KANJI BHACHU CHANDAT,MUMBAI vs. ITO 19(1)(1), MUMBAI

This appeal, filed by the assessee, being 09-12-2013 passed by the learned Commissioner of Income Tax (Appeals)- 30, Mumbai (Hereinafter called “the CIT(A)”), for the assessment year 2010-11.

The Grounds of appeal raised by the assessee in the memo of appeal filed with the Tribunal read as under:-

The Brief facts of the case are that the assessee derives total income by way of income from other sources.

The case was selected for scrutiny through CASS and notice u/s 143(2) of Income Tax Act,1961 (Hereinafter called “the Act”) dated 24.08.2011 was issued and duly served upon the assessee on 29th August 2011. Thereafter, several opportunities were given by the learned assessing officer(Hereinafter called “the AO”) to the assessee to appear before him for the assessment ITA 1681/M/14 3 proceedings u/s 143(3) of the Act read with the Section 143(2) of the Act but the assessee failed to avail the opportunity given by the AO and did not participated in the assessment proceedings. The complete details of date-wise opportunities given to the assessee by the A.O. has been mentioned in the assessment order dated 11.01.2013 passed u/s 144 of the Act vide page 1-4. The A.O. gathered the information from ICICI bank where the assessee had deposited Rs. 36,69,389/- in cash in his S.B. A/c No. 102601501981 in ICICI, Khar (West) branch ,Mumbai during the financial year 2009-10 which was added to the income of the assessee u/s 68 of the Income Tax Act, 1961 treating the same as unexplained cash credit as the assessee failed to explain the source of cash deposit in the saving bank account of the assessee with the said ICICI Bank . Similarly, as per the bank statement of the ICICI bank, an amount of Rs. 57/- received by the assesee towards interest on saving bank account was also added by the AO to the total income of the assessee as ‘income from other sources’ since the same was not disclosed by the assessee in the return of income filed with the Revenue and accordingly best judgment assessment was framed u/s 144 of the Act by the AO vide assessment order dated 11-01-2013.

Aggrieved by the above order dated 11.01.2013 passed by the AO u/s 144 of the Act , the assessee preferred an appeal before the CIT(A) and submitted that he is a small businessman doing business of resale of cloth and earning very small margin and does not have any business name, business place or any registration documents like VAT, so the bank was not ready to open current account in his name. The assessee submitted that the sale proceeds received in cash were deposited in the ICICI bank and withdrawals made from the said account for making purchases etc. The CIT(A), however, rejected the contentions of the assessee on the ground that the assessee has not furnished any documentary evidence to prove the ITA 1681/M/14 4 arguments made in the appellate proceedings and the appeal of the assessee was dismissed by the CIT(A) vide orders dated 09.12.2013.

Aggrieved by the above order of the CIT(A), the assessee is in further appeal before the Tribunal.

Before us, the ld. Counsel for the assessee submitted that the assessee was not given proper and adequate opportunity in accordance with the principles of natural justice and hence the assessee could not make proper representation before the authorities below. The ld. Counsel submitted that copy of P&L account, bank statement, cash book and purchase register are filed vide paper book page 3 to 35 with the Tribunal to evidence and substantiate the contentions of the assesssee that he was engaged in the business of trading during the previous year. The ld. Counsel submitted that principle of natural justice are not complied with by the authorities below and the CIT(A) has also not considered the evidences submitted by the assessee before him to substantiate his contentions. The ld. Counsel prayed that considering the totality of the situation, the matter may be sent back to the file of the A.O. so that the assessee can explain the genuineness of the transactions with cogent material/evidences which can be verified and authenticated by the authorities below and the assessment can be framed on merits and more so the assessment was original framed u/s 144 of the Act as best judgment assessment whereby the matter was decided ex-parte by the AO.

The ld. D.R., on the other hand, relied upon the orders of authorities below.

We have heard the arguments of both the sides and also perused the material available on record. We find from the assessment order that the ITA 1681/M/14 5 assessee was given number of opportunities to appear before the A.O. but he failed to comply with the notices. The best judgment assessment was framed ex-parte u/s 144 of the Act vide orders dated 11.01.2013 whereby the assessee has not filed any submission before the AO to substantiate and justify the return of income filed with the Revenue and the queries raised by the AO. Before the CIT(A) in the first appellate proceedings, the assessee submitted replies to support his contentions but the CIT (A) has not considered those contentions on merits nor remand report was called from the AO. The assessee has submitted in the SOF filed before the Tribunal that the assessee was prevented with the sufficient cause for not attending the proceedings before the AO as he was not residing at the address of the assessee with the Revenue and instead relatives of the assessee are residing there and the relatives of the assessee have not taken this matter seriously. The assessee submitted that in SOF filed before the Tribunal that the seriousness of the matter was known only when assessment order u/s 144 of the Act was received along with notice of demand u/s 156 of the Act and penalty notice u/s 271(1)(c) of the Act. In our considered view, the contentions of the assessee along with documents submitted as evidence to substantiate its return of income and the other explanation sought by the Revenue needs proper verification , authentication and enquiry by the authorities below to compute the correct income of the assessee in accordance with the Act. In our considered view, the interest of justice will be best served if we restore this matter back to the file of the A.O. with a direction to verify and authenticate the documents and contentions of the assessee after making necessary enquiry so that the correct income as per Act can be computed and after providing proper and adequate opportunity of being heard in accordance principles of natural justice and in accordance with law. The assessee is also directed to appear before the AO and produce necessary documents in evidence and shall co-operate with the authorities below as and when required. We order accordingly.

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