LAXMIBEN RAVJIBHAI PATEL,UNITED STATES vs. INCOME TAX OFFICER, WARD-3, NAVSARI., NAVSARI

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ITA 1273/SRT/2025Status: DisposedITAT Surat18 June 2026AY 2017-186 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee's explanation for the cash deposits was not satisfactorily linked to withdrawals made earlier. However, considering the materials placed on record and the fact that the CIT(A) had not fully considered them, the matter was set aside.

What were the facts?

The assessee, a non-resident, failed to file her income tax return for AY 2017-18. She made significant cash deposits during the demonetization period, which the Assessing Officer treated as unexplained income. The CIT(A) confirmed part of the addition.

What were the issues?

Whether the cash deposits made during demonetization were satisfactorily explained and whether the tax and penalty were correctly levied.

Which sections of the Income-tax Act were involved?

Section 144,Section 271AAC(1),Section 69A,Section 139(1),Section 142(1),Section 115BBE

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH “SMC”, SURAT

Before: Shri T.R. Sentil Kumar & Shri Ratnesh Nandan Sahay

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH “SMC”, SURAT (PHYSICAL HEARING) Before: Shri T.R. Sentil Kumar, Judicial Member And Shri Ratnesh Nandan Sahay, Accountant Member

ITA No: 1273 & 1274/SRT/2025 Assessment Year: 2017-18

Laxmiben Ravjibhai Patel Income Tax Officer Vadsangal, Gandevi Ward-3, Navsari-396360 Vs Navsari Gujarat PAN: COSPP8299A (Appellant) (Respondent) Assessee Represented: Ms. Chaitali Shah, C.A. Revenue Represented: Shri Ajay Uke, Sr. D.R. Date of hearing : 30-04-2026 Date of pronouncement : 18-06-2026 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-

These two appeals are filed by the Assessee as against the separate appellate orders both dated 17.09.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “Ld. CIT(A)”), arising out of the exparte assessment order passed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) and penalty levied under section 271AAC(1) relating to the same Assessment Year 2017-18.

I.T.A No. 1273 & 1274//SRT/2025 A.Y. 2017-18 Page No 2 Laxmiben Ravjibhai Patel vs. ITO

ITA No.1273/SRT/2025:- Brief facts of the case are, the 2. assessee is a non-resident, not filed her return of income for the AY 2017-18 under Section 139(1) of the Act. Whereas, the assessee made cash deposit amounting to Rs.14,51,500/-, in her bank accounts maintained with Dena Bank, Gandevi Branch, State Bank of India, Gandevi and Post-office savings Bank Account during the demonetization period. Since the assessee had not filed return of income, notice u/s 142(1) of the Act was issued to the assessee to explain the cash deposit made during demonetization period. The assessee partially explained the details with copies of passport, Bank accounts and another details. The Assessing Officer (Ld. A.O.) was not satisfied with the submissions made by the assessee, thereby made addition of Rs.19,32,300/- as unexplained income u/s 69A of the Act and calculated the tax thereon. The Ld. AO also initiated penalty proceedings u/s 271AAC of the Act.

3.

Aggrieved against the same, the assessee filed an appeal before Ld. CIT(A), who confirmed the addition by observing as follows:- “…….6.13 I have considered facts and circumstances of the case and submission of the assessee. It is found that the assessee has withdrawn the cash amounting to Rs. 28,15,000/- from 20.04.2016 to 18.04.2016. It may be appreciated that the assessee has submitted certified copy of the consent award passed by the Subdivisional Magistrate, Navasari dated 16th February, 2022. As such, it is effectively asserted that the assessee has withdrawn the cash, earmarked for renovation the house, since the house was acquired by consent award by the competent authority, renovation could not undertake and therefore the assessee has deposited such earmarked or reserved cash in the bank account during demonetisation. However, it is found that the assessee has withdrawn the cash during the period of 20.04.2016 to 18.04.2016. Whereas, the consent about was passed on 16th February, 2022. Therefore, there is inherent consistency in the submission of the assessee. What the assessee is trying to explain is that the assessee has withdrawn the cash during the period of 20.04.2016 to 18.04.2016 again re-deposited and again

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withdrawn and earmarked for renovation of the house and since the renovation of the house was cancelled again redeposited. However, such amount which was redeposited is much after [almost of the 5 years] of demonetisation. Therefore, the explanation of the assessee cannot be accepted that the cash was withdrawn and earmarked for the renovation of the house and since the renovation of the house was cancelled such cash was deposited in the bank account.

