SHRI BHADER PATEL,VILLAGE_ JETPURA vs. CIT(A), NATIONAL FACELESS APPEAL CENTRE(NFAC)

Per Paresh M Joshi, J.M.:

This is an Appeal filed by the Assessee under section 253 of

the income tax Act 1961,[ herein after referred to as the Act

for the sake of brevity] before this tribunal as & by way of a

second Appeal. The Assessee is aggrieved by the order

bearingNumber:-ITBA/NFAC/S/250/2024-

25/1068071496(1)dated 28.08.2024 passed by the Ld. CIT(A)

u/s 250 of the Act, which is herein after referred to as the

“Impugned order”. The Relevant Assessment year is 2017- 18 and the corresponding previous year period is from

01.04.2016 to 31.03.2017.

2.1 That as & by way of an assessment order made u/s 144 of

the Act, the total income of the assessee was computed &

assessed at Rs 10,25,000/-. The regular return of Income was

not filed. Section 69A of the act was invoked. That the aforesaid

assessment order bears No:- ITBA/AST/S/144/2019-

20/1018357108(1) & that the same is dated 27-09-2019 which

is herein after referred to as the “Impugned Assessment Order”.

2.2 That as per the SFT (Suspicious Financial Transaction)

report the assessee had made total cash deposit of Rs

10,25,000/- in his bank account maintained in the Canara Bank

during the FY 2016-17 in the period of Demonitization.

(2.3) That the Assessee had not filed his return of Income for the

year under consideration.

2.4 That a notice u/s 142(1) of the Act was issued to the

Assessee on 22-03-2018 calling upon him to prepare a true & correct return of Income for AY 2017-18. No return of Income was

filed within the specified time given.

2.5 Yet another notice u/s 142(1)(ii) of the Act dated 20-08-2019

was issued to the Assessee requiring him to explain the sources

of total cash deposits made in his bank Accounts during the FY

2016-17 with copies of supporting documents etc & with other

queries. A copy of this Notice i.e. 20-08-2019 was also served to

the Assessee through Inspector. The Date of Compliance was 04-

09-2019. No compliance was made by the Assessee & No

explanations, documents etc were placed on the record by the

Assessee. Therefore, a show cause notice u/s 144(1) of the Act

was issued on 05.09.2019 by Email & was also sent by DAK. The

case was fixed for 16.09.2019. No compliance was made to the

show cause notice. A summon u/s 131 of the Act was too issued

on 11.09.2019 for 16.09.2019 which too was not complied by the

Assessee on 16.09.2019.

2.6 That a notice u/s 133(b) was issued to the Canara bank

calling upon the said bank to give copy of assessee’s bank

account for the relevant period. The same was however provided

by the bank which was placed on the record. On going through the bank account, it was noticed that cash deposit of Rs

10,25,000/- was made during the demonitization i.e. FY 2016-17.

The cash deposit was not explained despite opportunities as

aforesaid. Hence, Cash was unaccounted on section 69A rws 115

BBE was invoked.

