2024 (6) TMI 926 - AT - Income Tax

Treatment of specified bank notes deposits - estimation of income at 8% on aggregate credits in bank accounts - addition of certain amounts to the income of the assessee - HELD THAT - We some force in the grievance of the assessee that without giving an opportunity to him, this addition is made. We also find that there is nothing suspicious in the submission of the assessee that having not been accustomed to the new procedures, the assessee missed the notices sent through e-mail and thereby could not participate in the proceedings - granting an opportunity would meet the ends of justice to put forth his case before the AO on all the issues under enquiry. We set aside the impugned order and restore the matter to the file of AO for taking a view according to law, after hearing the assessee. It is the last opportunity to the assessee to get the matter disposed of on merits. Appeal of assessee is treated as allowed for statistical purposes.

Summary

Issues Involved:
The issues involved in this case are related to the treatment of specified bank notes deposits, estimation of income at 8% on aggregate credits in bank accounts, and the addition of certain amounts to the income of the assessee.

Treatment of Specified Bank Notes Deposits:
The assessee, an agent for various entities, filed a return for the assessment year 2017-18 declaring income. The Assessing Officer noted significant deposits in the bank account during the year, including during the demonetization period. A portion of these deposits in specified bank notes was questioned. The Assessing Officer issued a notice seeking explanation on the treatment of these deposits. After considering the assessee's explanation, certain amounts were excluded, and the remaining sum was added to the income. The assessee appealed to the CIT(A) challenging this addition.

Failure to Appear Before CIT(A) and Ex Parte Decision:
Despite multiple notices, the assessee did not appear or submit any written explanations before the CIT(A). Consequently, the CIT(A) proceeded ex parte and upheld the addition made by the Assessing Officer, dismissing the appeal. The assessee then appealed against this decision.

Addition Without Sufficient Explanation:
The assessee's representative argued that the Assessing Officer made an addition to the income without seeking an explanation on this specific amount. The representative contended that the addition was made without proper communication or opportunity for the assessee to clarify the discrepancy. It was emphasized that the assessee was willing to cooperate and provide necessary evidence if given the chance.

Judgment:
Upon review, the ITAT Hyderabad found merit in the assessee's grievance regarding the addition made without adequate opportunity for explanation. The Tribunal acknowledged the assessee's claim of missing email notices due to unfamiliarity with new procedures. Consequently, the Tribunal set aside the CIT(A)'s order and remanded the matter back to the Assessing Officer for a fresh decision after giving the assessee a fair opportunity to present their case. This was deemed as the final chance for the assessee to address the issues. As a result, the appeal of the assessee was treated as allowed for statistical purposes.