KESAB COOMAR,KOLKATA vs. I.T.O., WARD - 32(1),, KOLKATA

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ITA 1950/KOL/2025Status: DisposedITAT Kolkata11 June 2026AY 2020-20219 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal, considering the circumstances and the assessee's claim of business sales being deposited, decided to remand the case back to the AO for a fresh assessment. The assessee was directed to be given a proper opportunity to be heard and was cautioned against seeking unnecessary adjournments.

What were the facts?

The assessee failed to comply with notices from the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) due to the illness and subsequent demise of his accountant. The AO made ex-parte additions for unexplained turnover and unexplained money under Section 69A, which the CIT(A) confirmed.

What were the issues?

Whether the additions made under Section 69A for cash deposits were justified when the assessee claimed they were from audited business sales, and whether the ex-parte assessment orders were valid given the circumstances of the accountant's demise.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 142(1),Section 144,Section 144B,Section 69A,Section 44AB,Section 272A(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘B’ 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)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2020-21 dated 23.06.2025. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal as per the enclosure to Form No. 36 which are descriptive and are the submissions of the assessee: "i. FOR THAT your Appellant submits that the Ld. Appellant Authority has passed the order in a very slip shed and perfunctory manner. The Ld. Authority acted arbitrarily in passing the order without considering into the records in the file in detail. Hence the order is void- ab- initio; ii. FOR THAT the Ld. Appellate Authority and Ld. Assessing Authority have failed to appreciate the nature of the business activities of the Appellant and also the withdrawn of cash from one account and deposit the same into ITA No(s). 1950/KOL/2025 Assessment Year(s) 2020-21 another account and these are merely a transfer of fund from one account to another account; iii. FOR THAT your Appellant submits that the impugned order dated 23.06.2025 is void for uncertainty, vagueness and inadequate findings of facts and law; iv. FOR THAT your Appellant is running a business of a proprietorship business. All day to day accounting and other allied activities are handled by its sole senior accountant who was associated for a long period of time with Appellant. The Appellant has no knowledge about accounting related matters and is totally unaware about the regular accounting aspect including the tax compliance matters also. All the monthly GST Returns including income tax matters are handled by the sole accountant; v. FOR THAT the Appellant is totally unaware of various notices served by the Income Tax Authority as the sole accountant is handing in all the accounts and tax related matters and these have never brought to the knowledge of the Appellant. During the past several months the accountant has been suffering from severe illness and on many occasions, he was hospitalized and under medical supervision; vi. FOR THAT your Appellant is a bone fide Appellant and complied with regular income tax return for past Assessment Years including filing of the Tax Audit Report (TAR) under Section 44AB of the Income Tax Act, 1961. However, due to severe illness of the accountant of the Appellant, the due compliances of filing of Income Tax Return have not been completed for the given Assessment Year; vii. FOR THAT the matter of non-compliances of income tax related issues have only been brought to the knowledge by his accountant only after issuing of the Assessment Order under provision of Section 144 read with Section 147 of the Income Tax Act, 1961. Your Appellant immediately made a consultation with an Advocate through his accountant and filed the Appeal enclosing various documents including Tax Audit Report for the given Assessment Year by your Appellant; viii. FOR THAT the Accountant of the Appellant has been admitted into hospital and expired and the documentary evidences of his illness and hospital related documents are enclosed herewith and marked as Annexure G; ix. FOR THAT the Ld. Appellate Authority and Assessing Authority have failed to appreciate that the books of account of the Appellate is audited under provision of section 44AB and the respective audit report in FORM 3CB is duly filed vide Acknowledge No 879392380210225. A copy of the Tax Audit Report is enclosed herewith and marked as Annexure H; x. FOR THAT the Ld. Appellate Authority has also failed to take into consideration the audited profit and loss statement where the turnover of the Appellate is clearly mentioned at Rs. 2,09,32,701/- and the copy of the Audit Report is enclosed herewith and marked as Annexure I; xi. FOR THAT the Ld. Appellate Authority has failed to consider the Bank Statement of the Appellate where it is clearly viable that the Appellate has withdrawn cash from its one Bank Account and deposited the same to its another bank account. The transaction is merely transfer of money from one bank to another bank and not and sale consideration. The Bank Statement of the Appellate is enclosed herewith and marked as Annexure J. There is no unaccounted money of the Appellate and the opinion framed by the Assessing Authority and also the Appellate Authority is not sustainable; xii. FOR THAT it is further submitted that it is a settled position of the law that provision of Section 69A cannot mechanically be invoked and the assessing authority ought to have gone through the details of the circumstances and ensured that the said amount of money is not actually been reflected in the books of accounts of the Appellant; xiii. FOR THAT once the amount deposited into bank account of the Appellant and the same is duly recorded in the books of account which have been audited, then the provision of Section 69A cannot be invoked and accordingly the tax cannot be imposed on such deposit of money into the bank account of the Appellant. Appellant would refer to a similar order in the matter of M/s Balsons Jewellers vs. Income Tax Officer, the Honble ITAT, Delhi Bench (ITA No. 563/Del/2024) has observed and passed the order in the matter of provision of Section 69A which reads as follows: … xiv. FOR THAT the Appellant has deposited the cash collection arising from the sale proceeds and the same is duly deposited into bank in several occasions and the cash sales and deposition of the same into the bank account cannot invoked the provision of section 69A and Appellant would refer the observation of the Ld. ITAT, in the matter of Tekchand Harilal vs. ITO, Balasore, ITAT, Cuttack Bench ITA No.110/CTK/2025 … xv. A summary of the details of transaction and reconciliation is provided hereinunder:

