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Facts
The assessee's A.Y. 2015-16 case was selected for limited scrutiny due to a substantial increase in capital. The Assessing Officer added Rs. 70,48,949/- as unexplained cash credits under section 68 due to the assessee's inability to substantiate the capital increase. The CIT(A) upheld this addition as the assessee failed to comply with notices and provide evidence.
Held
The Tribunal condoned the 611-day delay in filing the appeal, finding reasonable cause. It set aside the CIT(A)'s order and remanded the matter back for fresh adjudication, allowing the assessee a final opportunity to furnish all relevant documents and evidence before the CIT(A), conditional on depositing Rs. 10,000/- to the Prime Minister's Relief Fund.
Key Issues
1. Condonation of delay in filing the appeal. 2. Justification of addition made under section 68 for unexplained capital increase in the absence of evidence before lower authorities. 3. Whether to allow fresh opportunity to assessee to furnish evidence before CIT(A).
Sections Cited
143(3), 143(2), 142(1), 44AD, 68, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI MAKARAND V. MAHADEOKAR
(Assessment Year: 2015-16) Urvashiben Sunilbhai Amin, Vs. Income Tax Officer, A-37, Mani Nagar Society, B/h. Ward-1(2)(2), Aakash Ganga Apartment Manjalpur, Vadodara Vadodara-390010 [PAN No.AENPA2080B] (Appellant) .. (Respondent) Appellant by : Shri Prashant Upadhyay, AR Respondent by: Shri Nitin Vishnu Kulkarni, Sr. DR Date of Hearing 13.11.2025 Date of Pronouncement 27.11.2025 O R D E R
PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order dated 04.07.2023 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] for A.Y. 2015-16, arising from the assessment order passed under section 143(3) of the Income Tax Act,1961 [hereinafter referred to as “the Act”] on 24.11.2017.
Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 2– Condonation of Delay 2. At the threshold, it is noted that the Registry has reported a delay of 611 days in filing the present appeal. The assessee filed a condonation petition supported by a duly sworn affidavit stating that although the order of the CIT(A) was received on 04.07.2023 through email, she was not conversant with electronic communication and relied entirely upon her earlier Authorised Representative. Due to non-responsiveness and lack of guidance from the said representative, the appeal could not be filed within the prescribed time. Upon realizing the lapse, the assessee engaged a new Chartered Accountant and immediately initiated steps for filing the present appeal.
During the course of hearing, the learned Departmental Representative raised no objection to condoning the delay. Considering the submissions, the affidavit placed on record, absence of mala fides, and in the interest of substantial justice, we are satisfied that the assessee was prevented by reasonable cause from filing the appeal within limitation. Accordingly, the delay of 611 days is condoned, and the appeal is admitted for adjudication.
Facts of the Case 4. The assessee, an individual engaged in the business of manufacturing engineering goods under the proprietary concern M/s. New SK Engineering Works, filed her return of income for A.Y. 2015-16 Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 3– on 24.09.2015 declaring income of Rs. 4,90,538/-. The case was selected for Limited Scrutiny under CASS for the following reasons: i) tax credit claimed in ITR was less than that available in Form 26AS. ii) mismatch in turnover reported in audit report and return of income. iii) substantial increase in capital in a year.
Notices under sections 143(2) and 142(1) were issued, pursuant to which the assessee submitted ITR, Form 26AS, audit report in Forms 3CB and 3CD, profit and loss account, balance sheet, capital account, and bank statements. During assessment, the Assessing Officer issued notice dated 13.06.2017 requiring the assessee to furnish complete details of additions to the capital account along with supporting evidence and capital accounts for FYs 2013-14 and 2014-15. The assessee submitted that no capital was introduced during F.Y. 2014-15 but did not furnish the capital account statement. The AO downloaded ITRs for A.Ys. 2013-14, 2014-15 and 2015-16, and noted the following:
A.Y. Capital as per balance Gross total Total income Exempt sheet (Rs.) income (Rs.) (Rs.) income (Rs.) 2013-14 53,86,957/- 14,40,822/- 13,25,820/- Nil 2014-15 Details not filed as the 3,29,630/- 2,29,630/- Nil return was filed u/s 44AD 2015-16 1,24,15,536/- 6,53,442/- 4,90,540/- Nil Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 4– 6. The AO observed that the capital increased from Rs. 53,86,957/- as on 31.03.2013 to Rs. 1,24,15,536/- as on 31.03.2015 despite negligible income and absence of any exempt income. Further notice dated 10.11.2017 was issued calling for explanation and documentary evidence regarding the increase in capital, but there was no compliance. The AO reconstructed working of capital as under:
Capital as on 31.03.2013 – Rs. 53,86,957/- Add: Total income for A.Y. 2014-15 – Rs. 2,29,630/- Less: Estimated withdrawals – Rs. 3,78,000/- Capital as on 31.03.2014 – Rs. 52,38,587/- Add: Total income for A.Y. 2015-16 – Rs. 6,53,424/- Less: Withdrawals – Rs. 5,25,424/- Capital arrived at on 31.03.2015 – Rs. 53,66,587/-
As against this, the capital disclosed in ITR-4 for A.Y. 2015-16 was Rs. 1,24,15,536/-. The AO therefore treated the difference of Rs. 70,48,949/- as unexplained cash credits under section 68 and added it to the total income. Total income was assessed at Rs. 75,39,490/-Penalty proceedings under section 271(1)(c) were also initiated.
