2019 (5) TMI 750 - HC - Income Tax

Writ against order of AO - alleged non-compliance of direction of tribunal principal of natural justice - addition u/s 68 - unexplained cash deposits - AO worked out the peak credit at a particular amount and brought it to tax - CIT(A) enhance the addition - Tribunal remanded the matter back to the AO for fresh consideration - AO refused to go into the source of deposits and confined the discussion only to the computation of peak credit - assessee filed present writ petition against the said order - HELD THAT - We do not find that there was any violation of principles of natural justice. The refusal of the Assessing Officer to look into the sources of cash deposits, on the ground that there was no positive direction in this regard by the ITAT, cannot be taken to be a violation of the principles of natural justice. If the refusal of the Assessing Officer is wrong, it is a matter to be canvassed in the regular appeal. We can indicate is that though the Tribunal stated towards the end of para No.5 of its order that the grounds of appeal Nos.2 to 4 are treated as allowed, the discussion was confined only to re-computation of peak credit. Therefore, the allegation of non-compliance with the directions issued by the Income Tax Appellate Tribunal, is not patently made out so as to enable the petitioner to bypass the alternative remedy of appeal. Therefore, we find no reason to entertain the writ petition. Hence, the Writ Petition is dismissed, leaving it open to the petitioner to approach the CIT (Appeals). The Registry is directed to return the original impugned order. The CIT (Appeals) shall independently consider any such appeal filed by the petitioner without being influenced by any observations contained here.

Summary

Issues:
Challenging assessment order based on ITAT decision, violation of natural justice, compliance with ITAT directions.

Analysis:
The petitioner challenged an assessment order following an ITAT decision. The assessee's return of income for the assessment year 2010-11 revealed unexplained cash deposits in a bank account, leading to tax implications under Section 68 of the Income Tax Act. The CIT (Appeals) upheld and increased the addition, prompting the assessee to appeal to the Tribunal. The Tribunal allowed the appeal on peak credit, remanding the matter for further assessment. However, the Assessing Officer, post-remand, focused solely on peak credit computation, disregarding the source of deposits. The petitioner contended violation of natural justice and non-compliance with the ITAT order, opting for a writ petition over the appeal route.

The High Court found no breach of natural justice as the Assessing Officer's decision not to investigate the deposit sources lacked a specific ITAT directive. The court refrained from assessing if the Assessing Officer adhered to the ITAT order, stating the Tribunal's silence on this issue. Despite the Tribunal's allowance of specific grounds related to peak credit, the discussion centered on peak credit recalculation only, not broader compliance. Consequently, the court dismissed the writ petition, advising the petitioner to pursue the appeal remedy. The CIT (Appeals) was instructed to independently review any appeal without bias from the court's observations.

In conclusion, the High Court's judgment emphasized adherence to legal procedures, urging petitioners to exhaust statutory remedies before seeking judicial intervention. The ruling underscored the significance of following tribunal directives and maintaining procedural fairness in tax assessments.