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Facts
The assessee filed a return for AY 2017-18 and declared income of Rs.3,51,600. The case was selected for limited scrutiny regarding cash deposits during demonetization. The assessee claimed the deposits were from her husband's agricultural income and unsecured loans, but failed to provide documentary evidence.
Held
The Tribunal held that the assessee could not represent her case properly before the lower authorities and that the principles of natural justice were violated. Therefore, the issue was remitted back to the Assessing Officer for a fresh decision.
Key Issues
Whether the addition of unexplained cash deposits is justified without affording adequate opportunity to the assessee to present her case and produce evidence, and whether the principles of natural justice were violated by the lower authorities.
Sections Cited
250, 143(2), 142(1), 69A, 143(3)
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Income Tax Appellate Tribunal, “SMC’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against order of ld. Addl/JCIT(A)-2, Visakhapatnam vide order dated 27.6.2025 vide DIN & Order No. ITBA/APL/S/250/2025- 26/1077890970(1) passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”) for the assessment year 2017-18.
The assessee has raised the following grounds of appeal:
1. The impugned Appellate order dated 27.6.2025 passed by the Add/JCIT(A)-2 Visakhapatnam is opposed in law, facts and circumstances of the case.
2. That the ld. Add/JCIT(A)-2, has erred in law and on facts in confirming the addition of Rs.14,32,500/-, without affording adequate and reasonable opportunity of being heard to the appellant as the impugned appellate order has been passed Theeta Chowdayya Nagarathna, Bangalore Page 2 of 5 merely on the basis of two notices dated 13.5.2025 and 20.5.2025, which falls short of the principles of natural justice.
3. That the ld. Addl/JCIT(A)-2, has erred in confirming the addition of Rs.14,32,500/- without appreciating the fact that the appellant had sufficient source to substantiate the cash deposits made in the bank account during the demonetization period.
The ld. Add/JCIT(A)-2 has erred in not appreciating the fact that the assessment order passed by the ld. AO is ex facie in violation of the principles of natural justice, in as much as the said order was completed within a period of merely four months from the date of issuance of the first notice under section 142(1) of the Act dated 19.7.2019.
5. The appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing.
Total Tax effect : Rs.11,11,759/-
The brief facts of the case are that assessee being an individual filed her return of income for the assessment year 2017-18 on 12.7.2017 by declaring total income of Rs.3,51,600/-. Subsequently, the case was selected for limited scrutiny under CASS to examine “cash deposit during demonetization period”. Accordingly, notices u/s 143(2) as well as 142(1) of the Act were issued calling for information. During the course of assessment proceedings, the assessee submitted that the source of the cash deposits during the demonetization period was of her husband’s agricultural income amounting to Rs.12,32,500/- and unsecured loans received from her cousin amounting to Rs.2,00,000/- and the same had also been disclosed in cash transaction 2016 to income tax department. However, the assessee could not produced any supporting documentary evidence with regard to her claim.
3.1 The AO did not accept the explanation of the assessee with regard to the source of the cash deposits due to the fact that the assessee failed to produce any documentary evidence in support of agricultural income derived by her husband. Further, the assessee Theeta Chowdayya Nagarathna, Bangalore Page 3 of 5 had also failed to produce any documentary evidence in support of the receipt of unsecured loans from her cousin and accordingly concluded the assessment by treating the entire cash deposit during the demonetization period amounting to Rs.14,32,500/- as unexplained money u/s 69A of the Act and assessed on a total income of Rs.17,84,100/-.
4. Aggrieved by the assessment completed u/s 143(3) of the Act dated 13.11.2019, the assessee preferred an appeal before the ld. CIT(A)/Addl. JCIT(A).
Ld. Addl/JCIT(A)-2, Visakhapatnam dismissed the appeal of the assessee by holding that no reliable material has been placed on record to establish the genuineness or sources of cash deposit. As the assessee has failed to discharge the onus cast upon her under the law, the provisions of section 69A of the Act are squarely attracted and the said amount is rightly treated as unexplained money.
Again, aggrieved by the order of ld. Addl/JCIT(A)-2, Visakhapatnam, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee vehemently submitted that the assessee had requested for time before the AO to produce documents/records to substantiate the source of cash deposits. However, the AO without providing the time had passed an order, which is a clear violation of principles of natural justice. Further, the ld. A.R. submitted that even before ld. Addl/JCIT(A), the assessee could not represent her case as the ld. Addl. JCIT issued two notices on the assessee within a week after a gap of six years from the date of filing the appeal and passed order in haste without providing proper opportunity of being heard.
Ld. D.R. on the other hand vehemently supported the order of the authorities below and submitted that the assessee is very callous in her approach before both the authorities below and prayed that if the case is remanded back to the AO, some cost may be levied for the negligence on the part of the assessee.
We have heard the rival submissions and perused the materials available on record. It is an undisputed fact that the assessee could not represent her case before both the authorities below. The ld. A.R. of the assessee before us contended that the husband of the assessee is having 9 acres of agricultural land and agricultural produce are sold in the local market. The ld. A.R. of the assessee also submitted that before the ld. Addl. JCIT(A), the assessee also submitted the pahani in the name of husband of the assessee along with the confirmation letter from the cousin of the assessee as well as bank statement and accordingly prayed that one more opportunity may be granted before the AO to substantiate her claim. This being so, in the interest of natural justice and fair play and as requested by ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue in dispute to the file of AO and to decide afresh in accordance with law. Needless to say, a reasonable opportunity must be granted to the assessee. The ld. A.R. of the assessee has undertaken to file all the necessary documents and make necessary compliance before the AO. We make it clear that in case of further default, the assessee shall not be entitled to any leniency. It is ordered accordingly.
In the result, appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 12th Nov, 2025