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Facts
The assessee, a soft drink distributor, failed to file his return of income for AY 2017-18 and did not respond to notices. The Assessing Officer added cash deposits of ₹.4,72,64,356/- (excluding demonetization period) and ₹.36,02,000/- (during demonetization period) as unexplained income under Section 69A of the Income Tax Act.
Held
The Tribunal noted the assessee's plea of non-cooperation from the auditor and lack of awareness due to e-proceedings. Considering these circumstances, the Tribunal decided to remand the matter back to the CIT(A) for fresh consideration on merits, subject to payment of costs and condonation of delay.
Key Issues
Whether the CIT(A) was justified in confirming the addition of unexplained cash deposits made under Section 69A without condoning the delay and considering the explanation of the assessee.
Sections Cited
69A, 142(1), 133(6), 119(2)(b)
AI-generated summary — verify with the full judgment below
Before: Shri S.S. Viswanethra Ravi & Shri Jagadish
Year: 2017-18 Dhasaratharaman Gopikrishnan, Vs. The Income Tax Officer, No. 6, Lakshmi Nagar, Nandhivaram, Non Corporate Ward 22(1), Guduvancheri, Kanchipuram 603 202. Tambaram. [PAN:AIRPG0033A] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Ms. T.V. Muthu Abirami, Advocate ��थ� की ओर से/Respondent by : Shri A. Sasikumar, CIT सुनवाई की तारीख/ Date of hearing : 24.02.2025 घोषणा की तारीख /Date of Pronouncement : 28.02.2025 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 08.10.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2017-18.
The assessee raised 20 grounds of appeal amongst which, the only issue emanates for our consideration as to whether the ld. CIT(A) is justified in confirming the addition made under section 69A of the Income Tax Act, 1961 [“Act” in short] made by the Assessing Officer without condoning the delay in filing the appeal in the facts and circumstances of the case.
The assessee is an individual and engaged a soft drink beverage distributor of M/s. Pepsi Company doing his business in the name and style of M/s. M.S. Agency. The assessee did not file his return of income for the AY 2017-18. The Assessing Officer issued notice under section 142(1) of the Act requiring the assessee to furnish a return of his income. For the AY 2017-18, the assessee filed his return of income under section 119(2)(b) of the Act dated 01.11.2018, but, not filed return of income in response to notice under section 142(1) of the Act. Subsequently, notice under section 142(1) of the Act was issued calling for financial details of the assessee and there was no response from assessee. Under section 133(6) of the Act, bank statements were obtained from the Bank and on examination of the bank statement, the Assessing Officer noted that there is credit balance of ₹.4,72,64,356/- by way of cash deposit/account transfer entry excluding demonetization period. The Assessing Officer issued show-cause notice to treat the credit balance of ₹.4,72,64,356/- as assessee’s gross receipt and proposed to assess the income at 8% of such gross receipts which works out to ₹.37,81,149/- and brought to tax. Since there was no response from assessee, the Assessing Officer treated the same as income of the assessee. Further, the Assessing Officer noted that the assessee made cash deposit of ₹.36,02,000/- during demonetization period and did not furnish any documentary evidence for the same. Accordingly, the Assessing Officer treated the cash deposits as unexplained money under section 69A of the Act and brought to tax.
The assessee preferred an appeal before the ld. CIT(A) with a delay of 197 days. After considering the condonation petition, the ld. CIT(A) held that the explanation offered by the assessee cannot be said to be a sufficient cause for condoning the delay and rejected the same. On merits, the ld. CIT(A) rejected the contention of the assessee that the cash deposits were out of his business turnover since the assessee could not file any corroborative evidences either before the Assessing Officer or before the ld. CIT(A). With regard to the cash deposit during demonetization period, the ld. CIT(A) rejected the submissions of the assessee since the assessee could not file any satisfactory explanation with cogent evidence and dismissed the appeal filed by the assessee.
The ld. AR Ms. T.V. Muthu Abirami, Advocate submits that the notices issued during the course of assessment proceedings were sent to the auditor and the assessee was not aware of the notices issued by the Department. Since the auditor of the assessee did not cooperate with the assessee, the assessee cannot be penalized as the assessee was not well-versed with e-proceedings. Non-response to the notices issued by the Assessing Officer is either wilful or wanton. The ld. AR further submits that due to the circumstances beyond his control, the assessee could not file explanation/documentary evidence in support of his claim before the ld. CIT(A) and prayed to afford an opportunity to the assessee as the assessee is ready to prosecute his case without fail.
The ld. DR Shri A. Sasikumar, CIT opposed the same and drew our attention to para 7.1 of the impugned order and argues that the Assessing Officer provided adequate opportunities, but, the assessee did not respond or submit any details. He further submits that during the course of appellate proceedings, the assessee did not file documentary evidences in support of his claim. He vehemently argued that costs may be imposed in case this Tribunal afford an opportunity by remanding the matter to the file of the ld. CIT(A).
6. Considering the facts and circumstances of the case and submissions of the ld. AR and the ld. DR, in the interest of justice, we deem it proper to remand the matter to the file of the ld. CIT(A) subject to the condition of payment of ₹.10,000/- 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 condone the delay of 197 days in filing the appeal and consider the appeal on merits. The assessee is at liberty to file documentary evidence/written submission 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 28th February, 2025 at Chennai.