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Facts
The assessee is in the business of trading oil paint and related articles. The Assessing Officer (AO) made an addition of Rs. 8,65,000/- on account of unexplained cash deposited during demonetization. The assessee challenged this before the CIT(A), who passed an order without allowing a proper hearing, despite requests for video conferencing.
Held
The Tribunal held that the CIT(A) erred in passing the order without allowing the assessee an opportunity for hearing and without considering the merits of the case, dismissing the appeal for want of prosecution. The Tribunal also noted that the CIT(A) confirmed the addition without rejecting the books of account and invoking Section 145(3).
Key Issues
Whether the CIT(A) erred in confirming the addition without providing an adequate opportunity of hearing, and whether the addition was justified without rejecting the books of account.
Sections Cited
68, 145(3), 115BBE
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
This appeal by the assesse is directed against the order dated 11.01.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centers,(NFAC), Delhi for A.Y.2017-18.
Assessee has raised following grounds of appeal:
“1. That impugned order passed by the Ld. CIT(A) sustaining the order passed by the Ld. AO is bad in law, without jurisdiction, it is based on incorrect interpretation of law and without allowing proper and reasonable opportunity of being heard, moreover the facts have also been incorrectly construed.
2. That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in stating the fact that he has issued questionnaire alongwith Shri Atul Kantilal Jain notice dated 11.09.2023 but the appellant has not submitted the reply of the said questionnaire. In fact the assessee has not received any questionnaire attached with notice issued u/s 250 dated 11.9.2023 on its registered e-mail ID. 3.1 That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in passing the appellate order without allowing opportunity for hearing through video-conferencing which is specifically requested by written submission dated 19.9.2023 and 10.11.2022. 3.2 That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.8,65,000/- made u/s 68 being cash deposited during the course of demonetization in the bank account without appreciating the fact that during the assessment year in question and two preceding assessment years the turnover and cash received and deposited by the assesse is as under:
Assessment Total turnover Cash received Cash deposited year (Rs.) from cash sales in bank account and debtors (Rs.) out of cash sales and amount received from debtors (Rs.)
2017-18 10,56,34,551/- 1,75,51,260/- 1,51,44,000/- 2016-17 11,27,58,848/- 2,48,66,361/- 2,30,16,980/- 2015-16 12,35,35,215/- 2,33,01,897/- 2,16,64,310/-
3.3 That on the facts and in the circumstances of case and in law, the Ld. AO and CIT(A) failed to appreciate the fact that the assessee has filed the copies of account specifying full name, address, mobile number of the person from whom cash is received against the sales and copy of day to day and regular cash book from 1.11.2016 to 10.11.2016.
3.4 That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.8,65,000/- without rejecting the books of account and invoking provisions u/s 145(3) of the IT ACT. 3.5 That on the facts and in the circumstances of case and in law, the Ld. CIT(A) erred in confirming the addition of Rs.8,65,000/- u/s 68 and charging tax on the special rate u/s 115BBE.”
At the time of hearing the Ld. AR of the assessee submitted that the assessee is engaged in the business of trading of oil paint and related allied articles. The assessee filed his return of income on 30.10.2017 declaring total income of Rs.45,22,200/-. During the scrutiny the A.O has made an addition of Rs.8,65,000/- on account of unexplained cash deposited in the bank during the demonetization period. The assessee challenged the order of the A.O before CIT(A). The Ld. AR has pointed out that CIT(A) has issued two notices which was duly replied by the assessee however, no questionnaire was attached to the notices issued by CIT(A) and therefore, the impugned order was passed by CIT(A) without allowing hearing through video conference which was specifically requested vide written submissions dated 10.11.2022 and 19.09.2023. Thus, the Ld. AR has submitted that when the assessee has shown the turnover and sale proceeds recorded in the books of accounts and declared the income from the business activities of trading in oil paint and related items then without rejecting the books of accounts u/s 145(3) of the Act the addition made by the A.O is not justified. The CIT(A) has also confirmed the violation of principal of natural justice. The Ld. AR has thus, submitted that the impugned order of CIT(A) may be set aside and the matter may be remanded to the record of CIT(A) for fresh adjudication.
On the other hand Ld. Departmental Representative raised no serious objection if the matter is remanded to the record of CIT(A) for fresh adjudication.
We have considered the rival submissions and carefully perused the impugned order passed by the CIT(A). The CIT(A) has confirmed the addition made by the A.O on account of unexplained cash deposited in the bank account while recording the reasons that the assessee did not respond to the hearing notices issued with the sole intention of hiding the particulars. On the contrary the assessee has submitted that the CIT(A) has not asked the assessee to furnish any details or record but a simple notice of hearing was issued against which the assessee filed replies dated 10.11.2022 and 11.09.2023. A copy of request of the assessee for allowing the paper book as under:
5.1 Thus, it is clear that the assessee has demanded the hearing through video conferencing however, CIT(A) has passed the impugned order without allowing the hearing to the assessee.
Further the CIT(A) has not given any finding on merits of the issue but dismissed the appeal for want of prosecution. Accordingly, in the facts and circumstances of the case the impugned order of CIT(A) is set aside and the matter is remanded to the record of CIT(A) for fresh adjudication after giving appropriate opportunity of hearing to the assessee.
The appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 09.10.2024.