RAM BABU SAH,ROHTAS vs. ITO, WARD-3(4), SASARAM

Since these appeal heard together and facts of the issue are common, we dispose of the same by this consolidated order for the sake of convenience.

At the outset, Raghwendra Kr. Mishra the Ld.AR of the assessee brought to our notice that impugned assessment order is an ex parte order passed by the Assessing Officer ( in short, the ‘ AO’ u/s. 144 of the Act). According to the Ld.AR the assessee is engaged in the business of rice and other such materials. According to him, the assessment of the assessee was selected for scrutiny based on some information that the assessee had deposited an amount of Rs. 59,91,023/- in his saving bank account. The AO asked the assessee to give details of the deposits, which the assessee could not provide for reasons beyond his control, which prevented him from appearing. Pursuant thereto, the AO had made the entire addition of Rs.59,91,023/-. Aggrieved by the aforesaid order of the AO, the assessee preferred an appeal before the Ld. CIT(A), who confirmed the same. Aggrieved, assessee is before us.

Per contra, Shri Sanjay Mukherjee, Ld. CIT/DR submitted that the assessee had been given sufficient opportunity. However, for the reasons he has not preferred to appear before the Ld. AO and even during the appellate proceedings the assessee failed to furnish the details of the deposits made in the said saving bank account. Therefore, according to him, no second innings should be given to the assessee.

Having heard both the parties and after perusal of the records, we note that the AO has given opportunity to the assessee to appear by issuing notices u/s. 143(2) and 142(1) of the Act for compliance on various dates and directed him to appear on 18/9/2015 and thereafter, again notice was issued on 16-05-2016 for compliance. Since there was no compliance on the part of the assessee on both the occasions the AO initiated the penalty proceedings u/s. 271(1)(b) of the Act and thereafter, as per ex parte assessment order passed u/s. 144 of the Act making addition of Rs.59,91,023/-. On appeal, the Ld. CIT(A) has confirmed the action of the AO. Before the Ld. CIT(A) also the assessee pleaded that the assessee had not been given proper opportunity. Since it has been brought to our notice that assessee could not appear before the AO because of justifiable reasons, we are of the opinion the assessee be given one more opportunity to produce the evidences to substantiate the deposit of Rs.59,91,023/- in his SB account. For doing that we rely on the decision of the Hon’ble Supreme Court in the case of Tin Box Company Vs. CIT (2001) 249 ITR 216 (SC), wherein the Hon’ble Supreme Court has held as under:

In the light of the aforesaid decision of the Hon’ble Supreme Court and the facts discussed (supra), we remand the assessment back to the file of the AO. Since we have found that the assessee did not get proper opportunity before the AO, we set aside the impugned order of the Ld. CIT(A) and restore the assessment back to the file of the AO and direct the Ld. AO to frame the assessment afresh. Before us the Ld.AR undertakes that the assessee will appear before the AO and furnish the evidences regarding deposits made in saving bank account in question and participate in the assessment proceedings. The AO after hearing the assessee and after conducting enquiries in accordance to law may frame the assessment afresh as per law.

Coming to penalty order u/s. 271(1)(c) of the Act (Appeal No.190/Pat/18 for the AY 2014-15) confirmed by Ld. CIT(A), we note that since the quantum appeal (ITA No. 189/Pat/18 for the AY 2014-15) has been set aside to the file of the AO to frame the assessment afresh, consequently penalty order passed u/s. 271(1) (c) of the Act also does not survive. The AO after framing the fresh assessment has liberty to initiate the penalty proceedings as per law.

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