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Facts
The assessee filed a return of income declaring Rs.1,24,190, but the assessment order assessed income at Rs.3,32,680. The CIT exercised jurisdiction u/s 263 and directed a fresh assessment, which resulted in additions of Rs.47,38,010 and Rs.17,14,811. The First Appellate Authority (FAA) passed an ex-parte order confirming these additions as the assessee did not respond to notices.
Held
The Tribunal noted that the assessee had filed an appeal before the FAA and responded to notices. The FAA's order was considered cryptic for not considering the assessee's submissions. The Tribunal decided to remit the issues back to the CIT(Appeals) for fresh consideration.
Key Issues
Whether the ex-parte order passed by the FAA is sustainable when the assessee claims to have responded to notices and submitted documents. Whether the deposits in the bank account should be considered as income from other sources when the assessee filed return on a presumptive basis.
Sections Cited
44AD, 143(1), 143(3), 263, 68, 69A
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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI KESHAV DUBEY
Per Laxmi Prasad Sahu, Accountant Member
This appeal is filed by the assessee against the ex-parte order dated 03.05.2024 of the CIT(Appeals), National Faceless Appeal Centre, Delhi [NFAC], for the AY 2011-12.
Briefly stated the facts of the case are that the assessee filed return of income declaring income of Rs.1,24,190 estimating income @ 8% on the turnover u/s. 44AD of the Act. The return was processed u/s. 143(1) of the act. Subsequently the case was selected for scrutiny and assessment order was passed assessing the income at Rs.3,32,680.
The ld. Pr. CIT exercised his jurisdiction u/s. 263 of the Act and observed that the AO while completing assessment u/s. 143(3) has not examined the cash deposits in SB Account of more than Rs.10 lakhs and directed the AO for fresh assessment as per order u/s. 263. The AO passed the assessment order on 26.12.2006 u/s. 143(3) r.w.s. 263 of the Act and made addition of Rs.47,38,010 towards cash deposits in the account in Karnataka Bank Ltd. for want of proper explanation. The AO further noted that there was undisclosed credits in the bank account in Syndicate Bank Ltd. and for want of proper substantiation by the assessee made addition of Rs.17,14,811 u/s. 68. Aggrieved from the above order, the assessee filed appeal before the ld. First Appellate Authority (FAA).
The ld. FAA issued hearing notices on 28.01.2019, 15.02.2019, 14.11.2019 & 22.11.2019 and noted that the assessee has not responded till the date of passing of his order. Accordingly the FAA disposed off the case and confirmed the additions made by the AO towards both transactions of Rs.64,52,821 (47,38,010 + 17,14,811) and passed the order on 03.05.2024. Aggrieved, the assessee is in appeal before the ITAT.
The ld. AR vehemently argued the case and submitted that in response to notices of ld. FAA, the assessee responded to the notices issued. In this regard he filed a paperbook of 1-85 pages and in page 1 has spelt out the date of compliance and date of filing of response and acknowledgment no. containing the documents submitted. The other submissions are listed out in the paperbook. However, the ld. FAA has passed a very cryptic order without considering the written submissions of the assessee. He therefore requested that the matter may be sent back to the ld. FAA for fresh consideration. He also relied on the following judgments and submitted that the assessee was not required to maintain books of account and filed return of income under presumptive basis, therefore the deposit in bank account should not be considered as income from other sources:- (i) Shri Kokkarne Prabhakara in dated 11.9.2020. (ii) Girish V. Yalakkishettar (2020) 115 taxmann.com 489 (Bang. Trib) (iii) Thomas Eapen (2020) 113 taxmann.com 268 (Cochin Trib.) 6. The ld. DR relied on the order of lower authorities and submitted that the assessee’s turnover is of Rs.15.52 lakhs and cash deposit in bank account are not matching. The assessee has deposited cash more than the turnover in his SB account whereas if the assessee is running contract business the transaction might have been carried out towards Current Account. Over and above the cash deposit from the turnover of the assessee is income from other sources as unexplained investment. The definition of section 69A is very much applicable and he referred to page 12 of PB dated 11.3.2019. The assessee has agreed for addition of 1/4th of Rs.47,38,000 which clearly shows that the deposit in SB A/c is not part of the turnover.
Considering the rival submissions, we note that the assessee filed appeal before the ld. FAA and responded to the notices issued by the ld. FAA as per paperbook submitted. The assessee has filed index with documents submitted before the respective authority, which is reproduced below:-
On going through the order of the ld. FAA, the ld. FAA has noted that there is no response from the assessee’s side and accordingly he has passed the order. Considering the facts of the case and in the interest of justice, we remit the issues to the CIT(Appeals) for fresh consideration taking into consideration the documents as stated above and to pass a speaking order after giving reasonable opportunity of being heard to the assessee.
In the result, the appeal by the assessee is allowed for statistical purposes.
Pronounced in the open court on this 11th day of September, 2024.