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Income Tax Appellate Tribunal, VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
PER DUVVURU RL REDDY, Judicial Member :
This appeal filed by the assessee is against the order of the Ld. CIT(A)-NFAC in DIN & Order No. ITBA/NFAC/S/250/2023- 24/1060395006(1), dated 01/02/2024 arising out of the order passed U/s. 144 of the Income Tax Act, 1961 [“the Act”] for the AY 2017-18.
2 2. Briefly stated the facts of the case are that he assessee is an individual made cash deposits of Rs. 11,19,000/- in his bank account during demonetization period. Therefore, the Ld.AO issued a notice U/s. 142(1) of the Act and called for return of income for the AY 2017-18. As there was no response from the assessee, the Ld. AO issued a notice U/s. 142(1) of the Act and the assessee was sought to explain the reasons for non-filing of the return for the AY 2017-18 and was also asked to explain the sources of cash deposits made during the AY 2017-18. Considering the assessee’s failure to comply with the notice, the Ld. AO obtained the details of cash deposits by issuing a notice U/s. 133(6) of the Act and based on perusal of the details of cash deposits, the Ld.AO observed that the assessee made cash deposits of Rs. 11,19,000/- and in response to the notice stated above, the assessee submitted that the assessee was in the business of fish tanks during the year and fish sale receipts to the tune of Rs. 12,12,508/- was deposited in the banks during the demonetization period. The assessee also furnished a copy of receipt from Suchitra Fisheries and submitted that since the income from fish sale is below the taxable limit, the return of income was not filed. However, the Ld. AO observed that the assessee is not allowed to accept the cash in old demonetized
3 currency notes and therefore the cash receipts cannot be accepted as the business income of the assessee. Accordingly, the Ld. AO passed the order U/s. 144 of the Act and made an addition of Rs. 11,19,000/- on account of income from other sources and treated the same as unexplained income U/s. 69A of the Act and taxed the same U/s. 115BBE of the Act. Aggrieved by the order of the Ld. AO passed on 29/12/2019, the assessee preferred an appeal before the Ld. CIT(A)-NFAC.
3. On appeal, since there was no response from the assessee with respect to the hearing notices issued and in the absence of any representation on behalf of the assessee, the Ld. CIT(A)-NFAC passed the order ex-parte and dismissed the assessee’s appeal by confirming the addition made by the Ld. AO. Aggrieved by the order of the Ld. CIT(A)-NFAC, the assessee is in appeal before the Tribunal by raising the following grounds of appeal:
“1. The order of the Ld. CIT(A) is bad and erroneous in law.
The AO as well as the Ld. CIT(A) erred in not considering the submissions filed by the appellant during the course of proceeding in proper perspective.
The Ld. CIT(A)-NFAC has erroneously upheld the addition made by the AO of Rs. 11,19,000/- U/s. 69A r.w.s 115BBE of the Act towards cash deposits into Canara Bank A/c. Nol. 895101018171 during demonetization period though the assessee has explained the sources of cash deposits were out of sale of fish during fish culture business and produced related evidence.
4. The AO and the Ld. CIT(A) erred in observing that the appellant should not have received specified bank notes after 08/11/2016 till 31/12/2016 without considering the effect of section 3 of the specified bank notes (Cessation of Liabilities) Act, 2016.
Without prejudice, the Ld. AO and the Ld. CIT(A) erred in treating the cash deposits as income of the appellant, despite accepting the fact that the same were received from customers only in the course of business of the appellant, which was not rejected or found to be incorrect and incomplete.
The Ld. CIT(A) erred in upholding the addition of Rs. 11,19,000/- made by the AO in his order U/s. 144 dated 29/12/2019 towards unexplained cash credits into bank account U/s. 69A by wrongly applying the provisions of section 115BBE though the AO has accepted the sources of cash deposits is out of fish sales during fish culture business of the appellant. There by wrongly applying higher rate of tax instead of normal rate of tax.”
At the outset, the Ld. Authorized Representative [“Ld. AR”] submitted before us that the Ld. CIT (A)-NFAC has passed ex-parte order without providing proper opportunity to the assessee of being heard. It was therefore pleaded that the matter may be remitted back to the file of the Ld CIT (A)-NFAC in order to provide one more opportunity to the assessee of being heard.
5. 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 5 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.
6. I have heard the 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 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 appeal in-limine. In this situation, considering the issues involved in the appeal, I am of the considered view that the Ld. CIT(A)-NFAC ought to have decided the case on merits instead of dismissing the appeal in- limine. However, considering the prayer of the Ld. AR, and in the interest of justice as well as 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
6 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.
In the result, appeal filed by the assessee is allowed for statistical purposes as indicated hereinabove.
Pronounced in the open Court on 25TH September, 2024. Sd/- (दु�वू� आर.एल रे�ी) (DUVVURU RL REDDY) �याियकसद�य/JUDICIAL MEMBER Dated :25/09/2024 OKK - SPS आदेश की �ितिलिप अ�ेिषत /Copy of the order forwarded to:- 1. िनधा�रती/ The Assessee – Kameswara Rao Potluri, Flat No. 201, RK Enclave, Subbareddy Street, Gudivada, Krishna District, Andhra Pradesh. 2. राज�व/The Revenue – Income Tax Officer, Ward-1, Gudivada, Krishna District, Andhra Pradesh.