The assessee filed appeal before CIT(A) and raised grounds challenging the addition and initiation of penalty. Notices dated 12.05.2023 and 08.06.2023 were issued directing the assessee to upload balance sheets, capital accounts, explanation for non-furnishing before Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 5– AO, and complete ITRs for A.Ys. 2013-14 to 2016-17. The assessee sought adjournment but did not file any documents or explanation thereafter.
The CIT(A) observed absence of compliance, held that the assessee failed to substantiate the source of capital increase, and concluded that the AO’s action could not be faulted. Relying on judicial principles regarding appellate restraint, the CIT(A) upheld the addition of Rs. 70,48,949/- and dismissed the appeal.
Aggrieved by the order of CIT(A), the assessee is in appeal before us raising following grounds:
1. The order passed by the Commissioner of Income Tax (Appeals) – National Faceless Appeal Centre (CIT (A)) is legally flawed and should be considered bad in law.
The CIT (A) incorrectly confirmed the addition of Rs. 70,48,949/- made by the Assessing Officer (AO) from the appellant’s capital contribution, without considering the fact that the appellant’s books of accounts were audited by certified Chartered Accountants, and there was no material to support the addition.
3. The CIT (A) wrongly upheld the addition of Rs. 70,48,949/-, which was made by the AO based on assumptions, particularly regarding the appellant’s withdrawals, without any substantive evidence to justify the addition.
Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal
11. During hearing, the learned Authorised Representative reiterated that the assessee could not submit documents before the CIT(A) due to lack of proper representation and requested one more opportunity so that relevant books of account, capital accounts, bank statements and other evidences could be furnished. It was prayed that the matter be restored to the file of the CIT(A) for fresh adjudication.
Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 6– 12. The learned Departmental Representative fairly submitted that he had no serious objection to such restoration, provided reasonable conditions are imposed to ensure compliance.
We have carefully considered the rival submissions, perused the assessment order, order of the CIT(A), materials placed on record, and the affidavit explaining delay and lack of earlier compliance.
It is undisputed that the addition was made solely on the basis of absence of supporting evidence regarding the increase in capital. It is also evident from the appellate record that despite issuance of multiple notices, the assessee did not submit any documentary evidence before the CIT(A). Therefore, the CIT(A) had no material before him to evaluate the merits and was constrained to uphold the AO’s findings.
At the same time, the assessee has now expressed willingness to furnish complete evidences and has sought one final opportunity. The learned DR has not objected to such request. Considering the magnitude of addition, the requirement of proper verification, and in order to advance substantial justice, we deem it appropriate to restore the matter to the file of the CIT(A) for decision afresh after examining all relevant material.
However, keeping in view the delay and earlier non-compliance, such restoration deserves to be accompanied by reasonable conditions.
Urvashiben Sunilbhai Amin vs. ITO Asst.Year –2015-16 - 7– 17. Accordingly, the impugned order is set aside, and the matter is restored to the file of the CIT(A) for fresh adjudication on merits, in accordance with law, after granting adequate opportunity to the assessee.
This restoration is subject to the assessee depositing a cost of Rs. 10,000/- to the credit of the Prime Minister’s Relief Fund within 30 days from the date of receipt of this order and furnishing proof of such payment before the CIT(A).
The assessee shall cooperate fully and shall not seek unwarranted adjournments. The CIT(A) shall examine all evidences and submissions and pass a speaking order without being influenced by earlier orders.
In the result, the appeal is allowed for statistical purposes in the above terms. This Order pronounced in Open Court on 27/11/2025