Facts of the Case

The assessee is an individual who did not file return of income for the assessment year under consideration.

The Assessing Officer noticed that the assessee had undertaken various financial transactions during Financial Year 2017-18 relevant to A.Y. 2018-19. Accordingly, notices under Section 142(1) were issued seeking details of financial transactions.

The assessee submitted that he was working as a Business Correspondent of Central Bank of India and was engaged in services relating to deposit and transfer of funds.

The Assessing Officer directed the assessee to furnish:

  • KYC details of persons from whom cash deposits of Rs.3,93,90,244/- were collected;
  • Details of cash withdrawals of Rs.4,23,16,941/-;
  • Separate list of deposits and withdrawals containing serial number, name and address, date of transaction, and whether transactions were conducted at customer’s doorstep or otherwise;
  • Dates of deposits/withdrawals through current account.

The Central Bank of India, Kadipur Branch, also did not respond to notice issued under Section 133(6) regarding authenticity of its letter dated 23.01.2023 submitted by the assessee.

The Assessing Officer concluded that the source of cash deposits and withdrawals remained unexplained. Accordingly:

  • Total withdrawal of Rs.4,23,16,941/- was treated as unexplained money under Section 69A.
  • Interest income of Rs.8,291/- and commission/brokerage of Rs.1,05,214/- were taxed under Section 56.

The assessee filed appeal before the learned CIT(A), who dismissed the appeal observing that the assessee failed to provide evidence or proper explanation during appellate proceedings. Notices were issued on multiple dates, but there was no compliance.

Issues Involved

  1. Whether reassessment under Section 147 read with Section 144B was valid.
  2. Whether ex-parte assessment was passed without providing reasonable opportunity.
  3. Whether addition of Rs.4,23,16,941/- under Section 69A was sustainable.
  4. Whether CIT(A) erred in dismissing appeal without passing a speaking order on merits.

 Petitioner’s Arguments

The assessee contended that:

  • The assessment proceedings were initiated without proper appreciation of facts.
  • Approval granted by the Pr. CIT was mechanical.
  • The assessment order under Section 147 read with Section 144B dated 28.03.2023 was illegal and void ab initio.
  • Section 292BB could not cure the defect.
  • The Assessing Officer concluded assessment ex-parte without providing reasonable opportunity of being heard.
  • The CIT(A) also dismissed the appeal ex-parte without adjudicating the grounds on merits.

During hearing before the Tribunal, the primary issue pressed was that reasonable opportunity was not provided either at assessment stage or at appellate stage.

 

Respondent’s Arguments

The Revenue supported the orders of the lower authorities and relied on the findings recorded in the assessment and appellate orders.

 Court Order / Findings

  • The assessment was completed ex-parte.
  • The CIT(A) issued notices on 22.05.2024, 02.07.2024, 25.07.2024 and 22.08.2024.
  • There was no compliance from the assessee.
  • The CIT(A) did not pass a speaking order adjudicating the grounds on merits.

 

Important Clarification

The Tribunal did not adjudicate the merits of addition under Section 69A. The matter has been remanded solely for fresh adjudication after due verification and providing opportunity of hearing.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770884449_YOGESHCHANDRANISHADKADIPURKHURDVS.ASSESSMENTUNITINCOMETAXDEPARTMENTSULTANPURA2.pdf 

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