HANUMANTHAPPA KRISHNAPPA,KOLAR vs. INCOME TAX OFFICER, WARD-1, KOLAR

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ITA 14/BANG/2026Status: DisposedITAT Bangalore21 May 2026AY 2017-187 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal due to bona fide reasons. Considering the assessee's circumstances and the ex-parte assessment, the Tribunal restored the issue to the AO for fresh adjudication.

What were the facts?

The assessee failed to file an ROI and was assessed ex-parte. The Assessing Officer (AO) added cash deposits during demonetisation as unexplained income under Section 69A and estimated business income. The CIT(A) dismissed the assessee's appeal in limine.

What were the issues?

Whether the CIT(A) was justified in dismissing the appeal in limine without adjudicating on merits, and whether the assessee should be granted another opportunity to substantiate the source of cash deposits.

Which sections of the Income-tax Act were involved?

Section 69A,Section 144,Section 250,Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘SMC’ BENCH, BANGALORE

Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K

For Respondent: Shri Ganesh R Ghale, Standing Counsel for the Dept
Hearing: 07.05.2026Pronounced: 21.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL MEMBER

ITA No.14/Bang/2026 Assessment Year: 2017-18

Hanumanthappa Krishnappa, The Income Tax Officer, Vs. C/o Sri Ravindra, Ward – 1, Chowdeshwarinagar, Tekal Road, Kolar. Opp. Nandi Bar, Kolar – 563 101. PAN – BGCPK 8390 J APPELLANT RESPONDENT Assessee by : None Revenue by : Shri Ganesh R Ghale, Standing Counsel for the Dept. Date of hearing : 07.05.2026 Date of Pronouncement : 21.05.2026 O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The present appeal has been instituted by the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dated 29.05.2025 relevant to AY 2017-18.

2.

The assessee in the grounds of appeal has raised 13 grounds which, for the sake of brevity and convenience, we are not inclined to reproduce here. The grounds of appeal raised by the assessee are

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interconnected and pertain to the addition made by the Assessing Officer under section 69A of the Act.

3.

The relevant facts of the case are that the assessee, an individual, is having income from contract receipts and agricultural activities. The assessee failed to file its ROI for the captioned AY. As per the information received by the department, the assessee had deposited cash amounting to Rs. 14,54,000 in his bank account during the demonetisation period and Rs. 7,59,500 before demonetisation period and Rs. 37,975 post demonetisation period (Total Rs. 7,97,475). Based on this information, the Assessing Officer issued notices u/s 142(1) of the Act. However, the assessee failed to reply to such notice. As a result, the AO based on the information available before him completed assessment by adding Rs. 14,54,000 as unexplained cash deposits u/s 69A of the Act and Rs. 63,798 (deemed 8% turnover of gross receipts of Rs. 7,97,475) as business income to the total income of assessee. Hence, a total addition of Rs. 15,17,798/- was made to the total income of the assessee and the assessment was completed u/s 144 of the Act.

4.

Aggrieved by order of the AO, the assessee preferred an appeal before the Ld. CIT(A). The assessee before the Ld. CIT(A) submitted that the assessment was completed ex-parte u/s 144 of the Act since the notices issued by the AO could not be properly complied with by the assessee. It was submitted that the assessee had shifted his residence from the address available with the department and therefore earlier notices could not be received. The assessee submitted that immediately upon receiving the office letter dated 18.09.2019 through the local postman, the assessee approached the AO through his Accountant and

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furnished computation of income, bank statements and details relating to agricultural receipts. However, by that time the assessment order had already been passed.

5.

The assessee further submitted that the assessee is a small individual taxpayer residing in a village and was not properly aware of the legal provisions relating to filing of return and appeal. It was submitted that the delay in filing appeal occurred due to lack of proper professional guidance and bona fide misunderstanding regarding limitation period.

5.1 On merits, the assessee submitted that the cash deposits made during demonetisation period represented business receipts, agricultural income and redeposit of earlier cash withdrawals belonging to the assessee and his family members. It was further submitted that the assessee was engaged in contract activities and eligible for presumptive taxation u/s 44AD of the Act. Therefore, the cash deposits could not be treated as unexplained money u/s 69A of the Act.

5.2 The Ld. CIT(A), however, was not convinced with the explanation furnished by the assessee. The Ld. CIT(A) observed that despite sufficient opportunities granted during the appellate proceedings, the assessee failed to properly substantiate the claim with supporting evidences. The Ld. CIT(A) further observed that the assessee had not demonstrated sufficient cause for non-compliance before the AO and also failed to establish the source of cash deposits with cogent documentary evidences. Accordingly, the Ld. CIT(A) dismissed the appeal in limine and upheld the additions made by the AO u/s 69A of the Act and estimation of business income made in the assessment order passed u/s 144 of the Act.