6.14 It may be appreciated that the assessee has withdrawn Rs. 28,15,000/- from 20.04.2016 to 18.04.2016. The assessee has deposited cash amounting to Rs. 14,81,500/- during demonetisation that is after 08.11.2016. The assessee has not submitted any documentary evidence with respect to the availability of the cash for the period starting from 18.04.2016 to 08.11.2016. Therefore, there is no live link present between the cash withdrawn by the assessee before 18.04.2016 and deposit of cash during demonetisation period. Therefore, the assessee could not satisfactorily explained the nature and character of the transaction which yielded cash to the assessee and subsequently such cash was deposited in the bank accounts during demonetisation period.

…………..

6.18 During the course of appellate proceedings, the bank accounts, explosion of the assessee and material available on record is considered and it is found that the submission of the assessee could not satisfactorily explained live link between the cash available by way of withdrawal with the assessee and cash deposited in the bank account during demonetisation period as mentioned supra. Therefore, considering the facts and circumstances of the case, submission of the assessee and material available on record and the addition of amount of Rs.14,81,500/-made by the assessing officer under section 69A of the IT Act is confirmed.”

4.

Aggrieved against the appellate order, the assessee is in appeal before us raising following grounds of appeal:-

1.

On the facts and circumstances of the case as well as the law on subject, the learned CIT(A) has erred in not condoning the delay in filing of appeal by the assessee. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of Assessing Officer by sustaining the addition of Rs. 14,81,500/- out of Rs. 19,32,300/- on account of unexplained money u/s. 69A of the I.Τ. Act, 1961.

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3.

On the facts and circumstances of the case as well as the law on the subject, the learned assessing officer has erred in taxing the addition by taking the rate @77.25% by attracting S. 115BBE instead of taxing as per normal tax slab. 4. Even otherwise on the facts and circumstances of the case as well as law on the subject, the assessing officer has erred in taxing the income u/s 115BBE @ 77.25% in a retroactive manner by applying the duly substituted S.115BBE inserted retrospectively instead of taxing it at 35.54% as per the old provisions of S.115BBE. 5. It is therefore prayed that above addition made by the assessing officer and confirmed by Ld. CIT(A) may please be deleted. 6. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.

5.

Ld. Counsel appearing for the assessee, submitted before us, a paper book running to 60 pages which contains copies of Indian Passport, USA Passport, Bank Statement of Dena Bank, State Bank of India and Postal Department, SB account statement as well as Bank statement of Bank of Baroda and another State Bank of India. The assessee also placed on record the award received under Gujarat Rehabilitation and Resettlement Act 2013 for compulsory land acquisition of her lands. Thus, she claimed that, the assessee being a NRI could not produce all these details before the Ld. A.O., however, placed before the Ld. CIT(A), which has not properly considered by Ld. CIT(A), therefore, requested one more opportunity of hearing be given to the assessee and relied upon few case laws as well.

6.

Per contra, the ld. Sr. DR appearing for the Revenue, supported the orders passed by the Lower Authorities and requested to confirm the addition made by the Lower Authorities.

7.

We have heard the rival contention and perused the materials available on record. The assessee could not able to explain the cash

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deposits made during demonetization period and the assessee also produced the passport, visa entries and duration of stays made by the assessee in India. Later she could collect the bank details and placed in the paper book. The above details were not considered by the Ld. CIT(A) in the appellate proceedings. Therefore, in the interest of justice, we deem it fit to set aside the matter back to the file of Ld. J.A.O., to give one more opportunity of hearing to the assessee to explain its case with all material evidences. Needless to say, the assessee should be given this final opportunity of hearing and to produce all the details before the Ld. JAO.

8.

In the result, this appeal filed by the assessee is allowed for statistical purposes.

9.

ITA No.1274/SRT/2025:- the grounds raised by the assessee in this appeal are as follows:-

1.

On the facts and circumstances of the case as well as the law on subject, the learned CIT(A) has erred in not condoning the delay in filing of appeal by the assessee. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in partly confirming the action of Assessing Officer by sustaining the penalty of Rs. 1,14,445/- out of total penalty of Rs. 1,49,270/- u/s. 271AAC(1) of the I.Τ. Act, 1961. 3. It is therefore prayed that the above penalty levied by the assessing officer and partly confirmed by CIT(A) may please be deleted. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.

10.

This appeal is related to the penalty levied u/s 271AAC(1) of the Act. Since the quantum appeal is already set aside to the file of Ld.

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JAO, the Ld. A.O. is directed to initiate the penalty proceedings in accordance with law, after completion of the quantum case. 11. In the result, this appeal filed by the assessee is allowed for statistical purposes. 12. In the combined effect, both the appeals filed by the assessee are allowed for statistical purposes.

Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 18-06-2026.

Sd/- Sd/- (RATNESH NANDAN SAHAY) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 18/06/2026 Mittali आदेश क� �ितिलिप अ�ेिषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,

उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, सूरत

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