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Facts
The Assessing Officer initiated reassessment proceedings against the assessee for A.Y. 2013-14 and 2014-15 after finding significant cash deposits in her bank account for which no return of income was filed. Due to non-compliance with notices, the A.O. framed best-judgment assessments, treating the deposits as unexplained cash credits under Section 68 of the Act, which were subsequently upheld by the CIT(A). The assessee appealed to the ITAT, contending that the CIT(A) failed to consider her detailed submissions explaining the source of deposits as agricultural income.
Held
The Tribunal found that the assessee had indeed uploaded written submissions and supporting documents to the CIT(A) explaining the source of the bank deposits, but the CIT(A) disposed of the appeals without taking cognizance of these submissions. Consequently, the ITAT held that the CIT(A)'s orders suffered from perversity and the matter required re-adjudication. All quantum appeals and consequential penalty appeals were set aside to the file of the CIT(A) with a direction to reconsider the submissions and afford a reasonable opportunity of hearing to the assessee.
Key Issues
Whether the CIT(A) erred in upholding additions under Section 68 and consequential penalties under Section 271(1)(c) without considering the assessee's submissions explaining the source of bank deposits.
Sections Cited
147, 148, 144, 142(1), 68, 271(1)(c)
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.
The captioned appeals filed by the assessee are directed against the respective orders passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Geethala Tejaswini, Hyderabad.
Delhi, dated 27.12.2024, which in turn arises from the respective orders passed by the Assessing Officer (for short “A.O.”) under Section 147 r.w.s. 144 of the Income Tax Act, 1961 (for short “the Act”) dated 20.03.2022 and 23.03.2022 AND under Section 271(1)(c) of the Act, dated 23.09.2022 for A.Y 2013-14 and A.Y 2014-15, respectively. As common issues are involved in the captioned appeals, therefore, the same are taken up and disposed of by this consolidated order.
We shall first take up the quantum appeal filed by the assessee in for A.Y. 2013-14, wherein the impugned order has been assailed on the following grounds of appeal before us:
“1. The order of the Ld. CIT(A) is erroneous in law as well as on facts of the case and has erred in upholding the order of the AO.
2. The Ld. CIT(A) passed the order without considering the fact that the Appellant has made the submissions before the Ld. CIT(A) and accordingly the action taken by the Ld. CIT(A) accepting the addition is not in accordance with facts & law and hence the addition is liable to be deleted.
3. The Ld. CIT(A) without allowing proper opportunity of hearing to the Appellant, has passed the order upholding the order of the AO which is not sustainable and hence the addition made by the AO is liable to be deleted.
4. The Ld. CIT(A) has upheld the order of the Assessing Officer without even considering the submissions made before him and such action of the Ld. CIT(A) is prejudicial to the interests of the Appellant and not justifiable in the present facts and circumstances. Geethala Tejaswini, Hyderabad.
5. The Ld. CIT(A) ought to have considered the submissions made by the Appellant and the Ld. AO should not have made any additions u/s 68 of the IT Act, and hence the additions made by the Assessing Officer are liable for deletion.
6. The Ld. CIT(A) without going into the facts and circumstances of the case has confirmed the addition made by the AO and such action is not sustainable and hence the addition confirmed by the Ld. CIT(A) is liable for deletion. 7. The Ld. CIT(A) ought to have considered the fact that the Assessing Officer erred in invoking the provisions of section 68 of the IT Act and the additions made by the Assessing Officer are not sustainable and are liable for deletion. 8.The Appellant craves to add, alter, modify, or delete any of the above grounds of appeal at the time of hearing.”
Succinctly stated, the A.O., based on credible information gathered through inside portal of the Income-tax department, that the assessee had, during the subject year, deposited cash and other credits, aggregating to Rs. 86,10,524/- in her bank account with ICICI Bank, but had not filed her return of income for the year under consideration, i.e., A.Y. 2013-14, initiated proceedings under Section 147 of the Act. Notice under Section 148 of the Act dated 30.03.2021 was issued by the A.O.
As the assessee neither filed the return of income in compliance to notice under Section 148 of the Act, dated 30.03.2024 nor complied with the notices issued under Section 142(1) of the Act, therefore, the A.O., after validly putting the Geethala Tejaswini, Hyderabad. assessee to notice, proceeded with to frame the assessment to the best of his judgment under Section 144 of the Act. Accordingly, the A.O., in the absence of any details forthcoming regarding the sources of cash deposits/credits in the bank account of the assessee, aggregating to Rs. 86,10,524/-, viz., (i). cash deposits: Rs. 29,33,600/-; and (ii). other than cash credits: Rs. 56,76,924/- , held the same as unexplained cash credits under Section 68 of the Act.
5. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) inter alia observed that the assessee had failed to comply with the notice issued by the A.O. under Section 148 of the Act. Also, it was observed by him that the assessee, despite multiple statutory notices under Section 142(1) of the Act, served electronically and physically, had failed to come forth with any explanation regarding the deposits made in her bank account during the subject year. The CIT(A) observed that the A.O., in the absence of any explanation regarding the deposits of Rs. 86.10 lacs (approx.) in the bank account of the assessee, was constrained to treat the same as unexplained cash credits under Section 68 of the Act. Accordingly, the CIT(A) held that, for lack of Geethala Tejaswini, Hyderabad. co-operation, absence of evidence such as reconciliations, explanations and documentation, the A.O. had rightly held the deposits of Rs. 86.10 lacs (approx.) as unexplained cash credits under Section 68 of the Act. For the sake of clarity, the observations of the CIT(A) are culled out as under :
4.3 I have gone through the assessment order and record available. In the instant case, as regards, ground regarding order not sustainable on Facts or in Law is concerned. In my view, this is a general ground of appeal and serves as a broad challenge to the validity of the assessment order. It provides a foundation for the other specific grounds and allows the appellant to argue on various aspects of the order. While this ground lacks specificity, it is dismissed. 4.4 As regards, ground regarding invoking section 68 is concerned. The appellant alleges that the AO incorrectly invoked this section, potentially without sufficient evidence or justification. Presently, the appellant has not demonstrated that the credits in question as explained with proper documentation (e.g., confirmations, identity, and creditworthiness of creditors or sales with existence of business or sale of agriculture produce) to refute the AO's findings. Since the nature of credits in the bank account could not be established by appellant. The addition made by AO u/s 68 is confirmed. Regarding, procedural lapses, specifically the denial of adequate opportunity for the appellant to present their case is concerned. The appellant needs to show evidence (e.g., responses to notices or attempts to participate in proceedings) to substantiate this claim. However, the AO has mentioned in the assessment order that Due to repeated non-responsiveness, the case was handled under the Faceless Assessment Scheme and referred to the Verification Unit for physical service of notices. A show-cause notice and a draft assessment order were issued, but the assessee did not file a response." Considering the above, the ground of denial of adequate opportunity for the appellant is dismissed. The Addition of Rs. 86,10,524/- is Justified for lack of factual or legal basis in providing evidence such as reconciliations, explanations, and documentation for the disputed amount. The merits of this ground depend heavily on the evidence and reasoning not presented during the appellate proceedings. The substantive grounds (Grounds 2 and 4) require detailed evidence and explanation to overturn the additions which is not submitted during appeal. Geethala Tejaswini, Hyderabad.
As a result, the appeal of the assessee is dismissed.”
Being aggrieved with the order of the CIT(A), the assessee has carried the matter in appeal before us.
Shri C. Maheswar Reddy, C.A. the learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold of hearing of the appeal, submitted that the CIT(A) has grossly erred in law and on facts of the case in sustaining the impugned addition of Rs. 86.10 lacs (supra) made by the A.O. under Section 68 of the Act. Elaborating on his contention, the Ld. AR submitted that although the assessee had, in the course of the proceedings before the CIT(A), uploaded her written submissions on 21.12.2024, wherein she had come up with an explanation regarding the source of the deposits of Rs. 86.10 lacs made in her bank account during the subject year, but, the CIT(A) had grossly erred in law and on facts of the case in not considering the same while disposing of the appeal. The Ld. AR, to fortify his aforesaid contention, has taken us through the submissions that were e- filed/uploaded in the course of the proceedings before the CIT(A) on 21.12.2024, vide acknowledgment number 764121301211224, Geethala Tejaswini, Hyderabad.
(Pages 21 and 22 of the APB). Also, the Ld. AR had taken us through the documents/enquiries that were uploaded by the assessee in the course of the appellate proceedings before the First Appellate Authority, (Pages 23 to 32 of the APB). The Ld. AR had specifically drawn our attention to the written submissions that were uploaded by the assessee before the CIT(A), wherein it was categorically stated by her that the deposits made in her bank account, either in cash or through transfer of cheques aggregating to Rs. 86.10 lacs (supra), were the sale proceeds of agricultural produce and fruits cultivated by her on the agricultural lands owned both by her and her husband. The Ld. AR submitted that the CIT(A), by not taking cognizance of the written submissions of the assessee, had most arbitrarily sustained the impugned addition of Rs. 86.10 lacs that was made by the A.O. under Section 68 of the Act. It was, thus, submitted by the Ld. AR that as the CIT(A)'s order suffers from a serious perversity, therefore, the impugned addition made by him cannot be sustained and is liable to be struck down. Geethala Tejaswini, Hyderabad.
