DISCOVERY,KANNUR V. ASSESSMENT UNIT INCOME TAX DEPARTMENT, INCOME TAX DEPARTMENT

ITA 738/COCH/2024

AI Insights

The case involves an appeal by the assessee, Discovery Shreeshylam Kuthuparamba, against the order of the Commissioner of Income-tax (Appeals) which affirmed the AO's decision to add the entire credits of Rs.1,10,24,177 under sections 68 and 69A of the Income-tax Act, 1961. The AO had initially reopened the case due to unexplained cash withdrawals of Rs.1,08,20,000, which the assessee claimed were from the credited amount in their Federal Bank account. The Tribunal found that the AO had not provided sufficient time for the assessee to explain the source of the credits and noted procedural lapses in the notice service by the CIT(A). Consequently, the Tribunal remitted the matter back to the AO for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397232 (ITAT-COCHIN)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Laws Referred To: Income-tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LEENA LAL; SENIOR
• Assessee Lawyers: R. KRISHNAN
• Keywords: Opportunity of being heard
• Section: 69

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Inturi Rama Rao, Accountant Member & Shri Prakash Chand Yadav, Judicial Member ITA No.738/Coch/2024 : Asst.Year 2018-2019 Discovery Shreeshylam Kuthuparamba, Thalassery Kannur – 670 702 PAN : AAMFD7291C. v. The Assessment Unit Income Tax Department (Appellant) (Respondent) Appellant by : Sri.R.Krishnan, CA Respondent by : Smt.Leena Lal, Senior AR Date of Hearing : 27.05.2025. Date of Pronouncement : 30.05.2025 O R D E R Per Prakash Chand Yadav, JM : The present appeal of the assessee is arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals [“CIT(A)” for short] dated 27th June, 2024, having DIN & Order No.ITBA/NFAC/S/250/ 2024-25/1066154057(1) and relates to the assessment year 2018-2019. 2. The assessee has raised eight grounds of appeal, out of which ground Nos. 1 to 5 are related to the invocation of the provisions of sec.148A(d) of the Income-tax Act and in Ground Nos.6, 7 and 8, the assessee has challenged the merits of the case. ITA No.738/Coch/2024. Discovery. 2 3. At the outset, it is the case of the Revenue that the assessee failed to establish the source of the amount of Rs.1,10,24,177. It is pertinent to note here that initially the case of the assessee was reopened on the ground that there was cash withdrawals of Rs.1,08,20,000. When this question was raised with the assessee, the assessee explained that the that the withdrawals were out of the credits in the Federal Bank account of Rs.1,10,24,177. The Assessing Officer also accepted that there was credit of Rs.1,10,24,177 in the Federal Bank account of the assessee and the cash withdrawals are made from this account only. However, the AO added the entire credits u/s.68 / 69A of the Act, for the reason that nobody appeared from the side of the assessee to explain the source of the credit. The CIT(A) affirmed the order of the AO. 4. Aggrieved with the order of the CIT(A), the assessee has come up in appeal before the CIT(A). At the outset, the learned Counsel for the assessee argued that when withdrawals were admittedly made from the credits available in the Federal Bank, then no addition is warranted in this case. 5. The learned DR relied upon the orders of the authorities below. 6. After considering the rival submissions, we observe that in this case effective hearing with respect to the explanation of the source of credit was commenced on 15th January, 2024 and the final assessment order has been passed on 19th January, 2024, which means within five days the AO has passed the order. In our view, the time granted by the AO was ITA No.738/Coch/2024. Discovery. 3 not enough for explaining the source of the credits. Similarly, the CIT(A) has also issued notices via ITBA Portal, which is not a valid service of notice. Since the assessee has not filed the return of income for the impugned assessment year, and the only return was filed in pursuance of notice u/s.148 of the Act, we do not find any merits in the objections of the assessee with respect to the jurisdiction of the AO u/s.148A of the Act. Therefore, in the interest of justice, we remit the matter back to the file of the AO for examining afresh vis-à-vis merits of the addition, in accordance with law. Before parting we would like to observe that in case the credits were sufficient enough to meet the withdrawals then no addition is called for under section 69 of the Act. Needless to say, the AO shall afford meaningful opportunity of being heard to the assessee. 7. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 30th day of May, 2025. Sd/- (Inturi Rama Rao) Sd/- (Prakash Chand Yadav) ACCOUNTANT MEMBER JUDICIAL MEMBER Cochin; Dated : 30th May, 2025. Devadas G* Copy to : 1. The Appellant. 2. The Respondent. 3. The CIT, Cochin. 4. The DR, ITAT, Cochin. 5. Guard File. Asst.Registrar/ITAT, Cochin "