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Facts
The assessee filed an income return for AY 2017-18 admitting total income. The AO issued a notice asking the assessee to prove the nature and source of Specified Bank Notes (SBNs) deposited during demonetization. The assessee provided a reply but no evidence.
Held
The Tribunal found that the assessee was not given a proper opportunity to produce relevant material due to a short timeframe for the assessment order. Therefore, the Tribunal set aside the impugned order.
Key Issues
Whether the assessee was afforded a proper opportunity to present evidence regarding the nature and source of demonetized cash deposits.
Sections Cited
69, 143(2)
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Income Tax Appellate Tribunal, ‘D’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
1. This is an appeal preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 11.08.2025 for the Assessment Year (hereinafter referred to as ‘AY‘) 2017-18.
Ground No.1 of the assessee is against the action of the Ld.CIT(A)
passing the impugned order without adhering to the principles of natural justice and confirming the addition of ₹37,56,500/- u/s.69 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘).
The brief facts of the case are that the assessee is an individual, who had filed return of income (RoI) for AY 2017-18 on 20.09.2017 admitting total income at ₹9,37,740/-. The return was selected for scrutiny by CASS [cash deposited during demonetization period]. The AO is noted to have issued notice dated 18.12.2019 asking the assessee to prove the nature and source of Specified Bank Notes (SBNs) deposited during demonetization period to the tune of ₹37,56,500/-; and the AO acknowledges that the assessee had filed reply vide letter dated 20.12.2019, but, according to him, the assessee didn’t produce any evidence to substantiate the same. Therefore, he didn’t accept the explanation offered by the assessee and added ₹37,56,500/- u/s.69 of the Act. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who noticed that despite issuing notices on four (4) occasions, the assessee didn’t submit any documentary evidence to substantiate the grounds of appeal filed before him. Therefore, the Ld.CIT(A) finding no documentary evidence to substantiate the nature and source of cash deposits made during demonetization period was pleased to confirm the action of the AO.
4. Aggrieved by the aforesaid action of the Ld.CIT(A), the assessee is before us.
We have heard both the parties and perused the material available on record. The assessee in order to prove the nature and source of ₹37,56,500/- [SBNs deposited demonetization period] has filed the following documents before us :-
Sl.No. Particulars Page Nos. From To 1 ITR V for AY 2017-18 1 2 2 Computation of Income along with financial statement for the year ended 3 14 31.03.2017 3 Copy of Form 3CB-3CD 15 33
However, from a perusal of the assessment order and impugned order of the Ld.CIT(A), it is noted that the assessee didn’t file any relevant documents to substantiate the explanation given by her in her reply dated 20.12.2019 [before the AO]. Therefore, the AO confirmed the addition made u/s.69 of the Act; and the Ld.CIT(A) finding the assessee not responding to his notices has confirmed the action of the AO. In this regard, we find from perusal of the assessment order dated 20.12.2019 that even though notice u/s.143(2) of the Act was issued on 24.09.2018, due to change in jurisdiction [pursuant to the order passed by the Pr.CCIT, Tamil Nadu dated 01.10.2019], the new incumbent AO is noted to have issued fresh show cause notice to the assessee only on 18.12.2019 and the assessee has filed the reply within two days i.e. on 20.12.2019 and the AO has passed assessment order on 20.12.2019 i.e. on the same day. Therefore, we find that no proper opportunity was given to the assessee to produce relevant material to substantiate the nature and source of the SBNs deposited during demonetization period to the tune of ₹37,56,500/-. Therefore, we are inclined to set aside the impugned order of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment and the assessee is directed to file all the relevant documents to substantiate the nature and source of the SBNs during demonetization period and the AO to pass order in accordance to law. For such an action, we rely on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC)
In the result, appeal filed by the assessee is allowed for statistical purposes.