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Facts
The assessee, engaged in retail business, deposited Rs. 11,59,850/- in cash during the demonetization period. The assessee did not file a return of income and failed to comply with statutory notices. The Assessing Officer (AO) made additions under Sections 69A and 68 of the Income Tax Act. The CIT(A) dismissed the appeal due to a delay in filing and lack of condonation application.
Held
The Tribunal noted that the appeal before the CIT(A) was dismissed solely on the ground of limitation. Considering the grounds raised by the assessee regarding violation of principles of natural justice and the merits of the additions, the Tribunal deemed it appropriate to restore the matter to the AO.
Key Issues
Whether the AO erred in making additions without proper inquiry and violating principles of natural justice; whether the CIT(A) erred in dismissing the appeal solely on limitation without considering condonation.
Sections Cited
250, 144, 142(1), 133(6), 69A, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
Date of Hearing 02.04.2026 Date of Pronouncement 09.04.2026 O R D E R
PER VIMAL KUMAR, JM:
The appeal filed by the assessee is against the order dated 11.12.2024 of the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC) (hereinafter referred to as “Ld. CIT(A)”), u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), arising out of P a g e | Ambey Enterprises (AY 2017-18) order dated 13.12.2019 of the Ld. Assessing Officer/ITO Ward 58(1), Delhi (hereinafter referred to as “Ld. AO”), u/s 144 of the Act for Assessment Year 2017-18.
Brief facts of the case are that, the case was picked up under Operation Clean Money Drive as demonetization period, assessee had deposited cash of Rs.11,59,850/- in ICICI Bank, from demonetization period that is 09.11.2016 to 30.12.2016. The assessee was engaged in the retailing business and had not filed return of income. Notices u/s 142(1) dated 13.03.2018, 14.05.2019 and 02.09.2019 were issued. Final show cause notice was issued to assessee on 16.09.2019. The assessee made no compliance of above notices. Notice u/s 133(6) of the Act was issued to ICICI Bank on 17.06.2019, seeking bank statement and KYC details.
On completion of proceedings, Ld. AO, vide order dated 13.12.2019 made two additions of Rs.11,59,850/- u/s 69A of the Act and Rs.69,41,536.44/- on account of 6% of business receipt of Rs.11,56,92,274/- u/s 68 of the Act.
Against the order dated 13.12.2019 by Ld. AO, assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 11.12.2024.
P a g e | Ambey Enterprises (AY 2017-18) 5. Being aggrieved appellant-assessee preferred present appeal on following grounds:-
1. That on the facts and in the circumstances of the case and in law, the Id. AO erred in passing impugned orders u/s 144, which is objected and contested to be invalid because of order issued without any valid ground and also no any facts and material available on him for using section 69A of the income tax Act.
2. That the learned AO has erred in law by treating the amount credited before demonetization Rs. 11,56,92,274/- as unexplained money u/s 68 of the Income Tax Act, 1961 and making additions of Rs. 69,41,536.44 (being 6% of Rs. 11,56,92,274/-) to the total income of the assessee.
3. That the learned AO has erred in law by treating the cash deposited during demonetization Rs. 11,59,850/- as unexplained money u/s 69A of the Income Tax Act, 1961
4. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in passing impugned orders u/s 144, which is objected and contested to be invalid because of order issued without any valid ground and also no any facts and material available on him for using sections 68 and 69A of the income tax Act, 1961.
5. On Merits qua commission income and other additions That on the facts and in the circumstances of the case and in law, Ld. AO materially erred in arbitrary and hypothetical addition of income u/s 69A and A.O assumed that all amount credited in our bank accounts from different locations were belong to us and income assessment which estimation is not only high pitched but also lacks any rational justification except conjectures and surmises.
6. That on the facts and in the circumstances of the case and in law, Ld. AO materially erred in making impugned additions without pinpointing any sort of incriminating material or any unaccounted asset corresponding to the income assessed.
7. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in passing impugned orders u/s 144, which is objected and contested to be invalid as the P a g e | Ambey Enterprises (AY 2017-18) impugned order is passed without issuing any valid show cause notice (not available on income tax portal) which is a fundamental requirement under the Income Tax Act, 1961.
8. That on the facts and in the circumstances of the case and in law, Ld. AO materially erred in making impugned additions without considering of nature of transactions showing in bank statement and without making any possible and meaningful enquiry qua income assessed.
9. Fag end assessment order That on the facts and in the circumstances of the case and in law, the Ld. AO while making the impugned order dated 13.12.2019 has flouted following over reaching observations of the Hon'ble ITAT MUMBAI in case of M/s. Karthik Construction Co Vs. DCIT, which observations are reproduced herein below for sake of convenience: "A reading of section 69A of the Act makes it clear, addition can only be made when the assessee is found to be in possession of money bullion jewellery, etc., not recorded in his books of account. It is not the case of the Department that the loan repayment made during the year was either not recorded in the books of account or the source of fund utilized in repaying the loan is doubtful. That being the case, the addition under section 69A of the Act cannot be made. Therefore, the decision of the learned Commissioner (Appeals) has to be sustained." Hon'ble Allahabad High Court in case of V.K. Packaging Vs. Tax Recovery Officer and others (266 ITR 283), which observations are reproduced herein below for sake of convenience: "Before parting with the case we would like to state that we cannot appreciate this practice of the Income-tax Department of hurriedly passing assessment orders shortly before the limitation period is about to expire and justifying this practice by saying that there was shortage of time and hence it was impossible to verify the facts properly, and hence the additions were being made. It is common knowledge that when the limitation for making an assessment is about to expire (usually on 31st December) there is a sudden rush and scramble to complete the assessments. If this practice is countenanced the citizens of the country will be put to great harassment as exorbitant demands can be made against them merely by saying that there was shortage of time and hence additions were being made for this reason without verifying the facts correctly. It is the duty of the P a g e | Ambey Enterprises (AY 2017-18) Department to make a correct assessment and not to make an excessive assessment merely on the ground of shortage of time. No doubt the Department has to assess and collect the correct tax, but for this purpose it should devise and set up a rational scheme in accordance with law. It should certainly not make assessments hurriedly merely by saying that there is shortage of time (as often happens), thus putting the citizens to great harassment."
10. Fundamental Policy of Indian Law That on the facts and in the circumstances of the case and in law, the Ld. Assessing Authority while making impugned addition has flouted with impunity the fundamental policy of Indian Law, which says following principles must be strictly followed in passing any order. a. Judicial approach; b. Independent application of mind; c. Decision made should not perverse or irrational; In present case, none of the above principles have been followed.
The appellant craves leave to add, alter, amend, append or delete all or any of the ground of appeal
At the time of hearing, none appeared on behalf of the assessee.
Ld. Departmental Representative submitted that, Ld. CIT(A) dismissed the appeal, as assessee did not file any application for condonation of delay of 282 days in filing appeal and appeal in limine.
From examination of record, in light of aforesaid submission, it is crystal clear that, Ld. CIT(A) vide order dated 11.12.2024 dismissed the P a g e | Ambey Enterprises (AY 2017-18) appeal being barred by limitation as there was delay of 282 days in filing the appeal. Assessee did not file any application seeking condonation of delay in filing appeal. Ld. AO had passed assessment order dated 13.12.2019 u/s 144 of the Act as assessee did not comply with notices. In the grounds of appeal, appellant has challenged impugned orders on several grounds of violation of principle of natural justice.
9. In view of above material facts, in interest of justice, it is considered expedient to set aside impugned orders dated 11.12.2024 of Ld. CIT(A) and 13.12.2019 of Ld. AO and restore the matter to the file of Ld. AO for fresh decision in accordance with law after awarding fair opportunity of hearing to the assessee.
In the result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 09.04.2026
Sd/- Sd/- (S. Rifaur Rahman) (Vimal Kumar) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 09.04.2026 *Mittali, Sr. PS