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Facts
The assessee's bank account showed unexplained cash deposits of Rs. 5,00,000/-, leading the Assessing Officer to make an addition under Section 68 and initiate penalty proceedings under Sections 271(1)(c) and 271F. The assessee contended illness prevented the submission of details. The CIT(A) dismissed the appeal for statistical purposes, citing the assessee's failure to respond to hearing notices, without addressing the merits.
Held
The ITAT found the CIT(A)'s order cryptic, passed without considering the grounds of appeal or merits, and observed that the assessee was not given a fair and reasonable opportunity of hearing, particularly due to the Covid pandemic and short intervals between subsequent notices. Consequently, the ITAT set aside the CIT(A)'s order and remanded the matter for de-novo adjudication, directing the CIT(A) to provide adequate opportunity and decide on merits.
Key Issues
Whether the addition for unexplained cash deposits under Section 68 was justified; whether the CIT(A) erred in dismissing the appeal without considering merits and providing adequate opportunity of hearing; and the justification of penalty proceedings under Sections 271(1)(c) and 271F.
Sections Cited
144, 68, 271(1)(c), 271F
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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Siddhartha Nautiyal & Shri Makarand Vasant Mahadeokar
ITA No: 649/Ahd/2025 Assessment Year: 2011-12 Rinkle Vora The ITO, C-601, Swaminarayan Ward-5(2)(1), Avenue, Vs Ahmedabad Nr. Bhatha, Sarkhej Road, Vasna, Ahmedabad-380007 Gujarat PAN:BBHPP9402Q (Respondent) (Appellant) Assessee Represented: Shri Vidhi V. Pandya, C.A. Revenue Represented: Shri Arvind Kumbhare, Sr.D.R. Date of hearing : 25-09-2025 Date of pronouncement : 29-09-2025 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This appeal is filed by the Assessee as against the appellate order dated 05.12.2023 passed by the Additional Commissioner of Income Tax (Appeals)-2 Delhi arising out of the assessment order passed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2011-12.
The assessee has raised the following Grounds of Appeal:
A.Y. 2011-12 Page No 2 Rinkle Vora vs. ITO
Addition of Rs. 5,00,000/- u/s 68 on account of unexplained money and cash deposits. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly erred in making addition of Rs. 5,00,000/- to the income of the appellant on account of unexplained money and cash deposits.
2. Initiating penalty proceeding u/s 271(1) (c) of the Act. On facts and in the circumstances of the case and in law, the Ld. AO has grossly grossly erred in Initiating the proceedings for levy of penalty u/s.. 271(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.
3. 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. 271F of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated.
The brief facts of the case are that the assessee’s return of income was taken up for scrutiny assessment and during the course of proceedings, the Assessing Officer observed cash deposits in the bank account of the assessee which, according to him, were not properly explained. Since no satisfactory clarification or evidence was furnished by the assessee during assessment, the Assessing Officer treated the sum of Rs. 5,00,000/- as unexplained cash deposit and made an addition under section 68 of the Income- tax Act, 1961. The assessee contended that he was ill during the relevant period and therefore unable to collect and furnish the details of bank transactions before the Assessing Officer. Despite this, the Assessing Officer proceeded to complete the assessment and added the sum of Rs. 5,00,000/- to the total income. The Assessing Officer also initiated penalty proceedings separately under section 271(1)(c) of the Act for alleged concealment or furnishing of inaccurate particulars of income. Thus, the assessment was completed by making the addition of Rs. A.Y. 2011-12 Page No 3 Rinkle Vora vs. ITO 5,00,000/- as unexplained cash deposits and by initiating penalty proceedings under the above provision.
In appeal, CIT(Appeals) dismissed the assessee of the assessee with the following observations:
“3. The appellant was given many hearing notices 19.12.2019. 25.01.2021, 15.11.2023 and 24.11.2023 but no reply was filed by the appellant against any of the above notices. Further, it is noted that despite giving various opportunities to represent the case over the years the appellant has chosen not to submit any documents. It is apparent that appellant has not shown any interest in pursuing the appeal.
Therefore, considering the facts of the case, the appeal is hereby dismissed for statistical purposes.”
The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee. Before us, the ld. counsel for the assessee submitted that that CIT(Appeals) has passed a very cryptic order, in which neither any opportunity of hearing was provided to the assessee and neither was the case of the assessee was discussed on merits. The assessee had raised several grounds of appeal, but while dismissing the appeal of the assessee, none of the grounds of appeal raised by the assessee were discussed.
In response, Ld. DR placed reliance on the observations made by CIT(Appeals) in the appellate order.
A.Y. 2011-12 Page No 4 Rinkle Vora vs. ITO
We have heard the rival contentions and perused the material on record. On going through the appellate order, it is seen that the ld. CIT(Appeals) has passed a very cryptic order without adverting to the grounds of appeal raised by the assessee and without discussing the case on merits. It is further noticed that the first date of hearing fixed on 25.01.2021 was during the Covid pandemic period when normal functioning was seriously affected, while the subsequent dates of hearing, namely 15.11.2023 and 24.11.2023, were fixed at very short intervals without affording any effective opportunity to the assessee to represent his case. In these circumstances, we are of the view that the assessee has not been granted a fair and reasonable opportunity of being heard before the ld. CIT(Appeals). Accordingly, in the interest of justice, we set aside the impugned order of the ld. CIT(Appeals) and restore the matter to his file for de-novo adjudication. The ld. CIT(Appeals) shall consider the grounds of appeal raised by the assessee, examine the issues on merits, and decide the same in accordance with law after affording adequate opportunity of hearing to the assessee.