DINESH KUMAR DAS,KOLKATA vs. ITO, WARD 29(1), KOLKATA

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ITA 2171/KOL/2025Status: DisposedITAT Kolkata20 August 2026AY 2013-147 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found the CIT(A)'s order to be not a speaking order and that the assessee was not given a proper opportunity to explain the circumstances for cash payments. Therefore, the matter was remanded to the AO for fresh adjudication.

What were the facts?

The assessee's appeal was filed with a delay, which the Tribunal condoned due to the assessee being a senior citizen with health issues and unaware of the appellate order. The core issue involved an addition made under Section 40A(3) for cash payments.

What were the issues?

Whether the disallowance under Section 40A(3) for cash payments was justified, and whether the assessee was provided with adequate opportunity to explain exceptional circumstances under Rule 6DD.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 250,Section 147,Section 143(3),Section 148,Section 151,Section 143(2),Section 234A,Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘A’ BENCH AT KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Act for AY 2013-14 dated 13.09.2022. 1.1 Though the Registry has not calculated any delay in filing the appeal, but a perusal of Form No. 36 relating to appeal details mentioned the date of order u/s 250 as 13.09.2022 and the date of service or communication of the order as 29.08.2025 thereby there being a delay, the assessee has filed an affidavit for condonation of delay explaining the reasons that the assessee, being a senior citizen suffering from health ailments, did not receive any communication of the appellate order and only became aware of the dismissal of the appeal on 29.08.2025 via a call from CPC Bangalore regarding an outstanding demand; after which the appeal was filed without undue delay. It is also mentioned that since the knowledge of the impugned order was first obtained by the assessee on 29.08.2025, it is submitted that the date of service may be reckoned as 29.08.2025 and therefore, the appeal is in time. In the alternative, the assessee has submitted that if any delay is perceived to have occurred in filing the appeal, such delay is neither wilful nor deliberate, but solely attributable to circumstances beyond his control, as he was genuinely unaware of the passing of the said order until being informed by the CPC. After perusing the same, we are satisfied that the assessee had a reasonable and sufficient cause and was prevented from filing the instant appeal within the statutory time limit. We, therefore, condone the delay, if any, and admit the appeal for adjudication.

2.

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

"

1.

For that in the facts and circumstances of the case the Assessment Order and Appellate order passed were bad in law and orders be quashed.

2.

For that the finding given in the assessment order and the appellate order are perverse and be reversed.

3.

For that the Ld. CIT(A) erred in law and on facts in upholding the addition of Rs.3,24,42,226 u/s 40A(3) of the Income Tax Act, 1961 without properly considering the exceptional circumstances and business expediency that necessitated the cash payments. Hence, the addition of Rs.3,24,42,226 made u/s 40A(3) of the Income Tax Act, 1961 deserves to be deleted.

4.

For that the Ld. CIT(A) failed to appreciate that Section 40A(3) of the Income Tax Act, 1961 is not absolute and provides exceptions under Rule 6DD of the Income Tax Rules, 1962, particularly when cash payments are made under exceptional circumstances and business expediency. Hence, the appellate order passed be set aside.

5.

For that the facts and circumstances of the case the notice u/s 148 of the Income Tax Act 1961 was without juri iction and bad in law and hence the entire assessment order is bad in law and the same should be quashed.

6.

For that the reopening of assessment u/s 148 of the Income Tax Act 1961 was bad in law and hence the reopening be declared to be bad in law and the reassessment order be quashed.

7.

For that the reasons recorded before reopening of assessment u/s 148 of the Income Tax Act 1961 did not meet the test of settled law and hence the reopening be declared to be bad in law and the reassessment order be quashed.

8.

For that the reopening of assessment u/s 148 of the Income Tax Act 1961 was on borrowed satisfaction and not on any independent application of mind by the assessing officer and hence the reopening be declared to be bad in law and the reassessment order be quashed.

9.

For that the reopening of assessment u/s 148 of the Income Tax Act 1961 was without any relevant material having link to escapement of income and hence the reopening be declared to be bad in law and the reassessment order be quashed.

10.

For that the sanction u/s 151 of the IT Act 1961 before the reopening of assessment u/s 148 of the Income Tax Act 1961 was mechanical and without application of proper mind and the sanction was bad in law and hence the reopening be held to be bad in law.

11.

For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding that the material based on which the Ld Assessment Officer passed the assessment order are collected behind the back of the assessee and which were not provided during the course of assessment proceeding, thus material should be excluded/ignored for the purpose of this case.

12.

For that in the facts and circumstances of the case the Learned Commissioner of Income Tax Appeals erred in upholding that the statement of third parties on which the Ld Assessment officer relied during the course of assessment proceeding were not subjected to cross examination for the assessee, thus the third party statement relied upon should be excluded/ignored for the purpose of this case.

