2023 (7) TMI 455 - AT - Income Tax

Assessee's Appeal Dismissed for Lack of Evidence

The Tribunal dismissed the assessee's appeal due to lack of cooperation and evidence, upholding the AO's addition of cash deposits as income from an ... Addition of cash deposits - ex-parte orders u/s 144 - as submitted assessee had deposited cash in his bank account as against the addition of cash made by AO and further out of the six bank accounts reported by the AO, two bank accounts does not belong to the assessee - HELD THAT:- As before the AO the assessee did not appear and, therefore, the AO had no option, except to pass ex-parte orders u/s 144 and frame the assessment on the basis of material available before him. Before CIT(A) also no submissions were made by the assessee. Before us, all no material has been placed by the assessee to support his contentions and to point out any fallacy in the findings of lower authorities. When the appeal is filed before the appellate authorities by the assessee himself against the orders of the lower authorities, it is expected that the assessee shall put forth some documentary evidences in support of his contentions as it is the duty of the assessee to lead evidence in support of its claim and for the adjudicating authority to decide upon the sustainability of the claim on the basis of the evidence led by the parties before it. Assessee did not appear before any of the authorities. In absence of any contrary material brought on record to rebut the findings of lower authorities, we dismiss the grounds of the assessee. ISSUES PRESENTED AND CONSIDERED 1. Whether an appellate authority may decide an appeal on merits where the assessee fails to appear at multiple hearings and does not furnish evidence or applications for adjournment. 2. Whether cash deposits in bank accounts, unexplained by the assessee and established from bank information called under section 133(6), can be treated as unexplained cash credit and added to income under section 69 read with section 115JB where the assessee offers no explanation. 3. Whether the assessing officer's identification of multiple bank accounts and aggregation of cash deposits can be disturbed where the assessee contends some accounts do not belong to him but produces no documentary proof before any authority. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power to decide on merits despite non-appearance Legal framework: Appellate authorities have jurisdiction to hear and decide appeals brought before them; parties are required to prosecute appeals diligently, attend hearings, and furnish evidence. Procedural rules require service of notices and give the appellant an obligation to update address (Form No. 36) and to seek adjournment if unable to appear. Precedent treatment: No prior authorities were cited or relied upon in the judgment. Interpretation and reasoning: The Court noted repeated non-appearances at AO, CIT(A) and the Tribunal, returned notices marked 'recipient not found', absence of any application for adjournment, and no attempt to file fresh address details. The Tribunal emphasized that preferring an appeal entails actively pursuing it, including appearing and adducing evidence. In these circumstances, and given the absence of cooperation from the assessee, the Tribunal found no reason to keep the matter pending and proceeded to decide the appeal on merits after hearing the Departmental Representative. Ratio vs. Obiter: Ratio - An appellate body may dispose of an appeal on merits where an appellant repeatedly fails to appear, does not update contact details, and does not seek adjournment; the appellant's duty to prosecute the appeal may justify proceeding and decision in absence of the appellant. (This principle is applied as the operative reasoning for disposing the appeal.) Conclusions: The Tribunal was justified in exercising its discretion to hear and decide the appeal on merits despite non-appearance by the assessee, given repeated opportunities and failure to pursue the appeal or produce evidence. Issue 2 - Addition of unexplained cash deposits under section 69 read with section 115JB Legal framework: Where unexplained cash credits/deposits appear in the books or bank accounts of the assessee and the assessee fails to satisfactorily explain the nature and source, the assessing officer may treat such amounts as income from undisclosed sources under section 69 (and make consequential adjustments under charging provisions such as section 115JB as applicable). Information obtained under section 133(6) from banks may be used to establish the fact and quantum of deposits. Precedent treatment: No precedents were invoked by parties or by the Tribunal in its reasoning. Interpretation and reasoning: The AO obtained bank account information from banks under section 133(6) showing aggregate cash deposits of Rs. 1,17,83,775/-. The assessee did not appear before AO to explain these deposits nor did he furnish any documentary evidence at CIT(A) or before the Tribunal. The Tribunal held it is the duty of the assessee to lead evidence supporting his claim and to explain bank credits; absent any explanation or contrary material, the AO's treatment of deposits as unexplained and their addition to income was sustainable. The Tribunal accepted the bank-produced figures and the AO's adoption of the same as basis for the addition. Ratio vs. Obiter: Ratio - Where bank records obtained under statutory process show cash deposits and the assessee, despite opportunity, fails to explain or produce evidence, the assessing authority's addition of such deposits as unexplained under section 69 is sustainable. (This is the operative holding supporting dismissal of the appeal on this point.) Conclusions: The addition of aggregate cash deposits as unexplained income under section 69 read with section 115JB was upheld because the assessee failed to provide any explanation or evidence to rebut the bank information relied upon by the AO. Issue 3 - Challenge to identification/aggregation of bank accounts said not to belong to assessee Legal framework: An appellant challenging the AO's identification of bank accounts as belonging to the assessee must produce evidence (e.g., account ownership records, bank confirmations, or other documentary material) to rebut the AO's findings; mere assertion in grounds without supporting material is insufficient. Precedent treatment: None cited. Interpretation and reasoning: The assessee contended in grounds that two of the six bank accounts relied upon by the AO did not belong to him. However, no documentary evidence or submissions were placed before AO, CIT(A) or the Tribunal to substantiate that contention. The Tribunal stressed the burden rests on the assessee to lead evidence; without any material to contradict the bank information relied upon by AO, the Tribunal could not accept the bare contention. The Court therefore did not disturb the AO's aggregation of deposits across the accounts identified in the assessment order. Ratio vs. Obiter: Ratio - A contention that certain bank accounts do not belong to the assessee cannot succeed in absence of documentary evidence before the adjudicating authorities; failure to produce such evidence justifies upholding the AO's identification and aggregation of deposits. (This is part of the operative holding.) Conclusions: The Tribunal rejected the assertion that two accounts did not belong to the assessee for lack of proof and sustained the AO's aggregation of cash deposits across the identified accounts. Cross-references and interrelation of issues The Tribunal's disposition on Issues 2 and 3 is premised on Issue 1: the assessee's repeated non-appearance and failure to adduce evidence deprived the adjudicating authorities of any contrary material to the bank information relied upon by the AO. Consequently, procedural default (Issue 1) directly influenced the substantive outcome on unexplained cash deposits (Issue 2) and the challenge to account ownership (Issue 3).