MANUCHUKONDA SRI RAM, Vizianagaram V. INCOME TAX OFFICE, WARD-2, Vizianagaram

ITA 178/VIZ/2022

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The case involves Manchokonda Sri Ram, who appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the Assessment Year 2017-18. The appeal was based on the addition of Rs.27,17,100 as unexplained cash deposits during the demonetisation period, which was taxed under section 69A of the Income Tax Act, 1961. The Assessing Officer (AO) had initially made this addition due to the non-furnishing of a valid explanation regarding the nature and source of the cash deposits. The CIT(A) upheld the AO's decision, leading to the appeal before the Tribunal. The Tribunal found merit in giving the assessee another opportunity to present his case, emphasizing the principles of natural justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135943 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 03-01-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 18-09-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 142(1); 133(6); 119(2)(b); 69A; 139(4)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM ‘SMC’ BENCH, VISAKHAPATNAM श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER आयकर अपील सं./I.T.A.No.178/Viz/2022 (ननधधारण वर्ा / Assessment Year : 2017-18) Manchokonda Sri Ram D.No.7-1-36, Manchukonda Vari Veedhi Vizianagaram [PAN : ACNPR3037M] Vs. Income Tax Officer Ward-1 Vizianagaram (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri G.V.N.Hari, AR प्रत्यधथी की ओर से / Respondent by : Shri Sankar Pandi, DR सुनवधई की तधरीख / Date of Hearing : 04.01.2023 घोर्णध की तधरीख/Date of Pronouncement : 06 .01.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2022- 23/1044013388(1) dated 22.07..2022 for the Assessment Year (A.Y.) 2017-18. 2. Brief facts of the case are that the assessee is an individual. On the basis of data analytics and information gathered during the phase of 2 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram online verification under ‘Operation Clean Money’, the Assessing Officer (AO) noticed that the assessee had made cash deposits in his bank account during the demonetisation period in the F.Y.2016-17, but has not filed return of income for the A.Y.2017-18. Notice u/s 142(1) of the Income Tax Act, 1961 (in short ‘Act’) was issued on 28.11.2017, but the assessee has not complied with the same. Notice u/s 133(6) of the Act was issued to Yes bank, Vijaya bank and Axis bank, Vizianagaram Branches, where the cash was deposited by the assessee. On verification of the information gathered from all sources, the AO found that the assessee had made the following cash deposits. S.No. Name & Address of the bank Bank A/c No. Cash Deposited (Rs.) 1. Yes bank, Vizianagaram Branch 23485800000580 7,38,500 2. Vijaya Bank, Vizianagaram Branch 405901011001869 13,09,500 3. Axis Bank, Vizianagaram Branch 6140102000000 4,69,100 4. Axis bank, Vizianagaram Branch 6140101000000 2,00,000 Further, notices u/s 142(1) were issued on 11.06.2019 and 23.07.2019, but the assessee failed to comply with the notices. A final opportunity was given by issuing notice u/s 142(1) dated 23.07.2019, in 3 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram response to which the assessee’s representative had appeared and furnished a Lodged Return of Income filed u/s 139(4) r.w.s. 119(2)(b) of the Act for the A.Y.2017-18, computation of total income, audit report and copies of return of income for the A.Y.2016-17 and 2018-19. The Ld.AR explained that the source of cash deposits was the cash balance available as on 1 st April, 2016 and out of gold loan amount repaid by different loanees. The assessee was requested to furnish books of accounts of the assessee’s business for the F.Y.2015-16 and 2016-17 and complete details of persons to whom the assessee has given loans and dates of repayments and denominations of notes paid by them. In response, the assessee furnished his reply online on 07.12.2019 through e-proceedings. The assessee was also requested vide notices u/s 142(1) dated 29.11.2019 to furnish a copy of condonation letter granted by the Pr.Commissioner of Income Tax-1, Visakhapatnam to file the Return of Income u/s 139(4) r.w.s. 119(2)(b) of the Act for the A.y.2017- 18, but the assessee could not furnish the same. The AO has not accepted the explanation furnished by the assessee due to the reason that the assessee has deposited cash in his bank account during the demonetisation period, the assessee has not furnished any return of income inspite of issue of notice u/s 142(1, the assessee has not got his 4 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram books of accounts audited and has not furnished or uploaded the