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Facts
The assessee, a dealer of consumer electronics, deposited Rs. 49,95,000/- in cash into their bank account during the demonetization period, claiming it was generated from sales and debtors. The Assessing Officer (AO) added this amount as unexplained cash credit under Section 68 read with Section 115BBE of the Income Tax Act. The NFAC partly allowed the appeal, confirming an addition of Rs. 44,95,000/-.
Held
The Tribunal noted that the assessee faced a delay in filing the appeal due to a reasonable cause and condoned the delay. The Tribunal observed that the NFAC passed its order without hearing the assessee and that the assessee wished to present documentary evidence. Therefore, to ensure justice and fair play, the matter was restored to the NFAC for fresh adjudication after providing the assessee an opportunity to be heard.
Key Issues
Whether the deposit of cash during demonetization from sales and debtors can be treated as unexplained cash credit under Section 68. Whether the NFAC order passed without hearing the assessee is sustainable.
Sections Cited
143(2), 68, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “E” NEWDELHI
Date of hearing 01.07.2025 Date of 01.07.2025 pronouncement ORDER
PER SUDHIR KUMAR JM:
The assessee preferred the appeal, challenging the order dated passed by National Faceless Appeal Centre, Delhi (in short “NFAC”) order dated 16.03.2024 for A.Y. 2017-18.
2 2. The assessee has raised following grounds of appeal :
1. That the order passed by the learned CIT(A) NFAC after the order passed by A.O. Ward 49(3) Delhi, is against the law and facts of the case wherein he has finally given a relief of only Rs. 5,00,000/- and confirmed the addition of Rs. 44,95,000/- on account of cash deposited in Banks during the year under consideration.
2. That the Assessee was prevented by sufficient cause in not participating in the proceedings of Appeal before CIT (A) NFAC and therefore, the assessee has gone unheard in this matter and as per principles of natural justice, the assessee deserves a decent hearing to present his case. Grounds for Cash Deposited in Bank to the tune of Rs.49,95,000/- 3. THAT the Ld. AO has grossly erred in invoking Section 68 of the Income Tax Act. The deposits made by the assessee cannot by any stretch imagination be taken as Unexplained Cash Deposit. The deposits were out of sales proceeds/ amount received from sundry debtors resulting into cash in hand. The invoking of section 68 and charging tax u/s 115BBE of the Income Tax Act is wholly wrong and contrary to law.
3 3. The appeal is filed by 271 days delay and the assessee has filed an application with an affidavit for condonation of delay. We, have given a thoughtful consideration to the reasons mentioned in the application for the condonation of the delay. We are of the considered opinion that the assessee was prevented by reasonable and sufficient cause for not filing the appeal within the period of limitation, therefore, in the interest of justice the delay is condoned and appeal is admitted for adjudication.
The brief facts of the case are that the assessee has filed belated return of income for A.Y.2017-18 on 01-11-2017. The case was selected for scrutiny under CASS. Notice u/s 143(2) of the Act dated 24-08-2018 was issued. The assessee is a dealer of consumer electronic appliances and runs the proprietorship concern in the name and style of Messers US Electronics. During demonetization period from 09.11.2016 to 30.12.2016 the assessee has deposited the cash of Rs.49,95,000/-in assessee’s bank account. This cash was generated out of cash sales made during the normal course of business as well as realizations from debtors. During the course of proceedings, various 4 details such as audited financials, VAT returns, details of stock, confirmed copy of relevant ledgers, cash book, bank book, invoices and explanation for source of cash, etc. were submitted. The AO disregarded the submissions made and explanations given by the assessee and added Rs.49,95,000/- as unexplained cash credit u/s. 68 rws 115BBE of the Income Tax Act. Aggrieved by the order of the AO, the assessee was filed the appeal before NFAC, but NFAC has partly allowed the appeal observing as under : The appellant has not filed any submissions/ documentary evidence to support his grounds of appeal
during the appellate proceedings. However, looking to the facts and circumstances of the case, the opening balance as on 01.04.2016, the sales during demonetization period an amount of Rs.5,00,000/- can be treated as deposited from the known sources of the appellant and therefore, addition of Rs.44,95,000/- is confirmed and the appellant gets a relief of Rs.5,00,000/-. The grounds of appeal are partly allowed.
5. The Ld. Sr. DR has relied upon the orders of the authorities below and submitted that the appeal was rightly decided by the Ld. NFAC.
6. We have heard both the sides and perused the material available on record. The Ld. AR of the assessee submitted that assessee could 5 not file the submissions before the NFAC and now he wants to file the relevant documentary evidence before the NFAC. The NFAC has passed the order without hearing to the assessee. In the interest of justice and fair play we deem it fit to restore the matter to the file of the NFAC for fresh adjudication according to law after giving the opportunity of the being heard to the assessee. Therefore, we set aside the order passed by the Ld. NFAC.
In the result the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 01/07/2025.