2019 (9) TMI 379 - AT - Income Tax

No notice u/s.143(2) issued within the stipulated period of six months before completing the assessment u/s.153A r.w.s. 143(3 ) - HELD THAT - As the first notice u/s 143(2) of the Act was, in fact, issued within the stipulated period and further that the ld. AR also evinced interest in keeping the issue alive to be taken up before the higher forums rather than extensively arguing before the Tribunal, we decide this issue against the assessee without going further deep into it. Denial of natural justice - no proper opportunity by the CIT(A) - whether assessee was prevented by reasonable cause from appearing before the ld. CIT(A) - HELD THAT - Assessee was prevented by reasonable cause from appearing before the ld. CIT(A) as his father was not well and the fact that the AO could not properly appreciate the evidence because of limitation period setting in, both the sides fairly agreed that it would be in the interest of justice if the impugned orders are setaside and the matter is restored to the file of AO - assessee deserves to be given one more chance to present his case before the AO. We order accordingly. Setting aside the impugned orders, we direct the AO to frame the assessments for the years under consideration afresh as per law after allowing reasonable opportunity of hearing to the assessee. Addition on account of cash deposited in the bank account - HELD THAT - AO made the addition simply by considering the amounts of cash deposits on different dates in the bank account. Addition on account of cash deposits can be made only if the source of the deposits remains unexplained. If, on the other hand, the cash deposits in the bank are from the regular books of account maintained by the assessee, then such transactions cannot be said to be unexplained. AR has taken the argument that the said bank account is part of the assessee s regular books of account which was reflected in the balance sheet prior to the date of search. Remit the matter to the file of AO for examining if all the transactions, for which the addition has been made, were reflected in the assessee s regular books of account maintained prior to the date of search. In case such entries find their place in the regular books of account maintained prior to the date of search, then obviously no addition can be made. In the otherwise scenario, the AO will consider the issue afresh as per law. Penalty u/s.271B - HELD THAT - Quantum of penalty in these appeals is dependent upon the gross receipts in the quantum assessment, which issue we have restored above for fresh adjudication. Consequently, the impugned orders are set aside and the penalty matters are also sent back to the AO for considering the amount of gross receipts to be finally includible in the fresh determination of income of the assessee and then ascertaining the correct amount of penalty leviable, if any.

Issues:
1. Failure to issue and serve notice under section 143(2) of the Income-tax Act within the prescribed time period.
2. Assessment proceedings conducted in absence of the assessee before the CIT(A).
3. Estimation of commission income.
4. Addition on account of cash deposited in the bank account.
5. Confirmation of penalty under section 271B of the Act.

Issue 1: Failure to issue and serve notice under section 143(2):
The lead appeal raised the issue of failure to issue and serve notice under section 143(2) within the prescribed time period. The contention was that the notice was not issued within the stipulated six months before completing the assessment under section 153A. The AR referred to relevant judgments but the DR contended that the notice was issued in time. Despite arguments, the issue was decided against the assessee due to lack of further exploration.

Issue 2: Assessment proceedings in absence of the assessee before the CIT(A):
The appeals involved cases where the assessee could not represent before the CIT(A) due to health reasons. The CIT(A) proceeded ex parte leading to additions in the assessments. Both sides agreed that due to the health issue and limitation period affecting the AO's assessment, it was just to set aside the orders and restore the matter to the AO for fresh assessments after providing a reasonable opportunity to the assessee.

Issue 3: Estimation of commission income:
The appeals raised the issue of the estimation of commission income, which was similar across cases. Following the lead case's decision, the orders were set aside, and the matter was remitted to the respective AOs for fresh decisions with the assessee getting a reasonable hearing opportunity.

Issue 4: Addition on account of cash deposited in the bank account:
The appeals by one party involved additions on account of cash deposits in a bank account. The AR argued that the deposits were from regular books of account, reflected in the balance sheet. The Tribunal set aside the orders and directed the AO to examine if the transactions were reflected in the regular books of account prior to the search date, emphasizing that unexplained deposits could only be added.

Issue 5: Confirmation of penalty under section 271B:
The appeals were against the confirmation of penalty under section 271B for certain assessment years. As the quantum of penalty was dependent on the gross receipts in the quantum assessment, the Tribunal set aside the orders and sent the penalty matters back to the AO for reconsideration based on the fresh determination of income.

In conclusion, the Tribunal addressed various legal issues in the appeals, including notice issuance, assessment proceedings, income estimation, cash deposits, and penalty confirmation, providing detailed analysis and directions for each issue, ensuring fair opportunities for the assessee and compliance with legal provisions.

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