ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 8(1), HYDERABAD vs. SARAP VEERESHAM, RANGA REDDY

Brief facts of the case are that the assessee is an Individual, engaged in the business of retail trade of liquor and general commission agent, filed his return of income for the assessment year 2017-18 on 22/09/2017 declaring total income of Rs.22,95,250/-. The case of the assessee was selected for scrutiny to examine the cash deposit of Rs. 3,80,31,552/-, made by the assessee into his bank account. Notices were issued by the learned Assessing Officer u/s 142(1) of the Income Tax Act, 1961(“the Act”), but according to learned Assessing Officer, no response was submitted by the assessee. Learned Assessing Officer, therefore, assessed the income of the assessee under section 144 of the Act on 24/12/2019 at a total income of Rs. 3,80,31,552/-.

Aggrieved, assessee preferred appeal before the Ld. CIT(A) and submitted copies of Form no. 3CB, Form no. 3CD, Balance Sheet, P & L A/C and written submissions before the Ld. CIT(A). Ld. CIT(A) accepted the submission of the assessee and allowed the appeal of the assessee. 4. Feeling aggrieved by the order of learned CIT(A), Revenue is now in appeal before us, contending that the Ld. CIT(A) passed the order without calling remand report from the learned Assessing Officer and prayed for setting aside the order of the Ld. CIT(A) and restore the order of the learned Assessing Officer. 5. Per contra, learned AR submitted that the notices were sent by the learned Assessing Officer through ITBA portal or by email, which assessee did not notice, having not been accustomed to the same. Learned AR submitted that the assessee possessed all the material to establish that the deposits in the bank are business income only and it was only on verification of the material the learned CIT(A) had taken a plausible view and without disproving the material produced by the assessee, it is not open for the Revenue to seek the quashing of the impugned order. 6. We have gone through the record in the light of the submissions made on either side. In the present case, it is an admitted fact that the assessee failed to submit any documents before the learned Assessing Officer during the proceedings under section 143(3) of the Act. Plea of the assessee is that having not been accustomed to the online procedures, he could not verify the online notices and quite unaware of them. No doubt the assessee produced material in support of his contention before the Ld. CIT(A), but the learned CIT(A) accepted the contentions of the assessee on face value, without calling for any remarks or remand report from the learned Assessing Officer. Veracity of the documents produced by the assessee before the learned CIT(A) is a question of fact and it requires verification at the end of the learned Assessing Officer, which the learned CIT(A) missed to consider. Further, the highest that would happen by allowing an opportunity to the learned Assessing Officer to verify the question of fact as to the documents produced by the assessee, is that a cause would be decided on merits.

With this view of the matter, we set aside the impugned order and restore the issue to the file of the learned Assessing Officer to verify the veracity of the documents and pass a fresh order on merits after affording the opportunity of hearing to the assessee. Grounds of appeal