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Facts
The assessee, engaged in civil contractor services, did not file an income tax return for AY 2017-18. Information revealed that the assessee had deposited Rs. 20,97,000/- in cash in bank accounts during demonetization. The AO completed assessment u/s 144 after treating a belatedly claimed deduction as invalid and making additions for estimated profit and unexplained deposits.
Held
The Tribunal, while noting the assessee's failure to appear and provide justifications, condoned the delay in filing the appeal. Considering the pandemic and principles of natural justice, the Tribunal set aside the impugned order and restored the appeal to the AO for a denovo assessment, granting the assessee an opportunity to present evidence.
Key Issues
Whether the assessee was prevented by sufficient cause from appearing before the appellate authorities, and if so, whether a denovo assessment is warranted to allow for the production of evidence regarding unexplained cash deposits.
Sections Cited
142(1), 144, 69, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MANU KUMAR GIRI & SHRI S.R.RAGHUNATHA
The captioned appeal filed by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)(NFAC) Delhi [CIT(A)] dated 01.05.2024 for Assessment Year 2017-2018.
The registry has noted delay of 170 days in filing the appeal. Considering the reasons stated in the affidavit by the Assessee, we condone the delay and treat the reasons as ‘sufficient cause’ and admit the appeal for adjudication.
Brief facts are as under:
The assessee is an individual, engaged in civil contractor services. Assessee did not file return of income for the relevant assessment year. Based on information that assessee had deposited Rs.20,97,000/- by cash in his bank accounts during demonetization period, the AO issued notice u/s.142(1) requiring assessee to file return of income. Subsequently, assessee filed return of income on 11.09.2019 for AY 2017-18 belatedly claiming deduction under chapter VI-A amounting to Rs.1,51,522/- which was treated as invalid. The AO completed the assessment u/s.144 of the Act on 16.12.2019 making two additions on account of estimation of net profit amounting to Rs.2,28,111/- and unexplained deposits of Rs.17,28,852/- in bank accounts during demonetization period u/s.69 of the Act. However, the assessee has only contested addition of Rs.17,28,852/- on account of unexplained deposits in bank accounts during demonetization period before the CIT(A).
Assessee further challenged the order of assessment u/s 144 of the Act before the ld.CIT(A) who proceeded ex-parte and confirmed the order of the AO on merits. The ld. CIT(A) also recorded in para 7 as under:
“7. As mentioned above, the appellant failed to furnish any written submission whatsoever in response to various hearing notices issued u/s. 250 of the Act. However, in the statement of the facts, the appellant has not submitted any justification or explanation regarding source of deposits. In the grounds of appeal, the appellant has claimed that the deposits made by the assessee in his saving bank account were from personal cash held by him and his family. Further, the appellant in Column 12 which pertains to submissions of additional evidences under Rule 46A, the appellant has mentioned "Yes". In Column No. 12.1 which pertains to description of additional evidence, the appellant has mentioned "Invoices and other related documents" but no additional evidences have been uploaded.”
Aggrieved, assessee is in further appeal before us.
Before us, at the time of hearing, none appeared on behalf of the assessee, despite notice. Therefore, we proceed to dispose off the matter on merits, after perusal of records and hearing the Ld.DR. According to the assessee, though the CIT(A) has sent the notices during Covid-19 period which were not received by the assessee, hence, the assessee was prevented from appearance on the purported dates. Therefore, we are of the view that assessee may be provided an adequate and proper representation time to file evidence and documents, if any, to substantiate his explanation regarding cash deposits during demonetisation. The ld.DR stated that the assessee is habitual defaulter in appearing before the appellate authority hence no lenient view is to be taken in this case and prayed for dismissal of appeal.
We do concur with the submissions of Ld. Sr. DR, however, keeping in mind the Covid-19 pandemic and principle of natural justice and grant another opportunity of hearing to the assessee. We also find that assessee has not represented before the ld.CIT(A) despite notices for the reasons stated above. We also note that even before AO the order is in fact ex-parte. Accordingly, the impugned order is set aside and the appeal is restored back to the file of Ld. AO for denovo assessment on merits, after affording proper opportunity of hearing to the assessee. The assessee is directed to substantiate its case with all evidence and documents regarding cash deposits during demonetisation, if any, forthwith without any fail, failing which Ld. AO shall be at liberty to proceed with the assessment proceedings on merits as per law.
In the result, appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the open court on 4th April, 2025