RAMBABU ANGADALA,GUDIVADA vs. INCOME TAX OFFICER, WARD-1, GUDIVADA

This appeal filed by the assessee is against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [“Ld.CIT(A)-NFAC”] in DIN & Order No. ITBA/NFAC/S/250/2022-23/1047930303(1), dated 10/12/2022 arising out of the order passed U/s. 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18.

On perusal of the explanation given by the assessee with respect to filing of the appeal before the Tribunal beyond the prescribed time limit, I find that the assessee being an illiterate and having no knowledge about the proceedings under the Income Tax Act, the assessee did not respond to the notices issued during the assessment proceedings as well as the assessee 3 could not file the appeal before the Tribunal within the prescribed time limit. Therefore, I am of the opinion that the reasons advanced by the assessee for belated filing of the appeal constitute a reasonable and sufficient cause that prevented the assessee to file the appeal beyond the stipulated time. Hence, I hereby condone the delay of 475 days in filing the appeal of the assessee before the Tribunal and proceed to adjudicate the appeal on merits.

Briefly stated the facts of the case are that the assessee is an individual. For the AY 2017-18, the assessee did not file his return of income. As per the information available with the Department, the Ld. AO observed that the assessee has made cash deposits during demonetization period in his bank account in United Commercial Bank, Hanuman Junction and State Bank of India, Hanuman Junction aggregating to Rs. 11,00,000/-. Thereafter, the Ld. AO issued a notice U/s. 142(1)(i) of the Act to the assessee calling for return of income for the AY 2017-18. However, the assessee has not responded to the notice and did not file the return as called for. Subsequently, a show cause notice dated 23/11/2019 was issued to the assessee through e- mail and called for certain information including the source of 4 cash deposits made during the FY 2016-17 and was also asked to explain the reasons for non-filing of return of income. Since there was no compliance by the assessee to the show cause notice issued, the assessee was asked to show cause as to why the cash deposits made in the bank during the demonetization period in Specified Bank Notes [SBNs] amounting to Rs. 11,00,000/- should not be treated as unexplained income U/s. 69A r.w.s 115BBA of the Act for the AY 2017-18. In the meantime, the Ld. AO obtained the information from the respective banks by invoking the provisions of section 133(6) of the Act. In the absence of any response to the notices / show cause notice issued to the assessee, the Ld. AO proposed to complete the assessment U/s. 144 of the Act as best judgment assessment. While making the assessment, the Ld. AO observed that the assessee is having bank account in UCO bank and SBI and on perusal of the bank statements furnished by the bank authorities, it is noticed by the Ld. AO that the assessee has made cash deposits of Rs. 14,88,000/- from 1/4/2016 to 31/3/2017, including demonetization period from 09/11/2016 to 30/12/2016. The Ld. AO further observed that the assessee made cash deposits of Rs. 11,00,000/- during demonetization period in SBNs and also cash credits / deposits of Rs. 3,88,000/- during 5 the FY 2016-17 relevant to the AY 2017-18. The Ld. AO also observed that the assessee did not avail the opportunities given in order to explain the sources for cash deposits. Therefore, the Ld. AO considered the amount Rs. 14,88,000/- as in come of the assessee for the AY 2017-18 and brought to tax U/s. 69A r.w.s 115BBE of the Act as unexplained income. Thus, the Ld. AO completed the assessment U/s. 144 of the Act and passed the assessment order dated 17/12/2019. The Ld. AO also initiated the penalty proceedings while passing the assessment order. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.

The Ld. CIT(A) without giving reasonable opportunity dismissed the case ex-parte, thus violated the principles of natural justice.

For these and other reasons that are to be urged at the time of hearing the appellant prays the addition made may kindly be deleted.” Further, the assessee has also raised additional ground of appeal which read as under: “The Ld. AO failed to issue a notice U/s. 143(2) of the Income Tax Act, which is a jurisdictional requirement. In the absence of this notice, the consequential assessment order passed U/s. section 144 of the Income Tax Act is null and void and liable to be quashed.”

At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before me that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. The Ld. AR further submitted that the assessee being an illiterate and having no knowledge about the proceedings under the Income Tax Act, the assessee did not respond to the notices issued by the Ld. Revenue Authorities and could not even file the appeal before the Tribunal within the stipulated time. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)- 7 NFAC in order to provide one more opportunity to the assessee of being heard.

Ld. Departmental Representative [“Ld. DR”], on the other hand, vehemently opposed to the submissions of the Ld. AR and argued that several opportunities had been provided to the assessee however, on the given dates of hearing, neither the assessee nor his Representative has responded to the notices issued nor filed any details / submissions as called for by the Ld. CIT (A)-NFAC. It was further submitted that, under these circumstances, the Ld. CIT (A)-NFAC had no other option but to pass ex-parte order based on the materials available on record. Hence, it was pleaded that the order passed by the Ld. CIT(A)-NFAC does not call for any interference.

I have heard both the sides and carefully perused the materials available on record. On examining the facts of the case, I find that the Ld. CIT (A)-NFAC had posted the case on several occasions. However, there was no response on behalf of the assessee before the Ld. CIT(A)- NFAC on the dates of hearing with regard to the details / submissions as called for by the Ld. CIT(A)-NFAC. Therefore, the Ld. CIT (A)-NAFC was left with no other option except to adjudicate the appeal ex-parte and dismissed the appeal by confirming the additions made by the Ld. AO. Further, I have also noticed that the Ld. AO also passed the assessment 8 order U/s. 144 of the Act as there was no response to the notices issued to the assessee. Before me it was the contention of the assessee that the assessee has not received any notices / intimation about the disposal of the appeals by the Ld. Revenue Authorities. The Ld. AR further submitted that the assessee being an illiterate and having no knowledge about the proceedings under the Income Tax Act, the assessee did not respond to the notices issued by the Ld. Revenue Authorities and could not even file the appeal before the Tribunal within the stipulated time. In this situation, considering the facts and circumstances of the case and considering the issues involved in the appeal, as well as considering the prayer of the Ld. AR, in the interest of justice, strictly following the principles of natural justice, I hereby remit the matter back to the file of Ld. CIT (A)-NFAC in order to consider the appeal afresh and decide the case on merits by providing one more opportunity to the assessee of being heard in accordance with the principles of natural justice. At the same breath, I also hereby caution the assessee to promptly co-operate before the Ld. CIT (A)-NFAC in the proceedings failing which the Ld. CIT (A)-NFAC shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on the record. It is ordered accordingly.