GAHANCHA ALI AHMED,BHAKATPARA vs. ITO, WARD-MANGALDOI, MANGALDOI

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

Brief facts of the case are that the assessee was a non-filer for AY 2013-14, and the assessment was reopened u/s 147 of the Act on the information of cash deposits aggregating to ₹3,40,11,100/- in a savings bank account. A notice u/s 148 of the Act was issued on 26.03.2021, in response to which the assessee filed the return of income on 25.04.2021 declaring total income of ₹1,97,120/-. Despite the issuance of statutory notices u/s 143(2) and 142(1) of the Act, the assessee remained entirely non-responsive throughout the assessment proceedings. Consequently, the Assessing Officer (hereinafter referred to as Ld. 'AO') completed the assessment ex-parte u/s 147 r.w.s. 144 of the Act for the reason that the assessee was in possession of cash for which no source was provided and the same therefore, remained unexplained. The Ld. AO added the entire cash deposits of ₹3,40,11,100/- as unexplained money u/s 69A r.w.s. 115BBE of the Act, thereby assessing the total income at ₹3,42,08,220/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A). During the appellate proceedings, the assessee pleaded for the condonation of delay of 35 days in filing the appeal before the first appellate authority, stating that the assessee was not tech-savvy and was unaware of the order having been passed. Before the first appellate authority, the assessee furnished a Statement of Facts contending that he was a clerical staff member of 'Bhakatpara Samabai Samiti Ltd.' (a registered cooperative society engaged in the Public Distribution System and Mid-Day Meal programmes in Darrang District) on a meager annual salary of ₹ 15,240/-, besides running a tiny grocery business. He claimed that due to stringent banking limitations faced by the cooperative society and the urgent operational necessity to remit funds to the Food Corporation of India (FCI) for allocation of essential commodities, he was authorized by the society to collect cash from various PDS agents, deposit the same into his personal bank account, and execute corresponding debits for the society's work. He further pointed out that out of the total deposits, a sum of ₹ 29,12,347/- represented his personal business turnover which was already integrated into his return. The Ld. CIT(A) noted that the assessee remained non-compliant despite multiple hearing notices issued u/s 250 of the Act and also observed that the assessee's explanation that the cash deposits of ₹3,40,11,100/- belonged to M/s. Bhakatpara Samabai Samiti Ltd. was unconvincing and unsubstantiated, as the assessee failed to provide the PAN of the society or any cogent evidence regarding its activities and capacity to generate such cash. He held that the assessee was a non-filer with no known business sources and since he failed to prove the source of the funds deposited in the bank, the Ld. CIT(A) invoked the deeming provisions of section 69A of the Act to treat the amount as unexplained money. Accordingly, the Ld. CIT(A) confirmed the action of the Ld. AO and dismissed the appeal of the assessee.

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

Rival contentions were heard and the submissions made have been examined. The Ld. AR submitted that the assessee was employed with a society which distributes mid-day meals and PDS. He submitted that the entire collection of ₹ 3,40,11,100/- belonged to the cooperative society, Bhakatpara Samabai Samiti Ltd. (PAN: AADAB4734A), which was legally operating under centrally sponsored PDS and welfare schemes. He strongly urged that the cash was merely channeled through the assessee's account in a purely fiduciary, administrative capacity, and the corresponding bank ledger clearly demonstrates immediate debits/transfers for operational disbursements to the FCI and other government-linked distributors, ensuring that no wealth was retained or invested by the assessee. The Ld. AR acknowledged non- compliances before the lower authorities, attributing them entirely to ITA No(s). 372/GTY/2025 Assessment Year(s) 2013-14 severe medical disruptions and tech-illiteracy during the turbulent COVID-19 era. He submitted that if the matter is restored to the file of the Assessing Officer, the assessee would produce all relevant transactional logs, bank statements, certificates of authorization, and the financial profiles of the cooperative society to demonstrate that the money belonged to the society and not to the assessee and, therefore, no addition was warranted.

