Opportunity to explain source after non responding to subsequent notices by AO

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI ‘D’ BENCH

BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, AM

ITA No.4426 /Del/2012

Assessment year: 2007-08

Kuldeep Singh Ghotra

A-3/14-15, Sector -11,

Rohini, New Delhi

[PAN: AYZPS 1699 E ]

(Appellant)

V/s.

Income-tax Of f icer,

Ward 21(4),

New Delhi

 (Respondent)

Assessee by Shri Pankaj Dadu, AR

Revenue by Ms. Priscil la Singsi t , DR

Date of hearing 17-10-2012

Date of pronouncement 17-10-2012

O R D E R

A.N.Pahuja:-

This appeal filed on 16.08.2012 by the assessee against an order dated 29.02.2012 of the ld. CIT(A)-XI, New Delhi, raises the following grounds:-

“The learned Assessing Officer, Ward 21(4), New Delhi has erred in making additions of ``49,433/- on account of deduction under chapter VI-A for want of evidence and ``11 lacs on account of unexplained cash credits.

The learned Assessing Officer received information through AIR that the assessee has deposited cash of ``11 lacs in his bank account during financial year 2006-07. After which a notice u/s 143(2) was issued on assessee but the assessee did not receive any notice in respect of that and Assessing Officer without going into the depths and the facts of the case and without providing the opportunity added the said sum to the income of the assessee. An appeal was filed before CIT(A)-XI, New Delhi. But the same was also dismissed by CIT(A)-XI, New Delhi which is totally unfair and unjustified.

The above said additions may please be ordered to be deleted.

The assessee reserves the right to modify, alter, amend or/and add grounds of appeal on proceedings of the case.

2. Facts, in brief, as per relevant orders are that return declaring income of ``1,12,277/- beside agricultural income of ``1,05,000/-,filed on 9th July, 2007 by the assessee, was selected for scrutiny with the service of a notice u/s 143(2) of the Income-tax Act, 1961 (hereinafter referred to as the Act) issued on 23.07.2008. In this case, AIR information was received that the assessee deposited a sum of ``11 lacs in his saving bank account with Bank of Baroda, Shalimar Bagh, West Branch, Delhi. In response to the aforesaid notice u/s 143(2) of the Act issued on 23.07.2008 at the Kapurthala address given on PAN card, none responded. In response to a subsequent notice issued on 25<sup>th</sup> August, 2008 at Rohini address, the assessee appeared before the Assessing Officer[AO in short] on 5th September, 2008,when he was requested to file copy of bank statement of all accounts held by him during the previous year, statement of affairs as on 31.3.2006 and 31.3.2007 and history of the assessee along with details of his family and business & the case was adjourned to 22.09.2008. On the adjourned date, no compliance was made by the assessee. Even the subsequent notice dated 5th June, 2009 issued u/s 143(2) of the Act was returned by the postal authorities with the remarks ‘premises locked’. Another notice sent on 9th October, 2009 was also returned by the ‘postal authorities with the remarks ‘ left’. In these circumstances, the AO obtained a copy of bank statement of the assessee u/s 133(6) of the Act from the Bank of Baroda, Shalimar Bagh Branch, Delhi. Thereafter, though the AO issued three notices to the assessee u/s 143(2) of the Act on 06.11.2009 at assessee’s addresses viz.. 353, Basti Gujra, Jullunder City, Punjab; WZ-8A, Kirti Nagar, New Delhi and village Pondoori Rajputhan, PS Bholath, District Kapurthala, Punjab, requiring his presence on 16.11.2009. However, notice sent to Jullunder & Kirti Nagar,Delhi, were returned unserved by the postal authorities. In these circumstances, when the assessee did not explain the source of cash deposited in his bank account with the Bank of Baroda, the AO proceeded to complete the assessment ex parte  u/s 144 of the Act by treating the aforesaid cash amounting to ``11 lacs as unexplained deposit and added u/s 68 of the Act.

