Case Law Details
Srimathi Pichara Vs ITO (ITAT Hyderabad)
The case of Srimathi Pichara Vs ITO was heard by the Income Tax Appellate Tribunal (ITAT) Hyderabad. The assessee filed an appeal against the ex-parte addition of cash deposits made during the demonetization period under Section 69A of the Income Tax Act. The ITAT set aside the addition and directed the Assessing Officer to readjudicate the matter after providing the assessee with an opportunity to produce relevant documents for fact verification. This article provides an analysis of the case and its implications.
Analysis: The assessee failed to furnish details regarding cash deposits amounting to Rs. 18,98,000/- made during the demonetization period despite several opportunities and notices from the Assessing Officer. The Assessing Officer proceeded ex parte and added the amount as unexplained money under Section 69A of the Income Tax Act. The assessee appealed to the Commissioner of Income Tax (Appeals), but the appeal was dismissed as the assessee failed to submit supporting documents.
The assessee, in the present appeal, contended that the cash deposits were from business income and that there was no reason to suspect those deposits. The assessee also requested the case to be remanded to the Assessing Officer for factual verification and the submission of relevant documents.
The ITAT observed that the assessment order was passed under Section 144 of the Act, as the assessee did not appear before the Assessing Officer. The ITAT acknowledged the reasons provided by the assessee for non-appearance, such as personal reasons and the impact of the Covid-19 pandemic during the proceedings before the first appellate authority.
In light of these circumstances, the ITAT set aside the orders of the authorities below and directed the Assessing Officer to readjudicate the matter after giving the assessee an opportunity to produce relevant documents for fact verification. However, the ITAT clarified that this would be the last opportunity for the assessee and no further lenience would be granted.
Conclusion: The ITAT Hyderabad, in the case of Srimathi Pichara Vs ITO, set aside the ex-parte addition of cash deposits made during the demonetization period under Section 69A of the Income Tax Act. The ITAT directed the Assessing Officer to readjudicate the matter after providing the assessee with an opportunity to produce relevant documents for fact verification. This case highlights the importance of providing an opportunity for the assessee to present supporting documents and the need for factual verification before making additions or imposing penalties under the Income Tax Act.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by the assessee challenging the order dated 15/12/2021 passed by the learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Srimathi Pichara (“the assessee”) for the assessment year 2017-18.
2. Brief facts of the case are that the assessee is an individual. She filed her return of income for the assessment year 2017-18 on 06/04/2018 declaring an income of Rs. 2,71,980/-. The case was selected for scrutiny through CASS. According to the learned Assessing Officer, in spite of several opportunities and issuance of notices under section 143(2) and 142(1) of the Income Tax Act, 1961 (‘the Act’), the assessee failed to furnish any details in respect of the cash deposits in the bank to the tune of Rs. 18,98,000/- during the demonetization period. Learned Assessing Officer found that the assessee had shown the gross receipts from the business to the tune of Rs. 24,12,600/-, no details in respect of the nature of business or the business activities were produced. In these circumstances, learned Assessing Officer found no option to proceed ex parte and concluded the assessment by adding a sum of Rs. 18,98,000/- to the income of the assessee under section 69A of the Act, treating it as unexplained money.
3. Assessee preferred appeal before the learned CIT(A). Order of the learned CIT(A) reads that during the appellate proceedings also the assessee was granted several opportunities to file the submissions and documents in support of grounds of appeal, but she failed to avail the same by furnishing the documents in support of the grounds of appeal. Learned CIT(A), therefore, found no infirmity in the assessment order and accordingly confirmed the same.
4. Assessee, therefore, filed this appeal and submitted that the authorities below erred in reaching a conclusion that the amount under addition is an unexplained income of the assessee and as a matter of fact, it is not the case of the Revenue that the amount of Rs. 18,98,000/-deposited in the bank during the demonetization period was deposited in specified notes and, therefore, there is no reason to suspect those deposits at all. Learned Counsel appearing on behalf of the assessee submitted that assessee submits that through business, she derived that income and business need not be for any particular number of years or any particular length of time and a business could be by way of sporadic activities also. Learned counsel further submitted that the authorities never questioned the expenditure claimed by the assessee, they only questioned the income itself. Finally, learned Counsel submitted that if for any reason the Bench thinks it proper that without verification of facts, it is not possible to grant any relief to the assessee, the issue may be restored to the file of learned Assessing Officer so that the assessee would file all the relevant documents before the learned Assessing Officer.
5. Learned DR submitted that in spite of grant of several opportunities, the assessee failed to avail the same and, therefore, it is not open for the assessee to complain that sufficient opportunity was not granted to her. On the aspect of assessee requesting for remand, learned DR reports no objection because factual verification will help to decide the issue in an effective way.
6. Having regard to the facts and circumstances stated above, it could be seen from the orders of the authorities below, the assessment order is an order passed under section 144 of the Act and the assessee did not enter appearance before the learned Assessing Officer and the explanation now offered by the assessee is that due to personal reasons and being a woman, she could not appear before the learned Assessing Officer and pursue the proceedings effectively and insofar as the proceedings before the first appellate authority are concerned for a major period Covid Pandemic interfered.
7. In these circumstances, I am of the considered opinion that giving an opportunity to the assessee to produce all the relevant documents before the learned Assessing Officer for fact verification would meet the ends of justice. Hence, I quash the orders of the authorities below and restore the issue to the file of the learned Assessing Officer to decide it after hearing the assessee. It is made clear that it is the last opportunity to the assessee and no further lenience will be taken.
8. In the result, appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on this the 28th day of April, 2023.
