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Facts
The assessee deposited Rs. 10,90,930/- in cash during demonetization but did not file a return for the relevant AY. The AO reopened the assessment and made an ex-parte addition of Rs. 14,13,440/- as the assessee failed to explain the source of the cash deposits. The CIT(A) confirmed the addition.
Held
The Tribunal noted the assessee's negligence but, in the interest of natural justice, granted one more opportunity to substantiate the case before the AO. The impugned order was set aside, and the matter was remitted for denovo assessment.
Key Issues
Whether the assessee should be granted another opportunity to explain the source of cash deposits, despite previous negligence and failure to provide evidence to lower authorities?
Sections Cited
147, 144, 144B
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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 JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2017-18 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 31.01.2024 in the matter of assessment framed by the Assessing Officer [AO] u/s.
147 r.w.s 144 r.w.s 144B of the Income-tax Act,1961 (hereinafter “the Act”) on 31.03.2022.
The assessee has deposited cash of Rs 10,90,930/- during demonization in his bank account maintained with Indian Bank, Jolarpettai period, but has not filed return of income for the relevant A.Y. The AO therefore reopened assessment, and passed order ex- parte u/s.144 of the Act, assessing total income at Rs.14,13,440/-, as the assessee failed to explain the source of cash deposits with supporting bills and vouchers to substantiate the claim that the cash deposits were out of the sale proceeds of his proprietary concern M/s.
1. Sri Venkateshwara Agencies. Aggrieved, the assessee preferred an appeal before Ld. CIT(A). However, the Ld. CIT(A) has confirmed the addition as the assessee did not file any specific details regarding cash deposits in the bank account.
The Ld. Authorized Representative (A.R) of the assessee has submitted that the source of cash deposit is out of sale proceeds os M/s. Sri Venkateshwara Agencies. However, the evidence could not be submitted either before A.O or Ld. CIT(A). Therefore, in the interests of justice, one more opportunity may be granted to the assessee before to substantiate his case.
On the other hand, the Ld. Departmental Representative (DR), has relied on the orders of lower authorities.
We have heard the rival submissions, and perused the materials available on record. We find that the A.O and Ld. CIT(A) passed orders ex-parte as the assessee failed to furnish evidence regarding cash deposits made during demonetization period amounting to Rs.10,19,930/-. It is noted that the assessee has been negligent in pursuing the matter both before the A.O and the Ld. CIT(A). However, keeping in view the principles of natural justice, we are of the opinion that one more opportunity should be granted to the assessee to substantiate his case before the A.O. Accordingly, we set aside the impugned order and remit the matter back to the file of the A.O for denovo assessment in accordance with law, after affording reasonable opportunity of being heard to the assessee. This shall, however, subject to payment of costs of Rs.5,000/- (Rupees five thousand only).
The same shall be paid by the assessee to Tamil Nadu State Legal Services Authority at Hon’ble High Court of Madras within a period of one month from the date of receipt of this order and produce the receipt before the A.O. The assessee is also directed to comply with all the notices issued by the A.O and furnish all relevant details for fresh consideration. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 26th day of November, 2025 at Chennai.