ITAT sets aside CIT(A) order, directs preliminary enquiry on additional evidence and Section 249(4)(b) exemption claim

ITAT Ahmedabad set aside CIT(A)'s order and directed CIT(A) to conduct preliminary enquiry regarding assessee's claim of filing additional evidence including land records and agricultural income proof. The tribunal found sufficient reasons for assessee's non-appearance during reassessment proceedings. CIT(A) was directed to examine exemption from advance tax deposit under Section 249(4)(b) and pass reasoned order on appeal admission. If appeal is admitted, CIT(A) must adjudicate on merits while admitting additional evidence and following Section 250(6) requirements for determination points and reasoning. Appeal allowed for statistical purposes.

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Issues Involved:
1. Whether the cash deposit in the assessee's bank accounts should be considered as unexplained cash deposit.
2. Whether the appeal was rightly dismissed by the Commissioner of Income Tax (Appeals) due to non-payment of tax determined by the Assessing Officer.

Issue-Wise Detailed Analysis:

1. Unexplained Cash Deposit:
The Assessing Officer (AO) reopened the assessment under Section 147 of the Income-tax Act, 1961, based on information that the assessee had made a cash deposit of Rs. 11,65,300/- in his savings bank account. The assessee did not file a return of income in response to the notice issued under Section 148. Despite statutory notices under Section 142(1), there was no compliance from the assessee. The AO obtained bank statements under Section 133(6) and found total credits of Rs. 23,70,635/- in three bank accounts. The AO framed a best judgment assessment under Section 144, treating Rs. 21,20,635/- as undisclosed income under Section 69, excluding a returned cheque of Rs. 2,50,000/-. The assessee claimed the deposits were from agricultural income, which is exempt under Section 10(1).

2. Dismissal of Appeal by CIT(A) for Non-Payment of Tax:
The Commissioner of Income Tax (Appeals) dismissed the appeal under Section 249(4) due to non-payment of the assessed tax. The CIT(A) noted that the assessee did not file a return of income and did not pay the advance tax on the assessed income. The assessee argued that he was a farmer with agricultural income, which is exempt from tax, and thus believed he was not liable to file a return or pay advance tax. The CIT(A) rejected this contention, as the AO had assessed the income under 'income from other sources'.

Tribunal's Observations:
The Tribunal observed that the assessee did not file a return of income under Sections 139 and 148, believing his income was exempt as agricultural income. The Tribunal noted that the assessee provided land records and evidence of agricultural income as additional evidence under Rule 46A. The Tribunal found the assessee's explanation plausible and directed the CIT(A) to verify the claims. If the claims were found to be true, the CIT(A) should admit the appeal under the proviso to Section 249(4)(b), which allows exemption from depositing advance tax for good and sufficient reasons.

Conclusion:
The Tribunal set aside the CIT(A)'s order and directed the CIT(A) to make a preliminary enquiry into the assessee's claims. If the claims were found to be prima facie true, the CIT(A) should admit the appeal and adjudicate it on merits, considering the additional evidence provided by the assessee. The Tribunal allowed the appeal for statistical purposes, without commenting on the merits of the case.

Final Order:
The appeal filed by the assessee in ITA No.844/Ahd/2024 for the assessment year 2010-11 was allowed for statistical purposes.

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