2.7 That the assessee being aggrieved by the aforesaid

“Impugned Assessment Order” prefers the first appeal u/s

246A of the Act before the Ld CIT(A) who by the “Impugned

Order” has dismissed the first the appeal of the assessee on the

grounds & reasons stated therein. The core grounds and the

reasons for the dismissal of the first appeal was as under:-

“Ground 1 To 6: The grounds of appeal have been raised against the passing of assessment order u/s 144 by the Ld. AO wherein the appellant has contended that the impugned assessment order is erroneous to the extent that the Ld. AO added the deposits during demonetization to the tune of Rs. 10,25,000/-, Further, he applied the rate of tax u/s 115BBE @ 60% plus surcharge and cess. The LD AO was not justified in levying interest u/s. 234A, 234B, 234C and 234D and not justified in initiating penalty u/s. 270A and 271AAC. The appellant has also requested that the assessment order be hence quashed. During the course of assessment proceedings, due to non- compliance of the assessee, the Ld. A.O. passed an order u/s 144 of the Act on 27.09.2019. During the course of assessment proceedings, the Ld. AO made an addition of Rs. 10,25,000/- after making an observation that the assessee had deposited cash of Rs. 10,25,000/- in his Bank Accounts 2074897011868 maintained with Canara Bank, during demonetization period since no reply was received from the assesse. The sources for the same were unexplained cash credits u/s 69A of the Income tax Act, 1961 to be taxed along with section 115BBE(1)(i) of the Income Tax Act 1961, hence a penalty proceedings u/s 271AAC of the Income Tax Act, 1961 was initiated separately.

During the course of appellant proceeding, the appellant has submitted that the appellant is an individual, engaged in the business of milk supply. He has been doing this business for more than 30 years. The milking activity has been done by his family for generations. He collects on of supply of milk to his retail customers and collets cash from them on a monthly basis. During the F.Y. 2016-17, the government declared demonetization from 08.11.2016 to 30.12.2016 where assesse deposited the cash of Rs. 10,25,000/- into his loan account on 11.11.2016 and repaid the entire loan. The appellant has submitted the bank statement of the F.Y. 2016-17. From the submission of the appellant, It is seen that The appellant has deposited only Rs 10,25,000/- in the entire F.Y. 2016-17. Apart from this, the appellant has not deposited any amount in his bank account in the entire financial year. This shows that the appellant does not deposit money in the bank account habitually.

In view of the facts and circumstances as stated above, the addition made by the Ld. AO is confirmed. The grounds of appeal nos. 1 to 6 are dismissed. In the result, the appeal is Dismissed.”

2.8 That the assessee being aggrieved by the “Impugned

Order” has preferred the instant second appeal before this

Tribunal and has raised following grounds of appeal in the

Form No. 36 against the “Impugned Order” which are as

under:-

“1. That, on the facts and in the circumstances of the case, the order passed by the Ld. CIT(A) under section 250 of the Income Tax Act is illegal, bad in law, and devoid of merit, as it erroneously sustains the assessment order passed by Ld. AO which is contrary to provisions of law, facts on record, and principles of natural justice, and further erred in recording an incorrect A.Y. as "2020-21," instead of A.Y. as "2017-18," thereby rendering the impugned order factually incorrect and legally untenable.

3.1 The hearing in the matter took place before this tribunal on

15-04-2026 (PH) & 29-04-2026 (Finally heard) when the Ld AR

for & on behalf of the assessee appeared before us and Interalia

contended that the “Impugned Order” is bad in law, illegal & not

proper. It is violation of the principles of natural justice. It

therefore deserves to be set aside. It was next contended that the

Registry of this tribunal has pointed out the delay of 330 days in filling the instant second appeal. It was submitted that the

Impugned Order is dated 28-08-2024 whereas the appeal was

filed on 25-09-2025. The prescribed time limit to file the appeal is

two months from the end of the month in which the Impugned

Order was received. The assessee is an agriculturist & does allied

activities like selling milk. The assessee is conversant with

hindi only. Our attention was invited to Page 24 to 26 of the

appeal memo which was a condonation of delay application

placed on the record. The assessee is not aware of the online

procedure of dept of the Income tax. The Assessee health

condition is poor & necessary medical records are placed on

record. The Assessee could not appear & file the reply before the

Ld AO due to the aforesaid handicaps. There is no malafide

Intention behind delayed filling. Sufficient cause is shown &

delay should be condoned. Per Contra the Ld DR appearing for &

on the behalf of the revenue submitted that the Dept of Income

tax has no serious objection if this tribunal in its wisdom deems

fit to condone the delay. We after hearing both the parties are of

the considered view that sufficient cause is shown which is bonafide. Delay is therefore condoned & appeal is taken up for

hearing.

