DEVENDRA PANDAY,NEW DELHI vs. ITO (TDS), NEW DELHI

Brief facts of the case are that assessee had filed return of income declaring total income of Rs. 9,10,224/-. The AO in para 1 of his order has enumerated various notices issued to assessee, which remained uncomplied. The main issue was in regard to source of deposit of cash of Rs. 11,51,000/- with City Bank, New Delhi and Rs. 23,28,500/- with IDBI Bank Ltd. Further, AO noticed that assessee had claimed conveyance/ transport allowance, driver’s salary and other allowances against the income from salary. The necessary evidences were not filed. He disallowed some of the claims and made an addition of Rs. 3,79,176/- over and above the addition of Rs. 34,79,500/- in regard to deposits with the two banks noted above.

Before ld. CIT(A) the assessee submitted that when the case of the assessee was picked up for scrutiny, he appointed Mr. N.S. Dalal for representing the case before the AO. All the notices received from the office of AO were sent to Shri N.S. Dalal. However, he did not appear in any proceedings before the AO and the case was decided ex parte. The assessee filed additional evidence during the course of appellate proceedings. The same were forwarded to AO vide office letter dated 26.12.2004 for verification and report. The comments of the AO have been reproduced at pages 2 and 3 of ld. CIT(A)’s order. In these comments the AO primarily held that since non-attendance to the notices issued was deliberate, therefore the case did not qualify to be considered under Rule 46A.This report was forwarded to assessee for his comments. The assessee’s reply has been reproduced in para 4 of ld. CIT(A)’s order in which primarily it was emphasized that the default on the part of assessee was due to professional breach in service by CA. Accordingly, it was requested to accept the additional evidence and sent it back to the ld. AO for his comments on merits.

Ld. CIT(A), after considering the conduct of assessee before AO, pointed out that assessee had not furnished any supporting evidence to prove that the explanation offered was genuine. He further pointed out that in all human probabilities, salaried employee, whose case had been selected for scrutiny, would not forward the notice received by assessee to CA in routine manner. He further pointed out that when notice u/s 271(1)(b) was issued, then at least he should have appeared personally or at least should have replied to the show cause notice of the AO. He, accordingly, concluded that request of assessee under Rule 46A deserved to be rejected.

After considering merits, ld. CIT(A) partly confirmed the addition made against income from salary and also treated the amount deposited in the two bank accounts as unexplained cash deposits.

Ld. counsel for the assessee submitted that after assessee filed rejoinder before ld. CIT(A) vide letter dated 20.2.2015 and requested the ld. CIT(A) to accept the additional evidence and again direct to AO to comment on merit, ld. CIT(A) called for remand report on merit only. He further pointed out that ld. AO carried out thorough investigation and asked various details from assessee, which was submitted by assessee at ITO’s level. After considering this, the AO had sent his remand report. However, in the mean time the case moved to CIT(A)-XXVIII from CIT(A)-XXI, who after considering all the replies and remand reports, accepted certain additional evidences and rejected certain other evidences. Under such circumstances, ld. counsel submitted that the matter may be restored to the file of AO so as to enable the assessee to lead the necessary evidence to substantiate its claim. Ld. counsel referred to first remand report dated 5.1.2015 at page 78 of the PB and the second remand report dated 31.7.2015, contained at page 87 of the PB.

I have considered the submissions of both the parties and have perused the record of the case. It is well settled law that assessee cannot be made to suffer on account of the fault of the CA of the assessee. The assessee has given the name of the CA whom he had forwarded the notice. Therefore, ld. CIT(A)’s conclusion that the explanation of the assessee was not genuine, does not appear to be correct. Further, ld. CIT(A) has also accepted some additional evidences and rejected certain evidences, which is given in the statement of facts filed by assessee, which is reproduced hereunder: S. Particulars Page Accepted/ No. no. Rejected 1 Copy of ITR 1-8 Not ad evidence 2 Form 16 9-10 Accepted 3 Certificate from Landmark (Employer) 11 Accepted 4 Ledger of Contra account of IDBI Bank 12-13 Not Ad evidence 5 Ledger of Contra account of City Bank 14-15 Not Ad evidence 6 Confirmation from Anamika Lahori along 16-17 Rejected with pan no. 7 Purchase and sale document 18-42 Rejected 8 Bank statement of City Bank 43-64 Not Ad evidence 9 Bank statement of IDBI Bank 65-75 Not Ad evidence 10 Reply furnished before AO 76-78 Not Ad evidence 11 Confirmation from wife 79 Rejected 12 Confirmation from brother 80 Rejected 7.1. Considering the entirety of facts, I consider it in the interest of justice that one more opportunity should be afforded to assessee in order to impart substantial justice to him because he was prevented by sufficient cause from producing the necessary evidence before AO. Accordingly, orders of both the lower revenue authorities are set aside and the matter is restored back to the file of the AO for passing de novo assessment in accordance with law, after affording reasonable opportunity of being heard to the assessee.

In the result, assessee’s appeal is allowed for statistical purposes only. Order pronouncement in open court on 7/10/2016.