Addition of Rs.19 Lakh ‘unexplained money’ with Golgappa Vendor was remanded back

Sunny Vs ITO (ITAT Chandigarh)

Conclusion: Addition of Rs.19,07,000 as unexplained money for an individual who ran a small golgappa stall was remanded back for providing an opportunity of personal hearing as both the assessment order under Section 144 as well as first appellate order under Section 250(6) were not meritorious in nature.

Held: Assessee-individual ran a small golgappa stall. During the assessment Year (A.Y.) 2017-18, assessee deposited Rs.19,07,000 in his bank accounts. He  was served with notices under Section 142(1) of the Income Tax Act, 1961 but abstained from responding to the same effectively. As a consequence, AO concluded assessment under Section 144, and passed order under Section 69A making addition of Rs.19,07,000 as unexplained money. Aggrieved by the order, AO preferred an appeal before the Commissioner of Income Taxes ( CIT(A) ), who sustained the original Assessment Order. Assessee had appealed before the Tribunal contending that no hearing was afforded and ex-parte order was passed by CIT(A). It was held that both the assessment order under Section 144 as well as first appellate order under Section 250(6) were not meritorious in nature. The income computation during a year must be on real time basis after rival contentions of both the parties were analyzed which unfortunately had not happened. Assessee was also expected to be vigilante in so far as assessment proceedings were concerned. Most of the time assessee went in slow motion and avoid proceedings by not responding to notice(s) of Department, not appearing before AO, not following up with CA/Advocates. Department official who discharged quasi judicial function of adjudication and adjudgment were time bound too. Therefore, the impugned order was set aside on grounds of natural justice and the case was remanded back to the file of CIT(A) with a direction to him to afford a reasonable opportunity to the assessee of a personal hearing before the case was finally decided. CIT(A) was required to pass a well reasoned order on merits of the case.

FULL TEXT OF THE ORDER OF ITAT CHANDIGARH

This is an appeal filed by the assessee under Section 253 of the Income Tax Act, 1961 before this Tribunal as and by way of second appeal. The relevant assessment year is assessment year 2017-18. The corresponding previous year is from 01.04.2016 to 31.03.2017. The assessee is aggrieved by the order bearing No. ITBA/NFAC/S/250/2023-24/1057220538 (1) dated 19.10.2023 which is hereinafter referred to as the “impugned order”.

Factual Matrix

2. The assessee is an individual who had deposited Rs.19,07,000/- in his bank accounts with Kotak Mahindra Bank and Oriental Bank of Commerce during the previous year relevant to the assessment year 2017-18. The ld. AO issued notice(s) under Section 142(1) of the Income Tax Act, 1961 but the assessee did not respond to such notice(s) in an effective manner including the hearings so fixed. Thus, after issuing required notices and giving the opportunities of hearing, the assessment was concluded under Section 144 of the Income Tax Act, 1961 by adding Rs.19,07,000/- as unexplained money under Section 69A of the Act. The assessee is running a small golgappa stall. Return of income is not on record as not filed. In original assessment proceedings there is no compliance to notice(s) dated 10.03.2018, 24.04.2019, 29.07.2019, 20.08.2019, 30.08.2019, 05.09.2019, 12.09.2019, 19.09.2019 and 17.10.2019. The original assessment order bears No. ITBA/AST/ S/ 144/2019­20/101910453 (1) dated 28.10.2019 under Section 144 of the Income Tax Act, 1961 wherein the income is computed as Rs.19,07,000/-. Return of income was not filed.

3. The assessee being aggrieved by the aforesaid assessment order prefers first appeal before ld. CIT(A) in terms of Section 246A of the Income Tax Act, 1961 who by impugned order passed under Section 250(6) has sustained the original assessment order dated 28.10.2019.

4. The assessee being aggrieved by the impugned order of ld. CIT(A) has preferred second appeal under Section 253 to this Tribunal and has raised following grounds of appeal in form 36 which are as under :

1. That the CIT(A) has wrongly passed an ex-party order without providing a proper opportunity of being heard as the last hearing notice was of 18.05.2022 and the order is passed on 19.10.2023 i.e. after almost 17 months of last notice.

2. That the Order of CIT(A) is against the facts on record.

3. That the CIT(A) has wrongly confirmed the addition of Rs. 19.07,000/-without any basis whereas the appellant has specifically stated that the deposits are from the sale proceeds, past savings and bank withdrawals.

4 That the CIT(A) has wrongly confirmed the addition on account of the deposits of Rs 5,78,000/- made in the bank account of father of appellant in which appellant was a second holder.

5. The appellant craves leave for reserving the right to add, alter, modify, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

6. The appellant craves leave for reserving the right to add, alter, modify, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal.

Record of Hearing

5. The hearing in the matter took place before this Tribunal on 01.10.2024 when both the ld. AR for and on behalf of the assessee and ld. DR for and on behalf of the Revenue were heard on their respective contentions for some time. The sum and substance and in final analysis there was near unanimity that the impugned order be set aside and matter be remanded back to ld. CIT(A) for fresh adjudication on denovo basis. The ld. AR emphatically informed us and contended that the last opportunity which was afforded by the ld. CIT(A) was on 18.05.2022 whereas impugned order is dated 19.10.2023 i.e., after 17 months of last notice. Therefore, there is violation of principles of natural justice. No hearing was afforded and ex-parte order is passed by the ld. CIT(A).

Findings and conclusions

6. In the premises as aforesaid laid down by us, we are of the considered view that both the assessment order under Section 144 as well as first appellate order under Section 250(6) are not meritorious in nature. The income computation during a year must be on real time basis after rival contentions of both the parties are analyzed which unfortunately has not happened. The assessee is also expected to be vigilante in so far as assessment proceedings are concerned. Most of the time assessee goes in slow motion and avoid proceedings by not responding to notice(s) of Department, not appearing before ld. AO, not following up with CA/Advocates. The Department official who discharges quasi judicial function of adjudication and adjudgment are time bound too. Be that as it may, we, therefore, set aside the impugned order on grounds of natural justice and remand the case back to the file of ld. CIT(A) with a direction to him to afford a reasonable opportunity to the assessee of a personal hearing before the case is finally decided. The ld. CIT(A) to pass a well reasoned order on merits of the case.

Order  

7. In the result, the impugned order is set aside as and by way of remand to the file of ld. CIT(A).

8. The appeal of the assessee is allowed for statistical purposes.

Order pronounced on 29.10.2024.