2024 (4) TMI 1156 - AT - Income Tax

Best judgment assessment u/s 144 - appeal against the assessment order passed by AO u/s 144 rejected on the ground that assessee has not fulfilled the provisions of Section 249(4)(b) - Addition u/s 69A - HELD THAT - We find that the AO passed the assessment order u/s 144 because appellant did not comply with the notices issued to him on various dates. The order passed u/s 144 is best judgment assessment in absence of return of income filed u/s 139 or failure to comply with the terms of notice issued u/s 142(1). Since the appellant could not explain the source of cash deposits and credit entries AO has invoked the provision of Section 69A and added the total amount as unexplained money u/s 69A of the Act. On further appeal before first appellate authority, he has not admitted the appeal of assessee by stating that the appellant has not paid an amount equal to the amount of advance tax as per the provisions of Section 249(4)(b) of the Act. Both the authorities below have passed their respective orders without considering the merit of the case, as stated earlier. AR as stated that appellant was engaged in the business of trading of yarn during the year and only the profit element would be liable to tax and not the gross receipt. The appellant should be granted one more opportunity of hearing to furnish its explanation and supporting documents / details to support his case. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of appeal by the Commissioner of Income Tax (Appeals) due to non-fulfillment of provisions under Section 249(4)(b) of the Income-tax Act, 1961.
2. Dismissal of appeal by the Commissioner of Income Tax (Appeals) based on specific provisions under Section 249(4)(b) of the Act.
3. Confirmation of Assessing Officer's addition of unexplained money under Section 69A of the Income-tax Act, 1961.
4. Confirmation of Assessing Officer's invocation of Section 115BBE of the Act for taxing unexplained money at 60% and levying surcharge at 25%.
5. Admittance of appeal and deletion of additions made by Assessing Officer.

Analysis:

1. The appeal originated from an order by the Learned Commissioner of Income-tax (Appeals) National Faceless Appeal Centre, Delhi, against an assessment order passed by the Assessing Officer under Section 144 of the Income-tax Act, 1961 for the assessment year 2017-18. The grounds of appeal included challenges regarding the rejection and dismissal of the appeal, addition of unexplained money, and the application of tax rates under Section 115BBE.

2. The appellant failed to file a return of income for the relevant assessment year and did not respond to notices issued by the Assessing Officer. The Assessing Officer added cash deposits and credit entries as unexplained money, leading to the initiation of penalty proceedings. The appellant's appeal was transferred to the National Faceless Appeal Centre, where issues regarding the payment of advance tax under Section 249(4)(b) arose.

3. The Commissioner of Income Tax (Appeals) found that the appellant had not paid the required advance tax, leading to the dismissal of the appeal. The appellant's arguments regarding the absence of taxable income and lack of familiarity with tax procedures were considered but deemed insufficient to warrant admission of the appeal.

4. During the Tribunal hearing, the appellant's representative contested the non-admittance of the appeal, emphasizing the lack of taxable income and requesting a fair opportunity to present the case. The Revenue's representative supported the lower authorities' decisions, suggesting a possible restoration of the matter to the Assessing Officer.

5. The Tribunal reviewed the case, noting the failure of the appellant to comply with notices and the subsequent addition of unexplained money by the Assessing Officer. Recognizing the lack of consideration of the case's merits by the lower authorities, the Tribunal granted the appellant another opportunity to provide explanations and supporting documents. The matter was remitted back to the Assessing Officer for a fresh assessment, emphasizing the importance of natural justice principles.

6. Ultimately, the Tribunal allowed the appeal for statistical purposes, setting aside the Commissioner of Income Tax (Appeals)'s decision and directing a re-assessment by the Assessing Officer with proper opportunity for the appellant to present their case effectively.