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Facts
The assessee failed to file its return of income for AY 2018-19. Proceedings under section 147 were initiated based on cash deposits of Rs. 46,42,47,702/- and time deposits of Rs. 76,740/-. The assessment was completed ex-parte, treating these deposits as unexplained income. A penalty under section 271AAC(1) was also imposed.
Held
The Tribunal held that while the assessee made no compliance, the AO did not examine the cash deposits on merits. Citing the Gujarat High Court decision in Vareli Textiles Limited, the Tribunal set aside the matter to the CIT(A) to condone the delay and decide the appeal on merits, subject to a cost of Rs. 20,000/-. The penalty appeal was also restored to the CIT(A).
Key Issues
Whether the CIT(A) erred in dismissing the appeal in limine without adjudicating on merits and whether the additions and penalty were correctly sustained without proper examination of facts.
Sections Cited
147, 144, 148, 271AAC(1), 69A, 115BBE, 234A, 234B, 234C, 234D
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:
These two appeals are filed by the assessee against the separate orders of National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘CIT(A)’] both dated 14.07.2025 for the Assessment Year (A.Y.) 2018-19 in the proceeding u/s 147 r.w.s. 144 of the Act and u/s. 271AAC(1) of the Income Tax Act.
The brief facts of the case are that the assessee did not file its return of income for A.Y. 2018-19. A proceeding u/s. 148 of the Act was initiated in the case of assessee on the basis of information that cash deposit of & 461/Ahd/2026 Shree Trapaj Seva Sahakari Mandli Limited Vs. ITO, AY- 2018-19 2 Rs. 46,42,47,702/- and time deposit of Rs. 76,740/- was made in its bank account with Bhavnagar District Cooperative Bank. In the course of assessment proceeding no compliance was made by the assessee. Therefore, the assessment was completed ex-parte u/s. 147 r.w.s. 144 of the Act on 25.03.2023 at total income of Rs. 46,43,24,442/-. The entire cash deposit and the time deposit was considered as unexplained income of the assessee. The AO had also initiated penalty proceeding u/s. 271AAC of the Act, while completing the assessment. Thereafter, a separate penalty order u/s. 271AAC(1) was passed on 12.09.2023 imposing penalty of Rs. 3,58,69,063/- on the assessee.
3. Aggrieved with the orders of the AO, the assessee had filed an appeal before the first appellate authority, which was decided by the learned CIT(A), vide the impugned orders and the appeals of the assessee were dismissed. Th
Now the assessee is in second appeal before us. The following grounds have been taken in these two appeal:
1. The Ld. CIT(A) has erred, both in law and on facts, in dismissing the appeal in limine on the technical count of delay without entering into merits of the case.
2. The Ld. CIT(A) has erred, both in law and on facts, in confirming the action of AO in reopening the assessment u/s 147 of the Act.
& 461/Ahd/2026 Shree Trapaj Seva Sahakari Mandli Limited Vs. ITO, AY- 2018-19 3 3 The Ld. CIT(A) has erred, both in law and on not deleting addition of Rs.46,42,47,702/- made by AO u/s 69A of the Act in respect of deposits in bank account 4. The Ld. CIT(A) has erred, both in law and on facts, in not deleting addition of Rs.76,740/-made by AO u/s 69A of the Act in respect of time deposits.
The Ld. CIT(A) has erred, both in law and on facts, in confirming the action of AO in invoking section 115BBE of the Act in respect of all the additions.
Both, AO & CIT(A), have erred in passing the impugned orders without properly appreciating facts of the case, submissions of the assessee and documentary evidences available on record in the correct perspective.
The Ld. CIT(A) has erred in law and on facts of the case in confirming levy of interest u/s. 234A/B/C/D of the Act.
8. The Ld. CIT(A) has erred in confirming action of initiation of penalty proceedings under section 271AAC(1) of the Act.
9. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal.
1. The Ld. CIT(A) has erred, both in law and on facts, in confirming penalty of Rs.3,58,69,063/-levied under section 271AAC(1) of the Act.
2. The Ld. CIT(A) has erred, both in law and on facts, in not discussing merits of the appeal against penalty order and has further erred in confirming penalty on the mere count that quantum appeal has been dismissed.
In any case, quantification of penalty under section 271AAC(1) of the Act levied by the learned AO and confirmed by learned CIT(A) is erroneous.
4. Both, AO & CIT(A), have erred in passing the impugned orders without properly appreciating facts of the case, submissions of the assessee and documentary evidences available on record in the correct perspective.
& 461/Ahd/2026 Shree Trapaj Seva Sahakari Mandli Limited Vs. ITO, AY- 2018-19 4 5. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. We will first adjudicate in appeal of the assessee in respect of quantum addition.
5. Shri Parimalsinh B Parmar, the Ld. AR of the assessee submitted at the outset that there was delay in filing in appeal before the Ld. CIT(A) and that no compliance could be made by the assessee to the notices sent by him. Therefore, the Ld. CIT(A) had dismissed the appeal of the assessee by not condoning the delay and the matter was not adjudicated by him on merits. The Ld. AR submitted that the assessee may be allowed another opportunity of being heard by setting aside the matter to the file of Ld. CIT(A).
6. Per Contra, Shri Rignesh Das, the Ld. CIT-DR submitted that the assessee did not make any compliance before the AO which had resulted in ex-parte order. Further, no compliance was made before the Ld. CIT(A) as well. Considering the non-compliance of the assessee as well as the delay in filing of the appeal, the Ld. CIT(A) had rightly dismissed the appeal of the assessee. He, therefore, supported the order of the Ld. CIT(A).
7. We have considered the rival submissions. There is no dispute to the fact that no compliance was made by the assessee either before the AO or before the Ld. CIT(A). The source of cash deposits of Rs. 46.42 crores made in the bank account of the assessee was not explained at & 461/Ahd/2026 Shree Trapaj Seva Sahakari Mandli Limited Vs. ITO, AY- 2018-19 5 any stage. At the same time, the AO had merely treated the entire cash deposits and time deposit in the bank account as unexplained income of the assessee without even calling for the bank statement and examining the nature of transactions appearing in the bank account. It has been held by Hon’ble Gujarat High Court in the case of Vareli Textiles Limited (284 ITR 238) (Guj.) that meritorious case should not be thrown out on the ground of limitation. In the present case, the addition made on account of cash deposits was not examined on merits. We, therefore, deem it proper to set aside the matter to the file of Ld. CIT(A) with a direction to condone the delay in filing of appeal and thereafter adjudicate the grounds taken by the assessee on merits, subject to payment of cost of Rs. 20,000/- by the assessee which should be deposited to Prime Minister National Relief Fund, within a period of 15 days from the receipt of this order. The assessee is also directed to make compliance before the Ld. CIT(A) and file the necessary evidences in support of the grounds as raised by him. The Ld. CIT(A) will have liberty to call for a remand report of the AO on the fresh evidences filed before him and thereafter to decide the matter on merits, in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purpose.
Since the matter regarding quantum addition has been set aside to the file of Ld. CIT(A), we deem it proper to restore the appeal against the & 461/Ahd/2026 Shree Trapaj Seva Sahakari Mandli Limited Vs. ITO, AY- 2018-19 6 penalty order u/s. 271AAC(1) also to the file of Ld. CIT(A). Accordingly, the appeal of the assessee is allowed for statistical purpose.
In the result, both the appeals of the assessee are allowed for statistical purpose.
Order pronounced in the Court on 07/04/2026 at Ahmedabad.