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Facts
The assessee filed an income return for AY 2017-18 declaring Rs. 21,51,710 income. The AO completed assessment under Section 144, adding Rs. 7,64,25,823/- (later restricted to Rs. 5,54,20,833/-) as undisclosed income, considering deposits made during the demonetization period. The assessee failed to provide details and supporting evidence.
Held
The Tribunal set aside the order of the CIT(Appeals) and remitted the matter back for fresh adjudication on merits. The assessee was cautioned to cooperate with the proceedings.
Key Issues
Whether the addition made by the AO as undisclosed income based on bank deposits during the demonetization period is justified, and whether the CIT(Appeals) rightly dismissed the appeal ex-parte without considering the merits.
Sections Cited
143(2), 142(1), 144, 115BBE
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rajesh Kumar
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 29th January, 2025 passed for assessment year 2017-18.
(A.Y. 2017-2018) Sanjay De
The facts in brief are that the assessee is an individual, who filed his return of income for the assessment year 2017-18 on 31.03.2018 declaring total income of Rs.21,51,710/-. Nature of business of the assessee during the year was promoting and as developer. Notice under section 143(2) was issued to the assessee on 28.09.2018 through online and served on the assessee on the same date through online. Notice under section 142(1) dated 02.07.2019 and 20.08.2019 was also served on the assessee through online on the same date. There was no compliance from the assessee throughout the proceeding and even no details or document has been filed by the assesee. The ld. Assessing Officer completed the assessment under section 144 of the Income Tax Act, 1961 on the basis of the details and documents so far as available in record as well as details and documents so far as collected against verification. It appears from the income tax return that the assessee has shown gross profit of Rs.42,68,337/- and net profit of Rs.23,14,308/- against the turnover /receipts of Rs.1,95,80,880/-. However, the assessee has filed audited accounts for the AYs 2016-17 and 2018-19. It transpires from the record that the assessee during demonetization period deposited lumpsum amounts in his bank accounts. Even after repeated reminders and show cause notices, the assessee failed to furnish the details and denomination of cash receipts during and just prior to demonetization period as well as failed to furnish the denomination of cash deposited in Banks with supporting evidences. The assessee failed to mention the denomination of cash balance as on 08.11.2016 along with supporting evidence.
(A.Y. 2017-2018) Sanjay De The assessee failed to file copies of his books of accounts and documents for the year in question or earlier years or subsequent year as called for. During the course of scrutiny proceedings, the assessee was required to furnish the copies of all bank statements with details of source of fund along with evidence and details of withdrawals including cash withdrawals with application of withdrawals, but the assessee failed to produce the above documents. The assessee has shown total turnover of Rs.1,95,80,880/-. If it is considered that entire amount was received by the assessee and deposited in his abovementioned bank accounts, still there is excess undisclosed deposit of Rs.7,64,25,823/- (Rs.9,60,06,703/- minus Rs.1,95,80,880/-). The above fact clearly indicates that the assessee must have deposited the above sum out of his undisclosed source of income for the AY 2017-18. Hence, the ld. Assessing Officer added Rs.7,64,25,823/- to the total income of the asessee. Finally, ld. Assessing Officer restricted the addition to Rs.5,54,20,833/- [Rs.7,64,25,823/- (-) Rs.1,15,89,500/- (-) Rs.94,15,490/-] and directed to compute tax accordingly against this addition under section 115BBE. On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals).
The ld. CIT(Appeals) dismissed the appeal of the assessee ex- parte saying that in absence of written submission to substantiate his contentions made in the grounds of appeal and non- submission of any material in the course of appellate proceedings to controvert the findings along with corroborative evidences in the (A.Y. 2017-2018) Sanjay De assessment order made by the ld. Assessing Officer to arrive at his decision on the issues.
4. On being aggrieved, the assessee preferred appeal before the ITAT. At the outset, it was the submission of the ld. Counsel for the assessee that the assessee is willing to prosecute the appeal before the ld. CIT(Appeals) on merit and he pleaded to set aside the order passed by the ld. CIT(Appeals) and restore the matter to the file of ld. CIT(Appeals) to decide it afresh.
On the other hand, ld. Departmental Representative submitted that the assessee failed to bring any cogent material to substantiate his grounds of appeal before the ld. Assessing Officer as well as before ld. CIT(Appeals). Therefore, the ld. CIT(Appeals) rightly dismissed the appeal. He pleaded to confirm the order passed by the ld. CIT(Appeals).
We have heard both the sides and perused the material available on record. By considering the totality of the facts and circumstances of the case, we are of the view that it is a fit case to set aside the order passed by the ld. CIT(Appeals) and remit the matter back to the file of ld. CIT(Appeals) with a direction to dispose of the appeal without any inference on the observations of earlier order passed by him and to decide it afresh on merit. At the same breath, we also hereby caution the assessee to promptly co- operate with the proceedings before the Ld. CIT(Appeals) failing which the Ld. CIT(Appeals) shall be at liberty to pass appropriate order in accordance with law and merits of the case, based on the (A.Y. 2017-2018) Sanjay De materials available on the record. Thus, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/10/2025.