13.

For that the assessment order passed u/s 147/143(3) of the Income Tax Act, 1961 was without juri iction and hence the Ld CIT(A) erred in confirming the assessment order. The assessment order was bad in law and should be quashed.

14.

For that the facts and circumstances of the case the notice u/s 143(2) of the Income Tax Act 1961 was without juri iction and bad in law and hence the entire assessment order is bad in law and the same should be quashed.

15.

The appellant craves leave to produce additional evidences in terms of Rule 29 of the Income Tax (Appellate Tribunal) Rules 1963. 16. For that the facts and circumstances of the case the interest computed u/s 234 A/B/C/D of the IT Act 1961 is over charged and wrongly calculated and or is not applicable to the assessee case hence the interest be deleted and or correctly computed.

17.

The appellant craves leave to press new, additional grounds of appeal or modify, withdraw any of the above grounds at the time of hearing of the appeal."

3.

Brief facts of the case are that the assessee had filed the return of income for AY 2013-14 on 31.05.2017 declaring total income at ₹21,03,213/-. The Assessing Officer (hereinafter referred to as Ld. 'AO') examined the information regarding large cash purchases of goods and framed the assessment u/s 147 r.w.s. 143(3) of the Act determining the total income of the assessee at ₹3,46,63,230/- by making addition of ₹3,24,42,226/- u/s 40A(3) of the Act for cash purchases, besides additions of ₹2,01,107/- for undisclosed purchases and ₹3,760/- for undisclosed interest on refund. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A), who held that the assessee had failed to provide any evidence or explanation demonstrating how the mitigating circumstances under Rule 6DD of the Income Tax Rules, 1962 were applicable to the cash payments. Accordingly, the Ld. CIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

4.

Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

5.

Rival contentions were heard and the submissions made have been examined. The issue relates to the disallowance u/s 40A(3) of the Act. The Ld. AR drew our attention to page 2 of the assessment order and it was submitted that the then AR could not file any explanation. Our attention was also drawn to page 9 of the order of the Ld. CIT(A) . The Ld. AR submitted that the order of Ld. CIT(A) may be set aside and the issue may be remanded before the Ld. AO for adjudication. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

6.

We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Though the assessment order had been made u/s 143(3)/147 of the Act and is not an ex parte order but it is stated on page 3 of the assessment order that the Ld. AR appeared on 12.12.2017 but he could not file any explanation in response to the email dated 07.12.2017 requiring why the disallowance u/s 40A(3) of the Act should not be made. The Ld. CIT(A) has also noted that the assessee had not submitted even a single piece of evidence or any explanation as to what were the mitigating circumstances for applicability of Rule 6DD and except for discussing the provision of section 40A(3) of the Act read with Rule 6DD of the IT Rules and the judicial pronouncements and in para 8 mentioning that during the course of the appellate proceeding the Ld. AO had specifically asked the assessee to explain why expenditure incurred in cash of ₹3.24 Crore should not be disallowed for violation of the provision of section 40A(3) of the Act, no other reasons are mentioned for confirming the disallowance. The assessee had relied upon several case laws for consideration of various factors mitigating circumstances under which the provision of section 40A(3) of the Act would not be attracted but the assessee did not submit even a single piece of evidence or any explanation as to what were the circumstances in his case under which cash payments had to be made and also the claim that the payee was ITA No(s). 2171/KOL/2025 Assessment Year(s) 2013-14 assessed to income tax and that the payee had shown these receipts in the accounts filed with the Department. Considering them as extraneous facts having no bearing whatsoever as far as the provision of section 40A(3) of the Act are concerned, he dismissed the appeal.

7.

The Bench was of the view that the order of the Ld. CIT(A) is not a speaking order as he had needed to be satisfied as to why the assessee could not furnish the evidence for applicability of Rule 6DD of the IT Rules. Therefore, the Bench was of the view that in the interest of justice and fair play, one more opportunity needs to be provided to the assessee as requested. Hence, after examining the facts of the case and the law, we deem it appropriate to set aside the order of the Ld. CIT(A) and the assessment order of the Ld. AO and remand the matter before the Ld. AO for passing the assessment order de novo. Needless to say, the assessee shall be given a reasonable opportunity of being heard to make any further submission he wants to make in support of the claim that the provision of section 40A(3) was not applicable and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

8.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 20th August, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 20.08.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Dinesh Kumar Das, 26, Kali Temple Road, Kolkata, West Bengal, 700026. 2. ITO, Ward-29(1), Kolkata, Aayakar Bhawan Dakshin, 2, Gariahat Road, Kolkata, West Bengal, 700031. 3. CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

Deputy/

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