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6.

Aggrieved by the order of the Ld. CIT(A), the assessee preferred an appeal before us.

7.

The assessee through his written submission before us submitted that there is a delay of 156 days in filing the present appeal before the Tribunal. In this regard, reliance was placed on the affidavit dated 02.01.2026 filed by the assessee explaining the reasons for delay. The assessee submitted that the appellate order passed by the Ld. CIT(A) was sent to the old email ID of the earlier counsel which was no longer in use. It was further submitted that another email ID belonging to the local auditor’s office was a general office email and the communication was inadvertently overlooked by the office staff. The assessee came to know about the appellate order only upon receipt of communication from the Verification Unit during subsequent proceedings. Thereafter, the assessee immediately approached the professionals and took steps for filing the present appeal. The delay was further caused due to difficulty in tracing old appeal records owing to change in office premises of the earlier counsel.

7.1 On merits, the assessee in the ground of appeal submitted that the assessment was completed ex-parte u/s 144 of the Act and the cash deposits during demonetisation period represented contract receipts, agricultural income and redeposit of earlier cash withdrawals belonging to the assessee and his family members. It was submitted that the assessee is a small farmer and contractor residing in a village and was not properly aware of the technical provisions of the Income-tax Act. The assessee submitted that the AO erred in treating the entire cash deposits of Rs. 14,54,000/- as unexplained money u/s 69A of the Act taxable u/s 115BBE

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without bringing any cogent material on record. The assessee prayed that one more opportunity may be granted to substantiate the source of deposits with supporting evidences in the interest of substantial justice.

8.

The Ld. DR, on the other hand, vehemently supported the orders of the lower authorities. It was submitted that the assessee had consistently failed to comply with the statutory notices issued during the course of the assessment proceedings. The Ld. DR further submitted that even before the Ld. CIT(A), the assessee failed to comply with the notices issued, and therefore the Ld. CIT(A) was justified in dismissing the appeal in limine. According to the Ld. DR, the conduct of the assessee shows a continued pattern of negligence and lack of diligence in pursuing the appellate remedies available under the Act. It was therefore submitted that the assessee has failed to demonstrate sufficient cause for such repeated delays and non-compliance. In view of these circumstances, the Ld. DR submitted that the appeal of the assessee does not deserve to be admitted and the order of the Ld. CIT(A) may be upheld.

9.

We have heard the ld. DR and perused the materials available on record. We have also carefully considered the affidavit dated 02.01.2026 filed by the assessee explaining the reasons for delay in filing the present appeal before the Tribunal. On consideration of the facts stated in the affidavit, we are satisfied that the delay of 156 days in filing the appeal was caused due to bona fide reasons and circumstances beyond the control of the assessee. The assessee is a small farmer and contractor residing in a village and the appellate order was admittedly sent to the old/non-functional email address of the earlier counsel. Further, the communication sent to the local auditor’s office email was overlooked by

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the office staff. Immediately upon coming to know about the appellate order during subsequent proceedings, the assessee took steps for filing the present appeal. Therefore, following the principles laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs. MST. Katiji & Others reported in 167 ITR 471 (SC), we condone the delay in filing the present appeal and proceed to adjudicate the matter on merits. On merits, it is noticed that the assessment in the present case was completed ex-parte u/s 144 of the Act. The additions have been made mainly on the basis of cash deposits noticed in the bank accounts of the assessee during demonetisation period. The assessee has consistently contended that the cash deposits represented contract receipts, agricultural income and redeposit of earlier cash withdrawals belonging to the assessee and his family members. It is also noticed that the Ld. CIT(A) dismissed the appeal in limine without adjudicating the issues on merits. Considering the peculiar facts and circumstances of the present case, particularly the fact that the assessee is a small villager not well conversant with the technical provisions of the Income-tax Act and further considering that the assessment was completed without proper participation of the assessee, we are of the considered opinion that one more opportunity deserves to be granted to the assessee in the interest of substantial justice and fair play. Accordingly, we set aside the orders of the lower authorities and restore the entire issue to the file of the AO for fresh adjudication. The assessee is directed to furnish all necessary details and documentary evidences in support of the source of cash deposits including details relating to contract receipts, agricultural income and earlier cash withdrawals. The AO shall examine the same and pass a fresh speaking order in accordance with law after affording reasonable opportunity of being heard to the assessee. We make it clear that the

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assessee shall fully cooperate in the set aside proceedings and shall not seek unnecessary adjournments. Hence, the ground of appeal of the assessee is allowed for statistical purposes.

10.

In the result, appeal of assessee is allowed for statistical purposes.

Order pronounced in court on 21st day of May, 2026

Sd/- Sd/- (SOUNDARARAJAN K) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 21st May, 2026 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore

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