2024 (6) TMI 1435 - AT - Income Tax

Assessee gets fresh hearing opportunity after best judgment assessment under section 144 for unexplained demonetization deposits

Shri Sai Majur & Kamgaroni Sahkari Mandli Ltd. Versus The ITO, Ward – 5, Navsari

The ITAT SURAT allowed the assessee's appeal for statistical purposes, remanding the matter to the AO for fresh consideration. The assessee, a registered ... Best assessment judgement u/s 144 - Unexplained money u/s 69A r.w.s. 115BBE - assessee has failed to prove that the cash deposited during demonetization are normal business receipts - HELD THAT:- AR stated that assessee is a registered Co- operative Society engaged in the activity of collective disposal of labour of its members and is eligible for deduction u/s 80P - assessee has furnished computation of total income wherein net profit as per profit and loss account was shoen on which tax payable. The assessee has also submitted Form 26AS wherefrom it is seen that TDS was made. After giving credit for the TDS refund was due to the assessee. These facts were not before the Assessing Officer during the assessment proceedings. In the appeal before first appellate authority, the appeal was not admitted because assessee has not paid advance tax as required u/s 249(4)(b) - the facts remain that the assessee did not file its return of income u/s 139(1) of the Act or in response to notice u/s 142(1) of the Act. Before the Tribunal, assessee submitted paper book containing 94 pages including cash book, bank book, books of account, profit and loss account and balance sheet, copy of Form 26AS and computation of income. Hence, we are of the view that one more opportunity should be given to the assessee to plead his case before the AO. It is settled law that principles of natural justice require that the affected party is granted sufficient opportunity of being heard to present his case - Appeal of the assessee is allowed for statistical purposes. The appeal before the Appellate Tribunal emanated from an order passed under section 250 of the Income-tax Act, 1961 by the Commissioner of Income Tax (Appeals) for the Assessment Year 2017-18. The grounds of appeal raised by the assessee included challenges to the addition of a certain amount as unexplained money, the confirmation of an order under section 144 of the Act, and the denial of deduction under section 80P of the Act. The assessee, a cooperative society, failed to file the return of income for the relevant year and did not pay taxes due. The Assessing Officer treated certain cash deposits and credit entries in the bank account as unexplained income under section 69A of the Act, leading to an addition to the assessed income. The Assessing Officer also initiated penalty proceedings.The Commissioner of Income Tax (Appeals) upheld the Assessing Officer's order, noting the non-filing of the return and non-payment of advance tax by the assessee. The Tribunal heard arguments from both parties. The assessee contended that it was eligible for deduction under section 80P of the Act and that the order treating the cash deposits as unexplained income was incorrect. The Revenue argued in support of the Assessing Officer's order.The Tribunal found that the assessee had been non-compliant, failing to provide necessary details and responses to notices during the assessment proceedings. However, the assessee later submitted relevant documents and information before the Tribunal, which were not available to the Assessing Officer. The Tribunal observed that the principles of natural justice required giving the assessee another opportunity to present its case before the Assessing Officer. Therefore, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remitted the matter back to the Assessing Officer for fresh adjudication. The assessee was directed to provide all relevant details without seeking adjournments without valid reasons. The appeal of the assessee was treated as allowed for statistical purposes.In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes and directed the matter to be reconsidered by the Assessing Officer with the assessee given an opportunity to present its case. The decision was made in the interest of justice and adherence to the principles of natural justice.