2021 (1) TMI 531 - AT - Income Tax

Addition u/s 68 - Assessee shown earnest money with an opening balance as brought forward from the preceding year - AO made addition for want of any explanation about the nature and source of the said credit entry - assessee has contended that the amount was received through banking channel and under the contract as security deposit for the contract work to be carried out by the contractor however, the contract work was not carried by the contractor and the amount was refunded by the assessee in the subsequent year - HELD THAT - When the amount was claimed to have been received by the assessee through banking channel and under the agreement, which was claimed to be repaid by the assessee in subsequent year then the relevant documentary evidence is required to be verified before deciding the issue of unexplained cash credit. Hence, this issue is set aside to the record of the Assessing Officer to properly verify, examination and consider the evidence produced by the assessee. Addition towards the alleged booking amount received in cas h - Since the other issue is remanded to Assessing Officer for verification and for adjudication this issue also remanded to the Assessing Officer with similar directions. Validity of assessment proceedings for want of the valid notice u/s. 143(2) - HELD THAT - Though the Assessing Officer has stated in the assessment order that the notice u/s. 143(2) issued and served on the assessee by speed post on 29.09.2011 however, it is not clear, what is the date of the notice u/s. 143(2) and when it was dispatched - in the absence of the relevant record, this issue cannot be decided conclusively. The assessee though applied for certified copy of the assessment proceedings however, the same has not been supplied to the assessee till date. Therefore we set aside this issue to the record of the Assessing Officer to decide the same considering the objections of the assessee. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Assessment validity - Notice u/s. 143(2) not served within the period of limitation.
2. Addition of unexplained cash credit u/s. 68 - Nature and source of earnest money.
3. Addition sustained for alleged booking amount received in cash.

Analysis:

Assessment Validity - Notice u/s. 143(2):
The appellant contested the assessment validity due to the alleged non-service of notice u/s. 143(2) within the prescribed period. The Assessing Officer claimed to have served the notice through speed post on a specific date. However, the appellant challenged this assertion, stating that the notice was not received within the limitation period. The Tribunal found ambiguity regarding the date of the notice issuance and dispatch, emphasizing the lack of conclusive evidence. Consequently, the issue was remanded to the Assessing Officer for a detailed examination, considering the objections raised by the appellant and relevant facts related to the notice's issuance and service within the statutory time frame.

Addition of Unexplained Cash Credit u/s. 68 - Nature and Source of Earnest Money:
The primary contention revolved around the addition of &8377; 2,57,00,000 as unexplained cash credit under section 68 of the Income Tax Act. The Assessing Officer raised concerns about the nature and source of this amount, considering it unexplained. The appellant argued that the sum represented earnest money received from contractors through legitimate banking channels, supported by documentary evidence and bank statements. The appellant further clarified that the amount was security deposit for contract work, subsequently refunded due to non-performance of the contracted work. Despite the appellant's submissions and evidence, the Assessing Officer did not adequately consider the documentation provided. The Tribunal acknowledged the need for a thorough verification of the evidence before concluding on the issue, remanding it to the Assessing Officer for a comprehensive review and decision, ensuring the appellant's right to a fair hearing.

Alleged Booking Amount Received in Cash:
Another issue raised by the appellant concerned the addition sustained by the CIT(A) regarding an alleged booking amount received in cash. As this issue was intertwined with the previous matter related to unexplained cash credit, the Tribunal remanded it to the Assessing Officer for further examination and adjudication, aligning with the directions provided for the primary issue.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the importance of a fair assessment process, thorough examination of evidence, and adherence to procedural requirements to uphold the principles of natural justice and due process in tax matters.