2022 (3) TMI 22 - AT - Income Tax

Tribunal orders reassessment in bank account case, stresses fair hearing & natural justice

The Tribunal remanded the case to the Assessing Officer for thorough scrutiny of undisclosed bank account transactions, emphasizing the need for a fair ... Addition due to alleged non-appearance of the assessee - HELD THAT:- We are of the opinion that the matter deserves to be remanded back to the Ld. AO. DR had no objection. As observed from the statement of facts filed by the assessee before the CIT(A) that the assessee company had a bank account which was not mentioned in the balance sheet. The assessee's grievance before the CIT(A) was that the entire credit in that account even after explaining the transactions has been added to the income of the assessee. As been submitted by the Ld. AR that the explanation offered by the assessee has not been duly considered by the AO. CIT(A) has also passed ex-parte order in violation of principles of natural justice as no notice of hearing was served upon the assessee. Explanation, if any, in respect of the transactions recorded in the said bank account given by the assessee before the Ld. AO/CIT(A) is not forthcoming from the records. In such a scenario, it would be just and fair if the matter is remanded to the Ld. AO for fresh adjudication - Appeal is treated as allowed for statistical purposes. Issues:1. Addition of deemed income due to undisclosed bank account.2. Alleged violation of principles of natural justice by the Ld. CIT(A).Analysis:Issue 1: Addition of Deemed IncomeThe appeal was filed against the order of the Ld. Commissioner of Income Tax-31 relating to the assessment year 2013-14. The assessee, a consultancy services company, declared income of Rs. 2,070 and was selected for scrutiny under CASS. The Assessing Officer (AO) noted that the balance sheet showed NIL bank balance, but information revealed a significant credit balance in a Corporation Bank account. The AO added this amount as deemed income since the transactions were not reflected in the books. The Ld. CIT(A) upheld the addition due to the alleged non-appearance of the assessee. The Tribunal observed that the matter warranted remand to the AO for thorough scrutiny of the undisclosed bank account transactions after the assessee admitted its existence. The Tribunal ordered a fresh adjudication by the AO, emphasizing the need for a fair opportunity for the assessee to present its case.Issue 2: Alleged Violation of Principles of Natural JusticeThe assessee contended that the Ld. CIT(A) passed the order without providing a proper opportunity to be heard, violating principles of natural justice. The Tribunal agreed that the Ld. CIT(A) had indeed passed an ex-parte order without serving a notice of hearing to the assessee. The Tribunal found that the explanation offered by the assessee regarding the transactions in the undisclosed bank account had not been adequately considered by the authorities. In light of this, the Tribunal deemed it necessary to remand the matter back to the AO to ensure a fair and just adjudication process. The Tribunal emphasized the importance of affording the assessee a reasonable opportunity to present its case and ordered a fresh examination of the transactions recorded in the undisclosed bank account.In conclusion, the Tribunal allowed the appeal for statistical purposes and directed a reevaluation of the deemed income addition and compliance with principles of natural justice, highlighting the significance of a fair and transparent assessment process.