3.2 The Ld AR then contended & submitted that the “Impugned

Assessment Order” is u/s 144 of the Act. In so far as the

“Impugned Order” is concerned full & complete submissions

with regard to the activities of the assessee could not be urged in

an effective manner. Mention was made only of milk sale

activities while the assessee has agriculture activities too. There

was a error on the part of earlier counsel engaged who spoke

about milk sale activities only. It was submitted that

agriculture activities related bills are placed on record & Our

attention was invited to page 42 of PB which is a bill No:- 43

dated 25-10-2018 showing the assessee as an agriculturist

seller of soya 90 kg having value Rs 94,848/- issued by

Shree Nath Multi Trade Pvt. Ltd Next our attention was invited to

PB page 55 to a Receipt no:- 5850 dated 06.04.2019 issued by

Kailash grain mills Pvt. Ltd (Unit 2) in favour of the Assessee

(agriculturist) showing sale of 100kg wheat for Rs 9360/- paid

through RTGS. Upon a quarry by the bench how these are

relevant must be shown & matter was kept part-heard & was adjourned for 29-04-2026 (it is required to be noted that when

our attention was invited to page 30 of PB to bill dated 26-03-

2016 name of crop is illegible the value is Rs. 93,587/-).

3.3 On 29-04-2026 part heard matter was once again taken up

for the hearing when the Ld AR contended that the Impugned

Assessment Order being u/s 144 is an exparate order. In so far

as Impugned Order is concerned certain important facts were

not mentioned. That the representation was not proper &

effective by the erstwhile counsel who was engaged by the

Assessee. The source of cash deposit is the agriculture income &

agriculture land belongs to the assessee is of forefathers. In KCC

A/c 10,25,000/- appears, that before the Ld CIT(A) milk supply

business of the assessee was spoken about & nothing was

mentioned about the agriculture activities of the assessee. A

notarised affidavit is placed on record dated 24-04-2026 PB page

80 &81 were in it is stated that the Assessee is an agriculturist &

that previous counsel did not took cognizance of this activity as

the Assessee is familiar with hindi & not English. He could not

understand English version of documents & submissions. He has

KCC “Kisan Credit Card” & an amount of Rs 10,25,000/- was deposited for the renewal. The KCC perse establishes that the

Assessee has agriculture land. The milk sales is additional

business. Due to mistake by the earlier counsel he has changed

the old counsel: Reliance was then placed on Page 86,87 & 88 of

PB which are bills dated 02-04-2016, 05-09-2016 & 12-09-2016

evidencing the sale of wheat & soyabeen. Bills are issued by

Meena Seeds in favour of the Assessee, of amounts of Rs

1,87,177/- Rs 1,30,758/- & Rs 1,14,285/-. Reliance was then

placed on PB page 95 P2 Khasara showing assessee Name

amongst others & same is “Bandhak” with the canara bank

Palasia Point, Indore. It is irrigated land. Crops are wheat &

soyabean. FY is 2016-17. Thereafter the Ld AR took us to the

Bills of earlier years & later years to demonstrate bonafide of the

Assessee as an agriculturist . Few bills were joint in names & few

had the assessee name. (P35,36 joint) (P42-Assessee) page 103 of

PB was relied upon for form PII having assesse’s name amongst

other family members. Milk supply & sales is side business

pleaded AR. Per contra Ld DR submitted that Notice(s) were not

complied with which lead to order u/s 144. Now the papers &

documents are in the form of additional evidence which needs to be inquired into by the Ld AO & after due verification some

definite findings could be given. He stated that matter should be

set aside to file of the Ld AO with cost. Hearing was over &

concluded.

4.1 We have to decide the legality, validity and proprietary of the

“impugned order” basis records of the case & the rival

submission canvassed before us.

4.2 We have carefully perused the records of the case and have

heard the submissions.

