What did the Tribunal hold?

The Tribunal held that the assessee should be given an adequate opportunity to explain the source of the deposit. Giving one more opportunity would promote the cause of justice and enable the Assessing Officer to compute the correct taxable income.

The assessee made a cash deposit of Rs. 10,00,000/- in their bank account. The Assessing Officer passed an ex parte order under Section 144 of the Income-tax Act, 1961. The assessee claimed they could not present their case due to a family dispute and being stationed in Bangalore.

What were the issues?

Whether the assessee was denied a reasonable opportunity to present their case before the Assessing Officer, and if so, whether the matter should be remanded for fresh consideration.

Jyoti L Vyas vs ITO | s.144 | ITAT Chennai 2016

Income Tax Appellate Tribunal, ‘ B’ SMC BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN

For Respondent: Shri M. Murugaboopathy, Addl. CIT

Hearing: 16.06.2016Pronounced: 18.08.2016

आदेश /O R D E R

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 12, Chennai, dated 22.12.2015, and pertains to assessment year 2005-06.

Shri R. Venkatesh, the Ld. representative for the assessee, submitted that the only issue arises for consideration is with regard to 2 I.T.A.No.389/Mds/16 addition of `10,00,000/- being the cash deposit in the bank account.

According to the Ld. representative, the Assessing Officer passed order ex parte under Section 144 of the Income-tax Act, 1961 (in short "the Act"). According to the Ld. representative, the assessee’s mother sold her silver household articles and personal effects and the same was used for deposit in the assessee’s bank account. The assessee was initially engaged in the business of trading in glass bottles in the name of Vinayaka Glass Works. The assessee closed his business in the year 2002 and engaged in part time commission business during assessment years 2009-10 and 2010-11. According to the Ld. representative, the assessee was stationed in Bangalore and visiting Chennai occasionally. Due to family dispute, the assessee could not visit Chennai. Therefore, the assessee could not represent before Assessing Officer and present all material evidence with regard to cash deposit. Ld. representative submitted that an opportunity may be given to the assessee to produce all the necessary material before Assessing Officer

On the contrary, Shri M. Murugaboopathy, the Ld. Departmental Representative, submitted that the Assessing Officer has given adequate opportunity. However, the same was not availed

3 I.T.A.No.389/Mds/16 by the assessee. Therefore, the CIT(Appeals) has confirmed the addition made by the Assessing Officer.

I have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee has made cash deposit of `10,00,000/- in the bank account.

Therefore, it is for the assessee to explain the source for making the deposit. The assessee claimed that due to some family dispute, he was stationed in Bangalore and he could not visit Chennai. Therefore, he could not represent the case before the Assessing Officer with necessary material. This Tribunal is of the considered opinion that the assessee should be given adequate opportunity to explain the source of deposit in the bank account. Giving one more opportunity to the assessee would not prejudice the Revenue in any way. This Tribunal is of the considered opinion that giving one more opportunity to the assessee would promote the cause of justice.

Under the scheme of Income-tax Act, the Assessing Officer is expected to compute the taxable income as per the provisions of law.

Therefore, giving one more opportunity would enable the Assessing Officer to compute the correct taxable income as per the scheme of 4 I.T.A.No.389/Mds/16 the Act. Accordingly, the orders of the authorities below are set aside and the entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the issue in the light of the material that may be produced by the assessee and thereafter, decide the issue afresh after giving a reasonable opportunity to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced on 18th August, 2016 at Chennai.

JYOTI L VYAS,CHENNAI vs. ITO, CHENNAI

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