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Income Tax Appellate Tribunal, PUNE A BENCH : PUNE
Before: SHRI RAMA KANTA PANDA, VICE- & Ms. ASTHA CHANDRA
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE “A” BENCH : PUNE BEFORE SHRI RAMA KANTA PANDA, VICE-PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER I.T.A.No.1084/PUN/2024 (Assessment Year 2017-2018) Deepak Kapurchand Shaha ITO, Ward-1, Panvel, Kothari, Borli Panchatan, Panvel West. Shriwardhan, Raigad. vs. PAN : ACDPS 5247 A (Appellant) (Respondent) For Assessee : Mr. Mohammed Shahab Khan, (through virtual) For Revenue : Shri Ramnath P. Murkunde, DR Date of Hearing : 24.02.2025 Date of Pronouncement : 21.05.2025 ORDER PER ASTHA CHANDRA, JM:
The appeal filed by the assessee is directed against the order dated 19.03.2024 of the Ld. Commissioner of Income Tax (Appeals)/ NFAC, Delhi [“CIT(A)”] pertaining to Assessment Year (“AY”) 2017-18.
The assessee has raised the following grounds of appeal:-
“1. Addition on account of alleged unexplained cash deposit u/sec. 69A of the Income Tax Act, 1961 (Rs.90,92,250) 2. Addition on account of alleged unexplained cash deposit u/sec. 69A of the Income Tax Act, 1961 (Rs.10,08,947) 3. Addition on account of alleged unexplained cash deposit u/sec. 69A of the Income Tax Act, 1961 (Rs.21,20,000)
Briefly stated, the facts of the case are that assessee is an individual. It is a case of assessment framed u/sec. 144 of the Income Tax Act, 1961 (the “Act”). No return of income for the year
2 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) under consideration was filed by the assessee. It was found that during the demonetization period, the assessee had deposited cash aggregating to Rs. 21,20,000/- in his bank account with Bank of Maharashtra, Borli-Panchatan branch. Since the assessee had not filed his return of income for the relevant AY 2017-18, notice u/s 142(1) of the Act was issued on 09/01/2018 requiring him to file his return of income in the prescribed Form, which was duly served upon the assessee. For lack of compliance in response thereto as also to the show-cause letter and after obtaining information u/s 133(6) of the Act from the aforesaid bank about the cash deposits of the assessee of Rs. 21,20,000/- in his bank account, the Ld. Assessing Officer (“AO”) added the same to the income of the assessee u/s 69A of the Act as unexplained money. The Ld. AO also made the addition of Rs. 90,92,250/- as unexplained cash in the hands of the assessee and treated the other deposits of Rs. 10,08,747/- as unexplained income of the assessee u/s 69A of the Act. He therefore completed the assessment ex-parte at assessed income of Rs. 1,22,20,997/- vide his order dated 27/06/2019 passed u/s 144 of the Act.
The assessee challenged the ex-parte order before the Ld. CIT(A) who dismissed the appeal of the assessee without dwelling into the merits of the case on the ground that assessee has not shown any reasonable cause for non-filing of the return of income and non-compliance to the notice(s) issued during the assessment proceedings. The Ld. CIT(A) further observed that the assessee has furnished additional documentary evidence during the appellate
3 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) proceedings before him, which he rejected to admit and consider under the provisions of Rule 46A of the Income Tax Rules, 1962 observing that the assessee is not entitled to furnish the additional documentary evidences before him as these were not earlier produced before the Ld. AO.
Dissatisfied, the assessee is in appeal before this Tribunal and all the grounds of appeal relate thereto.
