The Chennai bench of the Income Tax Appellate Tribunal ( ITAT ) orders de novo assessment for unexplained investment with a cost of Rs. 5,000 imposed on the assessee.
The assessee, M/s Guru Krishnanand Charitable Trust, is registered under Section 12A of the Income Tax Act, 1961, and operates three projects, including Guru Saranalaym (Home for the Needy) and Guru Kripa Hospital.
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A search was conducted under Section 132 of the Income Tax Act on 27.11.2013 at the residence of Shri G. Vijaychand Jhabakh, a Chartered Accountant and trustee of Guru Krishnanand Charitable Trust. The trust had not filed a return of income for AY 2011-12. Following the search, inquiries revealed significant cash deposits in the trust’s bank accounts and irregularities like payments to individuals and fund withdrawals by trustees.
A notice under Section 148 of the Income Tax Act was issued on 01.09.2015, but the trust did not file a return. Despite further notices under Sections 142(1) and 271F, there was no compliance. Multiple reminders, including a final show-cause notice on 12.12.2016, were ignored, leading to the imposition of penalties under Section 271F of the Income Tax Act.
The assessing officer ( AO ) passed an order under Section 144 of the Income Tax Act assessing the income at Rs. 1.28 crore.
One of the issues raised by the assessee concerned unexplained cash credits in the bank accounts amounting to Rs. 72.63 lakhs. The Commissioner of Income Tax( Appeals ) [ CIT( A ) ] upheld the addition by noticing that the assessee had not explained the sources for the amount deposited in the bank account out of the cash balance in the cash book.
The ITAT observed that an ex-parte order was passed by the AO without providing the assessee an opportunity to explain its case.
The impugned order was set aside by the bench and the appeal was restored to the AO for fresh assessment after providing the assessee a proper hearing.
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The assessee was asked to pay Rs. 5,000 to the Tamil Nadu State Legal Services Authority within 30 days and submit proof to the AO. The assessee was directed to provide evidence promptly, failing which the AO was allowed the liberty to proceed with the assessment.
The ITAT, comprising Manoj Kumar Aggarwal ( Accountant Member ) and Manu Kumar Giri ( Judicial Member ) allowed the appeal for statistical purposes.
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