2017 (4) TMI 966 - AT - Income Tax

Addition u/s 69 - cash deposits in the bank unexplained - Held that - Assessee has claimed that an amount of ₹ 75,16,179/- deposited in cash in bank accounts with ICICI Bank and Bank of India , were partly out of certain loans raised by the assessee which were subsequently repaid while partly the same were out of sale of family jewellery. These contentions of the assessee need verification, enquiries as well examination by the AO on merits as the AO may deem fit to decide the matter on merits in accordance with law. Thus, we are setting aside the matter to the file of the AO for de-novo adjudication of all issues arising in the assessment on merits by the AO. We would like to clarify that this is an open remand as the orders were all passed by authorities below ex-parte, wherein it is averred by the Revenue that none appeared for the assessee and there has been no compliances on part of the assessee before the AO as well learned CIT(A).

Summary

Issues Involved:
Appeal against assessment order under section 144 of the Income-tax Act, 1961 for assessment year 2012-13 due to unexplained cash deposits and interest on undisclosed loan. Lack of appearance by the assessee during assessment and appeal proceedings. Request for remand to establish case on merits.

Analysis:

Issue 1: Unexplained Cash Deposits and Interest on Loan
The appeal was filed against the assessment order under section 144 of the Income-tax Act, 1961 for the assessment year 2012-13. The AO made additions totaling to ?75,16,179 as unexplained money under section 69 for cash deposits in bank accounts and ?21,304 towards interest on an undisclosed loan. The additions were primarily due to significant cash deposits not reported by the assessee in the return of income. The AO proceeded with a best-judgment assessment order as the assessee did not appear despite multiple notices and opportunities.

Issue 2: Lack of Appearance by the Assessee
Throughout the assessment and appeal proceedings, the assessee did not appear despite several notices issued by the AO and CIT(A). The authorized representatives of the assessee had entered appearance before the AO but claimed that no effective hearing was provided, leading to an ex-parte assessment order. The CIT(A) dismissed the appeal ex-parte, confirming all additions made by the AO. The assessee cited physical handicap and lack of proper representation as reasons for non-appearance.

Issue 3: Request for Remand
The assessee requested the Tribunal to remand the matter back to the AO to establish the case on merits. Grounds for remand included the partial cash deposits being from loans and sale of family jewelry, which needed verification and examination by the AO. The Tribunal set aside the matter for de-novo adjudication by the AO, emphasizing the need for proper opportunity for the assessee to present evidence and explanations in defense. The remand was considered an open one, ensuring compliance with principles of natural justice.

In conclusion, the Tribunal allowed the appeal for statistical purposes, directing a de-novo adjudication by the AO to provide the assessee with a fair opportunity to establish the case on merits. The decision highlighted the importance of proper representation and adherence to legal procedures in income tax assessments.