2020 (12) TMI 107 - AT - Income Tax

Tribunal directs fresh examination by AO, stresses natural justice & thorough investigation

The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the case afresh, considering the additional evidence provided by ... Assessment framed by the AO ex-parte u/s. 144 - undisclosed income - Non providing due and reasonable opportunity of being heard to the assessee - admission of additional evidence - HELD THAT:- In the present case, it is an admitted fact that the assessment was framed by the AO ex-parte u/s. 144 of the Act and the assessee had furnished new evidences which were not available either to the AO or the ld. CIT(A), however, these documents now furnished as additional evidence by the assessee go to the root of the matter, therefore, keeping in view the principles of natural justice, the same are to be admitted. As these documents were not before the AO or the ld. CIT(A), we deem it appropriate to set aside this case back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Issues Involved:1. Validity of the assessment order under Section 144 of the Income Tax Act, 1961.2. Justification of the addition of Rs. 20 Lakhs as unexplained income.3. Admission of additional evidence by the assessee at the appellate stage.Detailed Analysis:1. Validity of the Assessment Order under Section 144 of the Income Tax Act, 1961:The case was reopened under Section 147 read with Section 148 of the Income Tax Act, 1961, based on information that the assessee had made cash deposits of Rs. 20 Lakhs in HDFC Bank during the Financial Year 2010-11. The Assessing Officer (AO) issued multiple notices to the assessee, which were either not responded to or refused. Consequently, the AO completed the assessment ex-parte under Section 144, treating the Rs. 20 Lakhs as undisclosed income. The assessee argued that the AO passed a non-speaking order without verifying the actual cash deposits, which amounted to Rs. 10 Lakhs, not Rs. 20 Lakhs. The AO maintained that the assessment was completed based on the information available and the non-compliance of the assessee to the notices issued.2. Justification of the Addition of Rs. 20 Lakhs as Unexplained Income:The AO made an addition of Rs. 20 Lakhs, treating it as unexplained income. The assessee contended that the actual cash deposit was Rs. 10 Lakhs, and the AO did not verify this from the bank statement. The CIT(A) upheld the AO's decision, stating that the assessee failed to explain the source of the cash deposit and that the information from AIR and CIB indicated a total deposit of Rs. 20 Lakhs. The CIT(A) also noted that the assessee did not provide any additional evidence to substantiate the claim of Rs. 10 Lakhs being the actual deposit during the appellate proceedings.3. Admission of Additional Evidence by the Assessee at the Appellate Stage:The assessee sought to admit additional evidence, including an agreement to sell, bank statements, and affidavits, which were not presented during the assessment proceedings. The assessee argued that these documents go to the root of the matter and were not available earlier due to the lack of proper legal guidance. The Tribunal admitted the additional evidence, citing the principles of natural justice, and set aside the case to the AO for fresh adjudication. The Tribunal emphasized that these documents should be considered to provide a fair opportunity to the assessee to explain the source of the cash deposits.Conclusion:The Tribunal allowed the appeal for statistical purposes, directing the AO to re-examine the case afresh, taking into account the additional evidence provided by the assessee. The Tribunal highlighted the importance of natural justice and the need for a thorough investigation to ascertain the correct facts before making any additions to the income.