2023 and the AO has completed the assessment by & 1702/Bang/2024 Mohammed Shabbeer Housain Kembhui passing order u/s. 147 r.w.s. 144 on 18.03.2023. Therefore we see merit in the contention of the learned A.R. that sufficient opportunity was not given by the AO to submit relevant details and contend the issues on merits. Further we notice that the CIT(A) has adjudicated only the additional grounds raised by the assessee on the legality of making additions u/s. 68 of the Act when the books of account were rejected u/s. 145(3) of the Act. We further notice that the CIT(A) has not given any finding on the merits with regard to the additions made by the AO which the assessee contended through the main grounds of appeal raised before the CIT(A). It is relevant to notice that these facts are identical for both AY 2015-16 and AY 2018-19. During the course of hearing the learned A.R. submitted two paper books (with 130 pages for AY 2015-16 and with 111 pages for AY 2018-19) with various details furnished before the CIT(A) on merits. Considering the facts as enumerated above for both AYs and in the interest of natural justice and fair play we are inclined to give one more opportunity to the assessee to contend the issues on merits before the lower authorities. Accordingly we remit both the appeals back to the AO with a direction to consider the various details furnished by the assessee with regard to additions made and decide the issues on merits afresh in accordance with law. Needless to say that the assessee should be given reasonable opportunity of being heard. It is ordered accordingly.