SI Cash Deposited Details Amount No 1 Cash Deposit in Current Account [SFT -003(D)] -5835 1,21,32,500 2 Cash Deposit in Current Account [SFT -004] 27,13,000 3 Cash Deposit in Current Account [SFT -003(D)] 73,82,500 4 Total Cash Deposit in Bank Account as per Income Tax Notice 2,22,28,000 5 Turnover as per Audited Profit and Loss Account 2,09,32,701 6 Deposition of Cash from One Bank Account to Another 11,87,000 7 Collection from Other old dues 1,08,299 8 Total Amount 2,22,28,000 xvi. FOR THAT the Appellant having only source of Income from Business and Profession and during the said Assessment Year the income under the head of Business and Profession was amounting to Rs. 5,75,648/- and the self-assessment tax computation is provided hereinafter: SI Particulars Amount Amount No 1 Profit and Loss from Business Operation 5,75,648.00 2 Income from Other 5,75,648.00 3 Total Income 4 Less: Deduction Under Section 80 0.00 5 Taxable Income 27,630.00 6 Tax Payable on Taxable Income 7 Up to Rs. 2,50,000 = NIL 12,500.00 From 2,50,001 to 5,00,000 = 5% From 5,00,001 to 10,00,000 = 20% 15,130.00 8 Interest as applicable (01/04/2020 to 31/08/2025, 14,644.00 53 Months - 1% per month) 42,274.00 9 Total Tax with Interest Your Appellant is willing to pay all the income tax payable as per self- assessment computation of income along with the applicable interest and late fee payable thereon. The Appellant Authority is being folded Handly prayed to kindly take into consideration of the same based upon the circumstances and non-adherence of the notices solely based upon the illness of the sole accountant who has just expired after serving for a long period of time with the organization; xvii. FOR THAT the penalty proceedings initiated under provision of Section 272A(1)(d) for non-compliances of reply to Notice issued under section 142(1) is bad in law considering the current circumstances and liable to be set aside. The copy of the penalty order is enclosed herewith and marked as Annexure K; xviii. FOR THAT the act of the Ld. Adjudicating Authority without considering the principle of natural justice and passed the whimsical order is tantamount to a bad, unjustified, misconceived and arbitrary order and liable to be set aside; xix. FOR THAT your Appellate craves leave to add, alter, amend, modify or delete any of the above grounds of appeal."

3.