3. On appeal, the ld. CIT(A) issued a notice dated 24th July, 2011 for hearing on 18th August, 2011, when adjournment was sought by the assessee for 9th September, 2011. None appeared on this date nor responded to subsequent notice dated 19th December, 2011 requiring the assessee to attend on 18.01.2012. The notice dated 24.01.2012 issued for hearing on 15.02.2012 also went unresponded. Another notice dated 31.1.2012 for hearing on 24.2.2012 was handed over to the AO for service through the inspector . The AO had the said notice served through affixture on the premises of the assessee at A-3/14- 15, Sector-11, Rohini, Delhi. None responded to this notice also. In these circumstances, when the assessee did not appear before the ld. CIT(A) nor filed any written submissions, the ld.CIT(A) disposed of the appeal ex parte, holding as under:-

“I have perused the documents on record. I shall now take up the various grounds of appeal. The only ground of appeal is in r/o an addition of `11 lacs as unexplained deposit. The Assessing Officer had made the addition since no submissions were filed by the appellant in spite of various opportunities. In spite of several opportunities being given to the appellant. Since no further submissions/evidence was given before me by the appellant the addition of `11 lacs made by the Assessing Officer is confirmed. The grounds of appeal are rejected.”

4. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). At the outset, the ld. AR on behalf of the assessee prayed that the assessee should be allowed another opportunity to explain the source of cash deposited in his savings bank account with the Bank of Baroda. Similar request has been made in written submissions filed before us. To a query by Bench as to why the assessee did not respond to various notices issued by the AO even after he personally appeared before him on 5th September, 2008 and nor even responded to the subsequent notices issued u/s 143(2) of the Act as also why after seeking adjournment on 18.8.2011 in pursuance to notice issued by the ld. CIT(A) , the assessee did not respond to any of the subsequent notice nor filed any submissions, the ld. AR on behalf of the assessee did not reply and instead reiterated that the matter may be restored to the file of the AO for a fresh opportunity. To a further query by the Bench as to when the default committed by the assessee before the AO and learned CIT(A) have not been explained, why cost of ``10,000/- be not imposed, the ld. AR feebly replied that cost should be reasonable. On the other hand, the ld. DR did not oppose the submissions of the ld. AR for restoring the matter back to the file of the AO for a fresh opportunity.

5. We have heard both the parties and gone through the facts of the case. Indisputably the assessee having appeared personally before the AO on 5th September, 2008, did not explain the source of cash of ``11 lacs deposited in his savings bank account despite sufficient opportunity allowed by the AO nor submitted any explanation before the ld. CIT(A) even after seeking adjournment on 18th August, 2011. The ld. AR did not adduce any reasons before us for noncompliance of various notices issued by the AO and the ld. CIT(A) nor even placed before us any material, explaining the source of aforesaid cash of `11 lacs. In these circumstances, especially when the assessee is now prepared to explain the source of cash deposited in his bank account, in the interest of justice and fair play, we vacate the findings of the ld. CIT(A) and restore the matter to the file of the AO with the directions to allow another opportunity to the asssessee to explain the source of aforesaid cash , subject to payment of cost of ``10,000/- to the Revenue and thereafter, dispose of the matter in accordance with law. It may be clarified that the AO is free to undertake any independent enquires, if found necessary and thereafter, may pass such orders as he deems proper, in accordance with law. The assessee shall pay cost of ``10,000/- to the Revenue within a week of receipt of this order and furnish a copy of challan.

Thereafter, the assessee shall suo motu appear before the AO on 18.12.2012 along with evidence, explaining the source of cash of `11 lacs, for expeditious disposal of the matter. With these directions, grounds. raised in the appeal are disposed of , as indicated hereinbefore.

6. No additional ground having been raised before us in terms of residuary ground in the appeal, accordingly, this ground is dismissed.

7. No other plea or argument was made before us.

8. In the result, appeal is allowed but for statistical purposes.

Order pronounced in open Court

Sd/- Sd/-

(RAJPAL YADAV ) (A.N. PAHUJA)

(Judicial Member) (Accountant Member)

NS

Copy of the Order forwarded to:-

1. Assessee

2. Income-tax Officer, Ward 21(4), New Delhi.

3. CIT concerned.

4. CIT(A)-XI,New Delhi

5. DR, ITAT, ’D’ Bench, New Delhi

6. Guard File.

By Order,

Deputy/Asstt.Registrar

ITAT, Delhi