relevant audit report also within the stipulated time, the assessee has not furnished the details of persons to whom interest free loans were given. The assessee furnished that the persons to whom the assessee has advanced interest free loans were his friends and near relatives and confirmations from them in time would not have taken so long for the assessee. The AO observed that the assessee’s reply and explanation is very vague in nature and the assessee has resorted to evasive tactics and does not have explanation to offer for the cash deposits made by him during demonetisation time., hence made addition u/s 69A of the Act as unexplained cash deposits, taxable u/s 115BBE of the Act @60%. The AO also verified that the assessee has never been granted permission to file return of income u/s 139(4) r.w.s. 119(2)(b) by the Pr.Commissioner of Income Tax-1, Visakhapatnam, hence, treated the return of income as invalid and non-est 3. On being aggrieved the assessee preferred appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition made by the AO holding that the AO has rightly treated the cash deposits amounting to Rs.27,17,100/- during demonetisation period as unexplained money u/s 69A of the Act and added to the total income of the assessee and even during appellate 5 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram proceedings, the assessee has not made any written submission, except submitting the statement of facts. Therefore, the onus is on the assessee to prove the genuineness of the transactions which has not been proved by the assessee through any evidence or material on record during the assessment as well as appellate proceedings. 4. On being aggrieved, the assessee preferred appeal before the Tribunal and raised the following grounds : 1. The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in dismissing the appeal exparte. 3. The learned Commissioner of Income Tax (Appeals) ought to have deleted the addition of Rs.27,17,100/- made by the assessing officer u/s 69A of the Act towards alleged unexplained cash deposits in bank accounts. 4. Any other grounds may be urged at the time of hearing. 5. Ground No.1,2 and 4 are general in nature which do not require specific adjudication. 6. Ground No.3 is related to disallowance of cash deposits u/s 69A of the Act. The Ld.AR submitted that the Ld.CIT(A) is not justified in confirming the addition made by the AO towards alleged unexplained cash deposits in bank accounts. The Ld.AR submitted that the cash 6 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram deposits were made out of cash balance available as on 1 st April, 2016 and out of gold loan amount repaid by different loanees. The Ld.AR further pleaded before the Tribunal that the assessee may be given one more opportunity of being heard before the CIT(A) to substantiate his claim. 7. Per contra, the Ld.DR submitted that the assessee was given sufficient opportunities to prove his genuineness but the assessee failed to do so. Therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground 8. We have heard the rival parties, perused the material available on record and the orders of the lower authorities. It is undisputed fact that the assessee had deposited cash in his bank accounts during demonetisation period i.e. from 09.11.2016 to 31.12.2016. The AO made the addition for non furnishing of valid explanation about the nature and source of cash deposits with evidences, which was confirmed by the Ld.CIT(A). The Ld.AR pleaded before the Tribunal for affording one more opportunity of being heard before the Ld.CIT(A) to prove genuineness of the transactions. Keeping in view the principles of natural justice, we remit the matter back to the file of the Ld.CIT(A) to afford one more 7 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram opportunity of being heard to the assessee. The assessee is directed to adhere to the notices issued by the revenue authorities and furnish all relevant documents for adjudication. Apart from this, the assessee is directed to submit the letter which was given u/s 139(4) r.w.s. 119(2)(b) by the Pr.Commissioner of Income Tax-1, Visakhapatnam, failing which the decision will be taken on the material available on record. 9. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 6 th January, 2023. Sd/- (द ु व्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 06. 01.2023 L.Rama, SPS 8 I.T.A. No.178/Viz/2022, A.Y.2017-18 Manchukonda Sri Ram, Vizianagaram आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Manchokonda Sri Ram, D.No.7-1-36, Manchukonda Vari Veedhi, Vizianagaram 2. रधजस्व/The Revenue –Income Tax Officer, Ward-1, Vizianagaram 3. आयकर आयुक्त (अपील)/ The Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam