Facts of the Case

The assessee did not file a return of income for Assessment Year 2019-20. The Income Tax Department was in possession of information that the assessee had made cash deposits of ₹12,27,477 in a bank account maintained with Punjab National Bank and ₹86,000 in a bank account maintained with Bank of Baroda during the relevant year.

Based on this information, the case was reopened under section 147 of the Income-tax Act, 1961 after issuance of notice under section 148. As there was no compliance to statutory notices, the Assessing Officer proceeded to complete the assessment under section 144. Since the assessee failed to explain the nature and source of total cash deposits amounting to ₹13,13,477, the Assessing Officer treated the same as unexplained income under section 69A and completed the assessment under sections 147/144 at an income of ₹13,13,477. Penalty proceedings under sections 271AAC and 272A(1)(d) were also initiated.

The First Appellate Authority dismissed the appeal ex-parte on the ground of alleged delay.

 Issues Involved

  1. Whether the reassessment proceedings under sections 147 and 148 were validly initiated in the absence of proper service of notice under section 148A(b).
  2. Whether additions under section 69A for alleged unexplained cash deposits could be sustained in an ex-parte assessment under section 144.
  3. Whether dismissal of the appeal by the NFAC on an ex-parte basis violated principles of natural justice.

 Petitioner’s (Assessee’s) Arguments

The assessee contended that mandatory notices under section 148A(b) were never served, rendering the reassessment proceedings void ab initio. It was further argued that the assessee was a petty fruit and vegetable vendor and that the cash deposits pertained to business receipts. The assessee also submitted that the Assessing Officer failed to properly consider bank statements and did not allow telescoping of withdrawals against deposits. It was further contended that the NFAC wrongly dismissed the appeal ex-parte without considering submissions on merits and medical evidence explaining non-compliance.

 Respondent’s (Revenue’s) Arguments

The Department relied upon the orders of the Assessing Officer and the NFAC, contending that the assessee had remained non-compliant to statutory notices and that the ex-parte assessment was validly framed on the basis of 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 of the case, the Tribunal held that the assessee deserved one more opportunity to explain the source of cash deposits in his bank accounts.

Accordingly, the matter was restored to the file of the Assessing Officer with directions to provide reasonable opportunity of hearing and to decide the issue afresh in accordance with law. The appeal was allowed for statistical purposes.

 Important Clarification

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

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770627930_SANDEEPKUMARPANDEYHANDIAVS.INCOMETAXOFFICER13PRAYAGRAJ.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.