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Facts
The assessee filed an appeal against the order of the CIT(A) for AY 2017-18, which was filed with a delay of 201 days. The assessee, a proprietor, had substantial cash deposits during demonetization and made cash payments exceeding Rs. 20,000, which were treated as unexplained investment and disallowed.
Held
The Tribunal condoned the delay in filing the appeal, finding the reasons to be bonafide. The Tribunal decided to remand the matter back to the CIT(A) for fresh adjudication, subject to the assessee paying a cost of Rs. 25,000.
Key Issues
Whether the CIT(A) was justified in passing an ex-parte order and whether the assessee should be granted another opportunity to present their case before the CIT(A)?
Sections Cited
143(1), 40A(3), 69, 69A, 115BBE, 251(2)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri S.R. Raghunatha
Year: 2017-18 Shamimullah, Vs. The Income Tax Officer, No. 56, Masuthi Street, Non Corporate Ward 11(2), Near Canara Bank, Arakkonam, Chennai. Vellore 631 001. [PAN:DALPS5068E] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri G. Gopalan, IRS (JCIT Retd.) ��थ� की ओर से/Respondent by : Shri P. Krishna Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 08.05.2025 घोषणा की तारीख /Date of Pronouncement : 29.05.2025 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order dated 21.05.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18.
We find that this appeal is filed with a delay of 201 days. The assessee filed an affidavit for condonation of delay stating the reasons. Upon hearing both the parties and on examination of the said affidavit, we find the reasons stated by the assessee are bonafide, which really prevented in filing the appeal in time. Thus, the delay is condoned and admitted the appeal for adjudication.
The assessee raised 7 grounds of appeal amongst which, the only issue emanates for our consideration as as to whether the ld. CIT(A) is justified in concluding the appellate order, exparte the assessee in the facts and circumstances of the case.
Brief facts relating to the case are that the assessee is an individual and Prop. of Bismillah Proteins, filed his return of income for AY 2017-18 on 15.12.2017 declaring total income of ₹.3,72,390/- and the same was processed under section 143(1) of the Income Tax Act, 1961 [“Act” in short]. According to the Assessing Officer, the assessee has deposited cash of ₹.25,16,050/- during demonetization period and cash payments under section 40A(3) of the Act exceeding ₹.20,000/- amounting to ₹.1,17,80,795/-. Accordingly, the assessee was asked to furnish the source for cash deposit along with proof and explanation to cash payment. On verification of the details submitted by the assessee, the Assessing officer found that the assessee has deposited ₹.25,16,050/-, out of which, ₹.14,92,300/- was deposited on various dates in the denomination of ₹.500/- & ₹.1000/- during demonetization period. The Assessing Officer further noted that the assessee has opening cash balance as on 09.11.2016 amounting to ₹.3,24,103/-. Accordingly, the Assessing Officer treated ₹.11,68,197/- [₹.14,92,300 – ₹.3,24,103] as unexplained investment under section 69 of the Act and added to the total income of the assessee. Further, the Assessing Officer noted from the cash book of the assessee that the assessee made payments to an extent of ₹.35,34,239/- in excess of ₹.20,000/- to a person in a day otherwise than by an account payee cheque or an account payee bank draft which attracts disallowance under section 40A(3) of the Act. Accordingly, the Assessing Officer disallowed and added to the total income of the assessee.
The assessee carried the matter in appeal before the ld. CIT(A). The ld. CIT(A) issued hearing notices dated 24.11.2023, 23.01.2024 & 01.03.2024 and also show cause notices under section 251(2) of the Act dated 05.04.2024 & 30.04.2024, however, there was no compliance from the assessee. Thus, the ld. CIT(A) confirmed the addition made under section 69A r.w.s. 115BBE of the Act and also addition under section 40A(3) of the Act having no documentary evidence to justify as to how the assessee’s case is covered under the exception of Rule 6DD of Income Tax Rules, despite, various notices issued. Accordingly, besides confirming the addition made under section 40A(3) of the Act, the ld. CIT(A) enhanced the assessment by holding that the disallowance under section 40A(3) of the Act shall be 100% of cash payments exceeding ₹.20,000/- after issuing various notices for enhancement under section 251(2) of the Act.
The ld. AR Shri G. Gopalan, IRS (JCIT Retd.) submits that non- compliance to the notices issued by the ld. CIT(A) and the Assessing Officer is neither wilful nor deliberate but due to circumstances beyond assessee’s control. He submits that the assessee is an illiterate and not aware of income tax proceedings. Thus, he prayed that, one more opportunity may be afforded to the assessee to pursue his case before the ld. CIT(A).
The ld. DR Shri P. Krishna Kumar, JCIT opposed the same and drew our attention to para 4.5, 5.4 & 5.9 of the impugned order and argued that the ld. CIT(A) afforded ample opportunities to the assessee, but, it was not availed. He vehemently argued that costs may be imposed, in case this Tribunal affords an opportunity by remanding the matter to the file of the ld. CIT(A).
Heard both the parties and perused the material on record. We note that the assessment was completed under section 143(3) of the Act dated 29.12.2019. On perusal of the impugned order, we note that there was no assistance from the assessee to the hearing notices and show-cause notices issued by the ld. CIT(A). We find the assistance of assessee is necessary in terms of additions involves under section 69A and 40A(3) of the Act, further, we note that the ld. AR brought to our notice that the assessee is ready with all details concerning the aforementioned additions. Taking into consideration of the submissions of the ld. AR and the ld. DR and in the interest of justice, we deem it proper to afford one more opportunity and remand the matter to the file of the ld. CIT(A) subject to the condition of payment of ₹.25,000/- in favour of the State Legal Aid Authority, Hon’ble Madras High Court within 30 days from the date of receipt of this order and the ld. CIT(A) shall satisfy the payment of cost and decide the issues afresh after considering the written submissions/ documentary evidences as may be filed by the assessee to substantiate his claim. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 29th May, 2025 at Chennai.