INCOME TAX OFFICER, WARD-8(1), HYDERABAD vs. DHOBBA MADHAVI, HYDERABAD

This appeal filed by the Revenue is directed against the order dated 28.11.2023 of the learned CIT (A)-NFAC, Delhi, relating to A.Y.2017-18. The assessee has also filed the Cross Objection against the appeal filed by the Revenue. For the sake of convenience, these were heard together and are being disposed of by this common order.

Facts of the case, in brief, are that the assessee is an individual and has not filed her return of income for the impugned A.Y. On the basis of the data analytics and information gathered during the phase of online verification under ‘Operation Clean Money’, it was noticed that the assessee has deposited Rs.16,21,000/- in cash in her Bank Account maintained with Syndicate Bank during the demonetization period. Accordingly, notice u/s 142(1) was duly served on the assessee. However, the assessee failed to furnish any return of income for the impugned A.Y in response to notice u/s 142(1). Thereafter, the Assessing Officer also gave further opportunity to the assessee. However, there was no response from the side of the assessee for which the Assessing Officer proceeded to complete the assessment u/s 144 of the I.T. Act.

Before the learned CIT (A) NFAC, the assessee filed certain details based on which the learned CIT (A) NFAC directed the Assessing Officer to estimate the income from business @ 8 per cent of the total turnover or credits of Rs.1,06,57,801/- thereby sustaining the addition to the extent of Rs.8,52,625/- and deleting the balance amount. The relevant observation of the learned CIT (A) NFAC reads as under:

Aggrieved with such order of the learned CIT (A) the Revenue is in appeal before the Tribunal by raising various grounds. The assessee in her cross objection has challenged the estimation of profit @8% of the total credits in the Bank Account.

The learned DR submitted that the assessee did not appear before the Assessing Officer and has not submitted any details regarding the nature and source of the credits appearing in the bank Account for which the Assessing Officer completed the assessment u/s 144 of the I.T. Act wherein he made addition of Rs.1,06,57,801/- u/s 69A r.w.s. 115 BBE of the I.T.

The learned Counsel for the assessee, on the other hand, fairly conceded that there was no compliance before the Assessing Officer and the learned CIT (A) NFAC has not called for any remand report from the Assessing Officer. He however, submitted that he has no objection if the matter is restored to the file of the Assessing Officer for verification by giving an opportunity to the assessee.

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 assessee in the instant case has neither filed her return of income nor responded to the statutory notices issued u/s 142(1) for which the Assessing Officer completed the assessment u/s 144 of the I.T. Act and made addition of Rs.1,06,57,801/- u/s 69A r.w.s. 115BBE being the total cash deposits in the bank account during the period from 1.4.2016 to 31.3.2017. We find the assessee before the learned CIT (A) NFAC filed certain details based on which the learned CIT (A) NFAC directed the Assessing Officer to estimate the income @8% of the total cash deposits made into the bank account during the financial year 2016-17. However, the learned CIT (A) NFAC has neither called a remand report from the Assessing Officer nor gave an opportunity to the Assessing Officer to make his submissions. It is the submission of the learned Counsel for the assessee that he has no objection, if the matter is restored to the file of the Assessing Officer with a direction to the assessee to file the requisite details since the documents were never examined by the Assessing Officer which were filed before the learned CIT (A) NFAC for the first time. . 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 an opportunity to the assessee to substantiate the nature and source of the cash deposits by producing the relevant details. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to participate in the assessement proceedings and file the requisite details 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 Revenue as well as the grounds raised by the assessee in the cross objection are accordingly allowed for statistical purposes.

In the result the appeal filed by the Revenue and the C.O filed by the assessee are allowed for statistical purposes.