Income Tax Appellate Authority (ITAT), Hyderabad restores matter to Commissioner of Income Tax (CIT) as ex-parte order was passed without properly serving the hearing notice.
The assessee, Satyabhama Avadhanula is an individual working as Anganwadi Teacher and was deriving income from salary during the year under consideration. The assessee has not filed original return of income u/s 139(1) for the AY under consideration. Based on the information received from the Income Tax Department, Hyderabad about the availability of cash in the premises of the assessee, a commission u/s 131(1)(d) of the Act was issued to carry out necessary enquiries. In course of enquiry, it was found that the assessee along with her son were in possession of cash of Rs.22,50,500/- out of which the assessee was not able to explain the sources satisfactorily to the extent of Rs.22,00,000/. Therefore, a warrant u/s 132 of the Act was executed and cash of RS.22,00,000/- was seized from the assessee.
A statement was recorded u/s 131 from the assessee wherein she stated that the sources for RS.22,50,500/- are on account of repayments received from money lending activity and accumulated salary savings of her son. However, the assessee failed to substantiate her claim with any documentary evidence. Accordingly, the Assessing Officer issued notice u/s 142(1) to furnish return of income and also asked the assessee to explain as to why the cash receipt of Rs.22.00 lakhs should not be brought to tax as unexplained income.
The assessee explained that the above amount of cash receipts is out of accumulated savings over the years, moneylending business and house property income. Since the claim made by the assessee was not supported by any evidence, the Assessing Officer rejected the explanation given by the assessee and made addition of Rs.22.00 lakhs u/s 69A and 115BBE. Despite giving number of opportunities by the CIT, the assessee did not appear and the CIT in his ex-parte order upheld the action of the Assessing Officer.
R K Panda, Accountant Member observed that “It is the submission of the learned Counsel for the assessee that the CIT has passed an ex-parte order and in the interest of justice, the assessee should be given one more opportunity to substantiate the cash so found. Considering the totality of the facts of the case and in the interest of justice, I deem it proper to restore the issue to the file of the learned CIT (A) with a direction to grant one last more opportunity to the assessee to substantiate her case and decide the issue as per fact and law.”
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