2023 (2) TMI 638 - AT - Income Tax

Reopening of assessment u/s 147 - addition being cash deposited in the bank account; salary income and interest earned on the deposit - HELD THAT - It is seen that before the Assessing officer there was no effective representation on behalf of the assessee. Therefore in the interest of natural justice we deem it proper to set aside the orders of the authorities below and restore the assessment to the file of the AO who would verify the correctness of the claim of the assessee regarding gift received from her father and thereafter frame the assessment afresh. Grounds raised in this appeal are allowed for statistical purposes.

Summary

Issues involved:
Appeal against ex-parte assessment order u/s 144/147 without show cause notices, jurisdictional errors in framing assessment order, addition of cash deposits in bank account, interest income addition, lack of specifying sections for addition in assessment order.

Analysis:
1. The appeal was filed against an ex-parte assessment order u/s 144/147 by the National Faceless Appeal Centre without providing show cause notices or adequate opportunity to the assessee. The appellant argued that the assessment order was passed without assuming jurisdiction and without serving mandatory notices u/s 143(2), 148, and 142(1) of the Income Tax Act, 1961.

2. The National Faceless Appeal Centre confirmed the addition of Rs. 10,85,000 on account of cash deposits in the bank account without granting adequate hearing or the opportunity of cross-examination, which the appellant contended violated the principles of natural justice. Additionally, an addition of Rs. 8,582 on interest income was made without specifying the relevant section or subsection in the assessment order.

3. The Assessing Officer had information about cash deposits in the assessee's bank account, leading to the reopening of the case and framing of the assessment order u/s 147 read with Section 144 of the Income Tax Act, 1961. The assessment included additions for cash deposits, salary income, and interest earned, totaling Rs. 15,09,479.

4. The assessee appealed to the CIT(Appeals), who partially allowed the appeal by affirming the addition related to bank deposits and interest income, while providing relief on the salary income part. The appellant then appealed to the Tribunal, arguing that a valid explanation was provided for the cash deposit and submitted evidence in support of the claim of gift.

5. After hearing both parties, the Tribunal found that there was no effective representation on behalf of the assessee before the Assessing Officer. In the interest of natural justice, the Tribunal set aside the orders of the authorities below and directed the assessment to be restored to the file of the Assessing Officer for verifying the correctness of the claim regarding the gift received from the father and to frame the assessment afresh. The grounds raised in the appeal were allowed for statistical purposes.

6. The Tribunal allowed the appeal of the assessee for statistical purposes, and the order was pronounced in open court on 08th February 2023.