2024 (11) TMI 567 - AT - Income Tax

Reopening of assessment u/s 147 - information received through the Non-filers Monitoring System (NMS) indicating cash deposits in the assessee s ICICI Bank account - Fair opportunity for the assessee to present case or not? - addition of unexplained money u/s 69A of the Act, accepting part of the assessee s explanation for the cash deposits but rejecting others due to lack of documentary evidence - HELD THAT - We find that the assessee was deprived of a fair chance to present his case due to procedural and communication deficiencies. The reliance on the email communication, which the assessee had no access to, and the subsequent non-prosecution of the appeal without considering the merits of the case, are contrary to the principles of natural justice. The assessee should be granted a fresh opportunity to present the necessary documentation and explanations in support of his case. The order of the Addl.CIT(A) is set aside, and the matter is remanded back to the file of Addl.CIT(A) for fresh adjudication in accordance with law, after providing adequate opportunity to the assessee to present his case. In the result, the appeal filed by the assessee is treated as allowed for statistical purposes

Summary

Issues:
1. Jurisdiction of Assessing Officer in issuing notice under section 148.
2. Non-compliance with notices under section 250 of the Act during appellate proceedings.
3. Assessment of unexplained cash deposits in the bank account.
4. Fair opportunity for the assessee to present case and adjudication on merits.

Jurisdiction of Assessing Officer:
The appeal pertains to an individual engaged in the business of resale of plastic mats, operating between Kerala and Ahmedabad, who did not file the return of income for the Assessment Year (AY) 2014-15. The Assessing Officer (AO) reopened the assessment under section 147 of the Income Tax Act based on information received through the Non-filers Monitoring System (NMS) indicating cash deposits in the assessee's ICICI Bank account. The appellant argued that the AO at Ahmedabad had no jurisdiction to issue notice under section 148 or make an assessment for AY 2014-15 since the appellant was permanently residing in Kerala. However, the Tribunal did not delve into this issue as the appeal was remanded back for fresh adjudication.

Non-compliance with Notices:
The assessee failed to comply with notices issued under section 250 of the Act during the appellate proceedings before the Commissioner of Income Tax (Appeals) [CIT(A)]. The Addl.CIT(A) dismissed the appeal for non-prosecution due to lack of compliance with the notices. The appellant contended that the registered email address on the ITBA portal belonged to the assessee's tax consultant, who did not inform the assessee about the notices. The Tribunal observed that failure to inform the assessee of the notices should not be construed as non-compliance on the part of the assessee. The lack of access to technology and unawareness of the communications sent via email raised procedural fairness concerns, leading to the matter being remanded back for fresh adjudication.

Assessment of Unexplained Cash Deposits:
The AO added Rs. 12,19,200 as unexplained money under section 69A of the Act due to cash deposits in the ICICI Bank account. The CIT(A) upheld the addition without addressing the merits of the case, leading to the appeal before the Tribunal. The Tribunal found that the Addl.CIT(A) did not decide the appeal on its merits and solely relied on the AO's order without independently examining the issues raised by the assessee. The Tribunal emphasized that appellate authorities must adjudicate matters based on merits, particularly when significant legal and factual grounds are raised. The lack of fair opportunity for the assessee to present the case and the dismissal of the appeal without considering substantive issues led to the order being set aside and remanded back for fresh adjudication.

Fair Opportunity for the Assessee:
The Tribunal concluded that the assessee was deprived of a fair chance to present the case due to procedural and communication deficiencies. The reliance on email communication, which the assessee had no access to, and the non-prosecution of the appeal without considering the merits violated the principles of natural justice. The Tribunal set aside the Addl.CIT(A)'s order and remanded the matter back for fresh adjudication, ensuring the assessee is provided with an adequate opportunity to present the case. The appeal was treated as allowed for statistical purposes.

Conclusion:
The Tribunal's decision focused on ensuring procedural fairness, fair opportunity for the assessee to present the case, and adjudication on merits, ultimately remanding the matter back to the Addl.CIT(A) for fresh adjudication in accordance with the law.