The assessee has also filed detailed statement of facts before us stating that the appellant, Gahancha Ali Ahmed, is an individual residing in Darrang District, Assam. He was employed as a clerical staff by "Bhakatpara Samabai Samiti Ltd.", a cooperative society. In addition to his employment, the appellant also operated a small grocery business. During the year under consideration, the appellant had cash deposits of ₹ 3,40,11,100/- in his bank account maintained with Assam Gramin Vikash Bank. The appellant could not file his return of income for the financial year 2012-13, relevant to the A.Y. 2013-14, as he was deeply involved in the society's day-to-day affairs. At that time, he had limited exposure to formal compliance processes and was unaware of the filing requirements under the Income Tax Act. His focus remained on fulfilling his responsibilities within the cooperative society, and the return was unintentionally not filed within the prescribed time. However, in response to the notice under section 148 of the Act, he filed his return of income on 25.04.2021 declaring total income of ₹1,97,120.00 but inadvertently omitted to include his salary income of ₹ 15,240.00, which was a minor and unintentional error on his part. He acknowledges this omission and submits that it was not deliberate. The appellant was unable to comply with the subsequent notices issued under sections 143(2) and 142(1) of the act. This non-compliance was ITA No(s). 372/GTY/2025 Assessment Year(s) 2013-14 not deliberate. The appellant is not well-versed with the technical aspects of information technology and was not in receipt of the notices issued and also due the COVID-19 period, he was also unable to engage any responsible professional to assist him with the proceedings. The Ld. CIT(A), while disposing of the appeal, has made certain observations which are factually and legally untenable. It is submitted that the assessee was employed as a clerical staff by "Bhakatpara Samabai Samiti Ltd." (PAN: AADAB4734A), a registered cooperative society operating in Sherpur Gaon Panchayat, Balabari, and Panbari Gaon Panchayat areas of Darrang District, Assam. During the financial year 2012-13, the society was engaged in the distribution of essential commodities such as rice, atta, sugar, etc. under centrally sponsored and state-implemented schemes, including the Public Distribution System (PDS) and the Mid-Day Meal programme. The society received monthly allocations of these commodities from the Food Corporation of India (FCI) under instructions issued by the concerned authorities. Distribution was carried out through a network of authorized agents who operated across the allotted areas, including supplies to schools and economically weaker sections of the society. For discharging his administrative responsibilities within the society, the appellant received a salary of ₹ 15,240.00 during the relevant financial year. In addition to his employment, he also operated a small grocery business. Moreover, the appellant operated in a region where the local population preferred cash transactions. Therefore, transactions arising from the sale of subsidized goods under the PDS were settled in cash, which was collected by the authorized agents and handed over to the cooperative society. As part of his entrusted role for the financial year 2012–13, and owing to limitations in the society's banking arrangements together with ITA No(s). 372/GTY/2025 Assessment Year(s) 2013-14 the need to ensure timely remittance to the Food Corporation of India (FCI), the appellant was authorised to oversee the receipt of collections and the disbursement of payments on the society's behalf. Hence, the appellant was formally authorized to deposit the collected funds into his personal bank account for the financial year 2012-13. Due to limitations in the society's banking arrangements and the practical need to ensure timely payments to Food Corporation of India (FCI), the appellant was authorized to deposit the funds into his bank account. The bank account reflects corresponding debits, evidencing that the funds were utilised for operational purposes and not retained or invested as personal income. The appellant has disclosed ₹29,12,347.00 as business income in the return filed in response to the notice under section 148 of the act, which corresponds to his individual business activity. The remaining deposits pertain to society-related transactions carried out in good faith and in furtherance of welfare objectives. The explanation furnished is consistent, supported by transactional records, and merits due consideration. It is also stated that the learned CIT(A) has placed undue reliance on the appellant's status as a non-filer for the relevant assessment year, treating it as a basis to discredit the explanation offered for the cash deposits amounting to ₹ 3,40,11,100/-. The absence of a return for the relevant year cannot be construed as sufficient basis to disregard the explanation furnished for the cash deposits, particularly when the transactions are traceable and linked to identifiable business activity. The appellant has already clarified that the return could not be filed due to limited familiarity with tax procedures and his continuous engagement in the operational affairs of "Bhakatpara Samabai Samiti Ltd." The learned CIT(A) have also noted that the appellant failed to ITA No(s). 372/GTY/2025 Assessment Year(s) 2013-14 substantiate the source of cash and did not furnish supporting documents. In this regard, it is stated by the assessee that the was unable to comply with the notices issued under sections 143(2) and 142(1) of the act due to genuine difficulties faced during that period. With restrictions in place during the COVID-19 outbreak, he could not access professional assistance and lacked the technical knowledge required to respond through online systems. The observation that the appellant, being unfamiliar with computers, could not have handled such cash transactions is based on assumption and not backed by any evidence. In many cooperative societies operating in rural areas, it is quite common for individuals to manage large cash flows without using digital tools. The appellant was not the financial owner of the funds but was simply carrying out administrative duties. The absence of documents like a balance sheet or profit and loss account does not automatically mean the transactions were unexplained, especially when the appellant was only facilitating payments on behalf of the cooperative society. The Ld. CIT(A) have also observed that the PAN and financial details of "Bhakatpara Samabai Samiti Ltd." were not furnished. The appellant submits that these details can be produced before the Tribunal, along with relevant records to substantiate the nature of the cash deposits. The failure to consider this explanation and the absence of any inquiry into the society's functioning renders the assessment incomplete and prejudicial. In view of the above, the appellant states that the findings recorded in the order passed by the Ld. CIT(A) are based on assumptions and do not reflect a fair appreciation of the facts and circumstances of the case. The addition made under section 69A of the act is unjustified and deserves to be waived off in the interest of equity and natural justice. Additionally, the penalty u/s ITA No(s). 372/GTY/2025 Assessment Year(s) 2013-14 271(1)(b),271(1)(c) and 271F of the act should be deleted. Thus, the demand raised has resulted in undue hardship and harassment, contravening natural justice principles. The order warrants re- evaluation and should be set aside, cancelling the demand raised. Being aggrieved by the order of Commissioner of Income Tax (Appeals), the appellant is in appeal before us. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld.

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). The Ld. AR had submitted at the outset that there was no proper compliance before the Ld. CIT(A) and requested that the matter may be sent back for deciding the appeal on merits as the appeal was dismissed on account of non-prosecution as the assessee could not furnish any documents in support of the grounds of appeal nor could he rebut the order of the Ld. AO. It was stated that the assessee has sufficient evidence for the relief claimed and even before the Ld. AO the assessment was ex parte. The Ld. DR relied upon the order of the Ld. CIT(A) and requested that the same may be upheld. 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 before the Ld. CIT(A), in the interest of justice and fair play it was considered by the Bench 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 back 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 it wants to make in support of its grounds of appeal and shall not seek unnecessary adjournments. Accordingly, the grounds taken by the assessee in his appeal are partly allowed for statistical purposes.

In the result, the appeal filed by the assessee is partly allowed for statistical purpose Order pronounced in the open Court on 5th June, 2026. [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 05.06.2026 Bidhan (Sr. P.S.)

CIT-

CIT(DR), Guwahati Benches, Guwahati.

Guard File. //// By order