2021 (7) TMI 272 - AT - Income Tax

Addition u/s 68 towards unexplained cash credit - assessee has willfully not filed his return of income and, therefore, the source of investment and taxability remains unexplained - assessee is a doctor serving in Defense of Indian Government at different naval bases and has not filed his return of income although TDSs were deducted from his employer - HELD THAT - In this case, the assessee has not produced any evidence either before the AO or before the ld CIT(A). It is the contention of ld A.R. of the assessee that in the name of the assessee, one person has done fraudulent activities and the assessee is unnecessary suffering from that action, although he is a respectable person working in Indian Navy. The written submission filed by the assessee is self-explanatory, which is reproduced in the body of this order. In view of above, I deem it fit and proper to set aside the case, the assessee has not produced any evidence either before the AO or before the ld CIT(A). It is the contention of ld A.R. of the assessee that in the name of the assessee, one person has done fraudulent activities and the assessee is unnecessary suffering from that action, although he is a respectable person working in Indian Navy. The written submission filed by the assessee is self-explanatory, which is reproduced in the body of this order. We set aside the matter and restore the same to the file of the AO for denovo assessment. The Assessing Officer is directed to verify the documents/evidence furnished by the assessee in paper book and the contention of the assessee thoroughly and pass the assessment denovo. Appeal of the assessee is allowed for statistical purposes

Issues Involved:
1. Legality and justification of the addition of ?20,92,666/- under Section 68 towards unexplained cash credit.
2. Validity of the assessment order passed under Sections 144/147 of the Income Tax Act.
3. Allegation of fraudulent activities involving the misuse of the assessee's PAN and personal details.
4. Non-compliance with procedural requirements and denial of sufficient opportunity to the assessee.

Detailed Analysis:

1. Legality and Justification of the Addition of ?20,92,666/- Under Section 68:
The primary issue raised by the assessee was the addition of ?20,92,666/- under Section 68 towards unexplained cash credit. The assessee argued that this addition was "out & out illegal" as he was a victim of fraudulent activity by professionals who misused his data for unlawful pecuniary benefits. The assessee claimed that neither the bank account nor the transactions belonged to him. The CIT(A) observed that the entire receipt for which TDS was deducted under Sections 194J and 192A was treated as unexplained income by the AO. However, the CIT(A) directed the AO to treat 50% of the receipts where TDS was done under Section 194J as income in accordance with Section 44ADA and to calculate the taxable income from salary after giving standard deductions as reflected in 26AS.

2. Validity of the Assessment Order Passed Under Sections 144/147:
The assessment order was passed under Sections 144/147 due to the assessee's failure to file a return of income and respond to statutory notices. The AO opined that the assessee had willfully not filed his return, leading to the unexplained taxability of ?20,92,666/-. The assessee contested that he was not required to file a return as his tax liability was discharged through TDS. The CIT(A) partly allowed the appeal but passed an ex-parte order without considering the assessee's request to keep the hearing in abeyance until the PAN transfer was completed.

3. Allegation of Fraudulent Activities:
The assessee contended that he was a victim of fraudulent activities where his PAN and personal details were misused by another individual, Dr. Prasenjit Panda, who allegedly worked in Delhi and Gurgaon. The assessee provided evidence of his service in the Indian Navy and argued that it was impossible for him to serve in private organizations during the same period. The assessee sought an investigation into the fraudulent use of his PAN and requested the Tribunal to direct the jurisdictional AO to conduct necessary inquiries.

4. Non-Compliance with Procedural Requirements:
The assessee argued that the notices issued were not served at his correct address, and the assessment order was passed ex-parte without giving him sufficient opportunity to present his case. The Tribunal acknowledged that the assessee was prevented by sufficient cause from producing evidence due to his postings at different naval bases. The Tribunal noted that the CIT(A) also passed an ex-parte order without considering the assessee's request for adjournment.

Tribunal's Decision:
The Tribunal considered the submissions and evidence provided by the assessee, including the written submissions and oral arguments. It was observed that the assessee had not produced any evidence before the AO or CIT(A) due to the circumstances mentioned. The Tribunal deemed it fit to set aside the assessment order and restore the matter to the AO for a denovo assessment. The AO was directed to verify the documents and evidence furnished by the assessee and conduct a thorough examination of the matter. The assessee was also directed to furnish any additional evidence during the denovo assessment.

Conclusion:
The appeal of the assessee was allowed for statistical purposes, and the matter was remanded back to the AO for a fresh assessment after proper verification and investigation of the fraudulent activities alleged by the assessee. The Tribunal emphasized the need for a fair opportunity to be given to the assessee to present his case and for the AO to conduct a detailed examination of the evidence provided.

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