HEMU CHANDHAR CHELUPURU,KHAMMAM vs. INCOME TAX OFFICER, WARD-1, WARANGAL

Although a number of grounds have been raised by the assessee in ITA 656/Hyd/2023, however, these all relate to the ITA 656 and 657 of 2023 Hemu Chandhar Chelupuru ex-parte order of the learned CIT (A) NFAC in confirming the addition of Rs.49,17,240/- made by the Assessing Officer.

Facts of the case, in brief, are that the assessee is an individual and derives income form business. He filed his return of income for the A.Y 2011-12 on 28.07.2011 admitting total income at Rs.2,29,180/-. The return was selected for scrutiny under CASS and accordingly statutory notices u/s 143(2) & 142(1) of the I.T. Act were issued and served on the assessee. In absence of any compliance from the side of the assessee on a number of occasions, the Assessing Officer finally served the notice by affixture. Again, there was no response from the side of the assessee. Therefore, the Assessing Officer proceeded to complete the assessment u/s 144 of the I.T. Act.

During the course of assessement proceedings, the Assessing Officer noted that the assessee has not disclosed the amount deposited in Bank as per the return of income. However, inquiries conducted by the Assessing Officer revealed that the assessee was holding a Bank Account with ICICI Bank, JPN Road, Warangal bearing Account No.092201504112 wherein cash deposit of Rs.48,91,420/- are found. Since the assessee could not explain the source of such deposit of Rs.48,91,420/- the Assessing Officer made addition of the same as unexplained income of the assessee. Further, in absence of any evidence from the side of the assessee claiming deduction under Chapter VIA to the tune of Rs.25,818/-, the Assessing Officer disallowed the same. Accordingly, the Assessing Officer determined the total income of the assessee at Rs.51,70,240/-.

Since the assessee did not appear before the learned CIT (A) NFAC, despite number of opportunities granted, the learned CIT (A) NFAC in the ex-parte order passed by him, sustained the addition made by the Assessing Officer and accordingly upheld the order of the Assessing Officer. The Assessing Officer thereafter initiated penalty proceedings u/s 271(1)(c) of the I.T. Act. Since there was no compliance from the side of the assessee during the penalty proceedings, the Assessing Officer levied penalty of Rs.12,69,700/- being the minimum penalty leviable u/s 271(1)(c) of the I.T. Act. Since the assessee again did not appear before the learned CIT (A) NFAC despite 4 opportunities granted, the learned CIT (A) NFAC in the ex-parte order passed by him sustained the penalty levied by the Assessing Officer.

Aggrieved with such order of the learned CIT (A) NFAC the assessee is in appeal before the Tribunal by filing two appeals i.e. one for the quantum addition and the other for the penalty levied u/s 271(1)(c) of the I.T. Act.

The learned Counsel for the assessee at the outset submitted that in response to the notices issued on 23.05.2022, 06.07.2022 and 17.05.2023, the assessee had filed adjournment applications before the learned CIT (A) NFAC whereas the other notices dated 24.12.2020, 08.04.2022, 22.07.2022 and 12.10.2023 were not served on the assessee. He submitted that the assessee is not well conversed with the technology for which the notices issued through mail could not be looked into. The learned Counsel for the assessee further submitted that the Assessing Officer in the order passed u/s 144 has made the entire

The learned DR, on the other hand, strongly opposed the above arguments advanced by the learned Counsel for the assessee. He submitted that the chronology of dates mentioned by the learned CIT (A) NFAC shows the scant regard of the assessee to the statutory notices issued. Further, due to non-compliance of the assessee to the statutory notices issued by the Assessing Officer, he was constrained to serve the notice through affixture. He submitted this conduct of the assessee speaks in volumes. Under these circumstances, the learned DR submitted that the orders passed by the lower authorities should be upheld and both the appeals filed by the assessee should be dismissed.

We have heard the rival arguments made by both the sides, perused the orders of the AO and the learned CIT (A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in the instant case made addition of Rs.48,91,420/- being unexplained cash deposit in the Bank Account on the ground that the assessee could not explain the source of cash deposit of Rs.48,91,420/- in the bank account maintained with ITA 656 and 657 of 2023 Hemu Chandhar Chelupuru ICICI Bank, JPN Road, Warangal which was not disclosed in the return of income. We further find in absence of any evidence to support the claim of deduction under Chapter VIA to the tune of Rs.25,818/- the Assessing Officer disallowed the same and added to the total income of the assessee. We find the learned CIT (A) NFAC upheld the above two additions due to non-appearance of the assessee before him despite 6 opportunities granted. It is the submission of the learned Counsel for the assessee that the assessee in certain dates has sought adjournment and in certain other dates, the assessee has not received any notice of hearing for this unfortunate situation happened. It is also his submission that given an opportunity, the assessee is in a position to substantiate with evidence to the satisfaction of the Assessing Officer regarding the nature and source of such cash deposits. It is his also submission that while the Assessing Officer has considered the cash deposits as income of the assessee, however, he has not considered the previous withdrawals from the Bank Account to explain the source of such deposits. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one last opportunity to the assessee to substantiate his case by filing the requisite details and decide the issue as per fact and law. The assessee is also hereby directed to appear before the Assessing Officer and file the requisite details for early completion of the assessment without seeking any adjournment under any pretext failing which the Assessing Officer is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

Since we have remanded back the appeal challenging the quantum addition, the appeal filed by the assessee challenging the penalty levied by the Assessing Officer u/s 271(1)(c) which has been upheld by the learned CIT (A) is also restored to the file of the Assessing Officer for fresh adjudication.

Further, considering the careless attitude of the assessee by disregarding the statutory notices issued by the Assessing Officer and the learned CIT (A) NFAC, we levy a cost of Rs.5000/- on the assessee which shall be deposited with the State Legal Aide Services within two months from the date of this order. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, both appeals filed by the assessee are allowed for statistical purposes.