Facts of the Case

The assessee is an individual who filed his return of income declaring total income of Rs.2,80,120/-. The assessee disclosed Short-Term Capital Gain (STCG) of Rs.2,80,000/-.

During assessment proceedings, the Assessing Officer observed that the assessee had purchased a car for Rs.28,00,000/-, the source of which remained unexplained during enquiry.

The Assessing Officer issued various statutory notices and show cause notices requiring the assessee to explain the source of funds used for the purchase of the car. Due to non-compliance by the assessee, the Assessing Officer completed the assessment ex-parte and determined total income at Rs.30,80,120/-, making an addition of Rs.28,00,000/- under Section 69 of the Income Tax Act on account of unexplained investment.

The assessee preferred an appeal before the learned CIT(A), which was dismissed vide order dated 19.11.2024.

Issues Involved

  1. Whether addition of Rs.28,00,000/- under Section 69 on account of unexplained investment in purchase of car was justified.
  2. Whether ex-parte assessment and confirmation by CIT(A) were sustainable in law.
  3. Whether the matter required restoration for fresh adjudication after providing reasonable opportunity.

 Petitioner’s Arguments

During the course of proceedings before the Tribunal, none appeared on behalf of the assessee.

However, in Ground No. 4 of the appeal, the assessee himself submitted that due to lack of proper knowledge of law, he had not submitted valid documents earlier and if an opportunity was granted, he would produce all relevant lawful papers/documents along with supporting evidences in support of his claim.

 Respondent’s Arguments

The learned Senior Departmental Representative was heard, and the matter was decided on the basis of material available on record.

 Court Order / Findings

The Tribunal observed that:

  • The assessment was completed ex-parte due to non-compliance.
  • The addition of Rs.28,00,000/- was made under Section 69 for unexplained investment in purchase of car.
  • The assessee had expressed willingness to produce necessary documents and evidences if opportunity was granted.

Considering the specific facts and circumstances of the case, the Tribunal set aside the impugned appellate order dated 19.11.2024.

The issue relating to addition of Rs.28,00,000/- was restored to the file of the Assessing Officer with direction to pass a de novo assessment order in accordance with law after providing reasonable opportunity of hearing to the assessee.

The assessee was directed to produce necessary papers/documents along with supporting evidences before the Assessing Officer.

 Important Clarification

The Tribunal did not adjudicate on the merits of the addition under Section 69. The matter was restored solely for fresh examination and adjudication after affording reasonable opportunity.

The order emphasizes:

  • The necessity of providing reasonable opportunity of hearing.
  • The importance of supporting documentary evidence in cases of unexplained investment.
  • The principle that matters may be restored where the assessee undertakes to produce relevant evidence.

Link to download the order –  https://www.mytaxexpert.co.in/uploads/1770884714_MANOJKUMARSONIBANDAVS.THEINCOMETAXOFFICERWARD55BANDABANDA.pdf 

 

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