The appeal before the Income Tax Appellate Tribunal, Lucknow Bench, pertained to Assessment Year 2017-18 and arose from an ex-parte assessment framed under Section 144 of the Income Tax Act, 1961. The assessee had not filed a return of income for the relevant year, and based on information available with the Department regarding cash deposits made during the demonetisation period, the Assessing Officer initiated proceedings.

Due to non-compliance with statutory notices, the Assessing Officer obtained bank statements directly from the bank under Section 133(6). On examination of the total credits reflected in the bank account, additions were made by treating demonetisation-period cash deposits as unexplained money under Section 69A, while the remaining bank credits were considered business receipts and subjected to presumptive taxation under Section 44AD. The provisions of Section 115BBE were also invoked, and penalty proceedings were initiated separately.

Aggrieved by the assessment order, the assessee preferred an appeal before the National Faceless Appeal Centre and submitted additional evidence under Rule 46A of the Income Tax Rules, 1962. However, the appellate authority dismissed the appeal without either admitting or rejecting the additional evidence and without calling for a remand report from the Assessing Officer.

Before the Tribunal, the assessee submitted that non-compliance at the assessment stage occurred due to serious illness and that sufficient documentary evidence was available to explain the transactions. It was pleaded that one more opportunity be granted to present the case on merits.

After considering the submissions of both parties and the material on record, the Tribunal observed that the assessment was completed ex-parte and that the first appellate authority failed to follow the mandatory procedure prescribed under Rule 46A. The Tribunal held that denial of opportunity to consider additional evidence amounted to a violation of the principles of natural justice.

Accordingly, the ITAT set aside the order of the NFAC and restored the matter to the file of the Assessing Officer with a direction to provide a fresh opportunity to the assessee and to admit and examine all evidence produced. The assessee was cautioned to cooperate fully in the set-aside proceedings, failing which the Assessing Officer would be at liberty to proceed in accordance with law.

The appeal was thus allowed for statistical purposes.

Source link- https://itat.gov.in/public/files/upload/1767596411-vcVwWw-1-TO.pdf

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