2019 (1) TMI 792 - AT - Income Tax

Addition u/s 68 - nature and source of cash deposits in the bank accounts - Held that - Considering the submission of AR that given an opportunity assessee will be able to prove the nature and source of cash deposits in the bank accounts coupled with the fact that assessee s appeal was decided ex parte, we are inclined to restore the issues to the file of the Commissioner (Appeals) for de-novo adjudication of all the issues raised in the appeal after due opportunity of being heard to the assessee. We direct the assessee to respond to the notice of hearing to be issued by the learned Commissioner (Appeals) and represent its case properly on the date of hearing to be fixed by learned Commissioner (Appeals). In the event of any further default by the assessee to appear and represent its case properly, learned Commissioner (Appeals) is at liberty to decide the appeal on its own merits on the basis of materials available on record and in accordance with law. - Assessee s appeal is allowed for statistical purposes.

Summary

Issues:
Appeal against order of Commissioner of Income Tax (Appeals) for Assessment Year 2011-12 challenging additions made by Assessing Officer under section 147 of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2011-12. The assessee, a company engaged in deputing crew/officers for foreign vessels, did not initially file its return of income. The Assessing Officer reopened the assessment under section 147 of the Income Tax Act based on cash deposits in bank accounts. The assessee filed its return declaring nil income under normal provisions and book profit under section 115JB. The Assessing Officer added the cash deposit amounts to the income as the assessee failed to explain the source of the deposits. Additionally, an amount was added towards delayed payment of employee's contribution to provident fund. The Commissioner (Appeals) confirmed the additions ex parte as the assessee did not appear to represent the case despite notice of hearing.

The assessee raised grounds challenging the validity of the assessment reopening and the merits of the additions. During the hearing, the Authorized Representative requested to restore the issues to the Commissioner (Appeals) due to the lack of a reasonable opportunity for the assessee to be heard. The Departmental Representative supported the ex parte decision but agreed to provide another opportunity to the assessee.

The Appellate Tribunal considered the submissions and observed that the assessee had not explained the nature and source of cash deposits, leading to the additions under section 68 of the Act. Given the representation that the assessee could prove the nature and source of the deposits with an opportunity, the Tribunal decided to restore the issues to the Commissioner (Appeals) for fresh adjudication after affording the assessee a proper hearing. The assessee was directed to respond to the notice of hearing and represent its case adequately. If the assessee defaults again, the Commissioner (Appeals) can decide the appeal based on available records. No observations were made on the merits of the issues, and the appeal was allowed for statistical purposes.

In conclusion, the assessee's appeal against the additions made by the Assessing Officer under section 147 of the Income Tax Act for the Assessment Year 2011-12 was allowed for statistical purposes, and the issues were restored to the Commissioner (Appeals) for fresh adjudication with proper opportunity for the assessee to be heard.