S RAMESH,CHENNAI vs. ITO, NCW-22(5), TAMBARAM

This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeal), Addl/JCIT(A)-1, Lucknow, National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, vide order dated 23.08.2024.

At the outset, we find that there is a delay of 201 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay,

Brief facts are that the assessee is an individual running a hardware shop named Sri Mutharaman Hardwares, has filed his return of income for the AY 2017-18, on 09.01.2018, admitting a total income of Rs.8,76,030/-. As per the information of cash deposits to the tune of Rs.28,41,500/- during demonetization period i.e. 09.11.2016 to 30.12.2016 by the assessee into his bank account. The case was selected for limited scrutiny under CASS for the reason to verify cash deposit made during the A.Y.2017-18 and the assessee filed certain details and sought time to submit the other details and documents in support of his return and cash deposits made. The AO issued notice u/s.143(2) of the Act dated 24.09.2018 and issued notice u/s.142(1) of the Act on 12.07.2019. In response to the notice u/s.142(1), the assessee furnished cash book and claimed that the cash deposited were out of the sale proceeds during the demonetization period. On perusal of the cash book, the AO found that the assessee used to deposit the cash of daily sales in the bank on that day or next day and cash balance as on :-3-: ITA. No:1501/Chny/2025 08.11.2016 was Rs.Nil. Since the assessee running a hardware shop business and the assessee’s business does not come under the exempted category to the receive the demonetized currency against sale of products from the customers during the period from 09.11.2016 to 31.12.2016, the assessment was concluded u/s.143(3) of the Act dated 26.12.2019, by adding an amount of cash deposits made during the demonetization period in Savings Bank Account of Rs.5,85,000/- as unexplained investment u/s.69 of the Act and amount of cash deposit made in Current Account of Rs.22,56,500/- as unexplained cash credits u/s.68 of the Act.

Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld. CIT (A), NFAC, Delhi. However, the assessee did not respond to any of the five notices issued by the ld.CIT(A) from 03.02.2021 to 12.08.2024 as shown in the para 6.1 of the order. Hence, the ld.CIT(A) passed an exparte order dated 23.08.2024 by confirming the order of the AO and dismissed the appeal of the assessee.

The Ld.AR for the assessee submitted that the assessee has failed to take note of hearing notices sent through e-mail, resulting in non-participation of assessee during the appellate proceedings. It was prayed in the interest of justice and equity, the issue may be restored to the files of the ld.CIT(A) as a last opportunity for proper representation of his case.

The Ld.DR submitted that adequate opportunities were provided from the office the ld.CIT(A) and there is no violation of principles of natural justice. Therefore, it was prayed the appeal of the assessee may be dismissed.

We have heard rival submissions and perused the materials on record. The Office of the First Appellate Authority had issued five hearing notices as shown in his order in para 6.1. It was the contention of the ld.AR that the assessee had failed to take note of hearing notices sent from the office of the ld.CIT(A). We note that the AO has passed an order by making an addition of cash deposit during the demonetization period to the returned income to the tune of Rs.28,41,500/- u/s.68 & 69 of the Act and the same has been upheld by the ld.CIT(A) - NFAC due to non-participation of the assessee in the first appellate proceedings. Since, the ld.AR has assured the bench that the assessee will participate in the appellate proceedings given an opportunity again, in the interest of justice, we are of the considered view that the assessee needs to be given one more opportunity to prosecute the appeal on merits.

Therefore, in the present facts and circumstances of the case and to meet the ends of justice, we are deeming it fit to provide one more opportunity to the assessee and hence we set aside the order of the ld.CIT(A) and remit the matter back to the file to ld.CIT(A) to adjudicate the matter afresh in accordance to law, after providing reasonable opportunity to the assessee. Needless to say, assessee to be diligent and file written submissions and relevant documents if advised so.

In the result, appeal filed by the assessee is allowed for statistical purposes.