SHEO PUJAN PANDEY,RATLAM vs. DCIT RATLAM, RATLAM
Facts
The assessee deposited Rs. 11,62,000/- in cash in his bank account. The Assessing Officer (AO) treated this as unexplained money and made an addition to the total income. The assessee claimed the funds were withdrawn earlier and redeposited.
Held
The Tribunal held that the AO provided a very short and inadequate opportunity for the assessee to explain the cash deposit, violating principles of natural justice. The CIT(A) also failed to properly investigate the assessee's claim regarding prior cash withdrawal.
Key Issues
Whether the addition of unexplained cash deposit of Rs. 11,62,000/- is justified, considering the alleged violation of natural justice and inadequate investigation of the source of funds by the lower authorities.
Sections Cited
69A, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 30.10.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 27.12.2019 passed by learned ACIT/DCIT, Ratlam [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2017-18, the assessee has filed this appeal on the grounds as mentioned in Form No. 36 (Appeal Memo).
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 2. The background facts leading to present appeal are such that the
assessee-individual filed his return of income of AY 2017-18 declaring a
total income of Rs. 55,87,150/-. The case was selected for scrutiny and the
Ld. AO issued notices u/s 143(2)/142(1). Ultimately, the AO passed
assessment-order u/s 143(3) after making an addition of Rs. 11,62,000/-
u/s 69A treating the cash deposit of Rs. 11,62,000/- made by assessee in
HDFC Bank A/c No. 15751000021566 on 11.08.2016 (during
demonetization period) as unexplained money u/s 69A. Aggrieved, the
assessee carried matter in first-appeal but did not get any success. Now, the
assessee has come in next appeal before ITAT.
The sole issue involved in present appeal is the addition of Rs.
11,62,000/- made by Ld. AO and upheld by Ld. CIT(A).
We have heard learned Representatives of both sides and considered
their submissions, the orders of lower authorities and documents filed by
assessee in Paper-Book.
Ld. AR for assessee pointed out certain infirmities in the adjudication
made by lower-authorities, as under:
(i) Firstly, he carried us to following para of assessment-order:
“5. During the course of assessment proceedings, it is noticed that the assessee has deposited cash amounting to Rs. 11,62,000/- as per details given below:-
Name of Account number Date of cash Amount of cash the Bank deposit deposit
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18
HDFC 15751000021566 11/08/2016 Rs.11,62,000/- Bank Sec. 104, Noida
In view of the above aspects, it is clear that the assessee has deposited cash at Rs. 11,62,000/- in his bank account. However, the assessee has not made any compliance with respect to the said cash deposits in his bank account. Therefore, a show cause notice was also issued on 24/12/2019, fixing the case for filing of online written submission on or before 26/12/2019 vide which it has been asked to the assessee to explain the source of cash deposits in his bank account and also requested to explain as to why the said cash deposits should not be treated as unexplained money and why not added to the total income of the assessee. However, the assessee has not availed any opportunities of being heard as well as failed to comply with the earlier notices.” Referring to above, he demonstrated that the AO issued show-cause
notice on 24.12.2019 asking assessee to explain the source of
impugned cash deposit in bank a/c. The AO allowed time for reply
upto 26.12.2019. However, there was a holiday on 25.12.2019 on
account of chrisms. Thereafter, the AO passed ex-parte order on
27.12.2019. Thus, the AO has passed ex-parte assessment-order
giving a very short time, in fact no time, to assessee rendering the
assessee unable to make any submission.
(ii) Secondly, he carried us to the order of first-appeal passed by Ld.
CIT(A) and demonstrated that the assessee made a vehement
submission to Ld. CIT(A) explaining the source of deposit. The
submission made by assessee is re-produced by Ld. CIT(A) on Page 12
of impugned order [Point No. 16 & 17] according to which a cash
withdrawal of Rs. 19,00,000/- made from HDFC Bank A/c on
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 07.03.2014 was utilised for making impugned deposit of Rs.
11,62,000/-. Ld. AR referred following documentary evidences filed in
Paper-Book at Pages 2-28 in support of this submission made by
assessee, namely (i) Bank’s confirmatory letter dated 28.02.2020 of
cash withdrawal of Rs. 19,00,000/- having been made, (ii) Copy of
cheque used for making cash withdrawal, (iii) A/c statement of Joint
Bank A/c No. 50100023903997 from which cash withdrawal was
made, (iv) A/c statement of SB A/c No. 15751000021566 in which the
deposit of Rs. 11,62,000/- was made. He submitted that all these
documents were filed to Ld. CIT(A) whereupon the CIT(A) also sought
remand report from AO. However, the remand report called by CIT(A)
or submitted by AO was for the period 01.04.2016 to 10.08.2016 [Para
6.3 of impugned order] whereas the assessee made cash withdrawal
on 07.03.2014. He submitted that in subsequent paras 6.3.1 to 6.3.4
of impugned order, the CIT(A) has rejected the assessee’s claim of
utilization of cash withdrawal made on 07.03.2014 on his self-made
reasoning which is also wrong.
