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Facts
The assessee-appellant had appealed to the CIT(A) against an assessment order that added Rs. 1,49,25,000/- under Section 69A of the Income Tax Act, 1961, as unexplained money for Assessment Year 2017-18. The CIT(A) dismissed the appeal, holding that it was not admissible because the assessee had not filed a return of income and offered no valid explanation for non-compliance. The assessee contended that they were not involved in any business activities during the relevant financial year and therefore, no return was furnished.
Held
The appellate authority observed that the assessee's claim of not engaging in business activities and the subsequent non-filing of returns needed to be examined with evidence. The CIT(A)'s dismissal based solely on Section 249(4)(b) without considering the assessee's primary contention was found to be erroneous. The departmental representative had no objection to remanding the matter.
Key Issues
Whether the CIT(A) erred in dismissing the appeal without considering the assessee's claim of non-involvement in business activities and the reasons for not filing the return of income. Whether a remand for fresh adjudication with an opportunity to produce evidence was warranted.
Sections Cited
249(4)(b), 69A, 144, 115BBE, 271AAC, 272A(1)(d), 271F, 142(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES, “A” JAIPUR
Before: SHRI RATHOD KAMLESH JAYANTBHAI, AM & SHRI NARINDER KUMAR, JM vk;dj vihy la-@ITA No. 1226/JPR/2024
vkns'k@ ORDER PER:NARINDER KUMAR, JUDICIAL MEMBER On 09.08.2024, Commissioner of Income Tax (Appeal) (in short ‘CIT(A)’) /NFAC, Delhi passed order u/s 250 of Income Tax Act, 1961 (in short ‘Act’), relating to the Assessment Year 2017-18 thereby dismissing the appeal filed by the assessee-appellant herein, while observing that appeal was not admissible. appellant had not filed any return of income and also not paid any amount equal to the amount of advance payable by the assessee.
In this regard, reference was made to the provisions of section 249(4)(b) of the Act.
Ld. CIT(A) further observed that the appellant having not furnished any substantial cause or valid reason for non-compliance of the abovesaid mandatory requirement, the appeal was not admissible.
Accordingly, the appeal came to be dismissed.
3. For ready reference, it may be mentioned that assessee had challenged before ld. CIT(A), the assessment order dated 02.12.2019, whereby an addition, u/s 69A of the Act, to the tune of Rs. 1,49,25,000/- was made while framing assessment u/s 144 of the Act by observing at page 17 as under:-
“1. The assessee has made cash deposits amounting to Rs 16,50,000/- other Credit entries appearing in bank account of Rs 1,32,75,000/- thereby total amounting to Rs 1,49,25,000/- (above table:4) appearing in the PNB Bank Account of the assessee firm in the FY 2016-17 relevant to A Y: 2017-18 remained unexplained. The assessee firm has not filed ITR, not declared its true income and has not paid taxes due thereon. The assessee firm has not responded to notices u/s 142(1) and show-cause notices issued during e- assessment proceedings as discussed above. The assessee firm failed to give any explanation about the nature and source of cash deposits, hence the value of Credit entries, including Cash deposits of Rs 1,49,25,000/- appearing in the PNB Bank Account as tabulated in the body of the Order (as per above EFY Technologies table) is deemed as unexplained money u/s 69A of the Income Tax Act, 1961 and added to the Total Income of the assessee. The Total Income assessed is taxed u/s 115 BBE of the Act at the rate of 60%.
Further, penalty proceedings u/s 271 AAC of the Act in respect of unexplained income is initiated. As discussed in the body of the Order, the assessee firm has failed to comply with the notices u/s 142(1) of the Act issued and served upon the assessee during the course of E-scrutiny proceedings, penalty u/s 272A(1)(d) of the Act is also initiated. The assessee has not filed its Return of Income for AY 2017-18, therefore, penalty u/s 271F of the Act is also initiated for failure to furnish return of income.
Subject to the above discussion, Total Income of the assessee is assessed u/s 144 of the Act as under:
Returned Income Nil (ITR not filed) Add: Addition u/s 69A as discussed Rs. 1,49,25,000/- above paras. Rs. 1,49,25,000/-
Arguments heard. File perused.
The only contention raised by ld. AR for the appellant is that during Financial Year 2016-17 and even prior thereto i.e. in the F.Y 2015-16, the assessee firm did not indulge in any business activities, and that is why, no income tax return was furnished, and that ld. CIT(A) erred in dismissing the appeal while resorting to provisions of section 249(4)(b) of the Act, without taking into consideration said claim of the assessee-appellant.
In the given situation, ld. AR for the appellant has submitted that the impugned order deserves to be set aside and matter be evidence was sought to be produced and relied on in support of the claim that the assessee could not support any business activities, but said request was rejected by CIT(A).
Ld. DR for the department has no objection to the remand of the matter to the Assessing Officer for decision afresh by providing reasonable opportunities to the assessee so as to enable the assessee to produce all the relevant material in support of its claim.
On going through the assessment order dated 2.12.2019, we find that notices u/s 142(1) of the Act are recorded to have been issued to the assessee to seek its response as regards deposit of cash (SBN) to the tune of Rs. 13,50,000/- during the period of 09.11.2016 to 30.12.2016, and as to why the said firm had not filed any income tax return.
As is available from the assessment order, the assessee did not submit any response to notices u/s 142(1) of the Act and accordingly, the Assessing Officer proceeded further and completed the assessment u/s 144(1) raising demand of Rs.
1,49,25,000/-. assessee claimed before ld. CIT(A) that no reasonable opportunity was was provided by the Assessing Officer to the appellant of being heard and the assessment proceedings were completed within a period of 5 months, and as such assessee could not furnish all the requisite documents to support its claim and explain the deposit.
As is available from the impugned order passed by ld.
CIT(A), assessee sought to produce certain evidence, in the Appellate proceedings, in the form of a paper book alleging that the additional evidence was relevant. Learned CIT(A) rejected the prayer for taking on record the additional evidence.
As noticed above, ld. CIT(A) dismissed the appeal while resorting to provisions of section 249(4)(b) of the Act. In the given facts and circumstances, when the claim of the assessee was that no business activities were done by the assessee in the year under consideration, and as such there was no question of deposit of any advance tax of filing of any return, said question could be determined only after going through the evidence sought to be produced by the assessee. It is true that the assessee did not reply or evidence in the assessment proceedings. Before us, it has not been claimed by the assessee that the assessee firm was not aware of the assessment proceedings initiated after service of notice u/s 142(1). This goes to show casual approach of the assessee in the assessment proceedings.
In the given facts and circumstances, in view of the submission of ld. AR for the appellant and ld. DR for the Revenue, we find that this is a fit case for being remanded to the Assessing Officer. Result
As a result, this appeal is disposed of for statistical purposes and the matter is remanded to the Assessing Officer with the directions to adjudicate afresh, as regards framing of assessment for the year under consideration while providing reasonable to the assessee of being heard.
The assessee is also burdened with costs of Rs. 6,000/- (six thousands) only to be deposited in Prime Minister’s National Relief Fund. The assessee shall produce receipt before the Assessing remand.
Assessee is directed to appear before Assessing Officer.
File be consigned to the record room after the needful is done by the office.