NARAYAN SINGH NAYAK,JHABUA vs. THE ITO 2, RATLAM

This appeal by the assessee is directed against the order dated 22.11.2022 of Ld. Commissioner of Income Tax (Appeals) (in short Ld. CIT(A), National Faceless Appeal Centre, Delhi for Assessment Year 2017- 18. The assessee has raised following grounds of appeal:

“1. On the facts and circumstances of the case and in law the Ld. CIT- (A) grossly erred in confirming the addition made by learned AO of Rs. 16,87,000 passed u/s 144 and confirming the addition u/s 69A of the Act. 2. On the facts and circumstances of the case and in law Ld. CIT (A) grossly erred in confirming the addition u/s 69A of the Act ignoring the fact that the assessee is a salaried employee and has no other source of income. Further, the learned CIT (A) has not considered that Narayan singh Nayak Page 2 of 4 the deposition in the bank accounts during the demonetization period was out of past savings / bank withdrawals.

2. At the time of hearing the Ld. AR of the assessee has submitted that the AO has passed the assessment order u/s 144 due to non-appearance of the assessee in the assessment proceedings. The assessee challenged the action of the AO before the Ld. CIT(A) but the appeal of the assessee was dismissed ex-parte. On the ground that there is no compliance of notice issued by the CIT(A).

3. Ld. AR has submitted that the assessee has duly explained the source of deposit in the bank account during the year under consideration as the assessee has withdrawn more than sufficient from the bank account on account of maturity of FD. He has referred to the bank account statements in support of the source of the deposit and submitted that the said evidence has not been considered by the AO or by the CIT(A) during ex-parte order.

4. He has submitted that the additional evidence filed by the assessee explained the source of the deposit in the bank account as the assessee is a salaried employees and withdrawn the amount in just preceding year on account of maturity of sum fixed deposits. The amounts withdrawn for the purpose of marriage of the son but the same were subsequently deposited in the bank account as old notes in the demonetisation of 500 & 1000 were declared as not legal tender. He thus pleaded that the matter may be Narayan singh Nayak Page 3 of 4 remanded to the record of the Ld. CIT(A) for fresh adjudication after considering the relevant evidence filed by the assessee.

5. On the other hand, Ld. DR has raised no serious objection if the matter is remanded to the record of the Ld. CIT(A) for fresh adjudication.

6. We have considered the rival submission and relevant material on record. The assessee filed return of income on 29.03.2018 declaring total income of Rs.6,97,370/-. The case was selected for scrutiny under CASS. Since no body responded to the notice issued by the AO, the AO passed the assessment order u/s 144 as best suo-moto assessment and made addition of the total deposit in the bank account as unexplained money u/s 69A of the Act. The assessee has challenged the action of the AO, therefore, the assessee filed an appeal before the Ld. CIT(A) and explained in the statements of facts that the assessee is a government employee and deposited the said sum of Rs.16,87,000/- out of the cash in hand held by him which was withdrawn from the bank account in May 2015. The assessee has also explained surrounding facts being the parties of withdrawn the cash and utilizing part of the cash for construction of house along with loan taken by the assessee. However, the Ld. CIT(A) has confirmed the order of the AO on the ground that the assessee has not filed any reply to the notice issued or any documentary evidence in support of his claim. Since the assessee has not filed the relevant evidence being statement of bank accounts of the assessee showing withdrawals as well as deposits and source of the fund with the assessee which in our considered view is required to be verified. Accordingly in the facts and circumstances of the case and in the interest of justice, we set aside the impugned order of the Ld. CIT(A) and the matter is remanded to the record of the Ld. CIT(A) for fresh adjudication after verification and examination of the relevant record filed by the assessee as well as giving appropriate opportunity of hearing to the assessee.

Order pronounced in the open court on 26 .05.2023.