2024 (10) TMI 1195 - AT - Income Tax

Ex-parte dismissal of appeal by Ld. NFAC - unexplained SBN deposited into bank account - assessee decided to settled the tax dispute through Vivad Se Vishwas Scheme - rejection of books and determination of income - as submitted due to confusion created by erstwhile tax consultant who advised to opt for VSVS in place of prosecuting pending appeal, the appellant could neither pressed evidential documents filed by her in support of grounds raised nor could communicate her choice to continue VSVS - HELD THAT - The burden of proof that the SBN deposited into bank account do not represent the income was on the claimant assessee and failure to discharge such burden with convincing entrenched evidence may in view of decision in Shashi Garg Vs PCIT 2019 (7) TMI 410 - SC ORDER entitles the Revenue to assess the same as unexplained income. However, we note that owning to bonafied confusion the appellant could cause no appearance on other hand disregarding the appellant s written submissions Ld. NFAC dismissed the appeal ex-parte. Having considered the facts of the case holistically, in the larger interest of justice, we deem it to grant one more opportunity to the assessee by remitting the file to the Ld. NFAC for de-novo adjudication decide the issue afresh.

Summary

Issues:
1. Challenge to the ex-parte dismissal of appeal by the National Faceless Appeal Centre (NFAC).
2. Rejection of books and determination of income by the Income Tax Officer (AO).
3. Confusion regarding pursuing the Vivad Se Vishwas Scheme (VSVS) or prosecuting the pending appeal.

Analysis:
1. The appeal challenged the ex-parte dismissal of the assessee's appeal by the NFAC arising from an order passed by the AO under section 144 of the Income-tax Act, 1961. The assessee, identified as a non-filer, deposited a significant amount of specified bank notes into her bank account. The AO rejected the books of the assessee and treated the deposits as unexplained cash credit. The Tribunal noted the confusion faced by the appellant due to the advice of the tax consultant regarding the VSVS scheme. Despite the confusion, the NFAC proceeded ex-parte, upholding the rejection of books and addition made by the AO. The Tribunal, considering the facts holistically, granted one more opportunity to the assessee for de-novo adjudication by the NFAC for a fair decision on merits.

2. The AO rejected the books of the assessee and framed the assessment under section 144 of the Act, treating the SBN deposits as unexplained cash credit. The burden of proof lay on the assessee to show that the deposits did not represent income. The Tribunal referenced the Supreme Court decision in 'Shashi Garg Vs PCIT' to emphasize that failure to discharge this burden allows the Revenue to assess the deposits as unexplained income. However, the Tribunal acknowledged the genuine confusion faced by the appellant and directed a fresh adjudication by the NFAC to ensure justice.

3. During the first appellate proceedings, the assessee expressed intent to settle the tax dispute through the VSVS scheme but faced challenges in communicating this decision effectively due to the advice of the tax consultant. The NFAC, despite being informed of the situation, proceeded ex-parte, leading to the dismissal of the appeal. The Tribunal, in the interest of justice, ordered a re-examination of the case by the NFAC, allowing the assessee to present evidence and make a clear choice between VSVS and pursuing the appeal on merits. The Tribunal directed the NFAC to conduct three effective hearings and pass a speaking order in accordance with the law.

In conclusion, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fair and just process in tax dispute resolution, especially when faced with genuine confusion and procedural challenges.