4.3 We basis records of the case & after hearing and further

upon examining the rival contentions of the Ld AR & the Ld DR

canvassed before us, are of the considered opinion that the

“Impugned Assessment Order” is under section 144 of the

Act & the matter has not been adjudged & adjudicated basis

merits. In this regard, We hold that number of opportunities

were afforded to the assessee as & by way of notice(s) including

notice(s) u/s 142(1) & 144, hearing dates etc were fixed for

compliances etc but none were availed off by the assessee. The Dept had prior information about cash deposited during the

demonitization period & under these tiring circumstances

Invocation of section 144 is correct. But we are of the considered

opinion that in addition to above section like 142(1) & 144, the

Ld AO has many other coercive powers like S131 which too was

invoked in this case against assessee. In fact Dept invoked

section 133(6) against bank. Be that as it may & moving forward

in so far as Impugned Order u/s 250 is concerned the Ld CIT(A)

has passed the “Impugned Order” basis contention of the

Assessee that activity carried out by the Assessee was sale of

milk only & amount of Rs 10,25,000/- was deposited to clear off

the loan account during demonitization. No other defence of

plausible nature was set up with regard to sources of cash

deposit in one go.

4.4 We further observe & hold that there is 360 degree turn

around at the second appellate stage on the ground that the

assessee is an agriculturist also besides being a milk supplier.

This sudden volte-facie is that this fact was told to the assessee

old counsel but due to some factor not very expressly stated the

old counsel did not take any such plea.

4.5 We further observe & hold that Now in the Paper book a

totally new set of documents pertaining to the agriculture

activities of the assessee are placed on record at the second

appellate stage & a new case is set up before us (Including app

u/s 29 of ITAT rules 1963) (P14 to 16 of PB dated 15-04-

2026) (pages 80 to 120 of PB dt 29-04-2026) which is rightly

objected to by the Ld DR as recorded aforesaid. We hold that

additional plea of agricultural activities & fresh material &

documents which we have discussed & recorded were not before

the lower authorities. Consequently there is no finding in this

regard in both the orders of the lower authority. We express our

displeasure that the assessee has taken too much leeway with

law. Be that as it may we desire & want lower authorities to pass

adjudication order basis merits so that in ultimate analysis law

triumphs.

4.6 This tribunal has repeatedly stated that it desires that

the total income of the Assesse should always be computed &

assessed on the real time basis exigible to tax, in accordance with

law by following the due process of law under the act. This

tribunal also expects the assessee to be fully compliant & should cooperate with the Dept as & when notice(s), summons, etc are

issued. In brief this tribunal desires the meritorious disposal of

both the “Impugned Assessment Order as well as the

Impugned Order”. The Assessee Cooperation in this regard

assumes importance. The Assessee should be firm & should not

go in slumber mode. In the result we are of the considered

opinion that “Impugned Order” should be set aside & the matter

should be remanded back to the file of Ld AO for passing a fresh

order on the merits of the case. It is the expectation of this

tribunal that the Assessee would be firm in his stand now &

shall give his full & complete details including the latest Email

address/Id & that of his counsel where the notices etc could be

served effectively by the Dept. The Assessee is directed to attend

the hearings as & when fixed & to file reply & to furnish all the

material details in his defence before the Ld AO. Full compliances

to be done of notice(s) u/s 142(1) of the Act now.

4.7 In view of the above, we set aside the Impugned order &

remand the case back to the file of Ld AO on denovo basis, who

shall now paas a speaking & well reasoned order. In this peculiar

facts & circumstances we impose a cost of Rs 2500/- on the Assessee to be paid by a challan in favour of income tax Dept. We

admonish & caution the Assessee too looking to overall facts &

circumstances the case narrated herein above.

5 Order

5.1 In the result “Impugned Order” is set aside as & by way

of remand back to the file of Ld. AO with our above

observations.

5.2. Appeal of assessee is allowed for statistical purpose.

Pronounced in open court on 08.05.2026.

Sd/- Sd/-

(BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER

Indore Dated : 08/05/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore