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Facts
The assessee, a jeweller, failed to file its return of income and did not comply with notices issued by the Assessing Officer. The AO made additions under Section 68 for unexplained cash deposits and credits during demonetization, estimating profit on turnover. The CIT(A)/NFAC upheld these additions.
Held
The Tribunal noted the assessee's non-compliance but acknowledged the potential for arithmetical inaccuracies in the additions. In the interest of justice, the case was restored to the CIT(A)/NFAC for a final opportunity to the assessee to present its case.
Key Issues
Whether the CIT(A)/NFAC was justified in sustaining additions made by the AO due to the assessee's non-compliance, and whether the assessee should be granted a final opportunity to present its case and additional evidence.
Sections Cited
68, 142(1), 144, 115BBE
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: JUSTICE (RETD.) C V BHADANG & SHRI R. K. PANDA
This appeal filed by the assessee is directed against the ex-parte order dated 01.09.2023 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2017-18.
This appeal was earlier dismissed by the Tribunal for want of prosecution. Subsequently the Tribunal vide M.A. No.24/PUN/2025 order dated 18.07.2025 recalled its earlier order. Hence, this is a recalled matter.
Although a number of grounds have been raised by the assessee, however, these all relate to the ex-parte order of the Ld. CIT(A) / NFAC upholding the additions of Rs.65,13,000/- and Rs.45 lakhs respectively made u/s 68 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) by the Assessing Officer and sustaining the addition of Rs.36,94,745/- by estimating the profit @ 8% on the unexplained cash deposit and credits of Rs.4,61,84,320/-.
Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of purchase and sale of gold jewellery and silver utensils under the name and style of M/s. Arihant Jewellers, Shop No.22, Kohinoor Arcade, Opposite Bus Stop, Nigdi, Pune – 411044. Since the assessee has deposited huge amount of cash during the demonetization period and has not filed its return of income, the Assessing Officer issued notice u/s 142(1) of the Act which was duly served on the assessee. Since there was no compliance to the said notice, opportunity was granted by the Assessing Officer to the assessee for compliance. Again, there was no compliance from the side of the assessee. Therefore, the Assessing Officer proceeded to complete the assessment u/s 144 of the Act.
During the course of assessment proceedings the Assessing Officer noticed that the assessee has maintained a bank account bearing No.1101001888 with the Seva Vikas Cooperative Bank Limited, Pradhikaran Branch, Shop Nos.27, 28 and 29, Kohinoor Arcade, Tilak Chowk-Pune Mumbai Road, Pradhikaran, Pune – 411044 and another bank account No.4011691998 with Kotak Mahindra Bank, 13 & 13, “City Price”, Sector No.25, Pimpri Chinchwad, New Town Development, Nigdi, Pune – 411044, respectively in which cash amounting to Rs.65,13,000/- was deposited during the demonetization period. Since there was no compliance to the statutory notices issued by the Assessing Officer to explain the nature and source of such cash deposits, the Assessing Officer made addition of the same to the total income of the assessee and taxed the same @ 60% u/s 115BBE of the Act.
The Assessing Officer further noted that there were credits amounting to Rs.45 lacs in the bank account of the assessee for which the assessee, despite opportunities granted, failed to substantiate the nature and source of such credits. The Assessing Officer, therefore, added the same to the total income of the assessee by invoking the provisions of section 68 of the Act.
Similarly, in absence of any proper explanation regarding the nature and source of deposits of Rs.10 lacs on 27.05.2016 and Rs.9 lacs on 26.09.2016 in the current account held in Kotak Mahindra Bank, the Assessing Officer made addition of the same to the total income of the assessee by invoking the provisions of section 68 of the Act.
The Assessing Officer further noted the total credits into the bank account including the deposits during demonetization period and the credit of Rs.45 lacs comes to Rs.5,71,97,320/-. Since the assessee was engaged in the business activity, the Assessing Officer determined the total turnover/credits into the bank accounts at Rs.5,71,97,320/-. After excluding the amount of addition already made by him on account of deposits during the demonetization period as unexplained cash credits and the credit amount of Rs.45 lacs, the Assessing Officer determined the net turnover at Rs.4,61,84,320/- and estimated the profit @ 8% on the above which comes to Rs.36,94,745/- which was added to the total income of the assessee. Thus, the Assessing Officer determined the total income of the assessee at Rs.1,47,07,750/-.
Since the assessee despite number of opportunities granted by the CIT(A) / NFAC did not make any submission, the CIT(A) / NFAC in the detailed order passed by him, sustained the additions made by the Assessing Officer and dismissed the appeal filed by the assessee.
Aggrieved with such order of CIT(A) / NFAC, the assessee is in appeal before the Tribunal.
The Ld. Counsel for the assessee at the outset submitted that the e-mail ID of the employee was given for which all the notices were delivered to his e-mail ID. Since the employee did not notice the said e-mails, he did not inform the partners, therefore, nobody could appear before the Ld. CIT(A) / NFAC on the appointed dates. The Ld. Counsel for the assessee filed certain details in shape of additional evidences before the Tribunal with a request to admit the same. He further submitted that there are certain arithmetical inaccuracies in the figures of cash deposits made during the demonetization period which is around Rs.31 lakhs and not Rs.65,13,000/- as mentioned by the Assessing Officer and confirmed by the Ld. CIT(A) / NFAC. He submitted that in the interest of justice the matter may be remitted to the file of the Ld. CIT(A) / NFAC with a direction to give an opportunity to explain its case by filing the requisite details.
The Ld. DR on the other hand strongly opposed the arguments advanced by the Ld. Counsel for the assessee. He submitted that despite number of opportunities granted by the Ld. CIT(A) / NFAC the assessee did not make any submission. Therefore, in absence of any explanation before the Ld. CIT(A) / NFAC, he has rightly sustained the various additions made by the Assessing Officer. He accordingly submitted that the order of the Ld. CIT(A) / NFAC be upheld and the grounds raised by the assessee be dismissed.
We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that due to continuous non- compliance to the various notices issued by the office of the Ld. CIT(A) / NFAC, he sustained the various additions made by the Assessing Officer in absence of any explanation before him. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite documents / details before the Ld. CIT(A) / NFAC. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details and decide the issues as per fact and law. The assessee is also hereby directed to appear before the Ld. CIT(A) / NFAC on the appointed date and make its submissions, if any, without seeking any adjournment under any pretext failing which the Ld. CIT(A) / NFAC is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court at the conclusion of hearing itself i.e. on 25th August, 2025.