ICHETTIRA MANDAPPA MACHAIAH,KODAGU V. INCOME TAX OFFICER, WARD-1 , MADIKERI

ITA 1782/BANG/2024

AI Insights

The case involves Ichettira Mandappa Machaiah, a senior citizen and agriculturist, who appealed against the order of the CIT(A)/NFAC which was passed under section 250 of the Income Tax Act, 1961 for the assessment year 2017-18. The primary contention arose from an ex-parte order passed by the AO under section 144 of the Act, which treated a cash deposit of Rs. 12,00,000 in the assessee's bank account during the demonetization period as unexplained money under section 69A of the Act, and taxed it under section 115BB. The assessee failed to provide necessary documents to substantiate the source of the cash deposit, leading to the best judgment assessment by the AO. The CIT(A) dismissed the appeal, not accepting fresh evidences uploaded under Rule 46A. The Tribunal noted the lack of reasonable opportunity given to the assessee and the failure to consider additional evidences, thus remanding the matter back to the AO for a fresh assessment.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 470488 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 17-09-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GANESH R GALE; STANDING COUNSEL
• Assessee Lawyers: SANDEEP CHALAPATHY; CITING VARIOUS
• Keywords: Opportunity of being heard; Additional evidence
• Section: 144; 142(1); 250; 69A

Judgement Text

"ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1782/Bang/2024 Assessment Year: 2017-18 Ichettira Mandappa Machaiah PH No.1 Kushl Nagar Somwarpet Kodagu 571 234 Karnataka PAN NO : AOMPM2495K Vs. ITO Ward-1 Madikeri APPELLANT RESPONDENT Appellant by : Sri Sandeep Chalapathy, A.R. Respondent by : Sri Ganesh R Gale, Standing counsel for department Date of Hearing : 19.11.2024 Date of Pronouncement : 25.11.2024 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against CIT(A)/NFAC order dated 7.8.2024 vide DIN & order No.ITBA/NFAC/S/250/2024-25/1067404452(1) passed U/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the AY 2017-18. The assessee has raised the following grounds of Appeal : ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu Page 2 of 6 2. The brief facts of the case are that assessee is a Senior Citizen and predominantly an agriculturist having 28.64 acres of land. The assessee claimed to have growing coffee and do peasant activity for livelihood. The assessee lives in a very remote part of ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu Page 3 of 6 the village where any mode of communication and transportation is cumbersome and due to this the postal department has allotted post box number for the villagers in their office. 3. The assessee claims that one of his staff had collected the notices on his behalf from the post box and he had misplaced during the flood hit period as all were in havoc & trauma. This led the AO to pass an ex-parte order u/s 144 of the Income Tax Act, 1961 (in short “The Act”) to his best of the judgment. The ld. A.R. of the assessee claimed that the amount of Rs. 12,00,000/- cash deposited in Corporation Bank, Kushalnagar was his hard earned money over the period of time from agriculture and peasant activity which is not taxable u/s 10(1) of the Act and accordingly no return of income was required to be filed before the AO. 3.1 During the course of the assessment proceedings, the assessee again failed to furnish return of income u/s 142(1) of the Act in response to notice u/s 142 of the Act dated 9.3.2018. The AO has further observed that assessee has deposited cash of Rs.12 lakhs in the Corporation bank account during the demonetization period. Accordingly, bank statement for the period from 1.4.2016 to 31.3.2017 pertaining to the assessee was collected from the bank. As the assessee fails to comply with the terms of notice issued u/s 142(1) of the Act as well as 2 nos of show cause notices, the assessment proceedings were completed under the best judgement assessment. The AO observed that the assessee even failed to furnish any details relating to business activity undertaken, details of income earned, details of cash deposit made into the bank accounts, source of cash deposits and details of cash deposit made in the bank accounts during the demonetization period and accordingly held that as the assessee has not offered any explanation for the source of cash deposit made, and therefore, the entire cash deposit amounting to Rs.12 lakhs was treated as ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu Page 4 of 6 unexplained money of the assessee and added to the total income of the assessee u/s 69A of the Act and taxed u/s 115BB of the Act. 3.2 Aggrieved by the assessment completed u/s 144 of the Act dated 18.11.2019, the assessee preferred an appeal before CIT(A)/NFAC. The ld. CIT(A) dismissed the appeal of the assessee by not accepting the fresh evidences uploaded under Rule 46A in the form of agricultural land holdings Further, ld. CIT(A) has observed that the assessee has failed to substantiate the claim of filing fresh evidence before him with valid reasons and also failed to explain as to why the same were not filed before the AO and accordingly dismissed the appeal of the assessee by citing various decisions relied upon by him. Aggrieved by the order of ld. CIT(A), the assessee filed the present appeal before the Tribunal. 3.3 Before us, ld. A.R. of the assessee submitted that the assessee could neither appeared before the AO nor submit any documents/records as the assessee is a senior citizen and living in a very remote area where any mode of communication and transportation is cumbersome. Further, ld. A.R. of the assessee submitted that even ld. CIT(A) has not considered the details produced before him stating that the same cannot be accepted as the assessee has failed to substantiate the claim of filing fresh evidence and also has failed to explain as to why the same were not filed before the AO. 4. The ld. D.R. on the other hand vehemently submitted that the assessee could not produce any supporting documents/records before the assessing authority to substantiate the cash deposit of Rs.12 lakhs made in the bank account. Further, the assessee is a non-filer of Return and accordingly the ld. D.R. supported orders of authorities below. ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu Page 5 of 6 5. We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the assessee could not produce any documents/records to substantiate his claim before the AO. We also take a note of the fact that the case has been selected on the basis of the data analytic information gathered during the phase of online verification under Operation Clean Money. The assessee has deposited substantial cash in bank accounts during the demonetization period but have not filed the return of income for the assessment year 2017-18. 5.1 We find that in this case, admittedly, the order has been passed by the authorities below without giving reasonable opportunity of being heard. Further we also take a note of the fact that the ld. CIT(A) had also not considered the additional evidences uploaded as the conditions provided under rule 46A was not satisfied. Further we also take a note of the fact that the AO has not passed the Order in terms of various circulars issued dealing with the demonetization. Being So, we are of the opinion that in the interest of justice and fair play, one more opportunity may be granted to the assessee to substantiate his claim and accordingly we set-a-side the issue in dispute to the file of AO for fresh consideration in accordance with Law. The AO is directed to give reasonable opportunity of being heard to the assessee and decide the issue in the light of various CBDT instructions issued for dealing with the demonetization. The assessee is directed to submit all the documents/records within 90 days from the date of service of the notice and cooperate with the proceedings before the revenue authorities for proper adjudication of the case. We clarify that in case of further default, the assessee shall not be entitled for any leniency. ITA No.1782/Bang/2024 Ichettira Mandappa Machaiah, Kodagu Page 6 of 6 6. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 25th Nov, 2024 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 25th Nov, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "