The Surat Bench of the Income Tax Appellate Tribunal ( ITAT ) recently set aside an ex-parte addition ₹15 Lakh held as unexplained Bank Deposit by a deceased assessee, while calling on the Assessing Officer ( AO ) to conduct de novo assessment.
The Assessee, Nayanaben Farsuram Bhamwala had failed to file her returns for the Assessment Year (A.Y.) 2010-11 against which numerous notices and show-cause notices had been issued by the Department.
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Subsequently, the Assessment was completed on 22.12.2017, on which the AO observed that a cash deposit of ₹15,43,000/- had been made to the Assessee’s account maintained with Bank of Baroda; further, a bank interest of ₹31 was found to have been credited to the Assessee during Financial Year (F.Y.) 2009-10. Owing to the lack of any corroborative material attesting to the source of the ₹15,43,000/- cash deposit, the AO considered the same to be ‘unexplained money’ under Section 69A of the Income Tax Act, 1961.
In appeal, the Commissioner of Income Taxes (Appeals) ( CIT(A ) upheld the addition made by the AO owing to the Assessee’s failure to pursue the matter.
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CA Chaitali Shah appearing for the Appellant submitted before ITAT that the Assessee had passed away on 06.09.2018 and had been non-compliant on previous occasions owing to their ill-health and hospitalization, praying for opportunity of hearing on grounds of natural justice.
Meanwhile, Mukesh Jain representing the Revenue expressed no objection in restoring the matter to the file of the AO.
The two-member Bench of Pawan Singh, Judicial Member and Bijayananda Pruseth, Accountant Member observed no infirmity with the preceding observations that the assessee held cash deposits of ₹15,43,000/- and failed to cooperate with the statutory notices as well.
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However, observing the principles of natural justice, the Bench set aside the impugned order of the CIT(A) and restored the matter back to the file of jurisdictional AO with a direction to pass de novo assessment order after providing adequate opportunity of hearing to the Assessee. The Bench also issued a note of warning to the Assessee to be highly vigilant and diligent during the proceedings and to not seek adjournment without valid reasons.
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