The Ld. AR submitted that Ld. AO has passed the ex-parte order for non-compliance of notice(s) of hearing issued by him. The Ld. CIT(A) has dismissed the appeal of the assessee without considering the merits of the case but merely on technical grounds. The Ld. AR submitted that the assessee had brought to the notice of the Ld. CIT(A) that such non-compliance before the Ld. AO was not intentional for the reason that the assessee did not receive any mails from the Income Tax Department as the email ID of his Accountant was mentioned in the income tax portal, who did not inform the assessee about the receipt of the said notice(s). As regards, the addition of Rs. 90,92,250/- on account of cash deposits in the bank account as well as the addition of Rs. 21,20,000/- on account of cash deposits during the demonetization period, the Ld. AR reiterated the submissions made before the Ld. CIT(A) and contented that the assessee is a small businessman running a grocery store. The cash deposited in the bank account was generated from the grocery store sales made in cash on retail basis. Moreover, the purchases were made by the assessee in cash as well as through account payee cheques which were issued from 4 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) the same bank account. Also, the said cash deposits are not made in a single day, but are a total sum of cash deposits in the whole year. Similarly, the cash deposit of Rs. 21,20,000/- during the demonetization period, is not deposited on a single date, but over a period of two months of demonetization which is near about the above monthly cash deposit by the assessee during the year. He further contented that the Ld. AO has considered only the credit side entries of the bank account i.e. deposits and not considered the withdrawals and other payments made from the said bank account. The Ld. AO should have considered the profit margin of the assessee while making the impugned addition(s) which he failed to do. The Ld. AR submitted that since assessment was completed ex-parte, the assessee could not explain the source of alleged unexplained cash deposits to the Ld. AO corroborated by the relevant documentary evidence thereto. He submitted that during the appellate proceedings before the Ld. CIT(A), the assessee furnished the required documentary evidence in support of its claim by filing additional evidence under the provisions of Rule 46A of the Rules, however, the Ld. CIT(A) rejected to admit the same for the reason that these documents were not produced before the Ld. AO earlier. The Ld. AR then drew our attention to the fact that that the Ld. AO has accepted the cash deposits made in the subsequent A.Y. 2018-19 after considering the reply and documents furnished by the assessee during the assessment proceedings before him vide his order passed 147 r.w.s. 144B of the Act. The Ld AR therefore submitted that the assessee is in a position to explain and substantiate its case by filing the requisite supporting
5 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) details/documentary evidence before the lower authorities and urged that the matter may be set aside to the file of the Ld. CIT(A)/ AO for fresh adjudication on merits after affording an opportunity of being heard to the assessee.
The Ld. DR, on the other hand, supported the orders of the Ld. AO and Ld. CIT(A). He submitted that Ld. CIT(A) has not rejected the assessee’s appeal merely on technical ground as alleged by the Ld. AR and he was completely justified in not admitting the additional evidence furnished before him for the first time by the assessee.
We have heard the Ld. Representatives of the parties and perused the material on record and the Paper Book filed by the Ld. AR on behalf of the assessee. It is an admitted fact that Ld. AO has completed the assessment ex-parte for lack of supporting documentary evidence produced by the assessee before him. We observe that the Ld. CIT(A) has dismissed the appeal of the assessee without considering the merits of the case but merely on technical grounds. The Ld. CIT(A) has dismissed the appeal of the assessee without admitting the additional evidence furnished before him on the ground that the assessee did not have any reasonable cause for non-furnishing the same before the Ld. AO. Before us, it is the contention of the Ld. Counsel for the assessee that non- compliance before the Ld. AO was not intentional and that there was a reasonable cause for not being able to respond to the notices issued during the assessment proceedings as the assessee did not receive any mails from the Department which went to the email ID
6 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) of the his accountant. It is the contention of the Ld. AR that the additional evidence should have been admitted and the appellate order should have been passed by the Ld. CIT(A) on merits of the case in consideration of the same. The Ld. AR has therefore prayed that the matter may be set aside to the file of the Ld. CIT(A)/ Ld. AO to decide the issue(s) afresh as the assessee has a strong case on merits of the case which the assessee can duly explain and substantiate by filing the requisite documentary evidence in support of his claim. We find some force in the arguments and submissions of the Ld. AR as we notice that the Ld. AO has passed the assessment order ex-parte and the Ld. CIT(A) has passed the impugned order without considering the merits of the case and not admitting the additional evidence furnished by the assessee before him for the reasons mentioned in the preceding paragraph. Considering the totality of the facts and in the circumstances of the case enumerated above, we are of the view that in the interest of justice and fair play, the matter needs to be restored to the file of the Ld. AO for deciding the impugned issues afresh on merits in accordance with facts and law after allowing reasonable opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the Ld. AO on the date fixed for hearing and make his submissions/file the relevant documentary evidence without seeking any adjournment under any pretext unless otherwise required for reasonable cause, failing which the Ld. AO shall be at liberty to pass appropriate order as per law. The assessee is also directed to provide the correct and latest email ID and contact details to the Department for receiving notices of 7 ITA.No.1084/PUN./2024 (Deepak Kapurchand Shaha Kothari) hearing via Department’s portal and shall remain vigilant in accessing the same and responding to the notices. We direct and order accordingly. The grounds raised by the assessee are hence allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes
Order pronounced in the open Court on 21.05.2025.