Loading judgment…
Facts
The assessee, identified as a non-filer for AY 2012-13, made substantial cash deposits and a fixed deposit. The Assessing Officer, after the assessee failed to respond to notices, treated these as unexplained income. The CIT(A) upheld this addition.
Held
The Tribunal noted that the assessment was ex-parte due to the assessee's non-compliance. However, considering the interest of justice, it granted one more opportunity for the assessee to substantiate the source of funds, remitting the matter for denovo assessment.
Key Issues
Whether the assessee's failure to provide adequate evidence to explain cash deposits and fixed deposits, leading to an ex-parte assessment, warrants a denovo assessment with a further opportunity to prove the source of income.
Sections Cited
142(1), 148, 144, 147, 69, 272A(1)(b), 272A(1)(c), 271F, 234A, 234B, 69A
AI-generated summary — verify with the full judgment below
Detected automatically from the text. The count shows how many other judgments on BharatTax rely on the same authority.
Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: DR. BRR KUMAR & SHRI SIDDHARTHA NAUTIYAL
(Assessment Year: 2012-13) Mohanbhai Becharbhai Chauhan, Vs. Income Tax Officer, Sela MU-PO-SELA, Sanand, Ward-1(2)(3), Ahmedabad-382110 Ahmedabad [PAN No.ALCPC1600R] (Appellant) .. (Respondent) Appellant by : Ms. Vidhi V. Pandya, CA Respondent by: Shri Ravindra, Sr. DR 03.11.2025 Date of Hearing Date of Pronouncement 06.11.2025 O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), ADDL/JCIT(A)-1, Nashik vide order dated 10.06.2024 passed for A.Y. 2012-13.
The assessee has raised the following grounds of appeal:
“1. Addition of Rs. 5,00,000/- as unexplained cash deposits madein the bank account On facts and in the circumstances of the case and in law, ADDL/JCIT (A) by confirming the order passed by the Ld. AO, has grossly erred in making addition of Rs. 5,00,000/- as unexplained cash deposits made in Union Bank of India bearing account no. 392902010055153.
2. Addition of Rs. 4,00,000/- u/s 69 of the Income Tax Act, 1961 on the basis of unexplained investment being the amount of fixed deposit made during the year under consideration:
Mohanbhai Becharbhai Chauhan vs. ITO Asst.Year –2012-13 - 2– On facts and in the circumstances of the case and in law, ADDL/JCIT (A) by confirming the order passed by the Ld. AO, has grossly erred in making addition of Rs. 4,00,000/- unexplained investment being the amount of fixed deposit made during the year under consideration u/s 69 of the Income Tax Act, 1961.
Initiating penalty proceeding u/s 272A(1)(b): On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s. 272A(l)(b) of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.
Initiating penalty proceeding u/s 272A(1)(c) of the Act: On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s 272A(1)(c) of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.
5. Initiating penalty proceeding u/s 271F of the Act: On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings for levy of penalty u/s and 27 IF of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.
6. Levy of interest u/s 234A and u/s 234B of the Income Tax Act, 1961: On facts and in the circumstances of the case in law, the Ld. AO has grossly erred in levying interest u/s 234A and u/s 234B of the Act when no such interest is leviable. The interest levied by the Ld. AO should be deleted. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any grounds of appeal
at the time of or before the hearing of the appeal.”
3. The brief facts of the case are that the assessee, Shri Mohanbhai Chauhan, was identified by the Assessing Officer as a non-filer of return of income for the Assessment Year 2012-13, despite having made substantial cash deposits in his bank accounts. The Assessing Officer, on the basis of information received from the bank, noted that the assessee had deposited cash of Rs. 5,00,000/- on 15.09.2011 in his Union Bank of Mohanbhai Becharbhai Chauhan vs. ITO Asst.Year –2012-13 - 3– India account and had also made a fixed deposit of Rs. 4,00,000/- on 10.01.2011, which was closed by the assessee on 27.05.2011. Since the assessee did not file his return of income and also did not respond to repeated notices issued under sections 142(1) and 148 of the Income-tax Act, 1961 (the “Act”), the Assessing Officer proceeded to complete the assessment ex-parte under section 144 read with section 147 of the Act. The Assessing Officer, in the absence of any explanation by the assessee or supporting evidence filed by the assessee with regards to the source of the cash deposits and the fixed deposit, treated the aggregate sum of Rs. 9,00,000/- as unexplained money under section 69A of the Act and added the same to the total income of the assessee.