Brief facts of the case are that the assessee did not file the return of income u/s 139 of the Act for AY 2020-21. Based on the information regarding substantial cash deposits and withdrawals in the bank accounts along with sales reported under GSTR-1 and GSTR-3B, the Assessing Officer (hereinafter referred to as the Ld. 'AO') initiated proceedings u/s 147 of the Act and issued a notice u/s 148 of the Act. Despite the issuance of multiple notices u/s 142(1) and a show-cause notice u/s 144 of the Act, the assessee remained non-compliant. Consequently, the Ld. AO framed an ex-parte assessment u/s 147 r.w.s. 144 and 144B of the Act on 28.01.2025, determining the total income at ₹59,07,589/- after making an addition of ₹14,19,166/- estimated as 8% profit on the unexplained turnover of ₹1,77,39,577/-, and a further addition of ₹44,88,423/- on account of unexplained money u/s 69A of the Act. The assessee filed an appeal before the Ld. CIT(A). Despite repeated hearing notices, no written submissions or evidence were furnished apart from a single adjournment request. Observing persistent non-compliance, the Ld. CIT(A) proceeded ex-parte and, confirming the findings of the Ld. AO, dismissed the appeal for non- prosecution.

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 Ld. AR submitted at the outset that the assessee carries on the retail business and both before the Ld. AO as well as before the Ld. CIT(A), proper compliance could not be made in both the orders passed was ex parte. It was also stated that the assessee carries on the retail business and says hardware items and the GST return was duly filed and the compliance could not be made because the accountant had expired in 2019. In the course of the appeal. The assessee has also filed additional written submission in the paper book filed. It is submitted that the assessee is the proprietor of M/s R. M. Coomer & Sons, is engaged in the retail hardware business. It has been submitted by the appellant that the initial non-compliance with the notices issued by the Department was neither intentional nor deliberate, but occurred due to the prolonged illness and subsequent demise of his senior accountant. The appellant has stated that he was entirely dependent on the said accountant, who had been associated with the firm for over 40 years, and consequently remained unaware of the ongoing tax proceedings until the ex parte Assessment Order was passed under Sections 144, 147, and 144B of the Income Tax Act, 1961. On the merits of the additions made by the Ld. Assessing Officer, the appellant has submitted that the cash deposited into the respective bank accounts originated entirely from the cash proceeds realized through over-the-counter retail sales. The appellant emphasized that his books of accounts are duly audited, and the Tax Audit Report in Form No. 3CB, reflecting a net profit of ₹ 5,75,648/- for the relevant financial year, has been placed on record. The appellant has strongly contended that the provisions of section 69A of the Act cannot be invoked in the instant case to treat the cash deposits of ₹ 44,88,423/- as unexplained money. It was argued that since all the transactions of sales and purchases are duly recorded in the audited books of accounts, the primary conditions for invoking Section 69A are not satisfied. In support of this contention, the appellant has also placed reliance on the judicial pronouncements of the Hon'ble ITAT Delhi Bench in the case of M/s Balsons Jewellers vs. ITO (ITA No. 563/Del/2024) and the Hon'ble 110/CTK/2025) which support the view that Section 69A cannot be applied when cash sales deposited in the bank are properly recorded in audited books of accounts. Finally, the appellant has submitted that he is a bona fide assessee whose business was severely impacted during the COVID-19 pandemic and demonstrating his bona fide intent, the appellant has voluntarily deposited the self-assessed tax liability of ₹ 42,274/- along with interest. In light of these facts and the cited judicial precedents, the appellant has prayed that the additions made by the Ld. Assessing Officer be deleted, the assessment order be set aside, and the consequential demand be quashed. 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). Since there was no proper compliance before both the Ld. AO as well as the Ld. CIT(A), in the interest of justice and fair play it was considered that the request of the assessee to remand the case before the Ld. AO may be allowed so that a proper opportunity of being heard may be provided. Hence, after examining the facts of the case, we deem it appropriate to set aside the order of the Ld. CIT(A) and remit the matter to the Ld. AO for making the reassessment 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 his grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in the appeal are partly allowed for statistical purposes.

7.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 11th June, 2026. [George Mathan] [Rakesh Mishra] Judicial Member Accountant Member Dated: 11.06.2026 Bidhan (Sr. P.S.)

Copy of the order forwarded to:

1.

Kesab Coomar, 34, Indian Mirror Street, Taltala, Kolkata, West Bengal, 700013. 2. I.T.O., Ward-32(1), Kolkata, Income Tax Office, 10B, Middleton Road, Kolkata, West Bengal, 700071. 3. CIT(A)-NFAC, Delhi.

4.

CIT-

5.

CIT(DR), Kolkata Benches, Kolkata.

6.

Guard File. //// By order

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