IQBAL SHAIK,NELLORE vs. ITO., WARD INTERNATIONAL TAXATION, NELLORE

The Ld. AO erred, and the Ld. CIT(A) erred in confirming the order of Ld. AO in making the addition of Rs.30,46,500/- under Section 69A of the Act when the Appellant had discharged his onus of explaining the source of cash deposit.

5. The Ld. AO and the Ld. CIT(A) failed to note that the provisions of Section 69A do not apply to the Appellant as no books of account are required to be maintained by the Appellant.

6. The Ld. AO and the Ld. CIT(A) erred in not considering the explanation given by the Appellant that the cash deposits are received from the family members who

3 ITA.No.67/Hyd./2025 have withdrawn earlier from their bank accounts from the money received by them from the Appellant via banking channel to meet the emergency education needs. 7. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable the Honourable Members to decide this appeal according to law.”

3. Briefly stated facts of the case are that, the assessee did not file his return of income for the assessment year 2017-2018 within the time prescribed under section 139(1) of the Income Tax Act, 1961 [in short "the Act"]. On the basis of statement of financial transactions filed by the Bank in the wake of demonetization, there was information available with the Department that, assessee has made huge cash deposit during the demonetization period. Since the assessee has not filed his return of income and further, the case was flagged by the System on issue on notice under section 142-(1)(i) of the Act, the Assessing Officer issued notice under section 142(1) of the Act on 13.02.2018 calling the assessee to furnish true and correct return of income for 4 ITA.No.67/Hyd./2025 the assessment year 2017-2018 and file the same on or before 150.03.2018. The assessee did not file his return of income in response to the notice under section 142(1) of the Act. Therefore, show cause notice dated 24.09.2019 was issued and called-upon the assessee to file his submissions on or before 26.09.2019. In response, the assessee vide letter dated 26.09.2019 stated that, he is a non-resident Indian, working in Saudi Arabia and did not file his return of income because, he does not have any income chargeable to tax in India for the relevant assessment year. Subsequently, the case of the assessee has been transferred to Income Tax Officer, Ward (International Taxation), Nellore because, the jurisdiction over the assessee lies with Income Tax Officer, International Taxation, Nellore. Therefore, the case is transferred on 21.10.2019. Thereafter, the Assessing Officer issued one more letter dated 25.11.2019 in terms of section 129 of the Act and posted the case for hearing on 02.12.2019. Once again there is no compliance from the assessee. Therefore, one more show cause notice dated 25.11.2019 was issued to the assessee and called-upon the 5 ITA.No.67/Hyd./2025 assessee to file relevant evidences in respect of cash deposited into bank account. Since, there is no compliance from the assessee, the Assessing Officer passed order under section 144 of the Income Tax Act, 1961 [in short "the Act"] at his best judgement and determined the total income of the assessee at Rs.30,90,355/- by making addition of Rs. 30,46,500/- towards cash deposited into bank account under section 69A of the Act and further, made addition of Rs.43,855/- towards interest income under the head “Income from Other Sources”.

4. Aggrieved by the assessment order passed by the Assessing Officer, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the validity of assessment order passed by the Assessing Officer i.e., Income Tax Officer, Ward, (International Taxation), Nellore, in absence of notice issued under section 142(1) of the Act. The assessee had also challenged the addition made by the Assessing Officer towards cash deposited into bank account during demonetisation period in light of relevant evidences and 6 ITA.No.67/Hyd./2025 submitted that, the source for cash deposit is out of remittance from Abroad for the purpose of payment of school fees of his son and further, since the admission was not made because, his son was not qualified in NEET exam, the cash withdrawn from bank account of assessee’s brother, has been deposited into bank account of the assessee during the demonetization period.

8 ITA.No.67/Hyd./2025 demonetisation period. Further, on perusal of the relevant cash deposit during demonetisation period, it was noticed that, the cash deposits were made from different places. Therefore, it appears that, there is no co-relation between the explanation of assessee that, the cash deposits were made out of earlier withdrawals from his brother account for medical seat. Therefore, rejected the explanation of assessee and sustained the addition made by the Assessing Officer towards cash deposit under section 69A of the Act. The learned CIT(A) had also sustained the addition towards interest under the Head “Income from Other Sources”.