Per contra, Sri Gurpreet Singh, the learned Senior Departmental Representative (for short “Ld. DR”) relied upon the orders of lower authorities.
We have heard the learned Authorized Representatives of both parties, perused the orders of lower authorities and the material available on record.
Admittedly, it is a matter of fact borne from the record that the CIT(A) had approved the addition of Rs. 86.10 lacs made by the A.O. under Section 68 of the Act, primarily for the reason that the assessee had failed to come forth with any explanation regarding the source of the deposits in her bank account. Ostensibly, as the assessee had in the course of the assessment proceedings failed to provide any explanation regarding the source of the deposits in her bank account of Rs. 86.10 lacs (supra), thus, the A.O was prompted to frame the assessment to the best of his judgment under Section 144 of the Act. However, it transpires on a perusal of the record that the assessee, in the course of the proceedings before the CIT(A), had placed on record her written submissions along with supporting documents, vide Geethala Tejaswini, Hyderabad. her reply that was uploaded on 21.12.2024. At this point, we may herein observe that a perusal of the e-Proceedings Response Acknowledgement, dated 21.12.2024, (Page 21 of the APB), reveals that the assessee had claimed to have already filed her written submissions on 04.11.2024, but had once again placed the same on his record as part of the submissions that were to be filed with him latest by 16.12.2024. Although we are not oblivion of the fact that as per the aforesaid e-Proceedings Response Acknowledgement, the assessee was required to file her submission latest by 16.12.2024, which, however, she had filed on 21.12.2024, but the same could not have been brushed aside by the CIT(A) for more than one reason, viz., (i). that the assessee had claimed to have already filed the said written submissions online on 04.11.2024; and (ii). that as the CIT(A) had disposed of the appeal vide his order dated 27.11.2024, therefore, the aforementioned written submissions that were filed/uploaded on 21.12.2024 were very much available before him at the time of disposing of the appeal.
Be that as it may, we are of the firm conviction that as the assessee had, in the course of the proceedings before the CIT(A), Geethala Tejaswini, Hyderabad. come up with an explanation regarding the source of the deposits of Rs. 86.10 lacs (supra) in her bank account, therefore, the disposing of the appeal by him without taking cognizance of the said submissions/material cannot be approved on our part. We thus, in terms of our aforesaid deliberations, are of the firm conviction that the matter, in all fairness, requires to be set aside to the file of the CIT(A), with a direction to re-adjudicate the same after considering the written submissions/material that had been filed/uploaded by the assessee and are available on his record, based on a speaking order. Needless to say, the CIT(A) shall, in the course of the set-aside proceedings, afford a reasonable opportunity of being heard to the assessee.
Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations.
As the facts and the issues involved in the appeal filed by the assessee in for A.Y. 2014-15 relating to the dismissal of her of appeal by the CIT(A) remains the same as were there before us in her appeal for the immediately preceding year in Geethala Tejaswini, Hyderabad.
ITA No.322/Hyd/2025 for A.Y. 2013-14, therefore, our order therein passed shall apply mutatis mutandis for disposing of the present appeal. Accordingly, the captioned appeal i.e. for A.Y. 2014-15 is on the same terms set aside to the file of CIT(A) with a direction to re-adjudicate the same.
Resultantly, the appeal filed by the assessee is allowed on the same terms for statistical purposes. and 325/HYD/2025 for A.Y.s 2013-14 and 2014-15
We shall now deal with the appeals filed by the assessee in and 325/Hyd/2025, which in turn arises from the order passed by the A.O. u/s 271(1)(c) of the Act, dated 23.09.2022 for A.Ys. 2013-14 and 2014-15, respectively.
As we have set aside the orders passed by the CIT(A) disposing of the quantum appeals of the assessee for A.Y. 2013-14 and 2014-15, respectively, for fresh adjudication, therefore, the present appeals assailing the order passed by the CIT(A), wherein the assessee has assailed the penalty imposed by the A.O. u/s 271(1)(c) of the Act for both the captioned appeals are also on the Geethala Tejaswini, Hyderabad. same terms, set aside to the file of CIT(A). The CIT(A) is directed to dispose of the captioned appeals after adjudicating/ disposing of the quantum appeals in the case of the assessee.
Resultantly, the captioned appeals filed by the assessee are allowed for statistical purposes in terms of our aforesaid observations.
To sum up, all four appeals of the assessee are allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the Open Court on 18th July, 2025. /- (रवीश सूद) (मिुसूदन सावडिया) (RAVISH SOOD) (MADHUSUDAN SAWDIA) न्यायिक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 18.07.2025. TYNM/sps Geethala Tejaswini, Hyderabad.