MANUBHAI BABALBHAI PATEL,VADODARA vs. THE ITO, WARD-1(2)(1), VADODARA

The brief facts of the case are that the assessee is an individual and he did not file his income tax return for the Assessment Year 2016–17. Based on information from the Investigation Wing regarding unaccounted investments of ₹3,32,62,000/- during the year, the Assessing Officer reopened the assessment under Section 147 of the Income-tax Act (Act) In response, the assessee filed a belated return on 23.04.2021 declaring an income of only ₹2,65,000/- as “income from other sources”. During the course of re-assessment proceedings, the assessee submitted that he was Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 3– engaged in the Aangadia (courier and informal money transfer) business, earning about 0.1% commission on funds transferred on behalf of clients. The assessee submitted that the cash deposits in his Co-operative Bank account were not his own money but belonged to various clients, and that records were not maintained since such transactions were carried out informally and details were destroyed once completed. He also claimed that due to the pandemic, it was difficult to gather records or client details. The Assessing Officer, however, noted that cash deposits amounting to ₹3,32,62,000/- had been made in the assessee’s account with Shri Renuka Mata Multi State Urban Co-operative Credit Society Ltd., and the assessee had failed to provide any details or documents explaining the source or genuineness of these credits. Although multiple opportunities were given, the assessee could not substantiate his explanation or provide credible evidence. Accordingly, the Assessing Officer treated the entire amount of ₹3,32,62,000/- as unexplained money under Section 69A of the Act and added the same to the total income of the assessee.

In appeal before CIT(Appeals), he dismissed the appeal of the assessee on account of non-appearance, with the following observations:

We have heard the rival contentions and perused the material on record. We observe that in the instant case, order was passed by CIT(Appeals) on ex-parte basis without giving an opportunity of hearing to the assessee to present the case on merits. We note that on similar facts, Ahmedabad ITAT in the case of Naravatsinh Jagatsinh Chauhan in 1254 and 1255/Ahd/2024 vide orders dated 09/05/2025, restored the matter to the file of the Assessing Officer foe de-novo consideration. In this case the ITAT Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 5– considered appeals against ex parte assessment and penalty orders passed under sections 147 r.w.s. 144 and 271(1)(c) of the Act. The assessee in that case was an uneducated individual engaged in Angadia business and had not filed return of income and accordingly, the assessments were made based on cash deposits of over ₹14 crores and ₹2.32 crores found in his bank accounts, allegedly operated by third parties. The CIT(A) had dismissed his appeals ex parte due to non-compliance. The assessee explained that he was misled by an accountant and unaware of the proceedings due to his limited education and background. The Tribunal found merit in the assessee's explanation, particularly since no opportunity was provided to rebut evidence, and no proper inquiry was conducted into his claim that he had no ownership over the funds. The ITAT set aside the orders of the AO and CIT(A), restored the matters to the AO for fresh adjudication after providing relevant materials and an opportunity of hearing. Again, in the case of Bhavin Manoharbhai Parmar vs. Income Tax Officer, Ward-5, Mehsana [ITA No.1826/Ahd/2024, A.Y. 2016-17 vide order dated 06.05.2025], the Ahmedabad Bench of the ITAT considered an appeal against the order passed by the CIT(A), NFAC, confirming an addition of ₹1,38,32,749/- made under section 69 of the Act. The addition was based on unexplained cash deposits found in the assessee’s account with Sri Renuka Mata Multi-State Co-op Credit Society Ltd. The ITAT noted that the assessee had failed to provide any supporting evidence during the assessment proceedings or before the CIT(A). During the hearing before the Tribunal, the assessee filed an adjournment application. However, considering that no prejudice would be caused to the Revenue, the Tribunal remanded the matter back to the Assessing Officer with a direction to examine any explanations or documents Manubhai Babalbhai Patel vs. ITO Asst.Year –2016-17 - 6– the assessee may submit and to decide the issue afresh in accordance with law. The assessee was also directed to cooperate fully and avoid unnecessary adjournments. The appeal was allowed for statistical purposes. Accordingly, we note that since the facts of the assessee’s case are on an identical footing wherein no substantive evidence was furnished by the assessee during the course of assessment proceedings before the Assessing Officer and CIT(Appeals) also later dismissed the appeal of the assessee on ex-parte basis on account of non-appearance during the course of proceedings, we hereby restore the matter to the file of the Assessing Officer for de-novo consideration with an opportunity of hearing to the assessee to present his case on merits.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 02/09/2025