9 ITA.No.67/Hyd./2025 cause notice issued by the Assessing Officer submitted that, the Income Tax Officer, Ward-1, Gudur issued initial notice under section 142(1) of the Act. The case has been subsequently transferred to Income Tax Officer, Ward (International Taxation), Nellore and the Income Tax Officer, Ward (International Taxation), Nellore did not issue new or fresh notice under section 142(1) of the Act. Further, there is no valid order from the Authorities under section 127 of the Act for transferring the case. In absence of any order under section 127 of the Act or fresh notice issued under section 142(1) of the Act by the Assessing Officer who is having jurisdiction over the assessee, the assessment order passed by the Assessing Officer is invalid, void abinitio and liable to be quashed. In this regard, he relied upon the decision of Hon’ble High Court of Orissa in the case of Vedanta Resources Ltd., vs., ACIT, International Taxation, Bhubaneswar [2023] 150 taxmann.com 57 [Orissa]; (2) Order of ITAT, Ahmedabad Bench, Ahmedabad, in the case of ITO, Ward-1(2)(3), Ahmedabad vs., Mohammed Arif Ibrahimbhai Shaikh, Prop. Of M/s. I.K. Internatinal

10 ITA.No.67/Hyd./2025 ITA.No.1115/Ahd./2019, order dated 31.05.2022 and (3) Order of ITAT, Ahmedabad Bench, Ahmedabad, in the case of Kavitaben Chintanbhai Patel vs., Income Tax Officer, Ward-5(2)(3), Ahmedabad, ITA.No.306/Ahd./2021, order dated 03.08.2022.

12 ITA.No.67/Hyd./2025 has transferred the case to the Assessing Officer having jurisdiction over the assessee by transferring the case records to Income Tax Officer, Ward [International Taxation], Nellore. The Income Tax Officer, Ward (International Taxation), Nellore has given ample opportunities to the assessee to file relevant evidences by issuing various notices. However, the assessee neither filed any details nor raised any objection over the jurisdiction of the Assessing Officer. Once the assessee has not availed opportunity provided by the Assessing Officer and further, not raised any objection about the jurisdiction of the Assessing Officer, in our considered view, the assessee cannot now question the jurisdiction at this stage. Further, as per the provisions of section 124(3)(b) of the Act, where an assessee has not filed return after expiry of the time allowed in the notice under section 142(1) of the Act or under first proviso to section 144 show cause, why the assessment should not be completed to the best judgement of the Assessing Officer whichever is earlier, then, he cannot entitled to raise any question challenging the jurisdiction of 13 ITA.No.67/Hyd./2025 the Assessing Officer. In the present case, when the Assessing Officer issued initial notice under section 142(1) of the Act on 13.02.2018, the assessee did not file his return of income on or before the due date provided in the said notice. Further, when the Assessing Officer issued show cause notice under section 144, the assessee did not file any return of income. Therefore, in our considered view, in view of section 124(3)(b) of the Act, the assessee cannot call in question, the jurisdiction of Assessing Officer at this stage. This legal principle is supported by the decision of Hon’ble Delhi High Court in the case of Abhishek Jain vs., Income Tax Officer, Ward-55(1), New Delhi [2018] 94 taxmann.com 355 (Del.) and the decision of Hon’ble Supreme Court in the case of d DCIT (Exemption) vs., Kalinga Institute of Industrial Technology [2023] 454 ITR 582 (SC). Therefore, we are of the considered view that, there is no merit in the ground taken by the assessee challenging the jurisdiction of the Assessing Officer, in light of provisions of section 142(1) of the Act. In so far as various case law relied upon by the assessee including the decision of Hon’ble High Court of 14 ITA.No.67/Hyd./2025 Orissa in the case of Vedanta Resources Ltd., ACIT (supra), we find that, the facts of the above case are different from the facts of the assessee’s case and, therefore, the case law relied upon by the assessee are not considered.