Having submitted thus, Ld. AR narrated that the documents of
assessee clearly show that there was a cash withdrawal of Rs. 19,00,000/-
on 07.03.2014 from joint HDFC Bank A/c No. 50100023903997 of assessee
and his wife (Smt. Shamla Shivpujan Pandey). The unutilized portion of
such withdrawal available with assessee, was utilized for making impugned
deposit of Rs. 11,62,000/- in HDFC Bank A/c No. 15751000021566. Ld. AR
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 carried us through entries of deposits and withdrawals in bank a/cs from
07.03.2014 to 08.11.2016 in an attempt to demonstrate that there were only
three entries of cash deposits of Rs. 1,30,000/- on 25.03.2014, 50,000/- on
04.06.2014, 27,300/- on 03.12.2014 during this period. Therefore, even if
the amounts of these three entries of cash deposits are excluded from Rs.
19,00,000/-, the remaining cash available with assessee was more than
enough for making re-deposit of Rs. 11,62,000/- on 08.11.2016. He
submitted that the time-gap between withdrawal and re-deposit was about 2
years and 8 months which is not abnormal. He relied upon following
decisions wherein the additions made by assessing authorities in similar
situations have been deleted:
(i) ITAT, Delhi in ITO Vs. Mrs. Deepali Sehgal, ITA No. 5660/Del/2012, order dated 05.09.2014 (ii) ITAT, Chennai in Ganapathy Paneerselvam Vs. The Income-tax Officer, ITA No. 609/Chny/2025, order dated 27.06.2025 (iii) Hon’ble Kerala High Court in Commissioner of Income-tax Vs. K. Sreedharan (1993) 201 ITR 1010 (Ker) 7. With these submissions, Ld. AR prayed to delete the addition made by
AO. Alternatively, he agreed that the bench may remand this case to AO for
a fresh adjudication with suitable directions.
Per contra, the Ld. DR for revenue requested to turn down the Ld.
AR’s request to delete the addition. He, however, agreed that he would have
no objection against remanding this case to AO.
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 9. We have given our thoughtful consideration to rival submissions and
perused the material available on record. It is observed that the Ld. AO has
made the impugned addition of Rs. 11,62,000/- u/s 69A primarily on
account of non-compliance by the assessee in the course of assessment
proceedings. From the extract of assessment-order reproduced hereinabove,
it is evident that the show-cause notice was issued on 24.12.2019 fixing
compliance on 26.12.2019. Considering that 25.12.2019 was a public
holiday on account of Christmas, the effective time available with the
assessee was grossly inadequate. The Ld. AO proceeded to pass the
assessment-order on 27.12.2019 ex-parte. In our considered view, such a
truncated opportunity cannot be regarded as a reasonable and effective
opportunity of being heard, thereby resulting in violation of principles of
natural justice.
Further, it is also noticed that the assessee had furnished detailed
submissions before Ld. CIT(A) explaining the source of impugned cash
deposit, supported by documentary evidences including bank statements.
The Ld. CIT(A) had also called for a remand report from the AO; however, the
remand verification was confined only to the period 01.04.2016 to
10.08.2016 whereas the core claim of the assessee relates to cash
withdrawal made on 07.03.2014. Thus, the verification carried out during
remand proceedings does not address the primary explanation of the
assessee. Moreover, the rejection of assessee’s claim by Ld. CIT(A) appears to
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 be based on presumptions without bringing any cogent material on record to disprove the evidences furnished by the assessee.
Therefore, the claim of assessee i.e. re-deposit from earlier cash withdrawal, requires to be properly investigated by AO. Accordingly, as per consensus made by learned Representatives of both sides, we are inclined to remand this matter to the file of AO for a fresh adjudication. The AO shall give opportunities of hearing to assessee and shall consider evidences and submissions of assessee judiciously and in the light of decisions as narrated by Ld. AR without being influenced by earlier orders of lower authorities. The assessee is also directed to extend full co-operation to AO without seeking unnecessary adjournments. Ordered accordingly.
Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 27/03/2026
Sd/- Sd/-
(PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore
िदनांक/Dated : 27/03/2026
Patel/Sr. PS
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Sheo Pujan Pandey ITA No. 922/Ind/2024 – AY 2017-18 Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore p
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