The assessee did not file a return of income for Assessment Year 2012-13. Based on information available with the Income Tax Department that the assessee had deposited cash amounting to ₹12,84,330 in his savings bank account with Bank of Baroda, Bhadohi, the case was reopened under section 147 after issuance of notice under section 148 of the Income-tax Act, 1961.

During the reassessment proceedings, the authorised representative of the assessee appeared once and sought adjournment. Thereafter, there was no compliance. The Assessing Officer obtained bank account details under section 133(6) and noticed cash deposits of ₹12,84,330 and other credit entries of ₹1,78,444, aggregating to ₹14,62,774. As no explanation was furnished regarding the source of these deposits, the Assessing Officer treated the amount as unexplained income under section 69 and completed the assessment under section 144, assessing total income at ₹14,62,770.

 Issues Involved

  1. Whether the reassessment proceedings under section 147 were validly initiated and concluded.
  2. Whether addition under section 69 for cash deposits and credit entries could be sustained in an ex-parte assessment.
  3. Whether dismissal of the appeal by the First Appellate Authority for non-compliance violated principles of natural justice.

 Petitioner’s (Assessee’s) Arguments

The assessee contended that the reassessment proceedings were invalid due to improper service of notice under section 148 and absence of notice under section 143(2). It was further argued that the assessee had disclosed the deposits while filing return in response to notice under section 148 and that the authorities below failed to consider the same. The assessee also contended that the ex-parte appellate order was passed without serving notices in accordance with law, thereby violating principles of natural justice.

 Respondent’s (Revenue’s) Arguments

The Department opposed the appeal, contending that the assessee remained non-compliant despite opportunities and that the Assessing Officer and the First Appellate Authority were justified in passing ex-parte orders based on material available on record.

 Court Order / Findings

The Tribunal observed that both the Assessing Officer and the First Appellate Authority had passed ex-parte orders due to non-compliance by the assessee. However, considering the overall facts and circumstances, the Tribunal held that the assessee deserved one more opportunity to explain the source of cash deposits and credit entries in his bank account. Accordingly, the matter was restored to the file of the Assessing Officer with a direction to grant reasonable opportunity of hearing and decide the issue afresh in accordance with law. The appeal was allowed for statistical purposes.

Important Clarification

The Tribunal expressly cautioned that the assessee must fully comply with the directions of the Assessing Officer during the set-aside proceedings. Failure to do so would entitle the Assessing Officer to pass an order in accordance with law based on the material available on record, even on an ex-parte basis.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770627776_RAMKUMARMAURYABHADOHIVS.ITOWARD15BHADOHIBHADOHI.pdf  

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