14. CA, Kranthi Palivela, Learned Counsel for the Assessee, referring to the various evidences including bank statement of the assessee and his brother submitted that, the assessee has transferred the money from Saudi Arabia from his bank account in the month of December 2015 to his brother’s bank account for the purpose of payment of fees for his son admission to Medical College. The amount

15 ITA.No.67/Hyd./2025 transferred from his bank account to his brother bank account has been withdrawn by his brother immediately for the purpose of payment of fees. However, the son could not qualify in NEET exam for admission to MBBS course and the money transferred for the purpose of payment of fees was lying with his brother. Thereafter, the Government of India announced the demonetisation on 08.11.2016 and the assessee’s brother has deposited unutilized amount to his bank account. This fact has been explained to the learned CIT(A). The learned CIT(A), without considering the relevant facts, simply sustained addition made by the Assessing Officer. The Learned Counsel for the Assessee further submitted that, the assessee has transferred a sum of Rs.32.94 lakhs on various dates from 07.12.2015 to 10.02.2016 to his brother’s bank account in ICICI Bank. Later, his brother had withdrawn a sum of Rs.32,00,500/- from 14.02.2015 to 16.02.2016 and the amount was available with his brother. Since the announcement of demonetization on 08.11.2016, the amount available with the brother has been deposited into assessee’s bank

16 ITA.No.67/Hyd./2025 account. Since the source is explained out of fund transferred from outside India, the Assessing Officer ought to have accepted the explanation of assessee. However, the Assessing Officer and the learned CIT(A) without considering the relevant submissions, simply made the impugned addition towards cash deposit under section 69A of the Act. Therefore, he submitted that, the addition made by the Assessing Officer should be deleted.

17 ITA.No.67/Hyd./2025 demonetisation period. Since the assessee could not file relevant evidences to co-relate the cash deposited during demonetisation period out of funds transferred from the assessee bank account from Saudi Arabia, the Assessing Officer has rightly made addition under section 69A of the Act. The learned CIT(A) after considering the relevant submissions of the assessee, has rightly sustained the addition made by the Assessing Officer. Therefore, he submitted that, the order of the learned CIT(A) should be upheld.

19 ITA.No.67/Hyd./2025

20 ITA.No.67/Hyd./2025 of payment of Nabeel MBBS seat expenses’. It is also not in dispute that, the assessee’s brother has withdrawn the funds immediately after receipt of funds from his brother bank account. If we go by the amount of fund transferred by the assessee to his brother bank account and the amount of fund withdrawn by the assessee’s brother from his bank account, the amount is sufficient to explain the amount of cash deposit of Rs.30,46,500/- to assessee’s bank account during financial year relevant to assessment year under consideration, during the demonetization period. Although, the Assessing Officer has accepted these facts, but, rejected the explanation of assessee only on the ground that, there is no one to one co-relation between fund transferred from assessee bank account to his brother bank account and subsequent withdrawal and redeposit. In our considered view, the reasoning given by the learned CIT(A) are not acceptable for the simple reason that, upon perusal of the relevant evidences, it is undisputedly clear that, the assessee does not have any income in India, which is taxable under the Act, except funds transferred from his

21 ITA.No.67/Hyd./2025 bank account held at Saudi Arabia. Further, the Assessing Officer has not made-out any case that, funds transferred from outside India to his brother bank account has been utilised for some other purpose or invested in any asset. In absence of any finding as to contrary to the claim of the assessee, in our considered view, the explanation offered by the assessee with regard to source for cash deposit including cash deposit during demonetization period, needs to be accepted. The learned CIT(A) without considering the relevant facts, simply sustained the addition made by the Assessing Officer. Thus, we set-aside the order of the learned CIT(A) and direct the Assessing Officer to delete the addition made towards cash deposit into assessee’s bank account during the demonetisation period u/sec.69 of the Income Tax Act, 1961.

Order pronounced in the open Court on 16.07.2025.