4. In appeal before CIT(Appeals), the assessee contended that the source of cash deposits and investment in the fixed deposit was from agricultural income. The assessee submitted certain purchase bills for grains purchased from Suraj Traders to substantiate the agricultural activity and submitted that the fixed deposit was made out of agricultural earnings and which was later withdrawn by the assessee for medical purposes. However, the CIT(Appeals) observed that the assessee had not furnished any supporting documentary evidence such as sale bills of agricultural produce, land ownership details, or records showing agricultural operations carried out by him. The CIT(Appeals) held that mere filing of certain purchase bills without showing any source of sale proceeds or details of agricultural land by the assessee was not sufficient to prove the genuineness of the explanation. The CIT(Appeals) further Mohanbhai Becharbhai Chauhan vs. ITO Asst.Year –2012-13 - 4– observed that the onus lies on the assessee to explain the nature and source of any credit appearing in his bank account, and in the present case, such onus had not been discharged. Relying on the principles laid down by the Hon’ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) and Sumati Dayal v. CIT [1995] 214 ITR 801 (SC), the CIT(Appeals) invoked the test of human probabilities and concluded that the claim of agricultural income was not substantiated. The CIT(Appeals) also referred to Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) and McDowell & Co. Ltd. v. CTO [1985] 154 ITR 148 (SC), and held that unexplained money, if not properly explained by the assessee, can be assessed as income under section 69A of the Act. Accordingly, the addition of Rs. 9,00,000/- made by the Assessing Officer was upheld CIT(Appeals) and the appeal of the assessee was dismissed.
The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
We have heard the rival contentions and perused the material available on record. The undisputed fact remains that the assessment in the present case was framed ex-parte under section 144 read with section 147 of the Act since the assessee failed to comply with various statutory notices issued by the Assessing Officer and also did not furnish the requisite evidences before the Assessing Officer. Before the CIT(Appeals) as well, though the assessee made an attempt to substantiate the source of cash deposits and fixed deposit by submitting that the same were derived from agricultural income, however adequate supporting documents such as Mohanbhai Becharbhai Chauhan vs. ITO Asst.Year –2012-13 - 5– landholding details, sale bills of agricultural produce, or crop-wise income records were not produced by the assessee before CIT(Appeals). However, it is evident that the assessee had filed certain supporting papers at the appellate stage which were not examined by the Assessing Officer at all due to the ex-parte nature of the assessment.
Therefore, in the interest of substantial justice, we are of the considered view that one more opportunity should be granted to the assessee to substantiate his claim with necessary evidences. The Hon’ble Supreme Court in Kapurchand Shrimal v. CIT [1981] 131 ITR 451 (SC) has held that it is the duty of the appellate authority to correct the errors of the lower authorities and to remit the matter if necessary with proper directions to render justice to the parties. Considering the above legal position and keeping in view that the assessment was completed ex-parte without adequate opportunity, we deem it appropriate to set aside the matter to the file of the Assessing Officer for denovo assessment. The Assessing Officer shall afford reasonable opportunity of being heard to the assessee and permit him to produce relevant evidence in support of his claim that the cash deposits and fixed deposit originated from agricultural income. The assessee is also directed to extend full cooperation and furnish all documentary evidences, failing which the Assessing Officer shall be at liberty to decide the matter on the basis of material available on record. Further, we observe that since the assessee’s non-compliance before the Assessing Officer and appellate authority has led to unnecessary litigation and wastage of judicial time, we direct the assessee to pay a cost of Rs. 1,000/- to the credit of the Revenue before the next hearing, which shall be treated as a condition precedent for re-adjudication.
In the result, the appeal is allowed for statistical purposes, and the matter is restored to the file of the Assessing Officer for fresh consideration in accordance with law and after affording due opportunity to the assessee. This Order pronounced in Open Court on 06/11/2025