2023 (5) TMI 57 - AT - Income Tax

Unexplained cash deposited in bank account - compensation on account of acquisition of land by the Government - assessee contended that his only plea was that since he was not offered adequate opportunity of hearing both before the AO and the Ld.CIT(A), and could not make out his case suitably before them - HELD THAT - Assessee s consistent stand has been that the cash found deposited pertained to the amount which he received from the Government as compensation on account of acquisition of land under Land Acquisition Act which he withdrew and redeposited in his bank account over a period of time so as to keep cash handy for purchase of new land. On account of the assessee having been unable to avail opportunity of hearing before both the AO and the ld.CIT(A) for bonafide reasons, as noted above, in the interest of justice, we agree with the ld.counsel for the assessee that the assessee be granted further opportunity of hearing so as to plead and give due explanation duly substantiated with evidence for the source of cash deposited in his bank account. Accordingly, restore the issue back to the file of the AO for considering of the issue afresh after providing due opportunity of hearing to the assessee in accordance with law. Grounds of appeal of the assessee are allowed for statistical purposes.

Summary

Issues involved:
The appeal pertains to addition made to the income of the assessee on account of unexplained cash deposits in the bank amounting to Rs.22,01,000 for the Assessment Year 2017-18.

Details of the Judgment:

Issue 1: Opportunity of Hearing
The assessee contended that he was not offered adequate opportunity of hearing before both the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) due to being misinformed and not well-versed in tax matters. The plea was made to grant another opportunity of hearing to present evidence and explanations for the source of cash deposits. The Tribunal found merit in the assessee's argument, acknowledging the genuine reasons for non-appearance before the authorities. Consequently, the issue was restored back to the AO for fresh consideration after providing a proper opportunity of hearing to the assessee.

Issue 2: Merit of the Case
The assessee explained that the cash deposits in question were from compensation received for land acquisition by the Government, which was withdrawn and redeposited in the bank for future land purchase. Additionally, cash belonging to the assessee's wife was also deposited during the demonetization period. The Tribunal noted the consistent stand of the assessee regarding the source of cash deposits and the genuine reasons for not presenting the case effectively before the authorities. Considering the circumstances, the Tribunal allowed the appeal for statistical purposes and directed the matter to be reconsidered by the AO with proper opportunity for the assessee to substantiate the explanations with evidence.

Conclusion:
The Tribunal acknowledged the valid reasons for the assessee's inability to effectively present the case before the authorities and granted a further opportunity of hearing for the assessee to explain the source of cash deposits. The appeal was allowed for statistical purposes, and the issue was remanded back to the AO for fresh consideration in accordance with the law. The assessee was directed to cooperate in the proceedings before the lower authorities for the disposal of the case.