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Facts
The assessee, a proprietor of a photography business, did not file the return of income for AY 2017-18. Upon receiving information about cash deposits during the demonetization period, the AO issued a notice, and later the assessee filed a return declaring a lower income. The AO added the cash deposits as unexplained income. The CIT(A) dismissed the appeal ex-parte due to the assessee's non-response to notices.
Held
The Tribunal condoned the delay in filing the appeal, noting the assessee's lack of awareness. While acknowledging the assessee's failure to participate in proceedings, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the AO to re-adjudicate after providing a reasonable opportunity.
Key Issues
Whether the CIT(A) erred in treating cash deposits as unexplained income without proper review and whether the assessee's non-participation in proceedings justifies an ex-parte order.
Sections Cited
147, 142(1), 69A, 144, 143(3)
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
अपीलाथ� की ओर से/Appellant by : Ms. Jharna B Harilal, C.A. ��थ� की ओर से/Respondent by : Ms. Pryati Sharma, J.C.I.T. सुनवाई की तारीख/Date of Hearing : 03.06.2025 घोषणा की तारीख/Date of Pronouncement : 12.06.2025 आदेश /O R D E R
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal by the assessee is filed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2017-18, dated 14.08.2024.
The assessee has raised the following grounds of appeal:-
1. The forded of Learned CIT(A) is against the law and facts of the case.
2. The Ld. CIT(A) erred in treating the cash deposits of Rs.77,11,022/- as unexplained money u/s.69A without reviewing the facts..
:-2-: ITA. No.:667/Chny/2025 3. The Ld. CIT(A) erred in concluding that mere cash balance at the time of demonetisation is sufficient evidence to infer that the cash was obtained from unexplained source.
4. The Ld. CIT(A) erred in not considering the fact that the appellant had cash balance comprising of opening cash balance, realization from debtors and advances, jewel loans taken in his name and his spouse name were withdrawn and were re-deposited back due to demonetization.
The Ld. CIT(A) erred in not considering the fact that the source of income is well disclosed and established. Hence, the addition made u/s.69A is not tenable under law.
6. The appellant craves the leave of the appellant to raise any other ground that may adduced at the time of hearing.
At the outset, we find that there is a delay of 141 days in appeal filed by the assessee, for which the assessee has filed affidavit stating the reasons for delay, wherein, it is submitted that the assessee was lack of awareness regarding the relevant taxation matters and was not notified of the notices and orders issued by the Income Tax Department. Hence, there was a delay in filing the appeal by the assessee. After considering the Affidavit filed by the assessee and also hearing both the parties, we find that there is a reasonable cause for the assessee in not filing appeal on or before the due date prescribed under the law and thus, in the interests of justice, we condone delay in filing of appeal and admit the appeal filed by the assessee for adjudication.
The brief facts of the case are that the assessee is an individual and the proprietor of M/s.Max Colour Lab, which deals in taking photos, videos, indoor photography, doing lamination, framing of photos, CD Writing, VHS Writing and all type of allied works related to photography. The assessee had not filed
:-3-: ITA. No.:667/Chny/2025 the return of income for the A.Y. 2017-18. As per the information of cash deposits to the tune of Rs.77,11,022/- during demonetization period i.e. 09.11.2016 to 30.12.2016 by the assessee into his bank account, the AO issued notice u/s.142(1) of the Act on 30.11.2017. Later, the assessee filed his return of income for the A.Y.2017-18 dated 10.01.2019 by declaring an income of Rs.3,22,060/-. 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. Since the assessee failed to submit further details, the assessment was concluded u/s.144 of the Act, by adding an amount of cash deposit of Rs.77,11,022/- on account of unexplained money u/s.69A of the Act.
5. Aggrieved by the order of the AO assessee preferred an appeal before the ld.CIT(A),NFAC, Delhi. However, the assessee did not respond to any of the six notices issued by the ld.CIT(A) from 08.02.2021 to 09.07.2024. Hence, the ld.CIT(A) passed an exparte order dated 14.08.2024 on merits of the case 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-cooperation of assessee during the appellate proceedings as well as assessment proceedings. It was prayed in the interest of justice and equity, the issue may
:-4-: ITA. No.:667/Chny/2025 be restored to the files of the AO as a last opportunity for proper representation of his case.
The Ld.DR submitted that adequate opportunities were provided from the offices of the AO and 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 six hearing notices. 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 also passed an exparte order by considering the information available with the department along with few information and documents submitted by the assessee and made an addition 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 assessee has failed to participate both before the AO as well as the appellate proceedings, we levy the cost of Rs.5,000/- (Rupees Five Thousand only) to be paid to State Legal Aid Authority, Hon’ble High Court of Madras and produce proof of payment of cost to the Registry within 30 days from the date of receipt of this order. Accordingly, in the interest of justice, we set aside the order of the ld.CIT(A) and remit the matter back to the file of Assessing Officer by relying on the decision of the Hon’ble Supreme Court in the case of Tin Box Company vs CIT, [2001] 249 ITR 216 (SC) and :-5-: ITA. No.:667/Chny/2025 direct AO to denovo frame the order 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.
Order pronounced in the open court on 12th June, 2025 at Chennai.