In a recent ruling, the Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the ex-parte order regarding addition on cash deposits of Rs. 33 lakhs by noticing a clear violation of Section 250(6) of the Income Tax Act,1961.
In this case, the assessee, K. Adirajan, has approached the ITAT against the ex-parte order passed by the Commissioner of Income Tax ( Appeals ) [ CIT(A ) ], which confirmed the addition on cash deposits of Rs. 33 lakhs under Section 69 of the Income Tax Act, 1961, without giving adequate opportunity of being heard to the assessee.
The assessee deposited Rs. 33 lakhs in his savings account with Central Bank of India, Washermenpet Branch, Chennai. He explained the source as Rs. 29,00,000 belonging to his wife and daughters and Rs. 4,00,000 as his own savings. He claimed to have given five challans for depositing the amounts in the respective accounts of K. Adhirajan (Rs. 4,00,000), R. Shanthi (Rs. 8,00,000), R. Jeeva (Rs. 7,00,000), R. Mahalakshmi (Rs. 8,00,000), and R. Devi (Rs. 6,00,000). However, the bank manager allegedly deposited the entire amount into his account.
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But it is to be noted that this explanation was rejected by the assessing officer ( AO ) and made the addition by stating insufficient income returns of his wife and daughters and making an addition. On appeal, the CIT(A) passed an ex-parte order without addressing the merits of the case.
The ITAT noticed that the ex-parte orders were passed by the CIT( A ) without addressing the issue on merits, which is against Section 250(6) of the Act. The bench observed that According to Section 250(6) of the Act, the CIT(A) has the duty to decide on the merits of the appeal and provide reasons for their judgement.
The Tribunal concluded its ruling by stating that the assessee should be given another opportunity to present their case in accordance with natural justice principles.
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The ITAT bench, comprising Aby T. Varkey ( Judicial Member ) and Jagadish ( Account Member ) set aside the impugned order and remitted the matter back to the file of the CIT(A) to adjudicate this appeal afresh.
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